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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K







|x | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2014

or



| ̈ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

Commission File No. 001- 34280







LOGO

American National Insurance Company

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Texas                                                          |  | 74-0484030                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

One Moody Plaza

Galveston, Texas 77550-7999

(Address of principal executive offices) (Zip Code)

(409) 763-4661

(Registrants telephone number, including area code)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes     ̈  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes     ̈  No



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See
definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act:



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  | x |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).     ̈  Yes    x  No

The aggregate market value on June 30, 2014 (the last business day of the registrants most recently completed second fiscal quarter) of the voting
stock held by non-affiliates of the registrant was approximately $833.5 million. For purposes of the determination of the above-stated amount, only directors, executive officers and 10% shareholders are presumed to be affiliates, but neither the
registrant nor any such person concedes that they are affiliates of registrant.

As of February 17, 2015, there were 26,878,641 shares of the
registrants voting common stock, $1.00 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Information called for in Part III of this Form 10-K is incorporated by reference to the registrants Definitive Proxy Statement to be filed within 120
days of the close of the registrants fiscal year in conjunction with the registrants annual meeting of shareholders.









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AMERICAN NATIONAL INSURANCE COMPANY

TABLE OF CONTENTS



|                  |  |                                                                                                              |     |  |     | 
|----------------- |  | ------------------------------------------------------------------------------------------------------------ | --- |  | --- | 
|PART I            |  |                                                                                                              |     |  |     | 
|ITEM 1.           |  | BUSINESS                                                                                                     |     |  | 3   | 
|ITEM 1A.          |  | RISK FACTORS                                                                                                 |     |  | 11  | 
|ITEM 1B.          |  | UNRESOLVED STAFF COMMENTS                                                                                    |     |  | 18  | 
|ITEM 2.           |  | PROPERTIES                                                                                                   |     |  | 18  | 
|ITEM 3.           |  | LEGAL PROCEEDINGS                                                                                            |     |  | 18  | 
|ITEM 4.           |  | MINE SAFETY DISCLOSURES                                                                                      |     |  | 18  | 
|                  |  |                                                                                                             
|PART II           |  |                                                                                                              |     |  |     | 
|ITEM 5.           |  | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |     |  | 19  | 
|ITEM 6.           |  | SELECTED FINANCIAL DATA                                                                                      |     |  | 21  | 
|ITEM 7.           |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                        |     |  | 21  | 
|ITEM 7A.          |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                   |     |  | 56  | 
|ITEM 8.           |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                  |     |  | 59  | 
|ITEM 9.           |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                         |     |  | 105 | 
|ITEM 9A.          |  | CONTROLS AND PROCEDURES                                                                                      |     |  | 105 | 
|ITEM 9B.          |  | OTHER INFORMATION                                                                                            |     |  | 106 | 
|                  |  |                                                                                                             
|PART III          |  |                                                                                                              |     |  |     | 
|ITEM 10.          |  | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                       |     |  | 107 | 
|ITEM 11.          |  | EXECUTIVE COMPENSATION                                                                                       |     |  | 107 | 
|ITEM 12.          |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS               |     |  | 107 | 
|ITEM 13.          |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE                                     |     |  | 107 | 
|ITEM 14.          |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                       |     |  | 107 | 
|                  |  |                                                                                                             
|PART IV           |  |                                                                                                              |     |  |     | 
|ITEM 15.          |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                   |     |  | 108 | 
|INDEX TO EXHIBITS |  |                                                                                                              | 108 | 
|SIGNATURES        |  |                                                                                                              | 111 | 



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PART I



|ITEM 1. | BUSINESS
|------- | --------

Company Overview

American National Insurance Company has over 105 years of experience. We have maintained our corporate headquarters in Galveston, Texas since our founding in
1905. Our core businesses are life insurance, annuities and property and casualty insurance. We also offer limited health insurance. We provide personalized service to approximately six million policyholders throughout the United States, Puerto
Rico, Guam, and American Samoa.

In this document, we refer to American National Insurance Company and its subsidiaries as the Company,
we, our, and us.

Our vision is to be a leading provider of financial products and services for current and future
generations. For more than a century, we have maintained a conservative business approach and corporate culture. We have an unwavering commitment to serve our policyholders, agents, and shareholders by providing excellent customer service and
competitively priced and diversified products. We are committed to profitable growth, which enables us to remain financially strong. Acquisitions that are strategic and offer synergies may be considered, but they are not our primary source of
growth. We invest regularly in our distribution channels and markets to fuel internal growth.

We are committed to excellence and maintaining high ethical
standards in all our business dealings. Disciplined adherence to our values has allowed us to deliver consistently high levels of customer service through talented people, who are at the heart of our business.

Business Segments

Our family of companies includes six
life insurance companies, eight property and casualty insurance companies, and numerous non-insurance subsidiaries. Our business segments and the principal products they offer or manage follow.

Life Segment

Whole Life.Whole life
products provide a guaranteed benefit upon the death of the insured in return for the periodic payment of a fixed premium over a predetermined period. Premium payments may be required for the entire life of the contract, to a specified age or a
fixed number of years, and may be level or change in accordance with a predetermined schedule. Whole life insurance includes some policies that provide a participation feature in the form of dividends. Policyholders may receive dividends in cash or
apply them to increase death benefits or cash values available upon surrender, or reduce the premiums required to maintain the contract in-force.

Term
Life.Term life products provide a guaranteed benefit upon the death of the insured for a specified time period in return for the periodic payment of premiums. Coverage periods typically range from one to thirty years, but in no event longer
than the period over which premiums are paid.

Universal Life.Universal life insurance products provide coverage through a contract that gives the
policyholder flexibility in premium payments and coverage amounts. Universal life products may allow the policyholder, within certain limits, to increase or decrease the amount of death benefit coverage over the term of the contract and to adjust
the frequency and amount of premium payments. Universal life products are interest rate sensitive, and we determine the interest crediting rates, subject to policy specific minimums.

Equity-indexed universal life products have the same features as the universal life products, but also provide an opportunity for policyholders to earn
additional return through credited interest tied to the performance of a particular stock index, such as the S&P 500.



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Variable Universal Life.Variable universal life products provide insurance coverage on a similar basis as
universal life, except that the policyholder bears the investment risk because the value of the policyholders account balance varies with the investment experience of the securities held in the separate account investment options selected by
the policyholder.

Credit Life Insurance.Credit life insurance products are sold in connection with a loan or other credit account. Credit life
insurance products are designed to pay off the borrowers remaining debt to the lender on a loan or credit account if the borrower dies during the coverage period.

Annuity Segment

Deferred Annuity. A
deferred annuity is an asset accumulation product. Deposits are received as a single premium deferred annuity, or as multiple payments, in the case of a flexible premium deferred annuity. Deposits are credited with interest at our determined rates
subject to policy minimums. For certain limited periods of time, usually from one to ten years, interest rates are guaranteed not to change. Deferred annuities usually have surrender charges that begin at issue and reduce over time and may have
market value adjustments that can have a positive or negative effect on any surrender value.

An equity-indexed deferred annuity is credited with interest
at minimum rates established by state insurance law. Any additional interest credited is typically tied to the performance of a particular stock market index.

Single Premium Immediate Annuity (SPIA).A SPIA is purchased with one premium payment, providing periodic (usually monthly or
annual) payments to the annuitant for a specified period, such as for the remainder of the annuitants life. Return of the original deposit may not be guaranteed, depending on the terms of the annuity contract.

Variable Annuity. In a variable annuity the policyholder bears the investment risk because the value of the policyholders account balance varies
with the investment experience of the securities held in the separate account investment options selected by the policyholder. These products have no guaranteed minimum withdrawal benefits.

Health Segment

Medicare Supplement.Medicare Supplement insurance is a type of private health insurance designed to supplement or pay the costs of certain medical services not covered by Medicare.

Supplemental Insurance.Supplemental insurance is designed to provide supplemental coverage for specific events or illnesses such as cancer and
accidental injury or death.

Stop-Loss.Stop-loss coverage is used by employers to limit their exposure under self-insurance medical plans. Two
coverages, which are usually offered concurrently, are available.Specific Stop-Loss is initiated when claims for an individual reach a threshold; after the threshold is reached, the policy reimburses claims paid by the employer up to the
lifetime limit per individual. Aggregate Stop-Loss reimburses the employer once the groups total paid claims reach a threshold.

Credit
Disability.Credit disability (also called credit accident and health) insurance pays a limited number of monthly payments on a loan or credit account if the borrower becomes disabled during the coverage period.

Medical Expense.Medical expense insurance covers most health expenses including hospitalization, surgery and outpatient services (excluding dental and
vision costs). We discontinued marketing these products and existing contracts are in run-off.



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Property and Casualty Segment

Personal Lines. Personal lines include insurance policies issued to individuals for auto, homeowners and other exposures. Auto insurance covers specific
risks involved in owning and operating an automobile. Homeowner insurance provides coverage that protects the insureds property against loss from perils. Other personal insurance provides coverage for property such as boats, motorcycles and
recreational vehicles.

Commercial Lines. Agricultural business insurance is the majority of our commercial lines. This includes property and
casualty coverage tailored for a farm, ranch, vineyard or other agricultural business, contractors, and business within rural and suburban markets. Commercial auto insurance is typically issued in conjunction with the sale of our Agricultural
business insurance and covers specific risks involved in owning and operating vehicles. Other commercial insurance is also sold along with our Agricultural business and encompasses property, liability and workers compensation coverages.

Credit-Related Property Insurance Products.We primarily offer the following credit insurance products:

CollateralorCreditor Protection Insurance (CPI). CPI provides insurance against loss, expense to recover, or damage
to personal property (typically automobiles and homes) pledged as collateral resulting from fire, burglary, collision, or other loss occurrence that would either impair a creditors interest or adversely affect the value of the collateral. The
coverage is purchased from us by the lender according to the terms of the credit obligation and charged to the borrower by the lender when the borrower fails to provide the required insurance.

Guaranteed Auto Protection or Guaranteed Asset Protection (GAP). GAP insures the excess outstanding indebtedness over
the primary property insurance benefits that may occur when there is a total loss to or an unrecovered theft of the collateral. GAP can be written on a variety of assets that are used as collateral to secure credit; however, it is most commonly
written on automobiles.

Corporate and Other SegmentOur Corporate and Other segment is primarily our invested assets not used to
support insurance activities. It also includes our non-insurance subsidiaries, such as our limited investment advisory services.

Marketing Channels

Product distribution is managed to satisfy specific markets, maintain brand identities and minimize channel conflict across our five marketing
channels. When possible, products are cross-sold to maximize product offerings and return on investment in products and distribution. Our marketing channels are:

Independent Marketing Group (IMG)distributes life insurance and annuities through independent agents serving middle and
affluent markets, as well as niche markets such as the small pension plan sponsor. IMG provides products and service to clients in need of wealth protection, accumulation, distribution, and transfer. Products are marketed through financial
institutions, large marketing organizations, employee benefit firms, broker-dealers, and independent insurance agents and brokers.

IMG also markets to
individuals who favor purchasing insurance directly from insurance companies. It offers life insurance to middle-income customers through multiple channels including direct mail, internet and call centers.

Career Sales and Service Division (CSSD)  roots can be traced back to the Companys founding in 1905, and offers life
insurance, annuities, and limited benefit health insurance products through exclusive employee agents primarily to the middle-income market. CSSDs business model is structured to distribute new products as well as provide door-to-door
collections and personalized service to the customer via agents located throughout much of the United States. CSSD has evolved its operations to offer a wider variety of products and alternative payment options to meet the
changing needs of the customer.



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Multiple-lineoffers life insurance, health insurance, annuities, and property and casualty
insurance primarily through dedicated agents. Multiple-line serves individuals, families, agricultural clients, and small business owners at all income levels. Policyholders can do business with a single agent, which has been identified as an
important driver to client satisfaction

Health Insurance Divisionthrough independent agents and managing general underwriters
(MGU), serves the needs of a variety of markets including middle-income seniors, self-insured employers, and the special needs of individuals through supplemental products. The Health Division offers an array of life insurance, health
insurance, and annuity products for this growing segment of the population, including group life products, supplemental health insurance products, and health reinsurance. It remains committed to traditional Medicare supplement products. The Health
Division is responsible for the administration of health insurance products sold by other marketing channels.

Credit Insurance
Divisionoffers products that provide protection against specific unpaid debt in the event of loss due to death or disability, or in the event of a loss of ability to repay, such as involuntary unemployment or untimely loss
of collateral. Distribution includes general agents who market to financial institutions, automobile dealers, and furniture dealers. These general agents are given non-exclusive authority to solicit insurance within a specified geographic area and
to appoint and supervise subagents.

Policyholder Liabilities

We record the amounts for policyholder liabilities in accordance with U.S generally accepted accounting principles (GAAP) and the standards of
practice of the American Academy of Actuaries. We carry liabilities for future policy benefits associated with base policies and riders, unearned mortality charges and future disability benefits, for other policyholder liabilities associated with
unearned premiums and claims payable and for unearned revenue the unamortized portion of front-end fees. We also establish liabilities for unpaid claims and claim adjustment expenses, including those that have been incurred but not yet reported. In
addition, we carry liabilities for minimum death benefit guarantees relating to certain annuity contracts, secondary guarantees relating to certain life policies, and fair value reserves associated with living benefits embedded derivative
guarantees.

Pursuant to state insurance laws, we establish statutory reserves, which are reported as liabilities, and which generally differ from future
policy benefits determined using GAAP on our respective policies. These statutory reserves are established in amounts sufficient to meet policy and contract obligations, when taken together with expected future premiums and interest at assumed
rates.

Additional information regarding our policyholder liabilities may be found in Part II, Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operations Critical Accounting Estimates  Reservessection.

Risk Management

A conservative operating philosophy was a founding principle for our Company. We manage risks throughout the Company by employing controls in our insurance and
investment functions. These controls are designed to both place limits on activities and provide reporting information that helps shape any needed adjustments in our ongoing review of existing controls. We have a formal risk management program on an
enterprise wide basis to coordinate risk management efforts and to provide reasonable assurance that our risk taking activities are aligned with our strategic objectives. The Audit Committee of the Board of Directors also reviews the Companys
risk assessment and management policies. This risk management program includes a corporate risk officer who chairs a Management Risk Committee to ensure consistent application of the enterprise risk management process across all business segments.
We also use several senior management committees to support the discussion and enforcement of risk controls in our management of the Company.

Our
insurance products are designed to offer a balance of features desired by the marketplace with provisions that mitigate our risk exposures to allow prudent management across our insurance portfolio. We employ underwriting standards to ensure proper
rates are charged to various classes of insureds. In our life insurance and annuity products, we mitigate the risk of disintermediation through the use of surrender charges and market value adjustment features.



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The process of linking the timing and the amount of paying obligations related to our insurance and annuity
contracts and the cash flows and valuations of the invested assets supporting those obligations is commonly referred to as asset-liability management (ALM). Our ALM Committee regularly monitors the level of risk in the interaction of our
assets and liabilities and helps shape actions intended to attain our desired risk-return profile. Investment allocations and duration targets are also intended to limit the risk exposure in our annuity products by limiting the credited rate to a
range supported by these investments. Additional tools which help shape investment decisions include deterministic and stochastic interest rate scenario analyses using a licensed, third party economic scenario generator and detailed insurance ALM
models. These models also use experience related to surrenders and death claims.

We also manage risk by using reinsurance to limit our exposure on any
one insurance contract or any single event or series of events. Our reinsurance program addresses some of our individual risks with exposures above certain amounts as well as our exposure to catastrophes including hurricanes, tornadoes, wind and
hail events, earthquakes, fires following earthquakes, winter storms, and wildfires. We purchase reinsurance from many providers and we are not dependent on any single reinsurer. We believe that our reinsurers are reputable and financially secure,
and we regularly review the financial strength ratings of our reinsurers to ensure they meet established thresholds. Reinsurance does not remove our liability to pay our policyholders, and we remain liable to our policyholders for the risks we
insure.

In our Property and Casualty segment, the use of catastrophic event models is an important element of our risk management. These models assist us
in the management of our exposure concentrations and the amount and structure of our reinsurance purchases. In addition to reinsurance protection, we manage our exposure to catastrophic risk by limiting personal homeowners business in coastal areas,
implementing hurricane, wind and hail deductible requirements where appropriate, and not renewing coverage in regions where our exposure to risky events exceeds our risk appetite.

Pricing

We establish premium rates for life and health
insurance products using assumptions as to future mortality, morbidity, persistency, and expenses, all of which are estimates generally based on our experience, industry data, projected investment earnings, competition, regulations and legislation.
Premium rates for property and casualty insurance are influenced by many factors, including the estimated frequency and severity of claims, state regulation and legislation, competition, and general business and economic conditions, including market
interest rates and inflation. Profitability is affected to the extent actual experience deviates from our pricing assumptions.

Payments for certain
annuity and life products are not recognized as revenues, but are added to policyholder account balances. Revenues from these products are charges to the account balances for the cost of insurance risk and administrative fees and, in some cases upon
surrender. Profits are earned to the extent these revenues exceed actual costs. Profits are also earned from investment income on assets invested from the deposits in excess of the amounts credited to policyholders.

Premiums for accident and health policies must take into account the rising costs of medical care. The annual rate of medical cost inflation has historically
been higher than the general rate of inflation, requiring frequent rate increases, most of which are subject to approval by state regulatory agencies.

Competition

We compete principally on the scope of our
distribution systems, the breadth of our product offerings, reputation, marketing expertise and support, our financial strength and ratings, our product features and prices, customer service, claims handling, and in the case of producers,
compensation. The market for insurance, retirement and investment products continues to be highly fragmented and competitive. We compete with a large number of domestic and foreign insurance companies, many of which offer one or more similar
products. In addition, for our products that include an asset accumulation component, our competition includes domestic and foreign securities firms, investment advisors, mutual funds, banks and other financial institutions.



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Several competing insurance carriers are larger than we are and have brands that are more commonly known and
spend significantly more on advertising than we do. We remain competitive with these commonly known brands by relying on our abilities to manage costs, providing attractive coverage and service, maintaining positive relationships with our agents,
and maintaining our financial strength ratings.

Ratings

Insurer ratings are independent opinions of rating agencies regarding the capacity of an insurance company to meet the obligations of its insurance policies
and contracts in accordance with their terms. The ratings are based on each rating agencies quantitative and qualitative evaluation of a company and its management strategy. The rating agencies do not provide ratings as a recommendation to
purchase insurance or annuities, nor as a guarantee of an insurers current or future ability to meet contractual obligations. Each agencys rating should be evaluated independently of any other rating. Ratings may be changed, suspended,
or withdrawn at any time.

Our current insurer financial strength rating from two of the most widely referenced rating organizations as of the date of
this filing are as follows:



| |  |  | A.M. Best Company: A (1)
| | - |  | ------------------------



| |  |  | Standard & Poors (S&P): A (2)
| | - |  | --------------------------------



|(1) | A.M. Bests active company rating scale consists of thirteen ratings ranging from A++ (Superior) to D (poor).
|--- | -------------------------------------------------------------------------------------------------------------



|(2) | S&Ps active company ratings scale AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Regulation Applicable to Our Business

Our insurance operations are subject to extensive regulation, primarily at the state level. Such regulation varies by state but generally has its source in
statutes that establish requirements for the business of insurance and that grant broad regulatory authority to a state agency. Insurance regulation has a substantial effect on our business and governs a wide variety of matters, such as insurance
company licensing, agent and adjuster licensing, policy benefits, price setting, accounting practices, product suitability, the payment of dividends, the nature and amount of investments, underwriting practices, reserve requirements, marketing and
advertising practices, privacy, policy forms, reinsurance reserve requirements, risk and solvency assessments, mergers and acquisitions, capital adequacy, transactions with affiliates, participation in shared markets and guaranty associations,
claims practices and the remittance of unclaimed property. The models for state laws and regulations often emanate from the National Association of Insurance Commissioners (NAIC).

The U.S. Federal government has not historically regulated the insurance industry directly. In 2010 the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank) expanded the federal presence in insurance oversight. Dodd-Franks requirements include streamlining the state-based regulation of reinsurance and non-admitted insurance. Dodd-Frank established a new
Federal Insurance Office (FIO) within the U.S. Department of the Treasury, which is authorized to, among other things, gather data and information to monitor aspects of the insurance industry, identify certain issues in the
regulation of insurers, and preempt state insurance measures under certain circumstances. We believe there likely will be further federal incursion into the business of insurance, which may add significant legal complexity and associated costs to
our business. Furthermore, the staff of the Securities and Exchange Commission (the SEC), pursuant to a study required by Dodd-Frank, has recommended certain regulatory changes in the fiduciary duties applicable to broker-dealers and
investment advisers. These changes, if adopted, could affect how our variable insurance products are designed and sold in the future.

State insurance
departments monitor compliance with regulations through periodic reporting procedures and examinations. At any given time, financial, market conduct or other examinations of our insurance companies may be occurring.



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Regulatory matters having the most significant effects on our insurance operations and financial reporting are
described further below and see Item 1A, Risk Factors, Litigation and Regulation Risk Factors.

Limitations on Dividends by Insurance
Subsidiaries.Dividends received from our insurance subsidiaries represent one source of cash for us. Our insurance subsidiaries ability to pay dividends is restricted by state law and impacted by federal income tax considerations.

Holding Company Regulation.Our structure constitutes an insurance holding company system under the insurance laws of the states where we do business.
Our insurance companies are organized under the laws of Texas, Missouri, New York, Louisiana, and California. Insurance holding company system laws and regulations in such states generally require periodic reporting to state insurance regulators of
various business, risk management and financial matters and advance notice to, or in some cases approval by, such regulators prior to certain transactions between insurers and their affiliates. These laws also generally require regulatory approval
prior to the acquisition of a controlling interest in an insurance company. These requirements may deter or delay certain transactions considered desirable by management or our stockholders.

Price Regulation.Nearly all states have laws requiring property and casualty and health insurers to file price schedules and most insurers to file
policy or coverage forms, and other information with the states regulatory authority. In many cases these must be approved prior to use. The objectives of pricing laws vary, but generally a price cannot be excessive, inadequate or unfairly
discriminatory. Prohibitions on discriminatory pricing apply in the context of certain products as well.

Our ability to adjust prices is often dependent
on the applicable pricing law and our ability to demonstrate to the particular regulator that our pricing or proposed pricing complies with such law. In states that significantly restrict our underwriting selectivity, we can manage our risk of loss
by charging a price that reflects the cost and expense of providing our insurance products. In states that significantly restrict our price-setting ability, we can manage our risk of loss by being more selective in underwriting. When a state has
significant underwriting and pricing restrictions, it becomes more difficult for us to manage our risk of loss, which can impact our willingness and ability to market products in such states.

Guaranty Associations and Involuntary Markets.State insurance guaranty fund laws allow insurers to be assessed, subject to prescribed limits, fees to
cover certain obligations of insolvent insurance companies. In addition, to maintain our licenses to write property and casualty insurance in various states, we are required to participate in assigned risk plans, reinsurance facilities, and joint
underwriting associations that provide various insurance coverage to purchasers that otherwise are unable to obtain coverage from private insurers. Underwriting results related to these arrangements, which tend to be adverse, have not been material
to our results of operations.

Investment Regulation.Insurance company investment regulations require investment portfolio diversification and
limit the amount of investment in certain asset categories. Failure to comply with these rules leads to the treatment of non-conforming investments as non-admitted assets for measuring statutory surplus. In some instances, these rules require sale
of non-conforming investments.

Exiting Geographic Markets, Canceling and Non-Renewing Policies.Most states regulate an insurers
ability to exit a market by limiting the ability to cancel and non-renew policies. Some states prohibit an insurer from withdrawing one or more types of insurance business from the state, except pursuant to an approved plan. These regulations could
restrict our ability to exit unprofitable markets.

Statutory Accounting.Our financial reports to state insurance regulators utilize statutory
accounting practices as defined in the Accounting Practices and Procedures Manual of the NAIC, which are different from GAAP. Statutory accounting practices, in keeping with the intent to assure the protection of policyholders, are generally based
on a solvency concept, while GAAP is based on a going-concern concept. While not a substitute for GAAP performance measures, statutory information is used by industry analysts and reporting sources to compare the performance of insurance companies.



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State insurance laws require life and property and casualty insurers to annually analyze the adequacy of
statutory reserves. Our appointed actuaries must submit an opinion that policyholder and claim reserves are adequate.

Risk-Based Capital and Solvency
Requirements.The NAIC has developed a formula for analyzing capital levels of insurance companies called risk-based capital (RBC). The RBC formula is intended to establish minimum capital thresholds that vary with the size and mix
of a companys business and assets. It is designed to identify companies with capital levels that may require regulatory attention. At December 31, 2014, the Company and each insurance subsidiary was more than adequately capitalized and
exceeded the minimum RBC requirements.

The NAIC has also adopted a model law titled Risk Management and Own Risk and Solvency Assessment Model Act (ORSA
Model Act). The ORSA Model Act sets forth the requirements for maintaining a risk management framework and the regular completion of a related risk and solvency assessment exercise. The ORSA Model Act also requires the preparation of a summary
report related to the assessment exercise no less frequently than annually. The Company anticipates filing its first ORSA summary report in 2015.

Securities Regulation.The sale and administration of variable life insurance and variable annuities are subject to extensive regulation at the federal
and state level, including by the SEC and the Financial Industry Regulatory Authority (FINRA). Our variable annuity contracts and variable life insurance policies are issued through separate accounts that are registered with the SEC as
investment companies under the Investment Company Act of 1940. Each registered separate account is generally divided into sub-accounts, each of which invests in an underlying mutual fund that is itself a registered investment company under such act.
In addition, the variable annuity contracts and variable life insurance policies issued by the separate accounts are registered with the SEC under the Securities Act of 1933. The U.S. federal and state regulatory authorities and FINRA from time to
time make inquiries and conduct examinations regarding our compliance with securities and other laws and regulations. We cooperate with such inquiries and examinations and when warranted take corrective action.

In addition, our periodic reports and proxy statements to stockholders are subject to the requirements of the Securities Exchange Act of 1934 and
corresponding rules of the SEC, and our corporate governance processes are subject to regulation by the SEC and the NASDAQ Stock Market. Our registered wholesale broker-dealer and registered investment adviser subsidiaries are subject to regulation
and supervision by the SEC, FINRA and, in some cases, state securities administrators.

Suitability. FINRA rules require broker-dealers selling
variable insurance products to determine that transactions in such products are suitable to the circumstances of the particular customer. In addition, most states have enacted the NAIC Suitability in Annuity Transactions Model Regulation
that places suitability responsibilities on insurance companies in the sale of fixed and indexed annuities, including responsibilities for training agents.

Privacy and Personal Identifying Information Regulation.U.S. federal laws, such as the Gramm-Leach-Bliley Act, and the laws of some states regulate
disclosures of certain customer information and require us to protect the security and confidentiality of such information. Such laws also require us to notify customers about our policies and practices relating to the collection, protection and
disclosure of confidential customer information. Furthermore, state and federal laws, such as the federal Health Insurance Portability and Accountability Act regulate our use, protection and disclosure of certain personal health information.

Environmental Considerations.As an owner and operator of real property, we are subject to extensive federal, state and local environmental
laws and regulations. Inherent in such ownership and operation is the risk that there may be potential environmental liabilities and costs in connection with any required remediation of such properties. We routinely have environmental assessments
performed with respect to real estate being acquired for investment or through foreclosure, but we cannot provide assurance that unexpected environmental liabilities will not arise. In addition, we hold equity interests in companies that could
potentially be subject to environmental liabilities. Based on information currently available to us, management believes that any costs associated with compliance with environmental laws and regulations or any required remediation will not have a
material adverse effect on our business, results of operations or financial condition.



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Other types of regulations that affect us include insurable interest laws, employee benefit plan laws, antitrust
laws, federal anti-money laundering and anti-terrorism laws, employment and labor laws, and federal and state tax laws. Failure to comply with federal and state laws and regulations may result in censure; the issuance of cease-and-desist orders;
suspension, termination or limitation of the activities of our operations and/or our employees and agents; or the obligation to pay fines, penalties, assessments, interest, and/or additional taxes and wages. In some cases, severe penalties may be
imposed for breach of these laws. We cannot predict the impact of these actions on our businesses, results of operations or financial condition.

Item 1A, Risk Factors, below discusses significant risks presented to our business by extensive regulation and describes certain other laws and
regulations that are or may become applicable to us.

Employees

As of December 31, 2014, we had approximately 3,138 employees. We consider our employee relations to be good.

Available Information

We file periodic and current
reports, proxy statements and other information with the SEC. Such reports, proxy statements and other information may be obtained by visiting the Public Reference Room of the SEC at 100 F Street, N.E., Washington D.C. 20549 or by calling the SEC at
1-800-SEC-0330. The SEC maintains an internet website (www.sec.gov) that contains reports, proxy statements, and other information regarding issuers that file electronically with the SEC.

Our press releases, financial information and reports filed with the SEC (for example, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and any amendments to those forms) are available online at www.anico.com. The reference to our Internet website does not constitute the incorporation by reference of information contained at such website into this, or any other,
report. Copies of any documents on our website are available without charge, and reports filed with or furnished to the SEC will be available as soon as reasonably practicable after they are filed with or furnished to the SEC.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

Our performance is dependent on our ability to manage complex operational, financial,
legal, and regulatory risks and uncertainties throughout our operations. The most significant of these risks and uncertainties are described below. Any of these, individually or in the aggregate, could materially adversely impair our business,
financial condition or results of operations, particularly if our actual experience differs from our estimates and assumptions. While our enterprise risk management framework contains various strategies, processes, policies and procedures in place
to address these risks and uncertainties, we cannot be certain that these measures will be implemented successfully in all circumstances. In addition, we could experience risks that we failed to identify, or risks of a magnitude greater than
expected.

Economic and Investment Market Risk Factors

Our results of operations are materially affected by economic and political conditions in the U.S. and elsewhere. Despite the rise in U.S. equity
markets in 2013 and 2014, there continues to be uncertainty about the strength and sustainability of economic recovery. Factors such as continuing unemployment, declining workforce participation, consumer prices, geopolitical issues, energy prices,
stagnant family income, low consumer confidence and spending, and increased student and consumer debt can adversely affect the economy and demand for our products. For example, difficult credit conditions may adversely affect purchases of
credit-related insurance products, or our policyholders may choose to defer or stop paying insurance premiums, resulting in higher lapses or surrenders of policies.



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Interest rates have a significant impact on our business and on consumer demand for our products. Some of our
products, principally interest-sensitive life insurance and fixed annuities, expose us to the risk that changes in interest rates may reduce our spread, or the difference between the amounts we earn on investment and the amount we must
pay under our contracts. Persistently low (or lower) interest rates, compound this spread compression. When market interest rates decrease or remain at relatively low levels, prepayments and redemptions affecting our investment securities and
mortgage loan investments may increase as issuers and borrowers seek to refinance at a lower rate. Proceeds from maturing, prepaid or sold bonds or mortgage loan investments may be reinvested at lower yields, reducing our spread. Our ability to
decrease product crediting rates in response may be limited by market and competitive conditions and by regulatory or contractual minimum rate guarantees. Conversely, increases in market interest rates can also have negative effects. For example,
increasing rates on other insurance or investment products offered to our customers by competitors can lead to higher surrenders at a time when fixed maturity investment asset values are lower. We may react to market conditions by increasing
crediting rates, which narrows spreads. In addition, when interest rates rise, the value of our investment portfolio may decline due to decreases in the fair value of our fixed maturity securities. While we use ALM processes to mitigate the effect
on our spreads of changes in interest rates, they may not be fully effective. See the General Trends discussion in Part II, Item 7 below for further details about interest rates and our ALM processes.

Fluctuations in the markets for fixed maturity securities, equity securities, and commercial real estate could adversely affect our business.
Investment returns are an important part of our overall profitability. Substantially all of our investments, including our fixed income, equity, real estate and mortgage loan investment portfolios, are subject to market and credit risks, including
market volatility and deterioration in the credit or prospects of companies or governmental entities in which we have invested. We could incur significant losses from such risks, particularly during extreme market events. The concentration of our
investment portfolios in any particular industry, group of related industries or government issuers, or geographic sector can compound these risks.

In
addition to negatively affecting our investment returns, equity market downturns and volatility can have other adverse effects on us. First, equity market downturns and volatility may discourage new purchases of our products that have returns linked
to the performance of the equity market and may cause some existing customers to withdraw cash values or reduce investments in such products, in turn reducing our fee revenues. Second, the guarantees that we provide for certain products may cost
more than expected in volatile or declining equity market conditions, which could negatively affect our earnings. Third, our estimates of liabilities and expenses for pension and other postretirement benefits incorporate assumptions regarding the
rate used to discount our estimated future liability and the long-term rate of return on plan assets. Declines in the discount rate or the rate of return on plan assets, both of which are influenced by potential investment returns, could increase
our required cash contributions or pension-related expenses in future periods.

Some of our investments are relatively illiquid.Our investments in
privately placed securities, mortgage loans, and real estate, including real estate joint ventures and other equity interests, are relatively illiquid. If we suddenly require significant amounts of cash in excess of our ordinary cash requirements,
it may be difficult or not possible to sell these investments in an orderly manner for a favorable price.

Operational Risk Factors

Our actual experience could differ from our estimates and assumptions regarding product pricing, the fair value and future performance of our investments,
and the realization of deferred tax assets.Our product pricing includes long-term assumptions regarding investment returns, mortality, morbidity (the rate of incidence of illness), persistency (the rate at which our policies remain in-force),
operating expenses, and other underwriting assumptions. Our profitability substantially depends on our actual experience being consistent with or better than these assumptions. If we fail to appropriately price our insured risks, or if our claims
experience is more severe than we assumed, our earnings and financial condition may be negatively affected. Conversely, significantly overpriced risks may negatively impact new business growth and retention of existing business.

Our loss reserves are an estimate of amounts needed to pay and administer incurred claims and, as such, are inherently uncertain; they do not and cannot
represent an exact measure of liability. Inflationary events, especially events outside of historical norms, or regulatory changes that affect the assumptions underlying our estimates can cause variability. For example, increases in costs for auto
parts and repair services, construction costs, and commodities result in higher losses for property damage claims. Accordingly, our loss reserves could prove to be inadequate to cover our actual losses and related expenses. See Part II, Item 7,
Managements Discussion and Analysis of Financial Condition and Results of OperationsCritical Accounting EstimatesReserves for additional information.



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With respect to our investments, the determination of estimates for allowances and impairments varies by
investment type and is based upon our periodic evaluation of known and inherent risks associated with the respective asset class. Historical trends and assumed changes may not be indicative of future impairments or allowances. See Note 2, Summary of
Significant Accounting Policies and Practices, of the Notes to the Consolidated Financial Statements for further description of our evaluation of impairments.

Our assumptions regarding the future realization of deferred tax assets are dependent upon estimating the generation of sufficient future taxable income,
including capital gains. If future events differ from our current forecasts and it is determined that deferred tax assets cannot be realized, a deferred tax valuation allowance must be established, with a corresponding charge to net income.

Interest rate fluctuations and other events may require us to accelerate the amortization of deferred policy acquisition costs (DAC).When
interest rates rise, life and annuity surrenders and withdrawals may increase as policyholders seek to buy products with higher or perceived higher returns, requiring us to accelerate the amortization of DAC. To the extent such amortization exceeds
any surrender or other charges earned as income upon surrender and withdrawal, our results of operations could be negatively affected. Significantly lower future profits may cause us to accelerate DAC amortization, and such acceleration could
adversely affect our results of operations. See also Part II, Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations  Critical Accounting Estimates, and Part II, Item 8, Financial
Statements and Supplementary Date  Note 2, Summary of Significant Accounting Policies and Practices, and Note 10, Deferred Policy Acquisition Costs, of the Notes to the Consolidated Financial Statements for additional information.

We may be unable to maintain the availability of our systems and safeguard our data.We rely on the availability, reliability, and security of our
information-processing infrastructure, system platforms, and business applications to store, process, retrieve, calculate and evaluate customer and company information. In certain lines of our business, our information technology and
telecommunication systems interface with and rely upon third-party services. These business lines are highly dependent on our ability to access these external services to perform necessary business functions, such as acquiring new business, managing
existing business, paying claims, and ensuring timely and accurate financial reporting. Systems failures, extended outages, or damage or destruction to systems, whether caused by intentional or unintentional acts or events, could compromise our
ability to perform critical functions in a timely manner. We have implemented various strategies and ongoing processes to support, expand and continually update our infrastructure and systems to keep up with business requirements and changes,
whether regulatory, internal or market driven. However, if these systems were inaccessible or inoperable due to natural or man-made disasters, or if they fail to function effectively or as designed, the resulting disruptions may impede or interrupt
our business operations.

We receive and transmit confidential data with and among customers, agents, financial institutions and selected third party
vendors and service providers. We have invested significant time and resources towards preventing and mitigating data security risks through several layers of data protection technologies, designs and authentication capabilities. However, we cannot
be certain that our efforts will be effective against all security threats and breach attempts in light of increasingly complex persistent threat techniques and the evolving sophistication of cyber-attacks. A breach, whether from external or
internal sources, could result in access, viewing, misappropriation, altering or deleting information in our systems or in the systems of third parties on which we rely, including customers and employees personal and financial
information and our proprietary business information. Any significant disruption, security breach or unauthorized disclosure, whether affecting us or such third parties, could result in substantial business disruption, costs and consequences,
including repairing systems, increased security costs, customer notifications, lost revenues, litigation, regulatory action, fines and penalties, and reputational damage.

Employee and agent error and misconduct may be difficult to detect and prevent and may result in significant losses. Losses may result from, among
other things, fraud, errors, failure to document transactions properly, failure to obtain proper internal authorization, or failure to comply with regulatory requirements. It is not always possible to deter or prevent such misconduct, and the
precautions we take to prevent and detect this activity may not be effective in all cases.



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Our business operations depend on our ability to appropriately execute and administer our policies and
claims. Our primary business is writing and servicing life, annuity, property and casualty, and health insurance for individuals, families and commercial business. Any problems or discrepancies that arise in our pricing, underwriting, billing,
processing, claims handling or other practices, whether as a result of employee error, vendor error, or technological problems, could have a negative effect on operations and reputation, particularly if such problems or discrepancies are replicated
through multiple policies.

Catastrophic Event Risk Factors

We may incur significant losses resulting from catastrophic events.Our property and casualty operations are exposed to catastrophes caused by natural
events, such as hurricanes, tornadoes, wildfires, droughts, earthquakes, snow, hail and windstorms, and manmade events, such as terrorism, riots, explosions, hazardous material releases, and utility outages. Our life and health insurance operations
are exposed to the risk of catastrophic mortality or illness, such as a pandemic, an outbreak of an easily communicable disease, or another event that causes a large number of deaths or high morbidity. Our investment operations are exposed to
catastrophes as a result of direct investments and mortgages related to real estate. Our operating results may vary significantly from one period to the next since the likelihood, timing, severity, number or type of catastrophe events cannot be
accurately predicted. Our losses in connection with catastrophic events are primarily a function of the severity of the event and the amount of policyholder exposure in the affected area.

Some scientists believe climate change has added to the unpredictability, severity and frequency of extreme weather and loss events. To the extent climate
change increases the frequency and severity of such events, we may face increased claims. Moreover, we cannot predict how legal, regulatory and social responses to concerns about global climate change will impact our business.

The occurrence of events that are unanticipated in our business continuity and disaster recovery planning could impair our ability to conduct
business effectively. Our corporate headquarters is located in Galveston, Texas, on the coast of the Gulf of Mexico and in the past has been impacted by hurricanes. Our League City, Texas offices are designed to support our
operations and service our policyholders in the event of a hurricane or other natural disaster affecting Galveston. The primary offices of our property and casualty insurance companies are located in Springfield, Missouri and Glenmont, New York,
which helps to insulate these facilities and their operations from coastal catastrophes. However, the severity, timing, duration or extent of an event may be unanticipated by our disaster recovery and business continuity planning, which could result
in an adverse impact on our ability to conduct business. In the event that a significant number of our managers, employees, or agents were unavailable following such a disaster, or if our computer-based data processing, transmission, storage and
retrieval systems were affected, our ability to effectively conduct our business could be compromised.

Marketplace Risk Factors

Our future results are dependent in part on our ability to successfully operate in insurance and annuity industries that are highly competitive
with regard to customers and producers.Competition for customers has led to increased marketing and advertising by our competitors, many of whom have well-established national reputations and greater financial and marketing resources, as well
as the introduction of new insurance products and aggressive pricing. In particular, our Medicare Supplement business is subject to intense price competition, which could negatively impact future sales of these products and affect our ability to
offer this product. In addition, product development and life-cycles have shortened in many product segments, leading to more intense competition with respect to product features.

We also compete for customers funds with a variety of investment products offered by financial services companies other than insurance companies, such
as banks, investment advisors, mutual fund companies and other financial institutions. If we cannot effectively respond to increased competition, we may not be able to grow our business or we may lose market share.



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Strong competition exists among insurers for producers with demonstrated ability. We compete with other insurers
for producers primarily on the basis of our financial position, reputation, stable ownership, support services, compensation, product features and pricing. We may be unable to compete with insurers that adopt more aggressive pricing or compensation,
that offer a broader array of products or packages of products, or that have extensive promotional and advertising campaigns.

Our supplemental health
business could be negatively affected by alternative healthcare providers or changes in federal healthcare policy.Our Medicare supplement business is impacted by market trends in the senior-aged healthcare industry that provide alternatives to
traditional Medicare, such as health maintenance organizations and other managed care or private plans. The success of these alternative healthcare solutions for seniors could negatively affect the sales and premium growth of traditional Medicare
Supplement insurance and could impact our ability to offer such products. In addition, Congress or the U.S. Department of Health and Human Services (HHS) could make changes or cuts to the Medicare program or make other changes in federal
healthcare policy that could adversely impact our supplemental health business.

Litigation and Regulation Risk Factors

Litigation may result in significant financial losses and harm our reputation. Plaintiffs lawyers may bring lawsuits, including class actions,
against us relating to, among other things, sales or underwriting practices, agent misconduct, product design, product disclosure, product administration, fees charged, denial or delay of benefits, product suitability, claim and refund practices,
and breaches of duties to customers. Plaintiffs may seek very large or indeterminate amounts, including punitive and treble damages. The damages claimed and the amount of any probable and estimable liability, if any, may remain unknown for
substantial periods of time. Even when successful in the defense of such actions, we could incur significant attorneys fees, direct litigation costs and substantial amounts of management time that otherwise would be devoted to our business,
and our reputation could be harmed.

We are subject to extensive regulation, and potential further regulation may increase our operating costs and
limit our growth. We are subject to extensive insurance laws and regulations that affect nearly every aspect of our business. We are also subject to additional laws and regulations administered and enforced by a number of different governmental
authorities, such as state securities and workforce regulators, the SEC, the Internal Revenue Service (IRS), FINRA, the U.S. Department of Justice, the U.S. Department of Labor, the U.S. Department of Housing and Urban Development
(HUD), HHS, and state attorneys general, each of which exercises a degree of interpretive latitude. We face the risks that any particular regulators or enforcement authoritys interpretation of a legal issue may conflict with
that of another regulator or enforcement authority or may change over time to our detriment. Regulatory investigations, which can be broad and unpredictable, may raise issues not yet identified and could result in new legal actions against us and
industry-wide regulations that could adversely affect us.

The laws and regulations applicable to us are complex and subject to change, and compliance is
time consuming and personnel-intensive. Changes in these laws and regulations, or changes in their interpretations by courts or regulators, may materially increase our costs of doing business and may result in changes to our practices that may limit
our ability to grow and improve our profitability. Significant regulatory developments or actions against us could have material adverse financial effects and could cause significant harm to our reputation. Among other things, we could be fined,
prohibited from engaging in some or all of our business activities, or made subject to limitations or conditions on our business activities.



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As insurance industry practices and legal, judicial, social, and other conditions outside of our control change,
unexpected issues related to claims and coverage may emerge. These changes may include modifications to long established business practices or policy interpretations, which may adversely affect us by extending coverage beyond our underwriting intent
or by increasing the type, number, or size of claims. For example, a growing number of states have adopted legislation similar to the Model Unclaimed Life Insurance Benefits Act, which imposes new requirements on insurers to periodically compare
their life insurance and annuity contracts and retained asset accounts against the U.S. Social Security Administrations Death Master File, investigate any potential matches, determine whether benefits are payable, and attempt to locate
beneficiaries. Some states are attempting to apply these new laws retroactively to existing policies. A number of states have aggressively audited life insurance companies, including us and some of our subsidiaries, for compliance with such laws,
and more states could do so. Such audits have sought to identify unreported insured deaths and to determine whether any unpaid benefits, proceeds or other payments under life insurance or annuity contracts should be treated as unclaimed property to
be escheated to the state. We have modified our claims process to stay current with emerging trends. However, it is possible that such audits and/or additional enactment of similar legislation may result in additional payments to beneficiaries,
additional escheatment of funds deemed abandoned under state laws, regulatory actions, litigation, administrative fines and penalties, interest, and additional changes to our procedures.

Federal regulatory changes and initiatives also have affected us in recent years. For example, Dodd-Frank provides for enhanced federal oversight of the
financial services industry through multiple initiatives. Certain provisions of Dodd-Frank are or may become applicable to us, our competitors, or certain entities with which we do business. For example, it is possible that regulations issued by the
Consumer Financial Protection Bureau (CFPB) may extend, or be interpreted to extend, to the sale of certain insurance products by covered financial institutions, which could adversely affect sales of such products. In addition,
Dodd-Franks Volcker Rule may adversely impact the pricing and liquidity of certain securities in which we invest as a result of the rules proprietary trading and market making limitations. Further, regulations under Dodd-Frank require
the clearing of certain types of derivatives that historically have been traded over-the-counter, which may impose additional costs and regulation on us, expose us to the risk of a default by a clearinghouse, and cause us to alter our hedging
strategy or the composition of the risks we do not hedge. We may also encounter additional collateral requirements and costs associated with such transactions.

Second, we are subject to various conditions and requirements of the Patient Protection and Affordable Care Act of 2010 (the Healthcare Act). The
Healthcare Act may affect the small blocks of business we have offered or acquired over the years that is, or is deemed to be, health insurance. The Healthcare Act also influences the design of products sold by our Health segment, which may
influence consumer acceptance of such products and the cost of monitoring compliance with the Healthcare Act. Moreover, the Healthcare Act affects the benefit plans we sponsor for employees or retirees and their dependents, our expense to provide
such benefits, our tax liabilities in connection with the provision of such benefits, and our ability to attract or retain employees.

Third, certain
federal regulation may impact our property and casualty operations. In 2013, HUD finalized rules that may adversely impact our ability to differentiate pricing for homeowners policies using traditional risk selection analysis. Although these rules
were remanded to HUD for further consideration in 2014, it is uncertain to what extent the application of such rules may impact the property and casualty industry and underwriting practices, but it could increase litigation costs, force changes in
underwriting practices, and impair our ability to write homeowners business profitably. In addition, Congress or states may enact legislation affecting insurers ability to use credit-based insurance scores as part of the property and casualty
underwriting or rating process, which could force changes in underwriting practices and impair our property and casualty operations ability to write homeowners business profitably.

Lastly, international standards continue to emerge as responses to the globalization of the insurance industry and advances in thinking relating to
regulation, solvency measurement, risk management, and the important role insurance has in the global economy. Any international conventions or mandates that directly or indirectly impact or influence the nature of U.S. regulation or industry
operations could negatively affect us.

For further discussions of the kinds of regulation applicable to us, see Item 1, Business, Regulation
Applicable to Our Business section.

Changes in tax laws could decrease sales and profitability of certain products and increase our tax cost.Under current U.S. federal and state income tax laws, certain products we offer, primarily life insurance and annuities, receive tax treatment designed to encourage consumers to purchase these products. This treatment may encourage some
consumers to select our products over non-insurance products. The U.S. Congress from time to time may consider legislation that would change the taxation on insurance products and/or reduce the taxation on competing products. Such legislation, if
adopted, could materially change consumer behavior, which may harm our ability to sell such products and result in the surrender of some existing contracts and policies. In addition, changes in the U.S. federal and state estate tax laws could
negatively affect the demand for the types of life insurance used in estate planning. Uncertainty regarding the tax structure in the future may also cause some current or future purchasers to delay or indefinitely postpone the purchase of products
we offer. Lastly, changes to the tax laws, administrative rulings or court decisions affecting U.S. corporations or the insurance industry could increase our effective tax rate and lower our net income.



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New accounting rules or changes to existing accounting rules could negatively impact our business.We are
required to comply with GAAP. A number of organizations are instrumental in the development and interpretation of GAAP, such as the SEC, the Financial Accounting Standards Board (FASB), and the American Institute of Certified Public
Accountants. GAAP is subject to review by these organizations and others and is, therefore, subject to change in ways that could change the current accounting treatments we apply. Future changes to GAAP could have a negative impact on us.

We also must comply with statutory accounting principles (SAP) in our insurance operations. SAP and various components of SAP (such as
actuarial reserving methodology) are subject to review by the NAIC and its taskforces and committees, as well as state insurance departments. Future changes to SAP could impact our product mix, product profitability, reserve and capital
requirements, financial condition or results of operations.

See Note 3, Recently Issued Accounting Pronouncements, of the Notes to Consolidated Financial
Statements for a detailed discussion regarding the impact of the recently issued accounting pronouncements and the future adoption of new accounting standards on the Company.

Reinsurance and Counterparty Risk Factors

Reinsurance may not be available, affordable, adequate or collectible to protect us against losses. As part of our risk management strategy, we purchase
reinsurance for certain risks that we underwrite. Market conditions and geo-political events beyond our control, including the continued threat of terrorism, influence the availability and cost of reinsurance for new business. Moreover, in certain
circumstances, the price of existing reinsurance contracts may also increase. Reinsurance does not relieve us of our direct liability to our policyholders, even when the reinsurer is liable to us. Our reinsurers may not pay the reinsurance
recoverables owed to us or they may not pay these balances on a timely basis.

The counterparties to derivative instruments we use to hedge our
business risks could default or fail to perform. We enter into derivative contracts, such as options, with a number of counterparties to hedge various business risks. If our counterparties fail or refuse to honor their obligations, our economic
hedges of the related risks will be ineffective. Such counterparty failures could have a material adverse effect on us.

Other Risk Factors

Our financial strength ratings could be downgraded.Various Nationally Recognized Statistical Rating Organizations (NRSROs)
publish financial strength ratings as their opinion of an insurance companys creditworthiness and ability to meet policyholder and contractholder obligations. As with other companies in the financial services industry, our ratings could be
downgraded at any time and without any notices by any NRSRO. A downgrade or an announced potential downgrade of our financial strength ratings could affect us in many ways, such as:



| |  |  | reducing new sales of insurance and annuity products or increasing the number or amount of surrenders and withdrawals;
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | adversely affecting our relationships with our sales force, independent sales intermediaries and credit counterparties; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | adversely affecting our ability to obtain reinsurance at reasonable prices.
| | - |  | ---------------------------------------------------------------------------

It is likely that the NRSROs will
continue to apply a high level of scrutiny to financial institutions, including us and our competitors, and may adjust the capital, risk management and other requirements employed in the NRSRO models for maintenance of certain ratings levels.



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We are controlled by a small number of stockholders.As of December 31, 2014, the Moody Foundation, a
charitable trust controlled by Robert L. Moody, Sr. and two of his children, beneficially owned 22.8% of our common stock. In addition, Moody National Bank, of which Robert L. Moody, Sr. is chairman and chief executive officer, in its capacity as
trustee or agent of various accounts, had the power to vote an additional 45.5% of our common stock as of such date. As a result, subject to applicable legal and regulatory requirements, they have the ability to exercise a controlling influence over
matters submitted for stockholder approval, including the composition of our Board of Directors, and through the Board of Directors any determination with respect to our business direction and policies. This concentration of voting power could deter
a change of control or other business combination that might otherwise be beneficial or preferable to other stockholders. It may also adversely affect the trading price of our common stock if controlling stockholders sell a significant number of
shares or if investors perceive disadvantages in owning stock in a company controlled by a small number of stockholders.

See also Part II, Item 7A,
Quantitative and Qualitative Disclosures About Market Risk, for additional details regarding certain risks that we face.



|ITEM 1B. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

None.



|ITEM 2. | PROPERTIES
|------- | ----------

We own and occupy approximately 420,000 square feet at our corporate headquarters located in
Galveston, Texas. We also own the following properties that are materially important to our operations:



| |  |  | We own and occupy four buildings in League City, Texas, totaling approximately 346,000 square feet. Our Life, Health, and Corporate and Other business segments use approximately 60% of such space.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our Property and Casualty segment operates primarily in Springfield, Missouri and Glenmont, New York. The Springfield facility is approximately 234,000 square feet, of which we occupy approximately 89%, and the Glenmont
facility is approximately 140,000 square feet, all of which is occupied by us.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We believe our properties are adequate and suitable for our
business as currently conducted and are adequately maintained. The above does not include properties we own for investment purposes only.



|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

Information required for Item 3 is incorporated by reference to the discussion
under the heading Litigation in Note 19, Commitments and Contingencies, in the Notes to the Consolidated Financial Statements.



|ITEM 4. | MINE SAFETY DISCLOSURES
|------- | -----------------------

Not applicable



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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

Our common stock is traded on the
NASDAQ Global Select Market under the symbol ANAT. The following table presents the high and low prices for our common stock and the quarterly dividends declared per share.



|               |  |                       |        |  |          |   |        |           |  |   |      | 
|-------------- |  | --------------------- | ------ |  | -------- | - | ------ | --------- |  | - | ---- | 
|               |  | Stock Price Per Share |        |  | Dividend |  
|               |  | High                  |        |  | Low      |   |        | Per Share | 
|2014           |  |                       |        |  |          |   |        |           |  |   |      | 
|Fourth quarter |  | $                     | 116.50 |  |          | $ | 105.01 |           |  | $ | 0.77 | 
|Third quarter  |  |                       | 118.38 |  |          |   | 108.00 |           |  |   | 0.77 | 
|Second quarter |  |                       | 118.00 |  |          |   | 101.75 |           |  |   | 0.77 | 
|First quarter  |  |                       | 119.70 |  |          |   | 102.17 |           |  |   | 0.77 | 
|               |  |                       |        |  |          |   |        |           |  |   |      | 
|               |  |                       |        |  |          |   |        |           |  | $ | 3.08 | 
|               |  |                       |        |  |          |   |        |           |  |   |      | 
|2013           |  |                       |        |  |          |   |        |           |  |   |      | 
|Fourth quarter |  | $                     | 119.70 |  |          | $ | 92.11  |           |  | $ | 0.77 | 
|Third quarter  |  |                       | 116.32 |  |          |   | 96.52  |           |  |   | 0.77 | 
|Second quarter |  |                       | 101.55 |  |          |   | 84.62  |           |  |   | 0.77 | 
|First quarter  |  |                       | 87.34  |  |          |   | 68.62  |           |  |   | 0.77 | 
|               |  |                       |        |  |          |   |        |           |  |   |      | 
|               |  |                       |        |  |          |   |        |           |  | $ | 3.08 | 
|               |  |                       |        |  |          |   |        |           |  |   |      | 

We expect to continue to pay regular cash dividends, although there is no assurance as to future dividends because they depend
on future earnings, capital requirements and financial conditions. The payment of dividends is subject to restrictions described in Note 16, Stockholders Equity and Noncontrolling Interest, of the Notes to the Consolidated Financial
Statements and as discussed in Part II, Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations  Capital Resources.

On December 31, 2014, our closing stock price was $114.26 per share. As of December 31, 2014, there were 731 holders of record of our issued and
outstanding shares of common stock.

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information regarding our common stock that is authorized for issuance under American Nationals 1999 Stock and Incentive
Plan as of December 31, 2014:



|                                 |  |                                                                                          |   |  |                                                                       |   |        |                                                                                                                                        |  |  |           | 
|-------------------------------- |  | ---------------------------------------------------------------------------------------- | - |  | --------------------------------------------------------------------- | - | ------ | -------------------------------------------------------------------------------------------------------------------------------------- |  |  | --------- | 
|                                 |  | Equity Compensation Plan Information                                                     |  
|                                 |  | Number of securities to beissued upon exercise ofoutstanding options, warrantsand rights |   |  | Weighted-averageexercise price outstandingoptions, warrants andrights |   |        | Number of securitiesremaining available forfuture issuance underequity compensation plans(excluding
securitiesreflected in column (a)) | 
|                                 |  | (a)                                                                                      |   |  | (b)                                                                   |   |        | (c)                                                                                                                                    | 
|Plan category                    |  |                                                                                          |   |  |                                                                       |   |        |                                                                                                                                        |  |  |           | 
|Equity compensation plans        |  |                                                                                          |   |  |                                                                       |   |        |                                                                                                                                        |  |  |           | 
|Approved by security holders     |  |                                                                                          |  |  |                                                                       | $ | 107.39 |                                                                                                                                        |  |  | 2,094,579 | 
|Not approved by security holders |  |                                                                                          |  |  |                                                                       |   |       |                                                                                                                                        |  |  |          | 
|                                 |  |                                                                                          |   |  |                                                                       |   |        |                                                                                                                                        |  |  |           | 
|Total                            |  |                                                                                          |  |  |                                                                       | $ | 107.39 |                                                                                                                                        |  |  | 2,094,579 | 
|                                 |  |                                                                                          |   |  |                                                                       |   |        |                                                                                                                                        |  |  |           | 



19



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##### Table of Contents

Performance Graph

Prior to 2014, we used the total return values prepared by the Center for Research in Security Prices (CRSP) to comply with SEC rules requiring
disclosure of a comparison of our total return performance for the past five years against industry and broad market indexes. Effective January 2014, NASDAQ OMX replaced the CRSP Index with the comparable NASDAQ OMX Global Index in an effort to
provide a greater level of transparency. As a result of this change, our performance graphs now use the NASDAQ OMX Global Index.

The following graph
compares the cumulative stockholder return for our common stock for the last five years with the performance of the NASDAQ Stock Market and a NASDAQ Insurance Stock index using NASDAQ OMX Global Indexes. It shows the cumulative changes in value of
an initial $100 investment on December 31, 2009, with all dividends reinvested.



LOGO

Value at each year-end of a $100 initial investment made on December 31, 2009:



|                     |  |              |        |  |      |   |        |      |  |   |        |  |  |      |        |  |      |   |        |  |  |   |        | 
|-------------------- |  | ------------ | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  | ---- | - | ------ |  |  | - | ------ | 
|                     |  | December 31, |       
|                     |  | 2009         |        |  | 2010 |   |        | 2011 |  |   | 2012   |  |  | 2013 |        |  | 2014 |  
|American National    |  | $            | 100.00 |  |      | $ | 73.32  |      |  | $ | 65.03  |  |  | $    | 63.40  |  |      | $ | 104.57 |  |  | $ | 106.85 | 
|NASDAO Total OMX     |  |              | 100.00 |  |      |   | 117.55 |      |  |   | 117.91 |  |  |      | 137.29 |  |      |   | 183.26 |  |  |   | 203.05 | 
|NASDAQ Insurance OMX |  |              | 100.00 |  |      |   | 120.93 |      |  |   | 110.47 |  |  |      | 130.72 |  |      |   | 185.15 |  |  |   | 200.01 | 

This performance graph shall not be deemed to be incorporated by reference into our SEC filings or to constitute soliciting
material or otherwise be considered filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.



20



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##### Table of Contents

|ITEM 6. | SELECTED FINANCIAL DATA
|------- | -----------------------

American National Insurance Company

(and its subsidiaries)



|                                                       |  |                          |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        |  
|------------------------------------------------------ |  | ------------------------ | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  |  | - | ------ | -
|(dollar amounts in millions, except per share amounts) |  | Years ended December 31, |       
|                                                       |  | 2014                     |        |  | 2013 |   |        | 2012 |  |   | 2011   |  |  | 2010 |       
|Total premiums and other revenues                      |  | $                        | 3,051  |  |      | $ | 3,119  |      |  | $ | 2,987  |  |  | $    | 3,023  |  |  | $ | 3,073  |  
|                                                       |  |                          |        |  |     
|Income from continuing operations, net of tax          |  |                          | 249    |  |      |   | 272    |      |  |   | 192    |  |  |      | 192    |  |  |   | 144    |  
|Loss from discontinued operations, net of tax          |  |                          |       |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   | (1     | )
|Net income                                             |  |                          | 249    |  |      |   | 272    |      |  |   | 192    |  |  |      | 192    |  |  |   | 143    |  
|Net income attributable to American National           |  |                          | 247    |  |      |   | 268    |      |  |   | 191    |  |  |      | 191    |  |  |   | 144    |  
|                                                       |  |                          |        |  |     
|Per common share                                       |  |                          |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        |  
|Income from continuing operations                      |  |                          |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        |  
|- basic                                                |  |                          | 9.22   |  |      |   | 10.02  |      |  |   | 7.15   |  |  |      | 7.18   |  |  |   | 5.48   |  
|- diluted                                              |  |                          | 9.18   |  |      |   | 9.97   |      |  |   | 7.11   |  |  |      | 7.14   |  |  |   | 5.46   |  
|Loss from discontinued operations                      |  |                          |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        |  
|- basic                                                |  |                          |       |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   | (0.05  | )
|- diluted                                              |  |                          |       |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   | (0.05  | )
|                                                       |  |                          |        |  |     
|Net income attributable to American National           |  |                          |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        |  
|- basic                                                |  |                          | 9.22   |  |      |   | 10.02  |      |  |   | 7.15   |  |  |      | 7.18   |  |  |   | 5.43   |  
|- diluted                                              |  |                          | 9.18   |  |      |   | 9.97   |      |  |   | 7.11   |  |  |      | 7.14   |  |  |   | 5.41   |  
|Cash dividends per share                               |  |                          | 3.08   |  |      |   | 3.08   |      |  |   | 3.08   |  |  |      | 3.08   |  |  |   | 3.08   |  
|                                                       | 
|                                                       |  | December 31, 2014        |       
|                                                       |  | 2014                     |        |  | 2013 |   |        | 2012 |  |   | 2011   |  |  | 2010 |       
|Total assets                                           |  | $                        | 23,552 |  |      | $ | 23,325 |      |  | $ | 23,107 |  |  | $    | 22,490 |  |  | $ | 21,416 |  
|Total American National stockholders equity           |  |                          | 4,432  |  |      |   | 4,191  |      |  |   | 3,828  |  |  |      | 3,637  |  |  |   | 3,614  |  
|Total stockholders equity                             |  |                          | 4,445  |  |      |   | 4,203  |      |  |   | 3,839  |  |  |      | 3,650  |  |  |   | 3,618  |  

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Managements discussion and analysis (MD&A) of our financial condition and results of operations should be read in
conjunction with our consolidated financial statements and related notes included herein.

Forward-Looking Statements

Certain statements made in this report include forward-looking statements, within the meaning of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as expects, intends, plans, believes, estimates, will or words of similar
meaning; and include, but are not limited to, statements regarding the outlook of our business and financial performance. These forward-looking statements are subject to changes and uncertainties, which are, in many instances, beyond our control and
have been made based upon our assumptions, expectations and beliefs concerning future developments and their potential effect upon us. There can be no assurance that future developments will be in accordance with our expectations, or that the effect
of future developments on us will be as anticipated. It is not a matter of corporate policy for us to make specific projections relating to future earnings, and we do not endorse any projections regarding future performance made by others.
Additionally, we do not publicly update or revise forward-looking statements based on the outcome of various foreseeable or unforeseeable events. These forward-looking statements are not a guarantee of future performance and involve risks and
uncertainties. There are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including without limitations risks, uncertainties and
other factors discussed in Item 1A, Risk Factors and elsewhere in this report.



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##### Table of Contents

Overview

We
are a diversified insurance and financial services company, offering a broad spectrum of insurance products. Chartered in 1905, we are headquartered in Galveston, Texas. We operate in all 50 states, the District of Columbia, and Puerto Rico.

Our business has been and will continue to be influenced by a number of industry-wide, segment or product-specific trends and conditions. In our discussion
below, we first outline the broad macro-economic or industry trends (General Trends) that we expect to impact our overall business. Second, we discuss certain segment-specific trends we believe may impact individual segments or specific products
within these segments.

Segments

The insurance
segments do not directly own assets. Rather, assets are allocated to support the liabilities and capital allocated to each segment. The mix of assets allocated to each of the insurance segments is intended to support the characteristics of the
insurance liabilities within each segment including expected cash flows and pricing assumptions, and is intended to be sufficient to support each segments business activities. We have utilized this methodology consistently over all periods
presented.

The Corporate and Other business segment acts as the owner of all of the invested assets of the Company. The investment income from the
invested assets is allocated to the insurance segments in accordance with the assets allocated to each insurance segment. Earnings of the Corporate and Other business segment are derived from earnings related to invested assets not allocated to the
insurance segments and from our non-insurance businesses. All realized investment gains and losses, which includes other than temporary impairments (OTTI), are recorded in this segment.

General Trends

Our business, financial condition and
results of operations are materially affected by economic and financial market conditions. The U.S. and global economies, as well as the capital markets, continue to show mixed signals and uncertainties in these environments continue to be a
significant factor in the markets in which we operate. Factors such as consumer spending, business investment, the volatility of the capital markets, unemployment, the level of participation in the workforce, and the risk of inflation or deflation
will affect the business and economic environment and, in turn, impact the demand for the type of financial and insurance products we offer. Adverse changes in the economy could have a material adverse effect on us. However, we believe those risks
are somewhat mitigated by our financial strength, active enterprise risk management and disciplined underwriting for our products. Our diverse product mix across insurance segments is a strength that we expect will help us adapt to the volatile
economic environment and give us the ability to serve the changing needs of our customers. Additionally, through our conservative business approach, we believe we remain financially strong, and we are committed to providing a steady and reliable
source of financial protection for policyholders.

Interest Rates:The continued low interest rate environment has remained a challenge for life
insurers as the spreads on deposit-type contracts narrow, especially as interest rates approach minimum crediting rates. Low market interest rates reduce the spreads between the amounts we credit to fixed annuity and individual life policyholders
and the amounts we earn on the investments that support these obligations. Our ALM Committee actively manages the profitability of our in-force contracts. In previous years, we reduced the guaranteed minimum crediting rates on new fixed annuity
contracts and new business which has afforded us the flexibility to respond to the unusually low interest rate environment. In previous years, we also reduced crediting rates on in-force contracts, where permitted to do so. These actions have helped
mitigate the adverse impact of low interest rates on the profitability of these products, although sales volume could be negatively impacted as a result. We also maintain assets with various maturities to support product liabilities and ensure
liquidity. A gradual increase in longer-term interest rates relative to short-term rates generally will have a favorable effect on the profitability of our products. Rapidly rising interest rates, however, could result in reduced persistency of our
spread-based products, if contract holders shift assets into higher yielding investments. We believe our ability to react quickly to the changing marketplace will help us manage this risk.



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##### Table of Contents

The continued low interest rate environment also affects our estimated future profit projections, which could
impact the amortization of our DAC assets and the estimates of our policyholder liabilities. Significantly lower future profits may cause us to accelerate the amortization of DAC or require us to establish additional policyholder liabilities,
thereby reducing our earnings. We periodically review our assumptions with respect to future earnings to make sure that they remain appropriate considering the current interest rate environment.

Low interest rates are also challenging for property and casualty insurers. Investment income is an important element in earning an acceptable return on
capital. Lower interest rates resulting in lower investment income require us to achieve better underwriting results. We have adjusted policy prices to help mitigate the adverse impact of low interest rates on our property and casualty business.

Changing Regulatory Environment: The insurance industry is primarily regulated at the state level, although some life and annuity products and
services are also subject to U.S. federal regulation. We are regularly subjected to additional or changing regulation that requires us to update systems, change product structure, increase the amount of reporting or adopt changes to distribution.
These changes may increase the capital requirements for us and the industry, increase operating costs, change our operating practices and change our ability to provide products with pricing attractive to the marketplace.

Importance of Operating Efficiencies:The challenging economic environment and costs associated with greater regulation creates a further need for
operating cost reductions and efficiencies. We manage our cost base while maintaining our commitment to provide superior customer service to policyholders and agents. Investments in technology are coordinated through a disciplined project management
process. We anticipate continually improving our use of technology to enhance our policyholders and agents experience and increase efficiency of our employees.

Increased Role of Advanced Technology: Over the past several years, the use of mobile technology has changed the way consumers want to conduct their
business, including real-time access to information. Many of todays customers also expect to complete transactions in a digital format instead of traditional methods that require a phone call or submission of paper forms. Social media and
other customer-facing technologies are also reshaping the way companies communicate and collaborate with key stakeholders, and new tools exist to better collect and analyze information for potential business opportunities and better manage risks.
For example, American National has mobile-enabled all of its Internet-based access and leverages social media channels to reach out to potential customers to promote awareness of the company, including the products and services offered. We expect
that technology will continue to evolve, offering new and more effective ways to reach out to and service our customers and shareholders. American National evaluates available and evolving technologies and incorporates those that offer appropriate
benefits to the company and its customers into the organization.

Increased Challenges of Talent Attraction and Retention: Attracting individuals
with the right skills and retaining employees remains a business challenge. These challenges may become more difficult as the working population ages, the cost of higher education increases or if other industries develop a stronger appeal to job
seekers. We are increasing our training and development resources to enhance the ability of our employees to meet customers needs. In addition, we are expanding the use of technology to broaden our candidate base when recruiting and to deliver
targeted training to expand employee skills.

Life and Annuity

Life insurance and annuity are our mainstay segments, as they have been during our long history. We believe that the combination of predictable and decreasing
mortality rates, positive cash flow generation for many years after policy issue and favorable persistency characteristics suggest a viable and profitable future for these lines of business. We continue to use a wide variety of marketing channels
and plan to expand our traditional distribution models with additional agents.



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##### Table of Contents

Effective management of invested assets and associated liabilities involving crediting rates and, where
applicable, financial hedging instruments (which we use as economic hedges of equity-indexed life and annuity products), are important to the success of our life and annuity segments. Asset disintermediation, the risk of large outflows
of cash at times when it is disadvantageous to us to dispose of invested assets, is a risk associated with this segment.

Demographics: We believe
a key driver shaping the actions of the life insurance industry is the rising income protection, wealth accumulation, and insurance needs of retiring Baby Boomers (those born between 1946 and 1964). As a result of increasing longevity and
uncertainty regarding the Social Security System and an ongoing transition from defined benefit pension plans to 401(k) type retirement plans, retirees will need to accumulate sufficient savings to support retirement income requirements.

We are well positioned to address the Baby Boomers increasing need for savings tools and income protection. We believe our overall financial strength
and broad distribution channels position us to respond with a variety of products to individuals approaching retirement age, who seek information to plan for and manage their retirement needs. We believe our products that offer guaranteed income
flows for life, including single premium immediate annuities, are well positioned to serve this market.

Competitive Pressures: In recent years,
the competitive landscape of the U.S. life insurance industry has shifted. Established insurers are not only competing against each other but also against new market entrants that are developing products to attract the interest of the growing number
of retirees. Competition exists not only in terms of retaining and/or acquiring consumers business, but also in terms of access to producers and distributors. Consolidation among distributors coupled with the aging sales force remains a
challenge among insurers. In addition, the increased technological sophistication of consumers necessitates insurers and distributors to invest significant resources in technology to adapt to consumer expectations. We believe we possess sufficient
scale, financial strength, resources and flexibility to effectively compete in this market.

The annuity market is also highly competitive. In addition to
aggressive interest crediting rates on annuities and new product features on annuities, there is competition from other financial service firms. Insurers continue to evaluate their distribution channels and the way they deliver products to
consumers. We have never provided guaranteed living benefits as a part of our variable annuity products. We believe these products were not adequately priced relative to the risk profile of the product. While this may have impeded our ability to
sell variable annuities in the short term, we believe this strategy has given us an advantage in terms of profitability over the long-term.

We believe we
will continue to be competitive in the life and annuity markets through our broad line of products, diverse distribution channels, and consistent high level of customer service. We modify our products to meet customer needs and to expand our reach
where we believe we can obtain profitable growth. For example, traditional life insurance product sales increased in 2014 and 2013 primarily due to the new portfolio of term products introduced in 2012. Equity-indexed universal life insurance
product sales also increased in 2014 and 2013.

Health

Most of the major provisions of the Patient Protection and Affordable Care Act, and a reconciliation measure, the Health Care and Education Reconciliation Act
of 2010 (collectively, the Healthcare Acts), phased in effective January 1, 2014. The Healthcare Acts mandate broad changes in the delivery of health care benefits that have impacted our current business model including our
relationship with current and future customers, producers, and health care providers, as well as our products, services, and processes. As a result, the Healthcare Acts generated new opportunities in the limited benefit and supplemental product
markets. In recent years, we built a portfolio of such products that are sold in the worksite market as well as to individuals. We established new distribution channels and sales strategies and are experiencing increases in sales of our new
worksite products.

We expect our Managing General Underwriter (MGU) business to remain stable during 2015. We generally retain only 10% of
the MGU premium and risk. The majority of the revenue generated from this business is fee income included in Other income of the Health segments operating results.



24



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##### Table of Contents

Property and Casualty

Our operating results in this segment improved significantly in 2014. The improvement was driven by decreases in catastrophe losses, underwriting and risk
mitigation actions and improved pricing.

We remain committed to offering our personal and commercial property and casualty lines of business primarily
through exclusive agents. We use a balanced, focused and collaborative approach to both growth and profitability through the development of successful agencies. We launched a new Agent Career Program in 2013 to enhance how we recruit, select,
on-board and train new agent candidates. We are pleased with the results of the program and are experiencing growth in our agency force.

Our primary
focus is to acquire and retain profitable business. To accomplish this objective, we use sophisticated pricing models and risk segmentation, along with a focused distribution force. We believe this approach allows us to make product enhancements and
offer programs that are tailored to our target markets while charging the right premium for the risk.

Demand for property and casualty credit-related
insurance products continues to increase. Credit markets have improved in recent years, which is increasing sales in the auto dealer market and, in turn, demand for our GAP products. We continue to update credit-related insurance product offerings
and pricing to meet changing market needs, as well as adding new agents to expand market share in the credit-related insurance market. We are reviewing and implementing procedures to enhance customer service while, at the same time, looking for
efficiencies to reduce administrative costs.

Competition: The property and casualty insurance industry remains highly competitive. Despite the
competitive environment, we expect to identify profitable opportunities through our strong distribution channels, expanding geographic coverage, marketing efforts, new product development and pricing sophistication.

Critical Accounting Estimates

The preparation of
financial statements in accordance with GAAP requires us to make estimates and assumptions that often involve a significant degree of judgment, in particular, expectations of current and future mortality, morbidity, persistency, claims and claim
adjustment expenses, recoverability of receivables, investment returns and interest rates. In developing these estimates, we make judgments that are inherently uncertain and subject to material changes as facts and circumstances develop. Although
variability is inherent in these estimates, we believe that the amounts as reported are appropriate, based upon the facts available upon compilation of the consolidated financial statements.

On an ongoing basis, management reviews the estimates and assumptions used in the preparation of our financial statements. If current facts and circumstances
warrant modifications in estimates and assumptions, our financial position and results of operations as reported in the consolidated financial statements could change significantly.

A description of these critical accounting estimates is presented below. Also, see the Notes to the Consolidated Financial Statements for additional
information.

Reserves

Life and Annuity
Reserves

Life Reserving Determining the reserves for future amounts payable under life insurance policies requires the use of estimates.
Principal assumptions used in the determination of the reserves for future policy benefits are mortality, policy lapse rates, investment return, inflation, expenses and other contingent events as appropriate to the respective product type. Reserves
for incurred but not reported (IBNR) claims on life policies are calculated using historical claims information. Reserves for interest-sensitive and variable universal life insurance policies are equal to the current account value
calculated for the policyholder. Some of our universal life policies contain secondary guarantees, for which additional reserves are recorded based on the term of the policy.



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##### Table of Contents

Annuity ReservingWe determine the reserves for future amounts payable under annuity contracts, including
fixed payout and deferred annuities. Reserves for payout annuities with more than insignificant amounts of mortality risk are calculated in accordance with the applicable accounting guidance for limited pay insurance contracts. Benefit and
maintenance expense reserves are calculated by using assumptions reflecting our expectations, including an appropriate margin for adverse deviation. Payout annuity reserves are calculated using standard industry mortality tables specified for
statutory reporting. If the resulting reserve would otherwise cause profits to be recognized at the issue date, additional reserves are recorded. The resulting recognition of profits would be gradual over the expected life of the contract.

Reserves for deferred annuities are established equivalent to the account value held on behalf of the policyholder. Additional reserves for guaranteed minimum
death benefits are determined as needed in accordance with the applicable accounting guidance. The profit recognition on deferred annuity contracts is gradual over the expected life of the contract. No immediate profit is recognized on the sale of
the contract.

Key AssumptionsThe following assumptions reflect our best estimates and may impact our life and annuity reserves:



| |  |  | Future lapse rates will remain reasonably consistent with our current expectations;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | Mortality rates will remain reasonably consistent within standard industry mortality table ranges; and
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | Future interest spreads will remain reasonably consistent with our current expectations.
| | - |  | ----------------------------------------------------------------------------------------

RecoverabilityAt least annually, we test the adequacy of the net benefit reserves (policy benefit reserves less DAC) recorded for life insurance and
annuity products. This testing is referred to as Loss Recognition for traditional products and Unlocking for interest-sensitive products. To perform the tests, we use our current best-estimate assumptions as to policyholder
mortality, persistency, maintenance expenses and invested asset returns.

For interest-sensitive business, best-estimate assumptions are updated to
reflect observed changes based on experience studies and current economic conditions. We reflect the effect of such assumption changes in DAC and reserve balances accordingly. Due to the long-term nature of many of the liabilities, small changes in
certain assumptions may cause large changes in profitability. In particular, changes in estimates of the future invested asset return have a large effect on the degree of reserve adequacy and DAC recoverability.

For traditional business, a lock-in principle applies, whereby the assumptions used to calculate the benefit reserves and DAC are set when a
policy is issued and do not change with changes in actual experience. These include margins for adverse deviation in the event that actual experience differs from the original assumptions.

Health Reserves

Health reserves are established using
the following methods:

Completion Factor ApproachThis method assumes that the historical claim patterns will be an accurate representation of unpaid
claim liabilities. An estimate of the unpaid claims is calculated by subtracting period-to-date paid claims from an estimate of the ultimate complete payment for all incurred claims in the period. Completion factors are calculated which
complete the current period-to-date payment totals for each incurred month to estimate the ultimate expected payout.

Tabular Claims
ReservesThis method is used to calculate the reserves for disability income blocks of business. These reserves rely on published valuation continuance tables created using industry experience regarding assumptions of continued morbidity and
subsequent recovery. Reserves are calculated by applying these continuance tables, along with appropriate company experience adjustments, to the stream of contractual benefit payments. These expected benefit payments are discounted at the required
interest rate.



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##### Table of Contents

Future Policy BenefitsReserves are equal to the aggregate of the present value of expected future benefit
payments, less the present value of expected future premiums. Morbidity and termination assumptions are based on our experience or published valuation tables when available and appropriate.

Premium Deficiency ReservesDeficiency reserves are established when the expected future claim payments and expenses for a classification of policies are
in excess of the expected premiums for these policies. The determination of a deficiency reserve takes into consideration the likelihood of premium rate increases, the timing of these increases, and the expected benefit utilization patterns. We have
established premium deficiency reserves for portions of the major medical business and the long-term care business that are in run-off. The assumptions and methods used to determine the deficiency reserves are reviewed periodically for
reasonableness, and the reserve amount is monitored against emerging losses.

Property and Casualty Reserves

Reserves for Claims and Claim Adjustment Expense (CAE)Property and casualty reserves are established to provide for the estimated cost
of settling and paying both reported (case) as well as unreported (IBNR) claims. The two major categories of CAE are defense and cost containment expense, and adjusting and other expense. The details of property and casualty
reserves are shown below (in thousands):



|      |  |                   |         |  |                   |   |        |     |  |   |         |  |  |       |         |  |     |   |        |  |  |   |         | 
|----- |  | ----------------- | ------- |  | ----------------- | - | ------ | --- |  | - | ------- |  |  | ----- | ------- |  | --- | - | ------ |  |  | - | ------- | 
|      |  | December 31, 2014 |         |  | December 31, 2013 |  
|      |  | Gross             |         |  | Ceded             |   |        | Net |  |   | Gross   |  |  | Ceded |         |  | Net |  
|Case  |  | $                 | 500,122 |  |                   | $ | 38,995 |     |  | $ | 461,127 |  |  | $     | 469,845 |  |     | $ | 23,709 |  |  | $ | 446,136 | 
|IBNR  |  |                   | 368,356 |  |                   |   | 6,395  |     |  |   | 361,961 |  |  |       | 385,687 |  |     |   | 15,250 |  |  |   | 370,437 | 
|      |  |                   |         |  |                   |   |        |     |  |   |         |  |  |       |         |  |     |   |        |  |  |   |         | 
|Total |  | $                 | 868,478 |  |                   | $ | 45,390 |     |  | $ | 823,088 |  |  | $     | 855,532 |  |     | $ | 38,959 |  |  | $ | 816,573 | 
|      |  |                   |         |  |                   |   |        |     |  |   |         |  |  |       |         |  |     |   |        |  |  |   |         | 

Case ReservesReserves for reported losses are determined on either a judgment or a formula basis, depending on
the timing and type of the loss. The formula reserve is a fixed amount for each claim of a given type based on historical paid loss data for similar claims with provisions for trend changes, such as those caused by inflation. Judgment reserve
amounts generally replace initial formula reserves and are set for each loss based on facts and circumstances of each case and the expectation of damages. We regularly monitor the adequacy of reserves on a case-by-case basis and change the amount of
such reserves as necessary.

IBNRIBNR reserves are estimated based on many variables, including historical statistical information,
inflation, legal developments, economic conditions, and general trends in claim severity, frequency and other factors that could affect the adequacy of claims reserves. Loss and premium data is aggregated by exposure class and by accident year. IBNR
reserves are estimated by projecting ultimate losses on each class of business and subtracting paid losses and case reserves. Our overall reserve practice provides for ongoing claims evaluation and adjustment based on the development of related data
and other relevant information pertaining to claims. Adjustments in aggregate reserves, if any, are included in the results of operations of the period during which such adjustments are made.

We believe we conservatively reflect the potential uncertainty generated by volatility in our loss development profiles when selecting loss development factor
patterns for each line of business. See Results of Operations and Related Information by Segment  Property and Casualty, Prior Period Reserve Development section of the MD&A for additional information.

The evaluation process to determine the claims and CAE reserves involves the collaboration of underwriting, claims and internal actuarial departments. The
process also includes consultation with independent actuarial firms as part of our process of gaining reassurance that claims and CAE reserves estimate sufficiently, all obligations arising from all losses incurred as of year-end. The independent
actuarial firm completes the Statements of Actuarial Opinion required by individual state insurance regulations at each year-end, opining that the recorded statutory claims and CAE reserves are reasonable.

Premium Deficiency ReserveDeficiency reserves are recorded when the expected claims payments and policy maintenance costs for a product line are
in excess of the expected premiums for that product line. The determination



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of a deficiency reserve takes into consideration the current profitability of a product line using anticipated claims, CAE, and policy maintenance costs. The assumptions and methods used to
determine the deficiency reserves are reviewed periodically for reasonableness, and the reserve amount is monitored against emerging losses. There were no reserves of this type at December 31, 2014 and 2013.

Property and Casualty Reserving MethodologyThe following methods are utilized:



| |  |  | Initial Expected Loss RatioThis method calculates an estimate of ultimate losses by applying an estimated loss ratio to actual earned premium for each calendar/accident year. This method is appropriate for classes
of business where the actual paid or reported loss experience is not yet mature enough to influence 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 total. This method is appropriate when there is a relatively stable pattern of loss and expense emergence and a relatively large number of reported claims.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Ratio of Paid Defense and Cost Containment Expense to Paid Loss DevelopmentThis method uses the ratio of paid defense and cost containment expense to paid loss data and the historical development profiles on older
accident periods to project more recent, less developed periods to their ultimate total. 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 a selected ratio of prior calendar years paid expense to paid loss to project ultimate loss adjustment expenses for adjusting and
other expense. A percentage of the selected ratio is applied to the case reserves (depending on the line of insurance) and 100% to the indicated IBNR reserves. These ratios assume that a percentage of the expense is incurred when a claim is opened
and the remaining percentage is paid throughout the claims life.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The basis of our selected single point best estimate on a particular
line of business is often a blended result from two or more methods (e.g. weighted averages). Our estimate is highly dependent on actuarial and management judgment as to which method(s) is most appropriate for a particular accident year and class of
business. Our methodology changes over time, as new information emerges regarding underlying loss activity and other factors.

Key
AssumptionsThe following assumptions may impact our property and casualty reserves:



| |  |  | Stability of future inflation rates and consistency with historical inflation norms;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | The expected loss development patterns;
| | - |  | ---------------------------------------



| |  |  | A consistent claims handling, reserving, and payment process;
| | - |  | -------------------------------------------------------------



| |  |  | No unusual growth patterns or unexpected changes in the mix of business; and
| | - |  | ----------------------------------------------------------------------------



| |  |  | No significant prospective changes in laws that would significantly affect future payouts
| | - |  | -----------------------------------------------------------------------------------------

The loss ratio
selections and development profiles are developed primarily using our own historical claims and loss experience. These development patterns reflect prior inflation rates, and could be impacted by future changes in inflation rates, particularly those
relating to medical care costs, automobile repair parts and building or home material costs. These assumptions have not been modified from the preceding periods and are consistent with historical loss reserve development patterns.



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For non-credit lines of business, future inflation rates could vary from our assumption of relatively stable
rates. Unexpected changes in future inflation rates could impact our financial position and liquidity, and thus we chose to measure the sensitivity of our reserve levels to unexpected changes in inflation. The impacts of future inflation for a 1.0%
decrease and 3.0% increase over the implied inflation rate in the December 31, 2014 gross loss reserve balance are as follows (amounts in thousands):



|                                           |  |               |        |   |               |   |        | 
|------------------------------------------ |  | ------------- | ------ | - | ------------- | - | ------ | 
|Cumulative Increase (Decrease) in Reserves |  | 1.0% decrease |        |   | 3.0% increase |  
|Personal                                   |  |               |        |   |               |   |        | 
|Auto                                       |  | $             | (4,439 | ) |               | $ | 12,691 | 
|Homeowner                                  |  |               | (900   | ) |               |   | 2,388  | 
|Commercial                                 |  |               |        |   |               |   |        | 
|Agribusiness                               |  |               | (6,473 | ) |               |   | 24,845 | 
|Auto                                       |  |               | (1,981 | ) |               |   | 6,069  | 

The analysis of our credit insurance line of business quantifies the estimated impact on gross loss reserves of a reasonably
likely scenario of varying the ratio applied to the earned premium to determine the IBNR reserves at December 31, 2014. IBNR reserving methodology for this line of business focuses primarily on the use of a ratio applied to the unearned premium
for each credit insurance product. The selected ratios are based on historical loss and claim data. In our analysis, we varied this ratio by +/- 5% across all credit insurance products combined. The results of our analysis show an increase or
decrease in gross reserves across all accident years combined of approximately $5.0 million.

It is not appropriate to aggregate the impacts shown in our
sensitivity analysis, as our lines of business are not directly correlated. The variations are not meant to be a best-case or worst-case scenario, and it is possible that future variations will be more or less than the
amounts in our sensitivity analysis. While we believe these are possible scenarios based on the information available to us at this time, we do not believe the reader should consider our sensitivity analysis an actual reserve range.

Management believes our reserves at December 31, 2014 are adequate. New information, regulation, events or circumstances, unknown at the original
valuation date, however, may result in future development resulting in our ultimate losses being significantly greater or less than the recorded reserves at December 31, 2014.



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Deferred Policy Acquisition Costs

We had a DAC asset of approximately $1.25 billion and $1.28 billion at December 31, 2014 and 2013, respectively. Effective January 1, 2012, we
retrospectively adopted new accounting guidance and implemented a new DAC capitalization policy. See Note 10, Deferred Policy Acquisition Cost of the Notes to the Consolidated Financial Statements for a detailed discussion regarding the impact of
this pronouncement on us.

We believe the estimates used in our DAC calculations provide a representative example of how variations in assumptions and
estimates would affect our business. The following table displays the sensitivity of reasonably likely changes in assumptions in the DAC amortization for our long-tail business at December 31, 2014 (in thousands):



|                                                         |  |                     |         |  
|-------------------------------------------------------- |  | ------------------- | ------- | -
|                                                         |  | Increase/(decrease) |        
|                                                         |  | in DAC              |        
|Increase in future investment margins of 25 basis points |  | $                   | 38,016  |  
|Decrease in future investment margins of 25 basis points |  |                     | (41,938 | )
|                                                         | 
|Decrease in future life mortality by 1%                  |  |                     | 3,789   |  
|Increase in future life mortality by 1%                  |  |                     | (3,783  | )

Reinsurance

We
manage our underwriting risk exposures by reinsuring portions of our insurance risks. We manage counterparty risk by entering into agreements with reinsurers we consider creditworthy generally measured by the individual entity or entities
financial strength rating. However, we do not require a specified minimum rating. We monitor the concentrations of the reinsurers and reduce the participation percentage of lower-rated and unrated companies when appropriate. We monitor the financial
condition of our reinsurance counterparties and believe we currently have no significant credit risk related to those counterparties.

Some of our
reinsurance contracts contain clauses that allow us to terminate the participation with reinsurers whose ratings are downgraded. Information used in our risk assessment is comprised of industry ratings, recent news and reports, and a limited review
of financial statements. We also may require reinsurers not licensed in our state of domicile or with whom we have limited experience, to provide letters of credit, trust agreements, or cash advances to fund their share of outstanding and future
claims and CAE.

Other-Than-Temporary Impairment

Our accounting policy requires that a decline in the fair value of investment securities below their cost basis be evaluated on an ongoing basis to determine
if the decline is other-than-temporary. A number of assumptions and estimates inherent in evaluating impairments are used to determine if they are other-than-temporary, which include 1) our ability and intent to hold the investment securities for a
period of time sufficient to allow for an anticipated recovery in value; 2) the expected recoverability of principal and interest; 3) the length of time and extent to which the fair value has been less than cost basis; 4) the financial condition,
near-term and long-term prospects of the issue or issuer, including relevant industry conditions and trends and implications of rating agency actions and offering prices; and 5) the specific reasons that a security is in a significant unrealized
loss position, including market conditions, which could affect liquidity.

Valuation of Financial Instruments

The fair value of available-for-sale securities (equity and fixed maturity securities) is determined by management using one of the three primary sources of
information: the quoted prices in active markets; third-party pricing services; or independent broker quotations. Estimated fair value of securities based on quoted prices in active markets is readily and regularly available; therefore, valuation of
these securities generally does not involve management judgment. For securities without quoted prices, fair value measurement is determined using third-party pricing services proprietary pricing applications. Typical inputs used by the models
are relevant market information, benchmark curves, benchmark pricing of like securities, sector groupings and matrix pricing. Any securities remaining unpriced after utilizing the first two pricing methods are submitted to the independent brokers
for prices. We have



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analyzed the third-party pricing services and independent brokers valuation methodologies and related inputs, and have evaluated the various types of securities in our investment portfolio
to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs. Management completes certain tests throughout the year and at year-end to determine that prices provided by our pricing
services are reasonable.

We utilize over-the counter equity options to hedge our exposure to equity indexed universal life and equity-indexed deferred
annuity benefits, and the fair values for these options are sourced from broker quotations. Per Financial Accounting Standard 133, the equity indexed policies require a fair value calculation as part of their reserve. This is called the
value of embedded derivative (or VED) and the other part of the indexed policy reserve is called the host reserve. The embedded derivative represents future benefit cash flows in excess of minimum guarantee cash flows. The host covers the
minimum guarantee cash flows. Both the VED and the host reserve are calculated by a vendor-sourced reserve valuation system. The VED calculation model incorporates assumptions related to current option pricing (such as implied volatility
and LIBOR/swap curve), future policyholder behavior (such as surrenders and withdrawals), and factors affecting the value of future indexed interest periods (such as option budgets).

Pension and Postretirement Benefit Plans

On
October 31, 2013, the Company adopted certain amendments to freeze, effective at December 31, 2013, our defined benefit pension plans. See Note 18, Pension and Postretirement Benefits, of the Notes to the Consolidated Financial Statements
for a detailed discussion of the amendments. Our pension and postretirement benefit obligations and related costs covering our employees are estimated using actuarial concepts in accordance with the relevant accounting guidance. The discount rate
and the expected return on plan assets are important elements of expense and/or liability measurements. Each year, these key assumptions are reevaluated to determine whether they reflect the best estimates for the current period. Changes in the
methodology used to determine the best estimates are made when facts or circumstances change. Other assumptions involve demographic factors such as retirement age, mortality and turnover and, prior to the aforementioned plans freeze, the rate of
compensation increases. The expected long-term rate of return on plan assets is determined using the building-block method.

Litigation
Contingencies

Based on information currently available, we believe that amounts ultimately paid, if any, arising from existing and currently
potential litigation would not have a material effect on our results of operations and financial condition. However, it should be noted that the frequency of large damage awards, which bear little or no relation to the economic damages incurred by
plaintiffs, continue to create the potential for an unpredictable judgment in any given lawsuit. It is possible that, if the defenses in these lawsuits are not successful, and the judgments are greater than we anticipate, the resulting liability
could have a material impact on the consolidated financial statements.

Federal Income Taxes

Our effective tax rate is based on income, non-taxable and non-deductible items, statutory tax rates and tax planning opportunities available. Inherent in
determining our annual tax rate are judgments regarding business plans, planning opportunities and expectations about future outcomes. Our income tax liability includes the liability for unrecognized tax benefits, interest and penalties, that relate
to tax years still subject to review by the IRS or other taxing authorities. Audit periods remain open for review until the statute of limitations has passed.

GAAP requires us to evaluate the recoverability of our deferred tax assets and establish a valuation allowance, if necessary, to reduce our deferred tax asset
to an amount that is more-likely-than-not to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. Although realization is not assured, management
believes it is more-likely-than-not that the deferred tax assets, net of valuation allowances, will be realized.



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Managements best estimate of future events and their impact is included in our accounting estimates.
Certain changes or future events, such as changes in tax legislation, geographic mix of earnings and completion of tax audits could have an impact on our estimates and effective tax rate.

Consolidated Results of Operations

The following sets
forth the consolidated results of operations (in thousands):



|                                                     |  |                          |           |  |                        |   |           |      |  |   |           |  |  |      |         |   |  |   |         |  
|---------------------------------------------------- |  | ------------------------ | --------- |  | ---------------------- | - | --------- | ---- |  | - | --------- |  |  | ---- | ------- | - |  | - | ------- | -
|                                                     |  | Years ended December 31, |           |  | Change over prior year |  
|                                                     |  | 2014                     |           |  | 2013                   |   |           | 2012 |  |   | 2014      |  |  | 2013 |        
|Premiums and other revenues                          |  |                          |           |  |                        |   |           |      |  |   |           |  |  |      |         |   |  |   |         |  
|Premiums                                             |  | $                        | 1,815,971 |  |                        | $ | 1,735,526 |      |  | $ | 1,704,173 |  |  | $    | 80,445  |   |  | $ | 31,353  |  
|Other policy revenues                                |  |                          | 224,254   |  |                        |   | 210,224   |      |  |   | 198,401   |  |  |      | 14,030  |   |  |   | 11,823  |  
|Net investment income                                |  |                          | 932,858   |  |                        |   | 1,016,810 |      |  |   | 985,398   |  |  |      | (83,952 | ) |  |   | 31,412  |  
|Realized investments gains (losses), net             |  |                          | 41,422    |  |                        |   | 119,553   |      |  |   | 68,208    |  |  |      | (78,131 | ) |  |   | 51,345  |  
|Other income                                         |  |                          | 36,085    |  |                        |   | 37,097    |      |  |   | 30,880    |  |  |      | (1,012  | ) |  |   | 6,217   |  
|                                                     |  |                          |           |  |                        |   |           |      |  |   |           |  |  |      |         |   |  |   |         |  
|Total premiums and other revenues                    |  |                          | 3,050,590 |  |                        |   | 3,119,210 |      |  |   | 2,987,060 |  |  |      | (68,620 | ) |  |   | 132,150 |  
|                                                     |  |                          |           |  |                        |   |           |      |  |   |           |  |  |      |         |   |  |   |         |  
|Benefits, losses and expenses                        |  |                          |           |  |                        |   |           |      |  |   |           |  |  |      |         |   |  |   |         |  
|Policyholder benefits                                |  |                          | 542,015   |  |                        |   | 539,406   |      |  |   | 496,622   |  |  |      | 2,609   |   |  |   | 42,784  |  
|Claims incurred                                      |  |                          | 933,768   |  |                        |   | 886,398   |      |  |   | 949,106   |  |  |      | 47,370  |   |  |   | (62,708 | )
|Interest credited to policyholders account balances |  |                          | 353,492   |  |                        |   | 426,102   |      |  |   | 416,015   |  |  |      | (72,610 | ) |  |   | 10,087  |  
|Commissions for acquiring and servicing policies     |  |                          | 397,126   |  |                        |   | 371,948   |      |  |   | 364,911   |  |  |      | 25,178  |   |  |   | 7,037   |  
|Other operating expenses                             |  |                          | 485,865   |  |                        |   | 503,051   |      |  |   | 455,746   |  |  |      | (17,186 | ) |  |   | 47,305  |  
|Change in deferred policy acquisition costs (1)      |  |                          | 9,578     |  |                        |   | 29,835    |      |  |   | 32,915    |  |  |      | (20,257 | ) |  |   | (3,080  | )
|                                                     |  |                          |           |  |                        |   |           |      |  |   |           |  |  |      |         |   |  |   |         |  
|Total benefits and expenses                          |  |                          | 2,721,844 |  |                        |   | 2,756,740 |      |  |   | 2,715,315 |  |  |      | (34,896 | ) |  |   | 41,425  |  
|                                                     |  |                          |           |  |                        |   |           |      |  |   |           |  |  |      |         |   |  |   |         |  
|Income before other items and federal income taxes   |  | $                        | 328,746   |  |                        | $ | 362,470   |      |  | $ | 271,745   |  |  | $    | (33,724 | ) |  | $ | 90,725  |  
|                                                     |  |                          |           |  |                        |   |           |      |  |   |           |  |  |      |         |   |  |   |         |  



|(1) | A negative amount of net change indicates more expense was deferred than amortized and represents a decrease to expenses in the period indicated.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

A positive net change indicates less expense was deferred than amortized and represents an increase to expenses in the period indicated.

The most significant factor in the consolidated earnings decrease during 2014 compared to 2013 was the decrease in net realized investment gains. Consolidated
earnings increased during 2013 compared to 2012 as a result of a decrease in claims primarily in our property and casualty segment and an increase in net realized gains.



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Life

Life
segment financial results for the periods indicated were as follows (in thousands):



|                                                     |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|---------------------------------------------------- |  | ------------------------ | ------- | - | ---------------------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                     |  | Years ended December 31, |         |   | Change over prior year |  
|                                                     |  | 2014                     |         |   | 2013                   |   |         | 2012 |  |   | 2014    |   |  | 2013 |        
|Premiums and other revenues                          |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Premiums                                             |  | $                        | 307,771 |   |                        | $ | 293,173 |      |  | $ | 281,621 |   |  | $    | 14,598  |   |  | $ | 11,552  |  
|Other policy revenues                                |  |                          | 209,192 |   |                        |   | 195,644 |      |  |   | 185,536 |   |  |      | 13,548  |   |  |   | 10,108  |  
|Net investment income                                |  |                          | 232,389 |   |                        |   | 230,763 |      |  |   | 235,712 |   |  |      | 1,626   |   |  |   | (4,949  | )
|Other income                                         |  |                          | 1,427   |   |                        |   | 3,018   |      |  |   | 2,871   |   |  |      | (1,591  | ) |  |   | 147     |  
|                                                     |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Total premiums and other revenues                    |  |                          | 750,779 |   |                        |   | 722,598 |      |  |   | 705,740 |   |  |      | 28,181  |   |  |   | 16,858  |  
|                                                     |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Benefits, losses and expenses                        |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Policyholder benefits                                |  |                          | 351,271 |   |                        |   | 345,566 |      |  |   | 340,003 |   |  |      | 5,705   |   |  |   | 5,563   |  
|Interest credited to policyholders account balances |  |                          | 68,796  |   |                        |   | 56,805  |      |  |   | 58,158  |   |  |      | 11,991  |   |  |   | (1,353  | )
|Commissions for acquiring and servicing policies     |  |                          | 124,447 |   |                        |   | 117,832 |      |  |   | 97,455  |   |  |      | 6,615   |   |  |   | 20,377  |  
|Other operating expenses                             |  |                          | 194,927 |   |                        |   | 207,520 |      |  |   | 183,040 |   |  |      | (12,593 | ) |  |   | 24,480  |  
|Change in deferred policy acquisition costs (1)      |  |                          | (32,014 | ) |                        |   | (24,752 | )    |  |   | (7,167  | ) |  |      | (7,262  | ) |  |   | (17,585 | )
|                                                     |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Total benefits and expenses                          |  |                          | 707,427 |   |                        |   | 702,971 |      |  |   | 671,489 |   |  |      | 4,456   |   |  |   | 31,482  |  
|                                                     |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Income before other items and federal income taxes   |  | $                        | 43,352  |   |                        | $ | 19,627  |      |  | $ | 34,251  |   |  | $    | 23,725  |   |  | $ | (14,624 | )
|                                                     |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  



|(1) | A negative amount of net change indicates more expense was deferred than amortized and represents a decrease to expenses in the period indicated.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

A positive net change indicates less expense was deferred than amortized and represents an increase to expenses in the period indicated.

Earnings increased during 2014 compared to 2013 primarily due to a decrease in operating expenses, an increase in premiums on traditional products, and other
policy revenue. Earnings decreased during 2013 compared to 2012 primarily due to increases in operating expenses and policyholder benefits, partially offset by increases in premiums and other policy revenues

Premiums and other revenues

Premiums increased
during 2014 compared to 2013, and during 2013 compared to 2012 primarily driven by the continued growth of term products.

Other policy revenues include
mortality charges, earned policy service fees and surrender charges on interest-sensitive life insurance policies. An increase in interest-sensitive life policies contributed to the increases in these charges during 2014 compared to 2013, and during
2013 compared to 2012.



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Life insurance sales

The following table presents life insurance sales as measured by annualized premium, a non-GAAP measure used by the insurance industry, which allows a
comparison of new policies written by an insurance company during the period (in thousands):



|                      |  |                          |        |  |                        |   |        |      |  |   |        |  |  |      |        |   |  |   |        | 
|--------------------- |  | ------------------------ | ------ |  | ---------------------- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ | - |  | - | ------ | 
|                      |  | Years ended December 31, |        |  | Change over prior year |  
|                      |  | 2014                     |        |  | 2013                   |   |        | 2012 |  |   | 2014   |  |  | 2013 |       
|Whole life            |  | $                        | 26,165 |  |                        | $ | 25,209 |      |  | $ | 23,889 |  |  | $    | 956    |   |  | $ | 1,320  | 
|Term life             |  |                          | 29,226 |  |                        |   | 32,174 |      |  |   | 22,859 |  |  |      | (2,948 | ) |  |   | 9,315  | 
|Universal life        |  |                          | 37,773 |  |                        |   | 37,769 |      |  |   | 28,291 |  |  |      | 4      |   |  |   | 9,478  | 
|                      |  |                          |        |  |                        |   |        |      |  |   |        |  |  |      |        |   |  |   |        | 
|Total recurring       |  | $                        | 93,164 |  |                        | $ | 95,152 |      |  | $ | 75,039 |  |  | $    | (1,988 | ) |  | $ | 20,113 | 
|                      |  |                          |        |  |                        |   |        |      |  |   |        |  |  |      |        |   |  |   |        | 
|Single and excess (1) |  | $                        | 2,173  |  |                        | $ | 2,327  |      |  | $ | 1,949  |  |  | $    | (154   | ) |  | $ | 378    | 
|Credit life (1)       |  |                          | 3,940  |  |                        |   | 4,105  |      |  |   | 3,980  |  |  |      | (165   | ) |  |   | 125    | 



|(1) | These are weighted amounts representing 10% of single and excess premiums and 15% of credit life premuims.
|--- | ----------------------------------------------------------------------------------------------------------

Life insurance sales are based on the total yearly premium that insurance companies would expect to receive if all recurring premium policies would remain in
force, plus 10% of single and excess premiums and 15% of credit life premium. Life insurance sales measure activity associated with gaining new insurance business in the current period whereas GAAP premium revenues are associated with policies sold
in current and prior periods; therefore, a reconciliation of premium revenues and insurance sales is not meaningful.

Life insurance sales decreased
slightly during 2014 compared to 2013 due to a leveling out in new term life sales from their introduction in late 2012 and significant increase in 2013. Marketing activities at financial institutions with whom the Company markets life insurance
have been curtailed by such financial institutions as they seek to ensure compliance with Consumer Financial Protection Bureau rules and guidance.

Life
insurance sales increased in 2013 and 2012 due to a focus on life versus annuity production and expansion of product offerings. Term life sales increased as a result of a new term portfolio introduced in 2012. Equity-indexed universal life products
were the primary driver of the increase in universal life sales.

Benefits, losses and expenses

Policyholder benefits increased during 2014 compared to 2013 primarily due to higher claims in 2014. Policyholder benefits increased during 2013 compared to
2012 primarily due to an increase in claims and the accrual of interest related to claims identified upon the application of the modified claims settlement procedure described below. Policyholder benefits also increased due to a block of limited pay
contracts, which were evaluated as requiring additional reserves in 2013.

In the fourth quarter of 2011, we modified our claims settlement procedures in
response to the emerging regulatory shift from the long-standing practice of waiting for a beneficiary to file a claim to a view that insurers should actively seek possible beneficiary claimants. This led to an increase in our policyholder benefits
of $1.2 million in 2014, $8.5 million in 2013 and $22.1 million in 2012.

Commissions increased during 2014 compared to 2013, and during 2013 compared to
2012, primarily due to increased sales of our term and equity-indexed universal life products.

Other operating expenses decreased during 2014 compared to
2013. Other operating expenses increased during 2013 compared to 2012 as a result of increases in costs associated with the growth in our life insurance in-force during 2013 including increased costs allocated among our segments based on related
activity as well as sales bonuses paid to independent contractors. Substantially all independent contractor bonuses are capitalized as DAC; therefore, they have minimal impact on earnings.



34



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##### Table of Contents

The following table presents the components of the change in DAC (in thousands):



|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |       |  |  |   |        |  
|---------------------------- |  | ------------------------ | ------- | - | ---------------------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ----- |  |  | - | ------ | -
|                             |  | Years ended December 31, |         |   | Change over prior year |  
|                             |  | 2014                     |         |   | 2013                   |   |         | 2012 |  |   | 2014    |   |  | 2013 |      
|Acquisition cost capitalized |  | $                        | 110,195 |   |                        | $ | 107,410 |      |  | $ | 80,877  |   |  | $    | 2,785 |  |  | $ | 26,533 |  
|Amortization of DAC          |  |                          | (78,181 | ) |                        |   | (82,658 | )    |  |   | (73,710 | ) |  |      | 4,477 |  |  |   | (8,948 | )
|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |       |  |  |   |        |  
|Change in DAC (1)            |  | $                        | 32,014  |   |                        | $ | 24,752  |      |  | $ | 7,167   |   |  | $    | 7,262 |  |  | $ | 17,585 |  
|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |       |  |  |   |        |  



|(1) | A negative amount of net change indicates more expense was deferred than amortized and represents a decrease to expenses in the period indicated.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

A positive net change indicates less expense was deferred than amortized and represents an increase to expenses in the period indicated.

During the fourth quarter of 2014, the Company unlocked certain prospective DAC assumptions based on recent experience. The Universal Life (UL)
mortality assumption was unlocked for certain plans to reflect better than expected mortality experience. The UL interest spread was unlocked to reflect a lower spread on certain older plans with a 4.0% guaranteed crediting rates. The
changes resulted in a $9.1 million increase in DAC.

Policy in-force information

The following table summarizes changes in the Life segments in-force amounts (in thousands):



|                              |  |              |            |  |                        |   |            |      |  |   |            |  |  |      |           |  |  |   |           | 
|----------------------------- |  | ------------ | ---------- |  | ---------------------- | - | ---------- | ---- |  | - | ---------- |  |  | ---- | --------- |  |  | - | --------- | 
|                              |  | December 31, |            |  | Change over prior year |  
|                              |  | 2014         |            |  | 2013                   |   |            | 2012 |  |   | 2014       |  |  | 2013 |          
|Life insurance in-force       |  |              |            |  |                        |   |            |      |  |   |            |  |  |      |           |  |  |   |           | 
|Traditional life              |  | $            | 59,409,750 |  |                        | $ | 54,788,898 |      |  | $ | 48,856,459 |  |  | $    | 4,620,852 |  |  | $ | 5,932,439 | 
|Interest-sensitive life       |  |              | 26,166,314 |  |                        |   | 25,281,391 |      |  |   | 24,132,101 |  |  |      | 884,923   |  |  |   | 1,149,290 | 
|                              |  |              |            |  |                        |   |            |      |  |   |            |  |  |      |           |  |  |   |           | 
|Total life insurance in-force |  | $            | 85,576,064 |  |                        | $ | 80,070,289 |      |  | $ | 72,988,560 |  |  | $    | 5,505,775 |  |  | $ | 7,081,729 | 
|                              |  |              |            |  |                        |   |            |      |  |   |            |  |  |      |           |  |  |   |           | 

The following table summarizes changes in the Life segments number of policies in-force:



|                            |  |              |           |  |                        |  |           |      |  |  |           |  |  |      |         |   |  |  |          |  
|--------------------------- |  | ------------ | --------- |  | ---------------------- |  | --------- | ---- |  |  | --------- |  |  | ---- | ------- | - |  |  | -------- | -
|                            |  | December 31, |           |  | Change Over Prior Year | 
|                            |  | 2014         |           |  | 2013                   |  |           | 2012 |  |  | 2014      |  |  | 2013 |        
|Number of policies in-force |  |              |           |  |                        |  |           |      |  |  |           |  |  |      |         |   |  |  |          |  
|Traditional life            |  |              | 1,949,119 |  |                        |  | 2,002,602 |      |  |  | 2,122,666 |  |  |      | (53,483 | ) |  |  | (120,064 | )
|Interest-sensitive life     |  |              | 205,805   |  |                        |  | 196,949   |      |  |  | 185,729   |  |  |      | 8,856   |   |  |  | 11,220   |  
|                            |  |              |           |  |                        |  |           |      |  |  |           |  |  |      |         |   |  |  |          |  
|Total number of policies    |  |              | 2,154,924 |  |                        |  | 2,199,551 |      |  |  | 2,308,395 |  |  |      | (44,627 | ) |  |  | (108,844 | )
|                            |  |              |           |  |                        |  |           |      |  |  |           |  |  |      |         |   |  |  |          |  

Total life insurance in-force increased during 2014 compared to 2013, and during 2013 compared to 2012, while the total number
of policies decreased for the same periods, reflecting the transition to fewer but larger face amount policies.



35



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##### Table of Contents

Reinsurance

The table below summarizes reinsurance reserves and premium amounts assumed and ceded (in thousands):



|                    |  |                          |          |   |                          |   |          |      |  |   |          |   |  |      |         |   |      |   |         |   |  |   |         |  
|------------------- |  | ------------------------ | -------- | - | ------------------------ | - | -------- | ---- |  | - | -------- | - |  | ---- | ------- | - | ---- | - | ------- | - |  | - | ------- | -
|                    |  | Reserves                 |          |   | Premiums                 |  
|                    |  | Years ended December 31, |          |   | Years ended December 31, |  
|                    |  | 2014                     |          |   | 2013                     |   |          | 2012 |  |   | 2014     |   |  | 2013 |         |   | 2012 |  
|Reinsurance assumed |  | $                        | 117      |   |                          | $ | 442      |      |  | $ | 1,564    |   |  | $    | 137     |   |      | $ | 550     |   |  | $ | 2,189   |  
|Reinsurance ceded   |  |                          | (209,853 | ) |                          |   | (198,221 | )    |  |   | (189,335 | ) |  |      | (96,577 | ) |      |   | (93,240 | ) |  |   | (93,066 | )
|                    |  |                          |          |   |                          |   |          |      |  |   |          |   |  |      |         |   |      |   |         |   |  |   |         |  
|Total               |  | $                        | (209,736 | ) |                          | $ | (197,779 | )    |  | $ | (187,771 | ) |  | $    | (96,440 | ) |      | $ | (92,690 | ) |  | $ | (90,877 | )
|                    |  |                          |          |   |                          |   |          |      |  |   |          |   |  |      |         |   |      |   |         |   |  |   |         |  

We use reinsurance to mitigate excessive risk to the Life segment. During 2014, our retention limits were $2,750,000 for issue
ages 65 and under, and $1,725,000 for issue ages 66 and older for traditional and universal life. Accidental death and premium waiver benefits are mostly retained on new business. Increases in reserves and premium amounts ceded primarily reflect
increased use of reinsurance in conjunction with treaties related to universal life products. Decreases in assumed reserves and premium were primarily due to the cancellation of reinsurance agreements, which are now in run-off, and our writing of
this business on a direct basis with two credit life reinsurers.

Consistent with our corporate risk management strategy, we periodically adjust our
reinsurance program and retention limits as market conditions warrant. While, in the past, we have reinsured up to 90% of new business, we are currently reinsuring newly developed permanent products on a modified excess retention basis, in which we
reinsure mortality risk on a yearly renewable term basis, ceding a 75% quota share of policies with a face value of at least $500,000 up to our retention and then 100% in excess of retention.Current traditionally marketed term products are
reinsured on a modified excess retention basis, in which we reinsure mortality risk on a yearly renewable term basis, ceding 50% quota share of face amounts in excess of $250,000 up to our retention and then 100% in excess of retention.

Reinsurance is used in the credit life business primarily to provide producers of credit-related insurance products the opportunity to participate in the
underwriting risk through offshore producer-owned captive reinsurance companies. A majority of the treaties entered into by our Credit Insurance Division are written on a 100% coinsurance basis with benefit limits of $100,000 on credit life. We have
entered into funds withheld reinsurance treaties, which provide for cessions to the reinsurer on a written basis.

For 2014, the companies to whom we have
ceded reinsurance for the Life segment are shown below (in thousands, except percentages):



|                                                                                   |  |           |  |         |        |  |               |  |      |  
|---------------------------------------------------------------------------------- |  | --------- |  | ------- | ------ |  | ------------- |  | ---- | -
|                                                                                   |  | A.M. Best |  | Ceded   |        |  | Percentage of | 
|Reinsurer                                                                          |  | Rating(1) |  | Premium |        |  | Gross Premium | 
|Swiss Re Life & Health of America Inc.                                             |  | A+        |  | $       | 25,053 |  |               |  | 6.2  | %
|SCOR Global Life Reinsurance Company of Delaware                                   |  | A         |  |         | 17,051 |  |               |  | 4.2  |  
|Munich American Reassurance Company                                                |  | A+        |  |         | 14,019 |  |               |  | 3.5  |  
|Canada Life Assurance Company                                                      |  | A+        |  |         | 7,722  |  |               |  | 1.9  |  
|RGA Reinsurance Company                                                            |  | A+        |  |         | 6,549  |  |               |  | 1.6  |  
|General Re Life Corporation                                                        |  | A ++      |  |         | 5,026  |  |               |  | 1.2  |  
|Other Reinsurers with no single company greater than 5% of the total ceded premium |  |           |  |         | 21,157 |  |               |  | 5.2  |  
|                                                                                   |  |           |  |         |        |  |               |  |      |  
|Total life reinsurance ceded                                                       |  |           |  | $       | 96,577 |  |               |  | 23.8 | %
|                                                                                   |  |           |  |         |        |  |               |  |      |  



|(1) | A.M. Best rating as of the most current information available February 10, 2015.
|--- | --------------------------------------------------------------------------------



36



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##### Table of Contents

Annuity

Annuity segment financial results for the periods indicated were as follows (in thousands):



|                                                     |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |         |  
|---------------------------------------------------- |  | ------------------------ | ------- | - | ---------------------- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- | - |  | - | ------- | -
|                                                     |  | Years ended December 31, |         |   | Change over prior year |  
|                                                     |  | 2014                     |         |   | 2013                   |   |         | 2012 |  |   | 2014    |  |  | 2013 |        
|Premiums and other revenues                          |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |         |  
|Premiums                                             |  | $                        | 190,357 |   |                        | $ | 155,162 |      |  | $ | 116,393 |  |  | $    | 35,195  |   |  | $ | 38,769  |  
|Other policy revenues                                |  |                          | 15,062  |   |                        |   | 14,580  |      |  |   | 12,865  |  |  |      | 482     |   |  |   | 1,715   |  
|Net investment income                                |  |                          | 545,887 |   |                        |   | 632,536 |      |  |   | 603,349 |  |  |      | (86,649 | ) |  |   | 29,187  |  
|Other income                                         |  |                          | (1      | ) |                        |   | 351     |      |  |   | 196     |  |  |      | (352    | ) |  |   | 155     |  
|                                                     |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |         |  
|Total premiums and other revenues                    |  |                          | 751,305 |   |                        |   | 802,629 |      |  |   | 732,803 |  |  |      | (51,324 | ) |  |   | 69,826  |  
|                                                     |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |         |  
|Benefits, losses and expenses                        |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |         |  
|Policyholder benefits                                |  |                          | 234,173 |   |                        |   | 193,840 |      |  |   | 156,619 |  |  |      | 40,333  |   |  |   | 37,221  |  
|Interest credited to policyholders account balances |  |                          | 284,696 |   |                        |   | 369,297 |      |  |   | 357,857 |  |  |      | (84,601 | ) |  |   | 11,440  |  
|Commissions for acquiring and servicing policies     |  |                          | 48,478  |   |                        |   | 43,920  |      |  |   | 54,785  |  |  |      | 4,558   |   |  |   | (10,865 | )
|Other operating expenses                             |  |                          | 56,487  |   |                        |   | 63,326  |      |  |   | 45,317  |  |  |      | (6,839  | ) |  |   | 18,009  |  
|Change in deferred policy acquisition costs (1)      |  |                          | 31,735  |   |                        |   | 36,359  |      |  |   | 21,724  |  |  |      | (4,624  | ) |  |   | 14,635  |  
|                                                     |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |         |  
|Total benefits and expenses                          |  |                          | 655,569 |   |                        |   | 706,742 |      |  |   | 636,302 |  |  |      | (51,173 | ) |  |   | 70,440  |  
|                                                     |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |         |  
|Income before other items and federal income taxes   |  | $                        | 95,736  |   |                        | $ | 95,887  |      |  | $ | 96,501  |  |  | $    | (151    | ) |  | $ | (614    | )
|                                                     |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |         |  



|(1) | A negative amount of net change indicates more expense was deferred than amortized and represents a decrease to expenses in the period indicated.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

A positive net change indicates less expense was deferred than amortized and represents an increase to expenses in the period indicated.

Earnings remained relatively unchanged during 2014 compared to 2013, and during 2013 compared to 2012.

Premiums and other revenues

Annuity premium and
deposit amounts received are shown below (in thousands):



|                                 |  |                          |         |  |                        |   |         |      |  |   |           |  |  |      |         |   |  |   |          |  
|-------------------------------- |  | ------------------------ | ------- |  | ---------------------- | - | ------- | ---- |  | - | --------- |  |  | ---- | ------- | - |  | - | -------- | -
|                                 |  | Years ended December 31, |         |  | Change over prior year |  
|                                 |  | 2014                     |         |  | 2013                   |   |         | 2012 |  |   | 2014      |  |  | 2013 |        
|Fixed deferred annuity           |  | $                        | 316,265 |  |                        | $ | 260,289 |      |  | $ | 568,716   |  |  | $    | 55,976  |   |  | $ | (308,427 | )
|Single premium immediate annuity |  |                          | 215,871 |  |                        |   | 203,890 |      |  |   | 200,921   |  |  |      | 11,981  |   |  |   | 2,969    |  
|Equity-indexed deferred annuity  |  |                          | 245,574 |  |                        |   | 178,722 |      |  |   | 127,357   |  |  |      | 66,852  |   |  |   | 51,365   |  
|Variable deferred annuity        |  |                          | 110,854 |  |                        |   | 119,880 |      |  |   | 104,432   |  |  |      | (9,026  | ) |  |   | 15,448   |  
|                                 |  |                          |         |  |                        |   |         |      |  |   |           |  |  |      |         |   |  |   |          |  
|Total premium and deposits       |  |                          | 888,564 |  |                        |   | 762,781 |      |  |   | 1,001,426 |  |  |      | 125,783 |   |  |   | (238,645 | )
|Less: Policy deposits            |  |                          | 698,207 |  |                        |   | 607,619 |      |  |   | 885,033   |  |  |      | 90,588  |   |  |   | (277,414 | )
|                                 |  |                          |         |  |                        |   |         |      |  |   |           |  |  |      |         |   |  |   |          |  
|Total earned premiums            |  | $                        | 190,357 |  |                        | $ | 155,162 |      |  | $ | 116,393   |  |  | $    | 35,195  |   |  | $ | 38,769   |  
|                                 |  |                          |         |  |                        |   |         |      |  |   |           |  |  |      |         |   |  |   |          |  



37



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##### Table of Contents

We monitor account values and changes in those values as a key indicator of performance in our Annuity segment.
Shown below are the changes in account values (in thousands):



|                                          |  |                          |            |   |      |   |            |      |  |   |           |  
|----------------------------------------- |  | ------------------------ | ---------- | - | ---- | - | ---------- | ---- |  | - | --------- | -
|                                          |  | Years ended December 31, |           
|                                          |  | 2014                     |            |   | 2013 |   |            | 2012 | 
|Fixed deferred and equity-indexed annuity |  |                          |            |   |      |   |            |      |  |   |           |  
|Account value, beginning of period        |  | $                        | 9,355,946  |   |      | $ | 9,803,197  |      |  | $ | 9,824,416 |  
|Net inflows                               |  |                          | 408,615    |   |      |   | 293,746    |      |  |   | 518,074   |  
|Surrenders                                |  |                          | (1,158,463 | ) |      |   | (1,091,890 | )    |  |   | (879,886  | )
|Fees                                      |  |                          | (9,007     | ) |      |   | (9,067     | )    |  |   | (8,219    | )
|Interest credited                         |  |                          | 276,306    |   |      |   | 359,960    |      |  |   | 348,812   |  
|                                          |  |                          |            |   |      |   |            |      |  |   |           |  
|Account value, end of period              |  | $                        | 8,873,397  |   |      | $ | 9,355,946  |      |  | $ | 9,803,197 |  
|                                          |  |                          |            |   |      |   |            |      |  |   |           |  
|Single premium immediate annuity          |  |                          |            |   |      |   |            |      |  |   |           |  
|Reserve, beginning of period              |  | $                        | 1,144,616  |   |      | $ | 1,023,116  |      |  | $ | 926,016   |  
|Net inflows                               |  |                          | 82,820     |   |      |   | 77,896     |      |  |   | 55,227    |  
|Interest and mortality                    |  |                          | 47,228     |   |      |   | 43,604     |      |  |   | 41,873    |  
|                                          |  |                          |            |   |      |   |            |      |  |   |           |  
|Reserve, end of period                    |  | $                        | 1,274,664  |   |      | $ | 1,144,616  |      |  | $ | 1,023,116 |  
|                                          |  |                          |            |   |      |   |            |      |  |   |           |  
|Variable deferred annuity                 |  |                          |            |   |      |   |            |      |  |   |           |  
|Account value, beginning of period        |  | $                        | 489,305    |   |      | $ | 417,645    |      |  | $ | 380,129   |  
|Net inflows                               |  |                          | 108,094    |   |      |   | 115,890    |      |  |   | 99,432    |  
|Surrenders                                |  |                          | (129,577   | ) |      |   | (120,207   | )    |  |   | (102,058  | )
|Fees                                      |  |                          | (5,763     | ) |      |   | (5,356     | )    |  |   | (4,742    | )
|Change in market value and other          |  |                          | 32,457     |   |      |   | 81,333     |      |  |   | 44,884    |  
|                                          |  |                          |            |   |      |   |            |      |  |   |           |  
|Account value, end of period              |  | $                        | 494,516    |   |      | $ | 489,305    |      |  | $ | 417,645   |  
|                                          |  |                          |            |   |      |   |            |      |  |   |           |  

Deferred and single premium immediate annuity sales increased during 2014 compared to 2013, which resulted in the increase in
fund inflows to these products. The Company has increased its focus on the annuity channel, expanding distribution through the introduction of additional marketing programs and the development of new accounts. The Company also introduced a new
indexed annuity. Deferred annuity sales decreased during 2013 compared to 2012 primarily resulting from our management of these products to mitigate risks associated with investing in the persistently low interest rate environment. Surrenders
increased during 2014 compared to 2013, and during 2013 compared to 2012, primarily due to a larger block of policies reaching the end of their surrender charge period.

Variable deferred annuity net inflows decreased during 2014 compared to 2013, and increased during 2013 compared to 2012. These products have no guaranteed
minimum withdrawal benefits. Our total direct exposure on the guaranteed minimum death benefits associated with these products was $0.9 million and $1.5 million as of December 31, 2014 and 2013 respectively. Reinsurance, from reinsurers rated
A or higher by A.M. Best, reduced the net exposure to $0.2 million and $0.3 million, as of December 31, 2014 and 2013, respectively.

Benefits, losses and expenses

Policyholder
benefits consist of annuity payments and reserve increases for SPIA contracts. Benefits are highly correlated to the sales volume of SPIA contracts and increased for 2014 compared to 2013, and 2013 compared to 2012, commensurate with increases in
SPIA premium during these periods.

Commissions increased during 2014 compared to 2013 as a result of increased annuity sales. Commissions decreased
during 2013 compared to 2012 primarily due to reduced deposits as well as decreases in commission rates on certain annuities.

Other operating expenses
decreased during 2014 compared to 2013. Other operating expenses were higher in 2013 compared to 2012 due to higher technology cost and a benefit in 2012 relating to final resolution of certain litigation.



38



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##### Table of Contents

The change in DAC represents acquisition costs capitalized less the amortization of existing DAC, which is
calculated in proportion to expected gross profits. The following shows the components of the change in DAC (in thousands):



|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |         |  
|---------------------------- |  | ------------------------ | ------- | - | ---------------------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------ | - |  | - | ------- | -
|                             |  | Years ended December 31, |         |   | Change over prior year |  
|                             |  | 2014                     |         |   | 2013                   |   |         | 2012 |  |   | 2014    |   |  | 2013 |       
|Acquisition cost capitalized |  | $                        | 47,400  |   |                        | $ | 49,397  |      |  | $ | 68,799  |   |  | $    | (1,997 | ) |  | $ | (19,402 | )
|Amortization of DAC          |  |                          | (79,135 | ) |                        |   | (85,756 | )    |  |   | (90,523 | ) |  |      | 6,621  |   |  |   | 4,767   |  
|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |         |  
|Change in DAC (1)            |  | $                        | (31,735 | ) |                        | $ | (36,359 | )    |  | $ | (21,724 | ) |  | $    | 4,624  |   |  | $ | (14,635 | )
|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |         |  



|(1) | A negative amount of net change indicates more expense was deferred than amortized and represents a decrease to expenses in the period indicated.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

A positive net change indicates less expense was deferred than amortized and represents an increase to expenses in the period indicated.

During the fourth quarter of 2014, the Company unlocked certain prospective DAC assumptions based on recent experience. Lapse rates and withdrawal
assumptions were unlocked for certain gross unallocated variable annuities and certain fixed annuities resulting in a $1.0 million increase in DAC.

The
amortization of DAC as a percentage of gross profits is an important ratio for the Annuity segment. Changes in this ratio reflect the impact of emerging experience. For example, if experienced surrenders in the year are lower than what was projected
in last years DAC calculation, then DAC amortization will tend to decrease relative to gross margins. The ratios for the years ended December 31, 2014, 2013 and 2012 were 34.0%, 35.8%, and 41.5%, respectively.

Options and Derivatives

Shown below is the
incremental impact of option return to net investment income, and the impact of the equity-indexed annuity embedded derivative to interest credited to policyholders account balances (in thousands):



|                                             |  |                          |         |  |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |         |  
|-------------------------------------------- |  | ------------------------ | ------- |  | ---------------------- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- | - |  | - | ------- | -
|                                             |  | Years ended December 31, |         |  | Change over prior year |  
|                                             |  | 2014                     |         |  | 2013                   |   |         | 2012 |  |   | 2014    |  |  | 2013 |        
|Net investment income                        |  |                          |         |  |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |         |  
|Without option return                        |  | $                        | 496,652 |  |                        | $ | 550,313 |      |  | $ | 584,849 |  |  | $    | (53,661 | ) |  | $ | (34,536 | )
|Option return                                |  |                          | 49,235  |  |                        |   | 82,223  |      |  |   | 18,500  |  |  |      | (32,988 | ) |  |   | 63,723  |  
|                                             |  |                          |         |  |                       
|Interest credited to policy account balances |  |                          |         |  |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |         |  
|Without embedded derivative                  |  |                          | 255,383 |  |                        |   | 303,474 |      |  |   | 344,526 |  |  |      | (48,091 | ) |  |   | (41,052 | )
|Equity-indexed annuity embedded derivative   |  |                          | 29,313  |  |                        |   | 65,823  |      |  |   | 13,331  |  |  |      | (36,510 | ) |  |   | 52,492  |  

Net investment income without option return decreased during 2014 compared to 2013, and during 2013 compared to 2012 primarily
due to lower portfolio yield and aggregate account values. Fixed interest credited to policyholders account balances without embedded derivatives decreased due to these same two factors coupled with the $6 million non-recurring credited
interest relating to settled litigation during 2012.

The option return, as well as the related equity-indexed annuity embedded derivative, decreased
during 2014 compared to 2013, and increased during 2013 compared to 2012 due to the relative change in the S&P 500 Index during the respective periods. These option returns correlate to the 11.4%, 29.6%, and 13.4% change in the S&P 500 Index
during 2014, 2013, and 2012, respectively.



39



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##### Table of Contents

Health

Health segment results for the periods indicated were as follows (in thousands):



|                                                   |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |        |   |  |   |         |  
|-------------------------------------------------- |  | ------------------------ | ------- | - | ---------------------- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------ | - |  | - | ------- | -
|                                                   |  | Years ended December 31, |         |   | Change over prior year |  
|                                                   |  | 2014                     |         |   | 2013                   |   |         | 2012 |  |   | 2014    |  |  | 2013 |       
|Premiums and other revenues                        |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |        |   |  |   |         |  
|Premiums                                           |  | $                        | 216,868 |   |                        | $ | 212,931 |      |  | $ | 223,773 |  |  | $    | 3,937  |   |  | $ | (10,842 | )
|Net investment income                              |  |                          | 11,692  |   |                        |   | 11,314  |      |  |   | 11,789  |  |  |      | 378    |   |  |   | (475    | )
|Other income                                       |  |                          | 20,391  |   |                        |   | 17,629  |      |  |   | 15,548  |  |  |      | 2,762  |   |  |   | 2,081   |  
|                                                   |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |        |   |  |   |         |  
|Total premiums and other revenues                  |  |                          | 248,951 |   |                        |   | 241,874 |      |  |   | 251,110 |  |  |      | 7,077  |   |  |   | (9,236  | )
|                                                   |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |        |   |  |   |         |  
|Benefits, losses and expenses                      |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |        |   |  |   |         |  
|Claims incurred                                    |  |                          | 144,799 |   |                        |   | 139,762 |      |  |   | 155,825 |  |  |      | 5,037  |   |  |   | (16,063 | )
|Commissions for acquiring and servicing policies   |  |                          | 35,896  |   |                        |   | 28,225  |      |  |   | 26,383  |  |  |      | 7,671  |   |  |   | 1,842   |  
|Other operating expenses                           |  |                          | 43,261  |   |                        |   | 46,646  |      |  |   | 44,966  |  |  |      | (3,385 | ) |  |   | 1,680   |  
|Change in deferred policy acquisition costs (1)    |  |                          | (564    | ) |                        |   | 1,986   |      |  |   | 5,890   |  |  |      | (2,550 | ) |  |   | (3,904  | )
|                                                   |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |        |   |  |   |         |  
|Total benefits and expenses                        |  |                          | 223,392 |   |                        |   | 216,619 |      |  |   | 233,064 |  |  |      | 6,773  |   |  |   | (16,445 | )
|                                                   |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |        |   |  |   |         |  
|Income before other items and federal income taxes |  | $                        | 25,559  |   |                        | $ | 25,255  |      |  | $ | 18,046  |  |  | $    | 304    |   |  | $ | 7,209   |  
|                                                   |  |                          |         |   |                        |   |         |      |  |   |         |  |  |      |        |   |  |   |         |  



|(1) | A negative amount of net change indicates more expense was deferred than amortized and represents a decrease to expenses in the period indicated.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

A positive net change indicates less expense was deferred than amortized and represents an increase to expenses in the period indicated.

Earnings were relatively unchanged during 2014 compared to 2013 as the increase in premiums was offset by the increase in claims incurred. Earnings increased
39.9% for 2013 compared to 2012.

Premiums and other revenues

Health earned premiums for the periods indicated were as follows (in thousands, except percentages):



|                           |  |                          |         |  |      |  |       |      |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  
|-------------------------- |  | ------------------------ | ------- |  | ---- |  | ----- | ---- |  | - | ------- |  |  |  | ----- | - |  | - | ------- |  |  |  | ----- | -
|                           |  | Years ended December 31, |        
|                           |  | 2014                     |         |  | 2013 |  |       | 2012 | 
|Medicare Supplement        |  | $                        | 85,099  |  |      |  | 39.2  | %    |  | $ | 90,785  |  |  |  | 42.6  | % |  | $ | 96,808  |  |  |  | 43.3  | %
|Medical expense            |  |                          | 21,919  |  |      |  | 10.1  |      |  |   | 30,331  |  |  |  | 14.2  |   |  |   | 37,414  |  |  |  | 16.7  |  
|Group health               |  |                          | 33,835  |  |      |  | 15.6  |      |  |   | 37,391  |  |  |  | 17.6  |   |  |   | 40,130  |  |  |  | 17.9  |  
|Credit accident and health |  |                          | 13,736  |  |      |  | 6.3   |      |  |   | 15,029  |  |  |  | 7.1   |   |  |   | 16,686  |  |  |  | 7.5   |  
|MGU                        |  |                          | 24,230  |  |      |  | 11.2  |      |  |   | 19,619  |  |  |  | 9.2   |   |  |   | 17,103  |  |  |  | 7.6   |  
|Supplemental Insurance     |  |                          | 31,769  |  |      |  | 14.7  |      |  |   | 13,125  |  |  |  | 6.2   |   |  |   | 8,394   |  |  |  | 3.8   |  
|All other                  |  |                          | 6,280   |  |      |  | 2.9   |      |  |   | 6,651   |  |  |  | 3.1   |   |  |   | 7,238   |  |  |  | 3.2   |  
|                           |  |                          |         |  |      |  |       |      |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  
|Total                      |  | $                        | 216,868 |  |      |  | 100.0 | %    |  | $ | 212,931 |  |  |  | 100.0 | % |  | $ | 223,773 |  |  |  | 100.0 | %
|                           |  |                          |         |  |      |  |       |      |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  

Earned premiums increased during 2014 compared to 2013 primarily due to increased demand for individual limited benefit
products in the supplemental insurance line. Premiums decreased in 2013 compared to 2012 primarily resulting from the run-off of our closed block of medical expense insurance plans, which will continue to decrease. In addition, Medicare Supplement
premiums declined due to policy lapses outpacing new sales along with a lower average premium per policy on those new sales.



40



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##### Table of Contents

Our in-force certificates or policies as of the dates indicated are as follows:



|                           |  |              |         |  |      |  |       |      |  |  |         |  |  |  |       |   |  |  |         |  |  |  |       |  
|-------------------------- |  | ------------ | ------- |  | ---- |  | ----- | ---- |  |  | ------- |  |  |  | ----- | - |  |  | ------- |  |  |  | ----- | -
|                           |  | December 31, |        
|                           |  | 2014         |         |  | 2013 |  |       | 2012 | 
|Medicare Supplement        |  |              | 38,245  |  |      |  | 6.0   | %    |  |  | 40,064  |  |  |  | 6.4   | % |  |  | 41,562  |  |  |  | 6.7   | %
|Medical expense            |  |              | 3,313   |  |      |  | 0.5   |      |  |  | 4,633   |  |  |  | 0.7   |   |  |  | 5,745   |  |  |  | 0.9   |  
|Group                      |  |              | 16,877  |  |      |  | 2.6   |      |  |  | 19,679  |  |  |  | 3.1   |   |  |  | 19,868  |  |  |  | 3.2   |  
|Credit accident and health |  |              | 227,790 |  |      |  | 35.8  |      |  |  | 235,014 |  |  |  | 37.4  |   |  |  | 253,710 |  |  |  | 40.7  |  
|MGU                        |  |              | 239,537 |  |      |  | 37.6  |      |  |  | 221,811 |  |  |  | 35.3  |   |  |  | 197,050 |  |  |  | 31.6  |  
|Supplemental Insurance     |  |              | 70,207  |  |      |  | 11.0  |      |  |  | 61,342  |  |  |  | 9.8   |   |  |  | 55,756  |  |  |  | 8.9   |  
|All other                  |  |              | 41,417  |  |      |  | 6.5   |      |  |  | 45,369  |  |  |  | 7.2   |   |  |  | 49,743  |  |  |  | 8.0   |  
|                           |  |              |         |  |      |  |       |      |  |  |         |  |  |  |       |   |  |  |         |  |  |  |       |  
|Total                      |  |              | 637,386 |  |      |  | 100.0 | %    |  |  | 627,912 |  |  |  | 100.0 | % |  |  | 623,434 |  |  |  | 100.0 | %
|                           |  |              |         |  |      |  |       |      |  |  |         |  |  |  |       |   |  |  |         |  |  |  |       |  

Total in-force policies increased during 2014 compared to 2013, and 2013 compared to 2012 primarily due to an increase in the
MGU line and the supplemental insurance line, partially offset by a decrease in credit accident and health business. The MGU line increased as a result of our continued expansion in the MGU market as we believe an increasing number of employers will
use the stop loss market to manage the cost of providing health insurance for employees. Credit accident and health decreased due to the contraction in that market.

Benefits, losses and expenses

Claims incurred
increased during 2014 compared to 2013 primarily due to a judicial determination that the Company could not rescind a reinsurance agreement that was in dispute. Claims incurred during 2013 compared to 2012 decreased primarily as a result of the
continued decline in the closed medical expense block and a decrease in group claim submissions. Benefit ratios were 69.0% in 2014, 65.6% in 2013, and 69.6% in 2012. Commissions increased during 2014 compared to 2013 as a result of increased sales.

Other operating expenses decreased during 2014 compared to 2013. Other operating expenses increased during 2013 compared to 2012 as a result of managing
expenses as the aggregate health block of business increased.

Change in Deferred Policy Acquisition Costs

The following table presents the components of the change in DAC (in thousands):



|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |       | 
|---------------------------- |  | ------------------------ | ------- | - | ---------------------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------ | - |  | - | ----- | 
|                             |  | Years ended December 31, |         |   | Change over prior year |  
|                             |  | 2014                     |         |   | 2013                   |   |         | 2012 |  |   | 2014    |   |  | 2013 |       
|Acquisition cost capitalized |  | $                        | 19,530  |   |                        | $ | 13,263  |      |  | $ | 11,018  |   |  | $    | 6,267  |   |  | $ | 2,245 | 
|Amortization of DAC          |  |                          | (18,966 | ) |                        |   | (15,249 | )    |  |   | (16,908 | ) |  |      | (3,717 | ) |  |   | 1,659 | 
|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |       | 
|Change in DAC (1)            |  | $                        | 564     |   |                        | $ | (1,986  | )    |  | $ | (5,890  | ) |  | $    | 2,550  |   |  | $ | 3,904 | 
|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |       | 



|(1) | A negative amount of net change indicates more expense was deferred than amortized and represents a decrease to expenses in the period indicated.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

A positive net change indicates less expense was deferred than amortized and represents an increase to expenses in the period indicated.

The change in DAC had a smaller impact on expenses during 2014 compared to 2013 and in 2013 compared to 2012 due to the declining aggregate health block of
business.



41



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##### Table of Contents

Reinsurance

For the medical expense business, we use reinsurance on an excess of loss basis. We retain the first $500,000 per claim and amounts in excess of $2,000,000. We
cede or retrocede the majority of the risk associated with our stop loss and other MGU programs. We maintain reinsurance on a quota share basis for our long-term care and disability income business.

Reinsurance is also used in the credit accident and health business. In certain cases, particularly in the auto retail market, we may also reinsure the policy
written through non-U.S. producer-owned captive reinsurers to allow the dealer to participate in the performance of these credit accident and health contracts. A majority of the treaties entered into by our Credit Insurance Division are written on a
100% coinsurance basis with benefit limits of $1,000 per month.

For 2014, the companies to which we have ceded reinsurance for the Health segment are
shown below (in thousands, except percentages):



|                                                                                     |  |           |  |         |         |  |               |  |      |  
|------------------------------------------------------------------------------------ |  | --------- |  | ------- | ------- |  | ------------- |  | ---- | -
|                                                                                     |  | A.M. Best |  | Ceded   |         |  | Percentage of | 
|Reinsurer                                                                            |  | Rating(1) |  | Premium |         |  | Gross Premium | 
|Munich Reinsurance America                                                           |  | A+        |  | $       | 33,253  |  |               |  | 6.8  | %
|Maiden Rein North America, Inc.                                                      |  | A-        |  |         | 29,213  |  |               |  | 5.9  |  
|Harbour Life & Reinsurance Co Ltd.                                                   |  | Not rated |  |         | 26,069  |  |               |  | 5.3  |  
|American First Insurance Company                                                     |  | Not rated |  |         | 15,884  |  |               |  | 3.2  |  
|Other reinsurers with no single company greater than 5.0% of the total ceded premium |  |           |  |         | 169,949 |  |               |  | 34.6 |  
|                                                                                     |  |           |  |         |         |  |               |  |      |  
|Total health reinsurance ceded                                                       |  |           |  | $       | 274,368 |  |               |  | 55.8 | %
|                                                                                     |  |           |  |         |         |  |               |  |      |  



|(1) | A.M. Best rating as of the most current information available February 10, 2015.
|--- | --------------------------------------------------------------------------------



42



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##### Table of Contents

Property and Casualty

Property and Casualty results for the periods indicated were as follows (in thousands, except percentages):



|                                                    |  |                          |           |   |                        |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|--------------------------------------------------- |  | ------------------------ | --------- | - | ---------------------- | - | --------- | ---- |  | - | --------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                    |  | Years ended December 31, |           |   | Change over prior year |  
|                                                    |  | 2014                     |           |   | 2013                   |   |           | 2012 |  |   | 2014      |   |  | 2013 |        
|Premiums and other revenues                         |  |                          |           |   |                        |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Net premiums written                                |  | $                        | 1,109,029 |   |                        | $ | 1,069,694 |      |  | $ | 1,047,211 |   |  | $    | 39,335  |   |  | $ | 22,483  |  
|                                                    |  |                          |           |   |                        |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Net premiums earned                                 |  | $                        | 1,100,975 |   |                        | $ | 1,074,260 |      |  | $ | 1,082,386 |   |  | $    | 26,715  |   |  | $ | (8,126  | )
|Net investment income                               |  |                          | 58,843    |   |                        |   | 66,632    |      |  |   | 69,604    |   |  |      | (7,789  | ) |  |   | (2,972  | )
|Other income                                        |  |                          | 4,735     |   |                        |   | 6,239     |      |  |   | 6,360     |   |  |      | (1,504  | ) |  |   | (121    | )
|                                                    |  |                          |           |   |                        |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Total premiums and other revenues                   |  |                          | 1,164,553 |   |                        |   | 1,147,131 |      |  |   | 1,158,350 |   |  |      | 17,422  |   |  |   | (11,219 | )
|                                                    |  |                          |           |   |                        |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Benefits, losses and expenses                       |  |                          |           |   |                        |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Claims incurred                                     |  |                          | 745,540   |   |                        |   | 746,636   |      |  |   | 793,281   |   |  |      | (1,096  | ) |  |   | (46,645 | )
|Commissions for acquiring and servicing policies    |  |                          | 188,305   |   |                        |   | 181,748   |      |  |   | 186,288   |   |  |      | 6,557   |   |  |   | (4,540  | )
|Other operating expenses                            |  |                          | 130,655   |   |                        |   | 128,437   |      |  |   | 120,888   |   |  |      | 2,218   |   |  |   | 7,549   |  
|Change in deferred policy acquisition costs (1)     |  |                          | 10,421    |   |                        |   | 16,242    |      |  |   | 12,468    |   |  |      | (5,821  | ) |  |   | 3,774   |  
|                                                    |  |                          |           |   |                        |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Total benefits and expenses                         |  |                          | 1,074,921 |   |                        |   | 1,073,063 |      |  |   | 1,112,925 |   |  |      | 1,858   |   |  |   | (39,862 | )
|                                                    |  |                          |           |   |                        |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Income before other items and federal income taxes  |  | $                        | 89,632    |   |                        | $ | 74,068    |      |  | $ | 45,425    |   |  | $    | 15,564  |   |  | $ | 28,643  |  
|                                                    |  |                          |           |   |                        |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Loss ratio                                          |  |                          | 67.7      | % |                        |   | 69.5      | %    |  |   | 73.3      | % |  |      | (1.8    | ) |  |   | (3.8    | )
|Underwriting expense ratio                          |  |                          | 29.9      |   |                        |   | 30.4      |      |  |   | 29.5      |   |  |      | (0.5    | ) |  |   | 0.9     |  
|                                                    |  |                          |           |   |                        |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Combined ratio                                      |  |                          | 97.6      | % |                        |   | 99.9      | %    |  |   | 102.8     | % |  |      | (2.3    | ) |  |   | (2.9    | )
|                                                    |  |                          |           |   |                        |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Impact of catastrophe events on combined ratio      |  |                          | 5.9       |   |                        |   | 7.2       |      |  |   | 9.3       |   |  |      | (1.3    | ) |  |   | (2.1    | )
|                                                    |  |                          |           |   |                        |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Combined ratio without impact of catastrophe events |  |                          | 91.7      | % |                        |   | 92.7      | %    |  |   | 93.5      | % |  |      | (1.0    | ) |  |   | (0.8    | )
|                                                    |  |                          |           |   |                        |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Gross catastrophe losses                            |  | $                        | 64,479    |   |                        | $ | 83,903    |      |  | $ | 135,625   |   |  | $    | (19,424 | ) |  | $ | (51,722 | )
|Net catastrophe losses                              |  |                          | 65,374    |   |                        |   | 76,434    |      |  |   | 94,025    |   |  |      | (11,060 | ) |  |   | (17,591 | )



|(1) | A negative amount of net change indicates more expense was deferred than amortized and represents a decrease to expenses in the period indicated.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

A positive net change indicates less expense was deferred than amortized and represents an increase to expenses in the period indicated.

Property and Casualty results increased during 2014 compared to 2013, and during 2013 compared to 2012, due to continued reductions in the loss ratio. The
loss ratio was lower as a result of decreases in catastrophe losses, improved rate adequacy and underwriting improvements.

Premiums and other revenues

Net premiums written and earned increased during 2014 compared to 2013 due to continued changes to improve rate adequacy in our homeowners and
commercial lines. Net premiums written increased during 2013 compared to 2012 primarily due to rate adequacy improvements in our homeowners and commercial lines. Net premiums earned decreased during 2013 compared to 2012 primarily due to decreases
in our personal auto policies in force.

Benefits, losses and expenses

Claims incurred decreased during 2014 compared to 2013, and during 2013 compared to 2012, as a result of decreases in catastrophe losses. In addition, the loss
ratio decreased for all periods presented as a result of improved rate adequacy.



43



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##### Table of Contents

Gross catastrophe losses for the year ended December 31, 2014 were $64.5 million compared to $83.9 million
for 2013. Although there was an increase in the number of catastrophe events, we experienced a significant decrease in catastrophe losses due primarily to a decrease in the severity of catastrophes in 2014 as compared to 2013. In 2014, there were 32
catastrophe events compared to 30 in 2013, and 26 in 2012. Gross catastrophes for the year ended December 31, 2012 were $135.6 million, with $46.6 million of that amount attributable to Hurricane Sandy.

Commissions increased during 2014 compared to 2013 primarily due to an increase in premium as well as an increase in variable commissions driven by
improvement in the loss ratio. Commissions decreased during 2013 compared to 2012, primarily due to a shift from credit-related Guaranteed Auto Protection (GAP) commissioned products to non-commission products, which also have lower
premiums.

Products

Our Property and Casualty
segment consists of: (i) Personal products, marketed primarily to individuals, (ii) Commercial products, which focus primarily on agricultural and other commercial markets, and (iii) Credit-related property insurance products, which
are marketed to and through financial institutions and retailers. 2014 net premiums written for personal products, commercial products and credit-related products were 59.9%, 31.8% and 8.3%, respectively.

Personal Products

Personal Products results for
the periods indicated were as follows (in thousands, except percentages):



|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |         |  
|---------------------------- |  | ------------------------ | ------- | - | ---------------------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------ | - |  | - | ------- | -
|                             |  | Years ended December 31, |         |   | Change over prior year |  
|                             |  | 2014                     |         |   | 2013                   |   |         | 2012 |  |   | 2014    |   |  | 2013 |       
|Net premiums written         |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |         |  
|Automobile                   |  | $                        | 403,470 |   |                        | $ | 404,807 |      |  | $ | 416,611 |   |  | $    | (1,337 | ) |  | $ | (11,804 | )
|Homeowner                    |  |                          | 223,852 |   |                        |   | 216,806 |      |  |   | 208,131 |   |  |      | 7,046  |   |  |   | 8,675   |  
|Other personal               |  |                          | 37,290  |   |                        |   | 35,562  |      |  |   | 36,212  |   |  |      | 1,728  |   |  |   | (650    | )
|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |         |  
|Total net premiums written   |  | $                        | 664,612 |   |                        | $ | 657,175 |      |  | $ | 660,954 |   |  | $    | 7,437  |   |  | $ | (3,779  | )
|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |         |  
|Net premiums earned          |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |         |  
|Automobile                   |  | $                        | 400,050 |   |                        | $ | 404,664 |      |  | $ | 423,265 |   |  | $    | (4,614 | ) |  | $ | (18,601 | )
|Homeowner                    |  |                          | 219,920 |   |                        |   | 209,556 |      |  |   | 207,048 |   |  |      | 10,364 |   |  |   | 2,508   |  
|Other personal               |  |                          | 36,638  |   |                        |   | 35,597  |      |  |   | 35,738  |   |  |      | 1,041  |   |  |   | (141    | )
|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |         |  
|Total net premiums earned    |  | $                        | 656,608 |   |                        | $ | 649,817 |      |  | $ | 666,051 |   |  | $    | 6,791  |   |  | $ | (16,234 | )
|                             |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |         |  
|Loss ratio                   |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |         |  
|Automobile                   |  |                          | 78.0    | % |                        |   | 77.9    | %    |  |   | 77.9    | % |  |      | 0.1    |   |  |   |        |  
|Homeowner                    |  |                          | 64.1    |   |                        |   | 80.0    |      |  |   | 94.5    |   |  |      | (15.9  | ) |  |   | (14.5   | )
|Other personal               |  |                          | 42.6    |   |                        |   | 55.4    |      |  |   | 56.2    |   |  |      | (12.8  | ) |  |   | (0.8    | )
|Personal line loss ratio     |  |                          | 71.4    | % |                        |   | 77.4    | %    |  |   | 81.9    | % |  |      | (6.0   | ) |  |   | (4.5    | )
|Combined Ratio               |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |         |  
|Automobile                   |  |                          | 101.1   | % |                        |   | 101.0   | %    |  |   | 99.4    | % |  |      | 0.1    |   |  |   | 1.6     |  
|Homeowner                    |  |                          | 89.4    |   |                        |   | 104.9   |      |  |   | 119.0   |   |  |      | (15.5  | ) |  |   | (14.1   | )
|Other personal               |  |                          | 62.0    |   |                        |   | 77.0    |      |  |   | 76.6    |   |  |      | (15.0  | ) |  |   | 0.4     |  
|Personal line combined ratio |  |                          | 95.0    | % |                        |   | 101.0   | %    |  |   | 104.3   | % |  |      | (6.0   | ) |  |   | (3.3    | )

Personal Automobile: Net premiums written and earned decreased in our personal automobile line during 2014 compared to
2013, and 2013 compared to 2012, primarily due to a decline in policies in-force. The loss and combined ratio remained relatively unchanged during 2013 compared to 2012. The loss and combined ratio increased during 2014 compared to 2013, primarily
due to a decline in premiums which increased the overall expense to premium ratio.

Homeowners: Net premiums written and earned increased during
2014 compared to 2013, and 2013 to 2012 primarily due to increasing premium rates over the time period. The loss and combined ratios decreased during 2014 compared to 2013 due to a decline in weather-related losses and improved rate adequacy.



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Other Personal: These products include watercraft, rental-owner and umbrella coverages for individuals
seeking to protect their personal property and liability not covered within their homeowner and auto policies. The loss ratio decreased during 2014 compared to 2013, and 2013 compared to 2012, consistent with trends in the auto and homeowners
business.

Commercial Products

Commercial
Products results for the periods indicated were as follows (in thousands, except percentages):



|                               |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|------------------------------ |  | ------------------------ | ------- | - | ---------------------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------ | - |  | - | ------ | -
|                               |  | Years ended December 31, |         |   | Change over prior year |  
|                               |  | 2014                     |         |   | 2013                   |   |         | 2012 |  |   | 2014    |   |  | 2013 |       
|Net premiums written           |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Other commercial               |  | $                        | 150,819 |   |                        | $ | 137,107 |      |  | $ | 130,103 |   |  | $    | 13,712 |   |  | $ | 7,004  |  
|Agricultural business          |  |                          | 115,592 |   |                        |   | 107,894 |      |  |   | 98,026  |   |  |      | 7,698  |   |  |   | 9,868  |  
|Automobile                     |  |                          | 86,603  |   |                        |   | 79,875  |      |  |   | 78,450  |   |  |      | 6,728  |   |  |   | 1,425  |  
|                               |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Total net premiums written     |  | $                        | 353,014 |   |                        | $ | 324,876 |      |  | $ | 306,579 |   |  | $    | 28,138 |   |  | $ | 18,297 |  
|                               |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Net premiums earned            |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Other commercial               |  | $                        | 146,845 |   |                        | $ | 128,020 |      |  | $ | 122,174 |   |  | $    | 18,825 |   |  | $ | 5,846  |  
|Agricultural business          |  |                          | 111,599 |   |                        |   | 110,476 |      |  |   | 104,098 |   |  |      | 1,123  |   |  |   | 6,378  |  
|Automobile                     |  |                          | 84,653  |   |                        |   | 78,016  |      |  |   | 79,478  |   |  |      | 6,637  |   |  |   | (1,462 | )
|                               |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Total net premiums earned      |  | $                        | 343,097 |   |                        | $ | 316,512 |      |  | $ | 305,750 |   |  | $    | 26,585 |   |  | $ | 10,762 |  
|                               |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Loss ratio                     |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Other commercial               |  |                          | 77.5    | % |                        |   | 66.6    | %    |  |   | 66.4    | % |  |      | 10.9   |   |  |   | 0.2    |  
|Agricultural business          |  |                          | 66.6    |   |                        |   | 74.9    |      |  |   | 92.3    |   |  |      | (8.3   | ) |  |   | (17.4  | )
|Automobile                     |  |                          | 69.5    |   |                        |   | 66.0    |      |  |   | 64.6    |   |  |      | 3.5    |   |  |   | 1.4    |  
|Commercial line loss ratio     |  |                          | 72.0    | % |                        |   | 69.4    | %    |  |   | 74.7    | % |  |      | 2.6    |   |  |   | (5.3   | )
|Combined ratio                 |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Other commercial               |  |                          | 104.4   | % |                        |   | 94.3    | %    |  |   | 93.9    | % |  |      | 10.1   |   |  |   | 0.4    |  
|Agricultural business          |  |                          | 106.3   |   |                        |   | 111.5   |      |  |   | 127.8   |   |  |      | (5.2   | ) |  |   | (16.3  | )
|Automobile                     |  |                          | 92.6    |   |                        |   | 89.7    |      |  |   | 86.8    |   |  |      | 2.9    |   |  |   | 2.9    |  
|Commercial line combined ratio |  |                          | 102.1   | % |                        |   | 99.1    | %    |  |   | 103.6   | % |  |      | 3.0    |   |  |   | (4.5   | )

Other Commercial: Net premiums written and earned increased during 2014 compared to 2013, primarily due to increased
premium per policy in the workers compensation and business owners lines. In addition, net premiums written and earned increased during 2013 compared to 2012 as a result of rate increases in the workers compensation line. Increases
in the loss and combined ratios for 2014 compared to 2013 are due to larger reserve increases in the workers compensation line.

Agricultural
Business: Our agricultural business product allows policyholders to customize and cover their agriculture exposure using a package policy which includes coverage for residences and household contents, farm buildings and building contents,
personal and commercial liability and personal property. Net premiums written and earned increased during 2014 compared to 2013 primarily as a result of rate increases and a decrease in ceded premiums. Net premiums written and earned in 2013 as
compared to 2012 increased as a result of rate increase and increases in new business writings, partially offset by a decrease in policies in force. The loss and combined ratios decreased for all periods presented, primarily as the result of a
reduction in net catastrophe losses, and the rate and underwriting actions.

Commercial Automobile: Net premiums written and earned increased
during 2014 compared to 2013, primarily due to rate increases. Net premiums written remained relatively unchanged during 2013 compared to 2012. The loss and combined ratios increased during 2014 compared to 2013 primarily due to an increase in
overall average severity of losses.



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Credit Products

Credit-related property products for the periods indicated were as follows (in thousands, except percentages):



|                     |  |                          |         |   |                        |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|-------------------- |  | ------------------------ | ------- | - | ---------------------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------ | - |  | - | ------ | -
|                     |  | Years ended December 31, |         |   | Change over prior year |  
|                     |  | 2014                     |         |   | 2013                   |   |         | 2012 |  |   | 2014    |   |  | 2013 |       
|Net premiums written |  | $                        | 91,403  |   |                        | $ | 87,643  |      |  | $ | 79,678  |   |  | $    | 3,760  |   |  | $ | 7,965  |  
|Net premiums earned  |  |                          | 101,270 |   |                        |   | 107,931 |      |  |   | 110,585 |   |  |      | (6,661 | ) |  |   | (2,654 | )
|Loss ratio           |  |                          | 29.5    | % |                        |   | 22.7    | %    |  |   | 17.6    | % |  |      | 6.8    |   |  |   | 5.1    |  
|Combined ratio       |  |                          | 100.8   |   |                        |   | 99.3    |      |  |   | 95.3    |   |  |      | 1.5    |   |  |   | 4.0    |  

Credit-related property products are offered on automobiles, furniture and appliances in connection with the financing of
those items. These policies pay an amount if the insured property is lost or damaged and the amount paid is not directly related to an event affecting the consumers ability to pay the debt.

Net written premiums increased during 2014 compared to 2013 primarily due to increases in our Guaranteed Auto Protection (GAP) and Collateral Protection
business and the growth from 2013 to 2012 was driven by growth in our Collateral Protection business. Net earned premiums have decreased due to the shift from our GAP Insurance product to GAP Waiver and our other products in the rest of our
portfolio, that have smaller premiums and shorter terms, to have more influence on our entire block of business.

The loss and combined ratios increased
during 2014 compared to 2013 primarily due to an increase in claims in our collateral protection business.

Reinsurance

We reinsure a portion of the risks that we underwrite to manage our loss exposure and protect capital resources. In return for a premium, reinsurers assume a
portion of the claims incurred. In addition to our reinsurance coverage, we are partially protected by the Terrorism Risk Insurance Act of 2002, which was modified and extended through December 31, 2015 by the Terrorism Risk Insurance
Program Reauthorization Act of 2007.

We retain the first $1.0 million of loss per risk, which will remain the same for 2015. Our catastrophe reinsurance
retention covering property and casualty companies in total has been $40.0 million in recent years and will remain the same in 2015. The following table summarizes the Companys catastrophe reinsurance coverage effective during 2015.



|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Layer of Loss               |  | Catastrophe Reinsurance Coverage in Force                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Less than $10 million       |  | 100% of loss retained except for certain losses covered by the Catastrophe Aggregateand Stretch & Aggregatecoverage described below                                                                                                                                                                                                                                                                                                                                                     
|$10 million - $35 million   |  |        100% of earthquake losses countrywide

       66.67% of multiple peril losses in each of the following separate
regions  Northeast and Mid-Atlantic states
 Texas, Oklahoma, and Arkansas
 Coastal states from Louisiana to North Carolina

       30.5% of multiple peril losses in all states, excluding countrywide
earthquake losses and hurricane losses in coastal states ( covered by regional covers above), with inuring protection from other regional covers above.
|$15 million - $35 million   |  |        45.21% of multiple peril losses in all states, excluding countrywide earthquake
losses and hurricane losses in coastal states (covered by regional covers above), with inuring protection from other regional covers above                                                                                                                                                                                                                                                      
|                            | 
|$35 million - $100 million  |  | 97.5% of multiple peril losses covered by Corporate Program(1) (all perils).                                                                                                                                                                                                                                                                                                                                                                                                            
|                            | 
|$100 million - $200 million |  | 97.5% of multiple peril losses covered by Corporate Program(1) (all perils).                                                                                                                                                                                                                                                                                                                                                                                                            
|                            | 
|$200 million - $500 million |  | 100% of multiple peril losses covered by Corporate Program(1) (all perils).                                                                                                                                                                                                                                                                                                                                                                                                             



|(1) | The Corporate Program covers all non-credit property and casualty business, subject to certain limits, and is not specific to the Company or any of its subsidiaries, or any state or region.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Each per event coverage above includes one automatic reinstatement except for a 12.5% portion of the Corporate
Program (12.5% of $35 million to $500 million). The automatic reinstatement requires us to pay additional reinsurance premium for any losses into each reinsurance layer. The reinstatement premium is prorated by the percentage of actual loss to the
coverage, with the exception of losses from $35 million to $100 million which reflect a 50% reduction on the prorated amount. The 12.5% placement of non-reinstateable coverage reduces the amount of reinstatement premium we are obligated to pay.

We purchase a Catastrophe Aggregate reinsurance coverage that provides for $30 million of limit excess of $90 million of aggregated catastrophe losses.
Qualifying losses include amounts of retained losses below the $10 million retention of the catastrophe program. The Catastrophe Aggregate reinsurance coverage has been placed at 97.5% for 2015 and does not include a reinstatement.

A Stretch & Aggregate cover was first purchased in 2014. It consists of a $35 million annual limit available either wholly or in part across two
layers. The first layer is 8.75% of $400 million excess of $100 million on an occurrence basis. The second layer provides aggregate protection for a subject loss is $35 million excess of $5 million of each catastrophe. Recoveries follow satisfaction
of a $45 million annual aggregate deductible. At the beginning of 2014, the Stretch & Aggregate cover was placed at 71.43% for losses occurring during 2014. This cover was commuted effective July 1, 2014 and replaced at 100% for losses
occurring from July 1, 2014 to June 30, 2015.

We use multiple reinsurers with each reinsurer absorbing part of the overall risk ceded. The
primary reinsurers in the 2014 programs and the coverage each provides are shown in the following table:



|                                                                     |  |                     |                 |                         |       |             |  |  |       |   |  | 
|-------------------------------------------------------------------- |  | ------------------- | --------------- | ----------------------- | ----- | ----------- |  |  | ----- | - |  | 
|                                                                     |  | A.M. Best
Rating(1) |                 | Percent of Risk Covered |      
|Reinsurer                                                            |  |                     | NonCatastrophe |                         |       | Catastrophe | 
|Lloyds Syndicates                                                   |  | A                   |                 |                         | 44.8  | %           |  |  | 45.8  | %
|Tokio Millennium Re Ltd.                                             |  | A++                 |                 |                         |      |             |  |  | 7.1   |  
|Swiss Re                                                             |  | A+                  |                 |                         | 6.9   |             |  |  | 6.0   |  
|Safety National Casualty Corporation                                 |  | A+                  |                 |                         | 13.3  |             |  |  |      |  
|Hannover Ruckversicherung-Aktiengesellschaft, Germany                |  | A+                  |                 |                         | 9.3   |             |  |  |      |  
|Munich Re America                                                    |  | A+                  |                 |                         | 9.0   |             |  |  |      |  
|Amlin Bermuda Limited                                                |  | A                   |                 |                         | 5.1   |             |  |  |      |  
|Other Reinsurers with no single company with greater than a 5% share |  |                     |                 |                         | 11.6  |             |  |  | 41.1  |  
|                                                                     |  |                     |                 |                         |       |             |  |  |       |  
|Total Reinsurance Coverage                                           |  |                     |                 |                         | 100.0 | %           |  |  | 100.0 | %
|                                                                     |  |                     |                 |                         |       |             |  |  |       |  

Prior Period Reserve Development

The loss development table included herein shows the development of our claims and CAE reserves. The table does not present individual accident or policy year
development data. Conditions and trends that affected development of liabilities in the past may not occur in the future. Accordingly, it is inappropriate to anticipate future redundancies or deficiencies based on historical experience.

The top line shows our original estimated reserves, net of reinsurance recoverable, for each of the indicated years. The table then shows the cumulative net
paid claims and CAE as of successive years. The liabilities re-estimated shows the successive re-estimated amount of recorded reserves based on prior paid losses and loss expenses and the changes in estimates as of the end of each succeeding year.
The cumulative deficiency or redundancy is the aggregate change in the estimates over all prior years.



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Loss Development Table

Property and Casualty Claims and Claim Adjustment Expense Liability Development-Net of Reinsurance

Years Ended December 31,



|                                                                             |  |      |         |   |      |  |           |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|---------------------------------------------------------------------------- |  | ---- | ------- | - | ---- |  | --------- | ---- |  |  | ------- | - |  | ---- | ------- | - | ---- |  | ------- | ---- |  |  | ------- | - |  | ---- | ------- | - | ---- |  | ------- | ---- |  |  | ------- | - |  |  | ------- | - |  |  | ------- | 
|                                                                             |  | 2004 |         |   | 2005 |  |           | 2006 |  |  | 2007    |   |  | 2008 |         |   | 2009 |  |         | 2010 |  |  | 2011    |   |  | 2012 |         |   | 2013 |  |         | 2014 | 
|(Amounts in Thousands)                                                       |  |      |         |   |      |  |           |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      | 
|Liability for unpaid losses and loss adjustment expenses, net of reinsurance |  |      |         |   |      |  |           |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|(includes loss reserves, IBNR, allocated and unallocated expense)            |  |      | 678,379 |   |      |  | 796,267   |      |  |  | 801,953 |   |  |      | 809,500 |   |      |  | 847,860 |      |  |  | 856,662 |   |  |      | 887,008 |   |      |  | 857,836 |      |  |  | 832,653 |   |  |  | 816,573 |   |  |  | 823,088 | 
|                                                                             |  |      |         |   |      |  |           |      |  |  |        
|Cumulative paid losses and loss expenses                                     |  |      |         |   |      |  |           |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|One year later                                                               |  |      | 274,810 |   |      |  | 366,007   |      |  |  | 296,620 |   |  |      | 318,943 |   |      |  | 345,350 |      |  |  | 308,114 |   |  |      | 331,192 |   |      |  | 329,102 |      |  |  | 314,649 |   |  |  | 299,228 |   |  |  |         | 
|Two years later                                                              |  |      | 405,748 |   |      |  | 506,463   |      |  |  | 453,042 |   |  |      | 477,958 |   |      |  | 495,277 |      |  |  | 467,402 |   |  |      | 501,444 |   |      |  | 506,332 |      |  |  | 475,084 |   |  |  |         |   |  |  |         | 
|Three years later                                                            |  |      | 479,410 |   |      |  | 590,644   |      |  |  | 544,100 |   |  |      | 569,030 |   |      |  | 593,384 |      |  |  | 565,819 |   |  |      | 621,992 |   |      |  | 607,135 |      |  |  |         |   |  |  |         |   |  |  |         | 
|Four years later                                                             |  |      | 518,986 |   |      |  | 640,003   |      |  |  | 593,112 |   |  |      | 625,925 |   |      |  | 651,781 |      |  |  | 637,286 |   |  |      | 683,506 |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|Five years later                                                             |  |      | 541,627 |   |      |  | 664,587   |      |  |  | 623,884 |   |  |      | 655,613 |   |      |  | 696,867 |      |  |  | 671,923 |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|Six years later                                                              |  |      | 552,135 |   |      |  | 682,171   |      |  |  | 638,513 |   |  |      | 688,647 |   |      |  | 714,497 |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|Seven years later                                                            |  |      | 563,113 |   |      |  | 688,866   |      |  |  | 666,814 |   |  |      | 698,929 |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|Eight years later                                                            |  |      | 567,260 |   |      |  | 713,247   |      |  |  | 673,762 |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|Nine years later                                                             |  |      | 588,845 |   |      |  | 717,468   |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|Ten years later                                                              |  |      | 591,609 |   |      |  |           |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|                                                                             |  |      |         |   |      |  |           |      |  |  |        
|Liabilites re-estimated                                                      |  |      |         |   |      |  |           |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|One year later                                                               |  |      | 638,910 |   |      |  | 770,238   |      |  |  | 711,880 |   |  |      | 766,881 |   |      |  | 798,587 |      |  |  | 776,809 |   |  |      | 818,937 |   |      |  | 810,263 |      |  |  | 793,735 |   |  |  | 773,213 |   |  |  |         | 
|Two years later                                                              |  |      | 617,374 |   |      |  | 737,341   |      |  |  | 713,339 |   |  |      | 733,361 |   |      |  | 770,900 |      |  |  | 753,152 |   |  |      | 809,757 |   |      |  | 809,969 |      |  |  | 769,160 |   |  |  |         |   |  |  |         | 
|Three years later                                                            |  |      | 596,242 |   |      |  | 739,826   |      |  |  | 680,900 |   |  |      | 727,674 |   |      |  | 766,994 |      |  |  | 751,538 |   |  |      | 813,485 |   |      |  | 795,595 |      |  |  |         |   |  |  |         |   |  |  |         | 
|Four years later                                                             |  |      | 596,768 |   |      |  | 714,995   |      |  |  | 682,446 |   |  |      | 727,733 |   |      |  | 770,441 |      |  |  | 759,987 |   |  |      | 808,358 |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|Five years later                                                             |  |      | 585,370 |   |      |  | 717,473   |      |  |  | 685,471 |   |  |      | 735,407 |   |      |  | 777,939 |      |  |  | 759,216 |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|Six years later                                                              |  |      | 585,913 |   |      |  | 720,931   |      |  |  | 694,268 |   |  |      | 746,114 |   |      |  | 779,533 |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|Seven years later                                                            |  |      | 589,384 |   |      |  | 726,479   |      |  |  | 708,245 |   |  |      | 745,988 |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|Eight years later                                                            |  |      | 593,294 |   |      |  | 743,091   |      |  |  | 709,175 |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|Nine years later                                                             |  |      | 611,380 |   |      |  | 744,133   |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|Ten years later                                                              |  |      | 613,739 |   |      |  |           |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|                                                                             |  |      |         |   |      |  |           |      |  |  |        
|Deficiency(redundancy), net of reinsurance                                   |  |      | (64,640 | ) |      |  | (52,134   | )    |  |  | (92,778 | ) |  |      | (63,512 | ) |      |  | (68,327 | )    |  |  | (97,446 | ) |  |      | (78,650 | ) |      |  | (62,241 | )    |  |  | (63,493 | ) |  |  | (43,360 | ) |  |  |         | 
|                                                                             |  |      |         |   |      |  |           |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|                                                                             |  |      |         |   |      |  |           |      |  |  |        
|                                                                             |  | 2004 |         |   | 2005 |  |           | 2006 |  |  | 2007    |   |  | 2008 |         |   | 2009 |  |         | 2010 |  |  | 2011    |   |  | 2012 |         |   | 2013 |  |         | 2014 | 
|Net reserve, as initially estimated                                          |  |      | 678,379 |   |      |  | 796,267   |      |  |  | 801,953 |   |  |      | 809,500 |   |      |  | 847,860 |      |  |  | 856,662 |   |  |      | 887,008 |   |      |  | 857,836 |      |  |  | 832,653 |   |  |  | 816,573 |   |  |  | 823,088 | 
|                                                                             |  |      |         |   |      |  |           |      |  |  |        
|Reinsurance and other recoverables as initially estimated                    |  |      | 67,698  |   |      |  | 65,186    |      |  |  | 62,115  |   |  |      | 55,951  |   |      |  | 89,410  |      |  |  | 46,778  |   |  |      | 40,552  |   |      |  | 53,152  |      |  |  | 52,184  |   |  |  | 38,959  |   |  |  | 45,390  | 
|                                                                             |  |      |         |   |      |  |           |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |         |   |      |  |         |      |  |  |         |   |  |  |         |   |  |  |         | 
|Gross reserve as initially estimated                                         |  |      | 746,077 |   |      |  | 861,453   |      |  |  | 864,068 |   |  |      | 865,451 |   |      |  | 937,270 |      |  |  | 903,440 |   |  |      | 927,560 |   |      |  | 910,988 |      |  |  | 884,837 |   |  |  | 855,532 |   |  |  | 868,478 | 
|                                                                             |  |      |         |   |      |  |           |      |  |  |        
|Net re-estimated reserve                                                     |  |      | 613,739 |   |      |  | 744,133   |      |  |  | 709,175 |   |  |      | 745,988 |   |      |  | 779,533 |      |  |  | 759,216 |   |  |      | 808,358 |   |      |  | 795,595 |      |  |  | 769,160 |   |  |  | 773,213 |   |  |  |         | 
|Re-estimated and other reinsurance recoverables                              |  |      | 73,071  |   |      |  | 487,923   |      |  |  | 92,040  |   |  |      | 78,069  |   |      |  | 113,632 |      |  |  | 48,761  |   |  |      | 46,378  |   |      |  | 56,885  |      |  |  | 62,975  |   |  |  | 44,036  |   |  |  |         | 
|Gross re-estimated reserve                                                   |  |      | 686,810 |   |      |  | 1,232,056 |      |  |  | 801,215 |   |  |      | 824,057 |   |      |  | 893,165 |      |  |  | 807,977 |   |  |      | 854,736 |   |      |  | 852,480 |      |  |  | 832,135 |   |  |  | 817,249 |   |  |  |         | 
|                                                                             |  |      |         |   |      |  |           |      |  |  |        
|Deficiency(redundancy), gross of reinsurance                                 |  |      | (59,267 | ) |      |  | 370,603   |      |  |  | (62,853 | ) |  |      | (41,394 | ) |      |  | (44,105 | )    |  |  | (95,463 | ) |  |      | (72,824 | ) |      |  | (58,508 | )    |  |  | (52,702 | ) |  |  | (38,283 | ) |  |  |         | 

While we believe that our claims reserves at December 31, 2014 are adequate, new information, events or circumstances,
unknown at the original valuation date, may lead to future developments in our ultimate losses in amounts significantly greater or less than the reserves currently recorded. The actual final cost of settling both claims outstanding at
December 31, 2014 and claims expected to arise from unexpired periods of risk is uncertain. There are many other factors that would cause our losses to increase or decrease, which include but are not limited to: changes in claim severity;
changes in the expected level of reported claims; judicial action changing the scope or liability of coverage; changes in the regulatory, social and economic environment; and unexpected changes in loss inflation. The deficiency or redundancy for
different reporting dates is cumulative and should not be added together.



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We participate in the National Flood Insurance Program administered by the Federal Emergency Management Agency.
For the year ended December 31, 2005, the $370.6 million deficiency gross of reinsurance was primarily the result of our participation in this program. These losses are 100% reimbursed by the Federal government and do not impact our net reserve
calculations or our net loss development patterns. We had related to our participation, paid losses of $390.0 million because of the 2005 hurricanes, specifically Hurricane Katrina. Since reserves are not set up for the National Flood Insurance
Program, any payments made subsequent to year-end will appear as adverse development on a gross basis. If the flood losses were removed from the gross data, the $370.6 million deficiency would be a $19.4 million redundancy.

For 2014, the net favorable prior year claims and CAE development was $ 43.4 million, compared to approximately $63.5 million of net favorable prior year
development in 2013, as a result of better than expected paid and incurred loss emergence across several lines of business.

The current year loss ratio
is a blend of the current accident year loss ratio and the impact of favorable or adverse development on prior accident years during the current calendar year. Excluding the 4.0 point impact of favorable prior year loss development for accident
years 2013 and prior, the 2014 loss ratio would have been 71.7%. Excluding the 3.6 point impact of favorable prior year loss development for accident years 2012 and prior, the 2013 loss ratio would have been 73.1%.

Net favorable reserve development during 2014 and 2013 was primarily driven by personal auto, other liability, and commercial multi-peril and partially offset
by unfavorable development in Workers Compensation. Net and gross reserve calculations have shown favorable development as a result of loss emergence compared to what was implied by the loss development patterns used in the original estimation
of losses. For additional information regarding claims and CAE, refer to Note 12, Liability for Unpaid Claims and Claim Adjustment Expenses, of the Notes to the Consolidated Financial Statements.

Corporate and Other

Corporate and Other segment
financial results for the periods indicated were as follows (in thousands):



|                                                   |  |                          |         |  |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |        |  
|-------------------------------------------------- |  | ------------------------ | ------- |  | ---------------------- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- | - |  | - | ------ | -
|                                                   |  | Years ended December 31, |         |  | Change over prior year |  
|                                                   |  | 2014                     |         |  | 2013                   |   |         | 2012 |  |   | 2014    |  |  | 2013 |        
|Other revenues                                     |  |                          |         |  |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |        |  
|Net investment income                              |  | $                        | 84,047  |  |                        | $ | 75,565  |      |  | $ | 64,944  |  |  | $    | 8,482   |   |  | $ | 10,621 |  
|Realized investments gains, net                    |  |                          | 41,422  |  |                        |   | 119,553 |      |  |   | 68,208  |  |  |      | (78,131 | ) |  |   | 51,345 |  
|Other Income                                       |  |                          | 9,533   |  |                        |   | 9,860   |      |  |   | 5,905   |  |  |      | (327    | ) |  |   | 3,955  |  
|                                                   |  |                          |         |  |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |        |  
|Total other revenues                               |  |                          | 135,002 |  |                        |   | 204,978 |      |  |   | 139,057 |  |  |      | (69,976 | ) |  |   | 65,921 |  
|                                                   |  |                          |         |  |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |        |  
|Benefits, losses and expenses                      |  |                          |         |  |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |        |  
|Commissions                                        |  |                          |        |  |                        |   | 223     |      |  |   |        |  |  |      | (223    | ) |  |   | 223    |  
|Other operating expenses                           |  |                          | 60,535  |  |                        |   | 57,122  |      |  |   | 61,535  |  |  |      | 3,413   |   |  |   | (4,413 | )
|                                                   |  |                          |         |  |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |        |  
|Total benefits, losses and expenses                |  |                          | 60,535  |  |                        |   | 57,345  |      |  |   | 61,535  |  |  |      | 3,190   |   |  |   | (4,190 | )
|                                                   |  |                          |         |  |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |        |  
|Income before other items and federal income taxes |  | $                        | 74,467  |  |                        | $ | 147,633 |      |  | $ | 77,522  |  |  | $    | (73,166 | ) |  | $ | 70,111 |  
|                                                   |  |                          |         |  |                        |   |         |      |  |   |         |  |  |      |         |   |  |   |        |  

Earnings decreased during 2014 compared to 2013 primarily due to lower realized investment gains. The decrease in realized
gains is attributable to lower gains on equity securities and less real estate sale activity. Earnings increased during 2013 compared to 2012 primarily due to increases in realized gains and net investment income. The increase in realized gains was
driven by sales of investment real estate properties as well as a reduction in other-than-temporary impairments related to investment securities.

The
Corporate and Other business segment recorded other-than-temporary impairments of $6.6 million, $4.6 million, and $22.5 million in 2014, 2013 and 2012, respectively, which are included in Realized investments gains, net.



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Investments

We manage our investment portfolio to optimize the rate of return commensurate with sound and prudent asset selection and to maintain a well-diversified
portfolio. Our investment operations are regulated primarily by the state insurance departments where we or our insurance subsidiaries are domiciled. Investment activities, including setting investment policies and defining acceptable risk levels,
are subject to oversight by our Board of Directors, which is assisted by our Finance Committee and Management Risk Committee.

Our insurance and annuity
products are primarily supported by investment-grade bonds, and to a lesser extent collateralized mortgage obligations and commercial mortgage loans. We purchase fixed maturity securities and designate them as either held-to-maturity or
available-for-sale considering our estimated future cash flow needs. We also monitor the composition of our fixed maturity securities classified as held-to-maturity and available-for-sale and adjust the mix within the portfolio as investments mature
or new investments are purchased.

We invest in commercial mortgage loans when the yield and credit risk compare favorably with fixed maturity securities.
Individual residential mortgage loans including sub-prime or Alt A mortgage loans have not been and are not expected to be part of our investment portfolio. We invest in real estate and equity securities based on a risk and reward analysis where we
believe there are opportunities for enhanced returns.

The following summarizes the carrying values of our invested assets (other than investments in
unconsolidated affiliates) by asset class (in thousands, except percentages):



|                                                        |  |                   |            |  |                   |  |       |        |  |   |            |  |  |  |       | 
|------------------------------------------------------- |  | ----------------- | ---------- |  | ----------------- |  | ----- | ------ |  | - | ---------- |  |  |  | ----- | 
|                                                        |  | December 31, 2014 |            |  | December 31, 2013 | 
|                                                        |  | Amount            |            |  | Percent           |  |       | Amount |  |   | Percent    | 
|Bonds held-to-maturity, at amortized cost               |  | $                 | 8,225,050  |  |                   |  | 42.0  |        |  | $ | 8,491,347  |  |  |  | 43.8  | 
|Bonds available-for-sale, at fair value                 |  |                   | 4,921,807  |  |                   |  | 25.2  |        |  |   | 4,599,673  |  |  |  | 23.7  | 
|Equity securities, at fair value                        |  |                   | 1,516,978  |  |                   |  | 7.8   |        |  |   | 1,410,608  |  |  |  | 7.3   | 
|Mortgage loans on real estate, net of allowance         |  |                   | 3,359,586  |  |                   |  | 17.2  |        |  |   | 3,299,242  |  |  |  | 17.0  | 
|Policy loans                                            |  |                   | 405,979    |  |                   |  | 2.1   |        |  |   | 397,407    |  |  |  | 2.0   | 
|Investment real estate, net of accumulated depreciation |  |                   | 479,062    |  |                   |  | 2.4   |        |  |   | 507,142    |  |  |  | 2.6   | 
|Short-term investments                                  |  |                   | 431,000    |  |                   |  | 2.2   |        |  |   | 495,386    |  |  |  | 2.6   | 
|Other invested assets                                   |  |                   | 220,255    |  |                   |  | 1.1   |        |  |   | 201,442    |  |  |  | 1.0   | 
|                                                        |  |                   |            |  |                   |  |       |        |  |   |            |  |  |  |       | 
|Total investments                                       |  | $                 | 19,559,717 |  |                   |  | 100.0 |        |  | $ | 19,402,247 |  |  |  | 100.0 | 
|                                                        |  |                   |            |  |                   |  |       |        |  |   |            |  |  |  |       | 

The increase in our total investments at December 31, 2014 as compared to 2013 was primarily a result of an increase in
bonds and the market value of equity securities, partially offset by decreases in short term investment.

Each component of our invested assets and its
related revenues are described further in the Notes to the Consolidated Financial Statements within Item 8, Financial Statements and Supplementary Data.

BondsWe allocate most of our fixed maturity securities to support our insurance business. At December 31, 2014, our fixed maturity
securities had an estimated fair value of $13.6 billion, which was $0.7 billion, or 5.1%, above amortized cost. At December 31, 2013, our fixed maturity securities had an estimated fair value of $13.4 billion, which was $0.5 billion, or 3.7%,
above amortized cost. Fixed maturity securities estimated fair value, due in one year or less, increased to $1.3 billion as of December 31, 2014 from $1.1 billion as of December 31, 2013, primarily as a result of maturities.



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##### Table of Contents

The following table identifies the total bonds by credit quality rating, using both Standard &
Poors and Moodys ratings (in thousands, except percentages):



|             |  |                   |            |  |                     |   |            |                |  |  |               |  |  |                     |            |  |                |   |            |  |  |  |       | 
|------------ |  | ----------------- | ---------- |  | ------------------- | - | ---------- | -------------- |  |  | ------------- |  |  | ------------------- | ---------- |  | -------------- | - | ---------- |  |  |  | ----- | 
|             |  | December 31, 2014 |            |  | December 31, 2013   |  
|             |  | AmortizedCost     |            |  | EstimatedFair Value |   |            | % of FairValue |  |  | AmortizedCost |  |  | EstimatedFair Value |            |  | % of FairValue |  
|AAA          |  | $                 | 637,613    |  |                     |   | 676,728    |                |  |  | 5.0           |  |  | $                   | 621,527    |  |                |   | 649,161    |  |  |  | 4.9   | 
|AA           |  |                   | 1,647,110  |  |                     |   | 1,733,484  |                |  |  | 12.8          |  |  |                     | 1,472,221  |  |                |   | 1,511,517  |  |  |  | 11.3  | 
|A            |  |                   | 5,060,934  |  |                     |   | 5,348,438  |                |  |  | 39.4          |  |  |                     | 5,260,435  |  |                |   | 5,466,136  |  |  |  | 40.7  | 
|BBB          |  |                   | 5,121,394  |  |                     |   | 5,363,342  |                |  |  | 39.5          |  |  |                     | 5,094,589  |  |                |   | 5,272,246  |  |  |  | 39.2  | 
|BB and below |  |                   | 452,715    |  |                     |   | 452,728    |                |  |  | 3.3           |  |  |                     | 498,966    |  |                |   | 523,681    |  |  |  | 3.9   | 
|             |  |                   |            |  |                     |   |            |                |  |  |               |  |  |                     |            |  |                |   |            |  |  |  |       | 
|Total        |  | $                 | 12,919,766 |  |                     | $ | 13,574,720 |                |  |  | 100.0         |  |  | $                   | 12,947,738 |  |                | $ | 13,422,741 |  |  |  | 100.0 | 
|             |  |                   |            |  |                     |   |            |                |  |  |               |  |  |                     |            |  |                |   |            |  |  |  |       | 

We expect the exposure to below investment grade securities to decrease as these bonds approach maturity. We do not own direct
investments in sovereign debt issued by Greece, Ireland, Italy, Portugal or Spain.

Mortgage LoansWe invest in commercial mortgage
loans that are diversified by property-type and geography to support our insurance business. Generally, mortgage loans are secured by first liens on income-producing real estate with a loan-to-value ratio of up to 75%. Mortgage loans
held-for-investment are carried at outstanding principal balances, adjusted for any unamortized premium or discount, deferred fees or expenses, and net of allowances. The weighted average coupon yield on the principal funded for mortgage loans was
4.9% and 5.2% at December 31, 2014 and 2013, respectively. It is likely that the weighted average yield on funded mortgage loans will decline as loans mature and new loans are originated with lower rates in the current interest rate
environment.

Equity SecuritiesOur equity portfolio is in companies publicly traded on national U.S. stock exchanges; the cost and
estimated fair value of the equity securities are as follows (in thousands):



|                  |  |      |         |  |                 |   |         |                  |  |   |            |   |  |                |           |  |  |  |       | 
|----------------- |  | ---- | ------- |  | --------------- | - | ------- | ---------------- |  | - | ---------- | - |  | -------------- | --------- |  |  |  | ----- | 
|                  |  | Cost |         |  | UnrealizedGains |   |         | UnrealizedLosses |  |   | Fair Value |   |  | % of FairValue |          
|December 31, 2014 |  |      |         |  |                 |   |         |                  |  |   |            |   |  |                |           |  |  |  |       | 
|Common stock      |  | $    | 719,651 |  |                 | $ | 774,650 |                  |  | $ | (7,176     | ) |  | $              | 1,487,125 |  |  |  | 98.0  | 
|Preferred stock   |  |      | 19,733  |  |                 |   | 10,121  |                  |  |   | (1         | ) |  |                | 29,853    |  |  |  | 2.0   | 
|                  |  |      |         |  |                 |   |         |                  |  |   |            |   |  |                |           |  |  |  |       | 
|Total             |  | $    | 739,384 |  |                 | $ | 784,771 |                  |  | $ | (7,177     | ) |  | $              | 1,516,978 |  |  |  | 100.0 | 
|                  |  |      |         |  |                 |   |         |                  |  |   |            |   |  |                |           |  |  |  |       | 
|December 31, 2013 |  |      |         |  |                 |   |         |                  |  |   |            |   |  |                |           |  |  |  |       | 
|Common stock      |  | $    | 717,390 |  |                 | $ | 653,967 |                  |  | $ | (2,362     | ) |  | $              | 1,368,995 |  |  |  | 97.0  | 
|Preferred stock   |  |      | 23,690  |  |                 |   | 18,301  |                  |  |   | (378       | ) |  |                | 41,613    |  |  |  | 3.0   | 
|                  |  |      |         |  |                 |   |         |                  |  |   |            |   |  |                |           |  |  |  |       | 
|Total             |  | $    | 741,080 |  |                 | $ | 672,268 |                  |  | $ | (2,740     | ) |  | $              | 1,410,608 |  |  |  | 100.0 | 
|                  |  |      |         |  |                 |   |         |                  |  |   |            |   |  |                |           |  |  |  |       | 

Investment Real EstateWe invest in commercial real estate where positive cash flows and/or appreciation in
value is expected. Real estate may be owned directly by our insurance companies or non-insurance affiliates or indirectly in joint ventures with real estate developers or investors we determine share our perspective regarding risk and return
relationships. The carrying value of real estate is stated at cost, less accumulated depreciation and valuation allowances, if any. Depreciation is provided over the estimated useful lives of the properties.

Short-Term InvestmentsShort-term investments are primarily commercial paper rated A2/P2 or better by Standard & Poors and
Moodys, respectively. The amount fluctuates depending on the available long-term investment opportunities and our liquidity needs, including mortgage investment-funding commitments.

Policy LoansFor certain life insurance products, policyholders may borrow funds using the policys cash value as collateral. The
maximum amount of the policy loan depends upon the policys surrender value and the number of years since policy origination. As of December 31, 2014, we had $406.0 million in policy loans with a loan to surrender value of 57.6%, and at
December 31, 2013, we had $397.4 million in policy loans with a loan to surrender value of 67.9%. Interest rates on policy loans primarily range from 3.0% to 12.0% per annum. Policy loans may be repaid at any time by the policyholder and
have priority to any claims on the policy. If the policyholder fails to repay the policy loan, funds are withdrawn from the policys benefits.



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Net Investment Income and Net Realized Gains (Losses)

Net investment income decreased $84.0 million during 2014, primarily from decreased interest rates on bonds and mortgage loans of $52.8 million, from decreased
option income of $31.2 million due to smaller gains on the S&P index and decreased other invested asset income of $3.9 million due to fewer joint venture dispositions. Net investment income increased $31.4 million during 2013, primarily due to
increases in option income of $64.4 million from S&P index gains, and increased income of $16.7 million from participating mortgage loans. The 2013 net investment income gains were partially offset by $49.0 million in lower yields on bonds
outstanding.

Interest income on mortgage loans is accrued on the principal amount of the loan at the contractual interest rate. Accretion of discounts is
recorded using the effective yield method. Interest income, accretion of discounts and prepayment fees are reported in net investment income. Interest is not accrued on loans generally more than 90 days past due or when the collection of interest is
not considered probable. Loans in foreclosure are placed on non-accrual status. Interest received on non-accrual status mortgage loans is included in net investment income in the period received.

Net realized gains decreased $76.1 million during 2014 compared to 2013 primarily as a result of very strong markets for the type and location of investment
real estate sold in 2013. Net realized gains increased $33.4 million during 2013 compared to 2012 primarily due to an increase in realized gains from sales of real estate. Other-than-temporary impairment on investment securities increased $2.1
million during 2014 compared to 2013 and decreased $17.9 million during 2013 compared to 2012 primarily due to the $12.7 million bond impairment during 2012.

Net Unrealized Gains and Losses

The net
unrealized gains on available-for-sale securities at December 31, 2014 and December 31, 2013 were $1.01 billion and $812.8 million, respectively. Unrealized gains or losses on available-for-sale securities are recognized as other
comprehensive income or loss which has no impact on earnings. The gross unrealized gains of available-for-sale securities increased $145.1 million to $1.03 billion during 2014, resulting from increases in the value of bonds and equity securities.
The gross unrealized losses of available-for-sale securities decreased to $24.9 million at December 31, 2014 from $71.6 million at December 31, 2013. The gross unrealized gains of held-to-maturity securities increased $25.0 million to
$476.8 million and gross unrealized losses decreased from $120.1 million in 2013 to $48.9 million in 2014. The decrease in gross unrealized losses of available-for-sale and held-to-maturity securities during 2014 is primarily attributable to
corporate debt securities and the impact changes in interest rates have on fixed income securities.

The fair value of our investment securities is
affected by various factors, including volatility of financial markets, changes in interest rates and fluctuations in credit spread. We have the ability and intent to hold those securities in unrealized loss positions until a market price recovery
or maturity. Further, it is unlikely that we will be required to sell them prior to recovery, and recovery is expected in a reasonable period of time.

Liquidity

Our liquidity requirements have been and are
expected to continue to be met by funds from operations, comprised of premiums received from our customers and investment income. The primary use of cash has been and is expected to continue to be payment of policyholder benefits and claims
incurred. Current and expected patterns of claim frequency and severity may change from period to period but continue to be within historical norms. Management considers our current liquidity position to be sufficient to meet anticipated demands
over the next twelve months. Our contractual obligations are not expected to have a significant negative impact to cash flow from operations.

Changes in
interest rates during 2014 and market expectations for potentially higher rates through 2015 will likely lead to increases in the volume of annuity contracts, which may be partially offset by increases in surrenders. Freezing our defined benefit
pension plans will lessen the impact of changes in interest rates on our contributions to these plans and future contributions to our defined benefit plans may be smaller than historical contributions. A portion of the contributions will be used for
the employer matching contributions to defined contribution retirement plans, which will provide employees with the potential to accumulate assets for retirement. There are no other known trends or uncertainties regarding product pricing, changes in
product lines or rising costs, which would have a significant impact to cash flows from operations. No unusually large capital expenditures are expected in the next 12-24 months. Additionally, we have paid dividends to stockholders for over 100
consecutive years and expect to continue this trend.



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To ensure we will be able to continue to pay future commitments, the funds received as premium payments and
deposits are invested in bonds and commercial mortgages. Funds are invested with the intent that income from the investments and proceeds from the maturities will meet our ongoing cash flow needs. We historically have not had to liquidate invested
assets in order to cover cash flow needs. We believe our portfolio of highly liquid available-for-sale investment securities including equity securities is sufficient to meet future liquidity needs as necessary.

Our cash and cash equivalents and short-term investment position was $640.5 million compared to $613.3 million at December 31, 2014 and 2013,
respectively. The slight increase relates to an increase in cash and cash equivalents.

A downgrade or a potential downgrade in our financial strength
ratings could result in a loss of business and could adversely affect our cash flow from operations. See Item 1A, Risk Factors, for additional details.

Further information regarding additional sources or uses of cash is described in Note 19, Commitments and Contingencies, of the Notes to the Consolidated
Financial Statements.

Capital Resources

Our capital
resources are summarized below (in thousands):



|                                                                                                              |  |              |           |  |      |   |           |      |  |   |           | 
|------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- |  | ---- | - | --------- | ---- |  | - | --------- | 
|                                                                                                              |  | December 31, |          
|                                                                                                              |  | 2014         |           |  | 2013 |   |           | 2012 | 
|American National stockholders equity, excluding accumulated other comprehensive income, net of tax (AOCI) |  | $            | 3,941,348 |  |      | $ | 3,776,862 |      |  | $ | 3,585,826 | 
|AOCI                                                                                                          |  |              | 490,782   |  |      |   | 413,712   |      |  |   | 242,010   | 
|                                                                                                              |  |              |           |  |      |   |           |      |  |   |           | 
|Total American National stockholders equity                                                                  |  | $            | 4,432,130 |  |      | $ | 4,190,574 |      |  | $ | 3,827,836 | 
|                                                                                                              |  |              |           |  |      |   |           |      |  |   |           | 

We have notes payable relating to borrowings by real estate joint ventures that we consolidate into our financial statements
that are not part of our capital resources. During 2012, one real estate joint venture, which the company consolidates, borrowed $100.0 million from a third party using the real estate owned by the joint venture as collateral. The debt service on
the ten year loan is intended to be met by the earnings and cash flow of the joint venture. The lenders for the notes payable have no recourse against us in the event of default by the joint ventures. Therefore, the liability we have for these notes
payable is limited to our investment in the respective ventures, which totaled $15.0 million and $12.8 million at December 31, 2014 and 2013, respectively.

The changes in our capital resources are summarized below (in thousands):



|                                        |  |              |         |   |      |   |         |  
|--------------------------------------- |  | ------------ | ------- | - | ---- | - | ------- | -
|                                        |  | December 31, |        
|                                        |  | 2014         |         |   | 2013 |  
|Net income attributable to ANICO        |  | $            | 247,193 |   |      | $ | 268,372 |  
|Increase in net unrealized gains        |  |              | 110,214 |   |      |   | 87,095  |  
|Defined benefit pension plan adjustment |  |              | (32,190 | ) |      |   | 85,119  |  
|Dividends to shareholders               |  |              | (82,805 | ) |      |   | (82,831 | )
|Other                                   |  |              | (856    | ) |      |   | 4,984   |  
|                                        |  |              |         |   |      |   |         |  
|Total                                   |  | $            | 241,556 |   |      | $ | 362,739 |  
|                                        |  |              |         |   |      |   |         |  

During 2014, the change in our capital resources decreased substantially compared to 2013 primarily due to lower earnings,
increases in unrealized gains from our equity investment portfolio partially offset by lower unrealized gains from the effect of interest rates on our fixed income investments and the defined benefit pension plan adjustment. The pension plan
adjustment is attributable to a lower liability measurement due to decreases in the discount rate and plan amendments.



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Statutory Capital and Surplus and Risk-based Capital

Statutory capital and surplus is the capital of our insurance companies reported in accordance with accounting practices prescribed or permitted by the
applicable state insurance departments. RBC is calculated using formulas applied to certain financial balances and activities that consider, among other things, risks related to the type and quality of the invested assets, insurance risks associated
with an insurers products and liabilities, interest rate risks and general business risks. Insurance companies that do not maintain capital and surplus at a level at least 200% of the authorized control level RBC are required to take certain
actions. At December 31, 2014 and December 31, 2013, American National Insurance Companys statutory capital and surplus was $2,879,154,000 and $2,667,858,000, respectively. Additionally, each of the insurance subsidiaries had
statutory capital and surplus at December 31, 2014 and December 31, 2013, substantially above its authorized control level RBC.

The achievement of
long-term growth will require growth in American National Insurance Companys and our insurance subsidiaries statutory capital and surplus. Our subsidiaries may obtain additional statutory capital through various sources, such as retained
statutory earnings or equity contributions from us. As of December 31, 2014, the levels of our and our insurance subsidiaries capital and surplus exceeded the minimum RBC requirements.

Contractual Obligations

The following summarizes our
contractual obligations as of December 31, 2014 (in thousands):



|                                                |  |                        |            |  |                 |   |           |           |  |   |           |  |  |                  |           |  |  |   |            | 
|----------------------------------------------- |  | ---------------------- | ---------- |  | --------------- | - | --------- | --------- |  | - | --------- |  |  | ---------------- | --------- |  |  | - | ---------- | 
|                                                |  | Payments Due by Period |           
|                                                |  | Total                  |            |  | Less than1 year |   |           | 1-3 years |  |   | 3-5 years |  |  | More than5 years |          
|Life insurance obligations(1)                   |  | $                      | 5,514,173  |  |                 | $ | 7,032     |           |  | $ | 161,440   |  |  | $                | 295,031   |  |  | $ | 5,050,670  | 
|Annuity obligations(1)                          |  |                        | 12,664,762 |  |                 |   | 1,339,955 |           |  |   | 3,295,368 |  |  |                  | 2,444,443 |  |  |   | 5,584,996  | 
|Property and casualty insurance obligations (2) |  |                        | 871,105    |  |                 |   | 397,139   |           |  |   | 316,631   |  |  |                  | 108,254   |  |  |   | 49,081     | 
|Accident and health insurance obligations (3)   |  |                        | 223,457    |  |                 |   | 160,444   |           |  |   | 27,458    |  |  |                  | 9,349     |  |  |   | 26,206     | 
|Purchase obligations                            |  |                        |            |  |                 |   |           |           |  |   |           |  |  |                  |           |  |  |   |            | 
|Commitments to purchase and fund investments    |  |                        | 54,175     |  |                 |   | 53,959    |           |  |   | 108       |  |  |                  | 108       |  |  |   |           | 
|Mortgage loan commitments                       |  |                        | 421,120    |  |                 |   | 269,751   |           |  |   | 151,369   |  |  |                  |          |  |  |   |           | 
|Operating leases                                |  |                        | 1,883      |  |                 |   | 539       |           |  |   | 829       |  |  |                  | 479       |  |  |   | 36         | 
|Defined benefit pension plans(4)                |  |                        | 117,948    |  |                 |   | 11,079    |           |  |   | 27,157    |  |  |                  | 18,351    |  |  |   | 61,361     | 
|Notes payable(5)                                |  |                        | 108,177    |  |                 |   |          |           |  |   | 9,375     |  |  |                  |          |  |  |   | 98,802     | 
|                                                |  |                        |            |  |                 |   |           |           |  |   |           |  |  |                  |           |  |  |   |            | 
|Total                                           |  | $                      | 19,976,800 |  |                 | $ | 2,239,898 |           |  | $ | 3,989,735 |  |  | $                | 2,876,015 |  |  | $ | 10,871,152 | 
|                                                |  |                        |            |  |                 |   |           |           |  |   |           |  |  |                  |           |  |  |   |            | 



|(1) | Life and annuity obligations include undiscounted estimated claim, benefit, surrender and commission obligations offset by expected future premiums and deposits on in-force insurance policies and annuity contracts. All
amounts are gross of any reinsurance recoverable. Estimated claim, benefit and surrender obligations are based on mortality and lapse assumptions 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. As a result, the estimated obligations for insurance liabilities included in the
table exceed the liabilities recorded in the liability for future policy benefits and policy and contract claims. Due to the significance of the assumptions used, the amounts presented could materially differ from actual payments. Separate account
obligations have not been included in the table 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 and are presented in the less than
one-year category. All estimated cash payments are net of estimated future premiums on policies currently in-force net of future policyholder dividends payable. The participating policyholder share obligation included in other policyholder funds and
the 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.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(2) | Includes case reserves for reported claims and reserves for IBNR with the timing of future payments based on our historical payment patterns. The timing of these payments may vary significantly from the pattern shown in
the preceding table. The ultimate losses may vary materially from the recorded amounts, which are our best estimates.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Reflects estimated future claim payments for claims incurred based on mortality and morbidity assumptions that are consistent with historical claims experience. These are not discounted with interest and will exceed the
liabilities recorded in reserves for future claim payment, which are discounted with interest. Due to the significance of the assumptions used, the amounts presented could materially differ from actual payments.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Estimated payments through continuing operations for benefit obligations of the non-qualified defined benefit pension plan. A liability has been established for the full amount of benefits accrued.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | The estimated payments due by period for notes payable reflect the contractual maturities of principal for amounts borrowed by real estate joint ventures and collateralized by real-estate owned by the respective entity.
American Nationals liability is limited to its investment in the respective joint venture. See Note 6, Investment Real Estate, of the Notes to the Consolidated Financial Statements for additional details.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Off-Balance Sheet Arrangements

We have off-balance sheet
arrangements relating to third-party marketing operation bank loans as discussed in Note 19, Commitments and Contingencies, of the Notes to the Consolidated Financial Statements. We could be exposed to a liability for these loans, which are
supported by the cash value of the underlying insurance contracts. The cash value of the life insurance policies is designed to always equal or exceed the balance of the loans. Accordingly, management does not foresee any loss related to these
arrangements.

Related-Party Transactions

We have
various agency, consulting and service arrangements with individuals and entities considered to be related parties. Each of these arrangements has been reviewed and approved by our Audit Committee, which retains final decision-making authority for
these transactions. The amounts involved, both individually and in the aggregate, with these arrangements are not material to any segment or to our overall operations. For additional details see Note 20, Related Party Transactions, of the Notes to
the Consolidated Financial Statements.



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|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

Our investments and some of our products are
subject to market risks associated with changes in interest rates, credit spreads, issuer defaults and equity prices or market indices. Adverse changes due to these market risks may occur due to changes in market liquidity or to changes in market
perceptions of credit worthiness or risk tolerance among other factors.

We have a generally conservative management profile and emphasize prudent risk
management throughout all our operations. Our enterprise risk management procedures help us to identify, prioritize and manage various risks including market risk. Under the leadership of our Board of Directors and Corporate Risk Officer, we have
instituted a framework based on the principles of enterprise risk management to provide reasonable assurance regarding the achievement of our strategic objectives. Related activities include:



| |  |  | Identifying evolving and potential risks and events that may affect us;
| | - |  | -----------------------------------------------------------------------



| |  |  | managing risks within our risk profile;
| | - |  | ---------------------------------------



| |  |  | escalation of risks and disclosure of any risk limit breaches along with the correction method if appropriate;
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | tracking actual risk levels against predetermined thresholds; and
| | - |  | -----------------------------------------------------------------



| |  |  | monitoring of capital adequacy.
| | - |  | -------------------------------

We expect ongoing enterprise risk management efforts will expand the
management tools used to ensure an efficient allocation of capital and enhance the measurement of possible diversification benefits across business segments and risk classes.

A key component of our risk management program is our ALM Committee. The ALM Committee monitors the level of our risk exposure in managing our assets and
liabilities to attain the desired risk-return profile for our diverse mix of assets and liabilities and their resultant cash flows. This process includes maintaining adequate reserves, monitoring claims and surrender experience, managing interest
rate spreads, evaluation of alternate investment strategies and protecting against disintermediation risk for life insurance and annuity products.

As a
part of the ALM process, we establish target asset portfolios for each major line of business, which represent the investment strategies used to profitably fund our liabilities within acceptable levels of risk. We monitor these strategies through
regular review of portfolio metrics, such as effective duration, yield curve sensitivity, convexity, liquidity, asset sector concentration and credit quality. In executing these ALM strategies, we regularly reevaluate the estimates used in
determining the approximate amounts and timing of payments to or on behalf of policyholders for insurance liabilities. Many of these estimates are inherently subjective and could impact our ability to achieve our ALM goals and objectives. Our
Finance Committee also reviews the risks associated with evaluation of alternate investment strategies and the specific investments made to support our lines of business and for consistency with our overall investment strategy.

Interest Rate Risk

Interest rate risk is the risk that
the value of our interest sensitive assets or liabilities will change with changes in market interest rates. The fair market value of fixed maturity securities is inversely related to changes in market interest rates. As interest rates fall, the
cash flow from the interest coupon and dividend streams of existing fixed rate investments become more valuable as market values of fixed maturity securities rise. As interest rates rise, the inverse occurs and the market value of fixed maturity
securities falls.



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The carrying values of our investment in fixed maturity securities, which comprise 67.2% of our portfolio, are
summarized below (in thousands):



|                                                 |  |              |           |  |         |  |      |        |  |   |           |  |  |  |      |  
|------------------------------------------------ |  | ------------ | --------- |  | ------- |  | ---- | ------ |  | - | --------- |  |  |  | ---- | -
|                                                 |  | December 31, |          
|                                                 |  | 2014         |           |  | 2013    | 
|                                                 |  | Amount       |           |  | Percent |  |      | Amount |  |   | Percent   | 
|Bonds held-to-maturity                           |  | $            | 8,225,050 |  |         |  | 62.6 | %      |  | $ | 8,491,347 |  |  |  | 64.9 | %
|Bonds available-for-sale                         |  |              | 4,921,807 |  |         |  | 37.4 |        |  |   | 4,599,673 |  |  |  | 35.1 |  
|Net unrealized gains on available-for-sale bonds |  |              | 227,091   |  |         |  | 4.6  |        |  |   | 143,282   |  |  |  | 3.1  |  

The increase in the unrealized gains on available-for-sale bonds was primarily the result of a decrease in unrealized losses
on corporate debt securities. Information regarding our unrealized gains or losses is disclosed in Note 4, Investments in Securities, of the Notes to the Consolidated Financial Statements. Our exposure to cash flow changes is discussed further in
the Liquidity and Capital Resources section of the MD&A.

Our mortgage loans also have interest rate risk. As of December 31, 2014, these
mortgage loans have fixed rates ranging from 4.3% to 10.0%. Most of the mortgage loan contracts require periodic payments of both principal and interest, and have amortization periods of three to 30 years. Many of our mortgage loans contain
prepayment restrictions or fees or both that reduce the risk of payment before maturity or compensate us for all or a portion of the investment income lost through early payment of the loan principal.

Rising interest rates can cause increases in policy loans associated with life insurance policies and surrenders relating to life insurance or annuities.
Policyholders may move their assets into new products offering higher rates if there were sudden or significant changes in interest rates. Our life insurance and annuity product designs reduce the financial impact of early surrenders through the use
of restriction on withdrawal, surrender charges and market value adjustment features. ALM guidelines, including duration targets and asset allocation tolerances, help ensure this risk is managed within the constraints of established profitability
criteria. Consistent monitoring of and periodic changes to our product pricing help us to better match the duration of assets and liabilities. We may have to sell assets earlier than anticipated to pay for these withdrawals.

Falling interest rates can have an adverse impact on our asset accumulation investment products, such as our fixed deferred annuity business. We aim to manage
interest margin, which is the difference between yields on investments supporting our liabilities and amounts credited to policyholder account balances. As investment portfolio yields decline, we can reduce crediting rates on products, to a limit
defined by contractual minimum guarantees. Due to these contractual minimums, declines in interest rates can ultimately impact the profitability of this business. As of December 31, 2014, of our $8.8 billion deferred annuities, $101.2 million
have guaranteed minimum rates greater than or equal to 3.5% with no guarantees greater than 4.5%.

The profitability of some of our products could be
adversely affected by declining or persistently low interest rates. Assuming investment yields remain at 2014 levels, the impact of investing in that lower interest rate environment could reduce profit by $2.0 million in 2015, $4.0 million in 2016
and $4.7 million in 2017. In projecting this impact, we modeled projected crediting rates, considering interest spread targets and crediting rate floors.

Interest Rate sensitivity analysis:The table below shows the estimated change in pre-tax market values of our investments in fixed maturity securities
caused by instantaneous, one time parallel shifts in the corresponding year-end U.S. Treasury yield curves of +/- 100bps and +/- 50bps (in thousands):



|                  |  |                                                                                                 |         |  |      |   |         |    |  |   |          |   |  |   |          |  
|----------------- |  | ----------------------------------------------------------------------------------------------- | ------- |  | ---- | - | ------- | -- |  | - | -------- | - |  | - | -------- | -
|                  |  | Increase/(Decrease) in Market Value Given an Interest rateIncrease/(Decrease) of X Basis Points |        
|                  |  | (100)                                                                                           |         |  | (50) |   |         | 50 |  |   | 100      |  
|December 31, 2014 |  | $                                                                                               | 660,798 |  |      | $ | 326,441 |    |  | $ | (317,224 | ) |  | $ | (626,963 | )
|December 31, 2013 |  | $                                                                                               | 650,684 |  |      | $ | 321,498 |    |  | $ | (311,440 | ) |  | $ | (614,049 | )



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These calculations hold all other variables influencing the values of fixed maturity securities constant and
would not fully reflect any prepayment to the portfolio, changes in corporate spreads or non-parallel changes in interest rates for different maturities or credit quality. Actual results may differ materially from these amounts due to the
assumptions and estimates used in calculating the scenarios.

Credit Risk

We are exposed to credit risk, which is the uncertainty that a counterparty will honor its obligation under the terms of a security, loan or contract including
reinsurance agreements. To help manage credit risk, we have an Investment Plan approved by our Board of Directors. This plan provides issuer and geographic concentration limits, investment size limits and other applicable parameters such as mortgage
loan-to-value guidelines. Investment activity, including the setting of investment policies and defining acceptable risk levels, is subject to review by our Finance Committee and Management Risk Committee.

We are also exposed to the risk created by changes in market prices and cash flows associated with fluctuations in the credit spread or the markets
perception of the relative risk and reward to hold fixed maturity securities of borrowers with different credit characteristics or credit ratings. Credit spread widening will reduce the fair value of our existing investment portfolio and will
increase investment income on new purchases. Credit spread tightening would have the opposite effect. Information regarding the credit quality of our fixed maturity securities can be found in the Investments section of the MD&A.

We are subject to credit risk associated with our reinsurance agreements. While we believe our reinsurers are reputable and have the financial strength to
meet their obligations to us, reinsurance does not eliminate our liability to pay our policyholders, and we remain primarily liable to our policyholders for the risks we insure. We regularly monitor the financial strength of our reinsurers and the
levels of concentration to individual reinsurers to verify they meet established thresholds.

Equity Risk

Equity risk is the risk that we will incur realized or unrealized losses due to changes in the overall equity investment markets or specific investments within
our portfolio. At December 31, 2014, we held approximately $1.5 billion of equity investments, which are subject to equity risk. Our exposure to the equity markets is managed by sector and individual security and is intended to track the
Standard & Poors 500 Index (S&P 500) with minor variations. We mitigate our equity risk by diversification of the investment portfolio.

We also have equity risk associated with the equity-indexed life and annuity products we market. We have entered into derivative transactions, primarily
over-the-counter equity call options, to hedge our exposure to equity-index changes.

Changes in Accounting Principles

Refer to Note 3, Recently Issued Accounting Pronouncements, of the Notes to the Consolidated Financial Statements for a discussion of recently issued
accounting pronouncements not yet adopted.



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|Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------

Index to Annual Consolidated Financial Statements



|                                                                                                                  |  |  |    | 
|----------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|Report of Independent Registered Public Accounting Firm                                                           |  |  | 60 | 
|Report of Independent Registered Public Accounting Firm on Internal Control                                       |  |  | 61 | 
|Consolidated Statements of Financial Position as of December 31, 2014 and 2013                                    |  |  | 62 | 
|Consolidated Statements of Operations for the years ended December 31, 2014, 2013, and 2012                       |  |  | 63 | 
|Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2013, and
2012             |  |  | 64 | 
|Consolidated Statements of Changes in Stockholders Equity for the years ended December 
31, 2014, 2013, and 2012 |  |  | 64 | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013, and 2012                       |  |  | 65 | 
|Notes to the Consolidated Financial Statements                                                                    |  |  | 66 | 



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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

American National
Insurance Company:

We have audited the accompanying consolidated statements of financial position of American National Insurance Company and subsidiaries
(the Company) as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income, changes in stockholders equity, and cash flows for each of the years in the three year period ended
December 31, 2014. In connection with our audits of the consolidated financial statements, we also have audited financial statement schedules I to V. These consolidated financial statements and financial statements schedules are the
responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
American National Insurance Company and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 2014, in conformity with
U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the Companys internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control  Integrated Framework (1992) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO), and our report dated February 27, 2015 expressed an unqualified opinion on the effectiveness of the Companys internal control over financial reporting.

/s/ KPMG LLP

Houston, Texas

February 27, 2015



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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

American National
Insurance Company:

We have audited American National Insurance Companys (the Company) internal control over financial reporting as of
December 31, 2014, based on criteria established in Internal Control  Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Companys management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Annual Report on Internal Control over Financial
Reporting. Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit.

We conducted
our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors
of the company; and (3) 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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, American National Insurance Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2014, based on criteria established in Internal Control  Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of
financial position of American National Insurance Company and subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income, changes in stockholders equity, and cash flows for
each of the years in the three-year period ended December 31, 2014, and the related financial statement schedules I-V, and our report dated February 27, 2015 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Houston, Texas

February 27, 2015



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AMERICAN NATIONAL INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands, except for share and per share data)



|                                                                                                                                       |  |              |            |   |      |   |            |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | - | ---- | - | ---------- | -
|                                                                                                                                       |  | December 31, |           
|                                                                                                                                       |  | 2014         |            |   | 2013 |  
|ASSETS                                                                                                                                 |  |              |            |   |      |   |            |  
|Fixed maturity, bonds held-to-maturity, at amortized cost (Fair Value $8,652,913 and $8,823,068)                                       |  | $            | 8,225,050  |   |      | $ | 8,491,347  |  
|Fixed maturity, bonds available-for-sale, at fair value (Amortized cost $4,694,716 and $4,456,391)                                     |  |              | 4,921,807  |   |      |   | 4,599,673  |  
|Equity securities, at fair value (Cost $739,384 and $741,080)                                                                          |  |              | 1,516,978  |   |      |   | 1,410,608  |  
|Mortgage loans on real estate, net of allowance                                                                                        |  |              | 3,359,586  |   |      |   | 3,299,242  |  
|Policy loans                                                                                                                           |  |              | 405,979    |   |      |   | 397,407    |  
|Investment real estate, net of accumulated depreciation of $193,611 and $211,575                                                       |  |              | 479,062    |   |      |   | 507,142    |  
|Short-term investments                                                                                                                 |  |              | 431,000    |   |      |   | 495,386    |  
|Other invested assets                                                                                                                  |  |              | 220,255    |   |      |   | 201,442    |  
|                                                                                                                                       |  |              |            |   |      |   |            |  
|Total investments                                                                                                                      |  |              | 19,559,717 |   |      |   | 19,402,247 |  
|                                                                                                                                       |  |              |            |   |      |   |            |  
|Cash and cash equivalents                                                                                                              |  |              | 209,455    |   |      |   | 117,946    |  
|Investments in unconsolidated affiliates                                                                                               |  |              | 319,283    |   |      |   | 341,012    |  
|Accrued investment income                                                                                                              |  |              | 185,943    |   |      |   | 194,830    |  
|Reinsurance recoverables                                                                                                               |  |              | 428,654    |   |      |   | 414,743    |  
|Prepaid reinsurance premiums                                                                                                           |  |              | 56,019     |   |      |   | 57,869     |  
|Premiums due and other receivables                                                                                                     |  |              | 280,587    |   |      |   | 279,929    |  
|Deferred policy acquisition costs                                                                                                      |  |              | 1,253,544  |   |      |   | 1,277,733  |  
|Property and equipment, net                                                                                                            |  |              | 110,794    |   |      |   | 107,070    |  
|Current tax receivable                                                                                                                 |  |              | 8,669      |   |      |   | 18,507     |  
|Other assets                                                                                                                           |  |              | 137,856    |   |      |   | 142,043    |  
|Separate account assets                                                                                                                |  |              | 1,001,515  |   |      |   | 970,954    |  
|                                                                                                                                       |  |              |            |   |      |   |            |  
|Total assets                                                                                                                           |  | $            | 23,552,036 |   |      | $ | 23,324,883 |  
|                                                                                                                                       |  |              |            |   |      |   |            |  
|LIABILITIES                                                                                                                            |  |              |            |   |      |   |            |  
|Future policy benefits                                                                                                                 |  |              |            |   |      |   |            |  
|Life                                                                                                                                   |  | $            | 2,770,232  |   |      | $ | 2,677,213  |  
|Annuity                                                                                                                                |  |              | 1,006,748  |   |      |   | 903,437    |  
|Accident and health                                                                                                                    |  |              | 58,364     |   |      |   | 71,941     |  
|Policyholders account balances                                                                                                        |  |              | 10,781,285 |   |      |   | 11,181,650 |  
|Policy and contract claims                                                                                                             |  |              | 1,297,708  |   |      |   | 1,297,646  |  
|Unearned premium reserve                                                                                                               |  |              | 755,051    |   |      |   | 739,878    |  
|Other policyholder funds                                                                                                               |  |              | 344,090    |   |      |   | 326,885    |  
|Liability for retirement benefits                                                                                                      |  |              | 195,712    |   |      |   | 160,853    |  
|Notes payable                                                                                                                          |  |              | 108,177    |   |      |   | 113,849    |  
|Deferred tax liabilities, net                                                                                                          |  |              | 290,112    |   |      |   | 220,428    |  
|Other liabilities                                                                                                                      |  |              | 498,528    |   |      |   | 456,818    |  
|Separate account liabilities                                                                                                           |  |              | 1,001,515  |   |      |   | 970,954    |  
|                                                                                                                                       |  |              |            |   |      |   |            |  
|Total liabilities                                                                                                                      |  |              | 19,107,522 |   |      |   | 19,121,552 |  
|                                                                                                                                       |  |              |            |   |      |   |            |  
|STOCKHOLDERS EQUITY                                                                                                                   |  |              |            |   |      |   |            |  
|Common stock, $1.00 par value, - Authorized 50,000,000, Issued 30,832,449 and 30,832,449, Outstanding 26,871,942 and 26,895,188
shares |  |              | 30,832     |   |      |   | 30,832     |  
|Additional paid-in capital                                                                                                             |  |              | 9,248      |   |      |   | 4,650      |  
|Accumulated other comprehensive income                                                                                                 |  |              | 490,782    |   |      |   | 413,712    |  
|Retained earnings                                                                                                                      |  |              | 4,003,209  |   |      |   | 3,838,821  |  
|Treasury stock, at cost                                                                                                                |  |              | (101,941   | ) |      |   | (97,441    | )
|                                                                                                                                       |  |              |            |   |      |   |            |  
|Total American National stockholders equity                                                                                           |  |              | 4,432,130  |   |      |   | 4,190,574  |  
|Noncontrolling interest                                                                                                                |  |              | 12,384     |   |      |   | 12,757     |  
|                                                                                                                                       |  |              |            |   |      |   |            |  
|Total stockholders equity                                                                                                             |  |              | 4,444,514  |   |      |   | 4,203,331  |  
|                                                                                                                                       |  |              |            |   |      |   |            |  
|Total liabilities and stockholders equity                                                                                             |  | $            | 23,552,036 |   |      | $ | 23,324,883 |  
|                                                                                                                                       |  |              |            |   |      |   |            |  

See accompanying notes to the consolidated financial statements.



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AMERICAN NATIONAL INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share data)



|                                                                                            |  |                          |            |   |      |   |            |      |  |   |            |  
|------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                            |  | Years ended December 31, |           
|                                                                                            |  | 2014                     |            |   | 2013 |   |            | 2012 | 
|PREMIUMS AND OTHER REVENUE                                                                  |  |                          |            |   |      |   |            |      |  |   |            |  
|Premiums                                                                                    |  |                          |            |   |      |   |            |      |  |   |            |  
|Life                                                                                        |  | $                        | 307,771    |   |      | $ | 293,173    |      |  | $ | 281,621    |  
|Annuity                                                                                     |  |                          | 190,357    |   |      |   | 155,162    |      |  |   | 116,393    |  
|Accident and health                                                                         |  |                          | 216,868    |   |      |   | 212,931    |      |  |   | 223,773    |  
|Property and casualty                                                                       |  |                          | 1,100,975  |   |      |   | 1,074,260  |      |  |   | 1,082,386  |  
|Other policy revenues                                                                       |  |                          | 224,254    |   |      |   | 210,224    |      |  |   | 198,401    |  
|Net investment income                                                                       |  |                          | 932,858    |   |      |   | 1,016,810  |      |  |   | 985,398    |  
|Net realized investment gains                                                               |  |                          | 48,062     |   |      |   | 124,144    |      |  |   | 90,725     |  
|Other-than-temporary impairments                                                            |  |                          | (6,640     | ) |      |   | (4,591     | )    |  |   | (22,517    | )
|Other income                                                                                |  |                          | 36,085     |   |      |   | 37,097     |      |  |   | 30,880     |  
|                                                                                            |  |                          |            |   |      |   |            |      |  |   |            |  
|Total premiums and other revenues                                                           |  |                          | 3,050,590  |   |      |   | 3,119,210  |      |  |   | 2,987,060  |  
|                                                                                            |  |                          |            |   |      |   |            |      |  |   |            |  
|BENEFITS, LOSSES AND EXPENSES                                                               |  |                          |            |   |      |   |            |      |  |   |            |  
|Policyholder benefits                                                                       |  |                          |            |   |      |   |            |      |  |   |            |  
|Life                                                                                        |  |                          | 351,271    |   |      |   | 345,566    |      |  |   | 340,003    |  
|Annuity                                                                                     |  |                          | 234,173    |   |      |   | 193,840    |      |  |   | 156,619    |  
|Claims incurred                                                                             |  |                          |            |   |      |   |            |      |  |   |            |  
|Accident and health                                                                         |  |                          | 144,799    |   |      |   | 139,762    |      |  |   | 155,825    |  
|Property and casualty                                                                       |  |                          | 745,540    |   |      |   | 746,636    |      |  |   | 793,281    |  
|Interest credited to policyholders account balances                                        |  |                          | 353,492    |   |      |   | 426,102    |      |  |   | 416,015    |  
|Commissions for acquiring and servicing policies                                            |  |                          | 397,126    |   |      |   | 371,948    |      |  |   | 364,911    |  
|Other operating expenses                                                                    |  |                          | 485,865    |   |      |   | 503,051    |      |  |   | 455,746    |  
|Change in deferred policy acquisition costs                                                 |  |                          | 9,578      |   |      |   | 29,835     |      |  |   | 32,915     |  
|                                                                                            |  |                          |            |   |      |   |            |      |  |   |            |  
|Total benefits, losses and expenses                                                         |  |                          | 2,721,844  |   |      |   | 2,756,740  |      |  |   | 2,715,315  |  
|                                                                                            |  |                          |            |   |      |   |            |      |  |   |            |  
|Income before federal income tax and equity in earnings/losses of unconsolidated affiliates |  |                          | 328,746    |   |      |   | 362,470    |      |  |   | 271,745    |  
|                                                                                            |  |                          |            |   |      |   |            |      |  |   |            |  
|Less: Provision for federal income taxes                                                    |  |                          |            |   |      |   |            |      |  |   |            |  
|Current                                                                                     |  |                          | 72,327     |   |      |   | 64,928     |      |  |   | 52,135     |  
|Deferred                                                                                    |  |                          | 19,704     |   |      |   | 34,713     |      |  |   | 23,447     |  
|                                                                                            |  |                          |            |   |      |   |            |      |  |   |            |  
|Total provision for federal income taxes                                                    |  |                          | 92,031     |   |      |   | 99,641     |      |  |   | 75,582     |  
|Equity in earnings (losses) of unconsolidated affiliates, net of tax                        |  |                          | 11,969     |   |      |   | 9,476      |      |  |   | (3,905     | )
|                                                                                            |  |                          |            |   |      |   |            |      |  |   |            |  
|Net income                                                                                  |  |                          | 248,684    |   |      |   | 272,305    |      |  |   | 192,258    |  
|Less:Net income attributable to noncontrolling interest, net of tax                         |  |                          | 1,491      |   |      |   | 3,933      |      |  |   | 1,217      |  
|                                                                                            |  |                          |            |   |      |   |            |      |  |   |            |  
|Net income attributable to American National                                                |  | $                        | 247,193    |   |      | $ | 268,372    |      |  | $ | 191,041    |  
|                                                                                            |  |                          |            |   |      |   |            |      |  |   |            |  
|Amounts available to American National common stockholders                                  |  |                          |            |   |      |   |            |      |  |   |            |  
|Earnings per share                                                                          |  |                          |            |   |      |   |            |      |  |   |            |  
|Basic                                                                                       |  | $                        | 9.22       |   |      | $ | 10.02      |      |  | $ | 7.15       |  
|Diluted                                                                                     |  |                          | 9.18       |   |      |   | 9.97       |      |  |   | 7.11       |  
|Cash dividends to common stockholders                                                       |  |                          | 3.08       |   |      |   | 3.08       |      |  |   | 3.08       |  
|Weighted average common shares outstanding                                                  |  |                          | 26,802,841 |   |      |   | 26,791,900 |      |  |   | 26,714,865 |  
|Weighted average common shares outstanding and dilutive potential common shares             |  |                          | 26,918,670 |   |      |   | 26,914,591 |      |  |   | 26,863,674 |  

See accompanying notes to the consolidated financial statements.



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AMERICAN NATIONAL INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)



|                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------ |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                   |  | Years ended December 31, |        
|                                                                   |  | 2014                     |         |   | 2013 |   |         | 2012 | 
|Net income                                                         |  | $                        | 248,684 |   |      | $ | 272,305 |      |  | $ | 192,258 |  
|                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Other comprehensive income, net of tax                             |  |                          |         |   |      |   |         |      |  |   |         |  
|Change in net unrealized gain on securities                        |  |                          | 110,214 |   |      |   | 87,095  |      |  |   | 96,005  |  
|Foreign currency transaction and translation adjustments           |  |                          | (954    | ) |      |   | (512    | )    |  |   | 120     |  
|Defined pension benefit plan adjustment                            |  |                          | (32,190 | ) |      |   | 85,119  |      |  |   | (13,518 | )
|                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Other comprehensive income, net of tax                             |  |                          | 77,070  |   |      |   | 171,702 |      |  |   | 82,607  |  
|                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Total comprehensive income                                         |  |                          | 325,754 |   |      |   | 444,007 |      |  |   | 274,865 |  
|                                                                   |  |                          |        
|Less: Comprehensive income attributable to noncontrolling interest |  |                          | 1,491   |   |      |   | 3,933   |      |  |   | 1,217   |  
|                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Total comprehensive income attributable to American National       |  | $                        | 324,263 |   |      | $ | 440,074 |      |  | $ | 273,648 |  
|                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  

AMERICAN NATIONAL INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

(In thousands, except for per share data)



|                                                            |  |                          |           |   |      |   |           |      |  |   |           |  
|----------------------------------------------------------- |  | ------------------------ | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                            |  | Years ended December 31, |          
|                                                            |  | 2014                     |           |   | 2013 |   |           | 2012 | 
|Common Stock                                                |  |                          |           |   |      |   |           |      |  |   |           |  
|Balance at beginning and end of the period                  |  | $                        | 30,832    |   |      | $ | 30,832    |      |  | $ | 30,832    |  
|                                                            |  |                          |           |   |      |   |           |      |  |   |           |  
|Additional Paid-In Capital                                  |  |                          |           |   |      |   |           |      |  |   |           |  
|Balance as of January 1,                                    |  |                          | 4,650     |   |      |   |          |      |  |   |          |  
|Reissuance of treasury shares                               |  |                          | 1,635     |   |      |   | 3,025     |      |  |   | (204      | )
|Income tax effect from restricted stock arrangement         |  |                          |          |   |      |   | 80        |      |  |   | (747      | )
|Modification of restricted stock                            |  |                          |          |   |      |   |          |      |  |   | (7,327    | )
|Amortization of restricted stock                            |  |                          | 2,963     |   |      |   | 1,545     |      |  |   | 10,170    |  
|Purchase of ownership interest from noncontrolling interest |  |                          |          |   |      |   |          |      |  |   | (1,892    | )
|                                                            |  |                          |           |   |      |   |           |      |  |   |           |  
|Balance at end of period                                    |  |                          | 9,248     |   |      |   | 4,650     |      |  |   |          |  
|                                                            |  |                          |           |   |      |   |           |      |  |   |           |  
|Accumulated Other Comprehensive Income                      |  |                          |           |   |      |   |           |      |  |   |           |  
|Balance as of January 1,                                    |  |                          | 413,712   |   |      |   | 242,010   |      |  |   | 159,403   |  
|Other comprehensive income                                  |  |                          | 77,070    |   |      |   | 171,702   |      |  |   | 82,607    |  
|                                                            |  |                          |           |   |      |   |           |      |  |   |           |  
|Balance at end of the period                                |  |                          | 490,782   |   |      |   | 413,712   |      |  |   | 242,010   |  
|                                                            |  |                          |           |   |      |   |           |      |  |   |           |  
|Retained Earnings                                           |  |                          |           |   |      |   |           |      |  |   |           |  
|Balance as of January 1,                                    |  |                          | 3,838,821 |   |      |   | 3,653,280 |      |  |   | 3,545,546 |  
|Net income attributable to American National                |  |                          | 247,193   |   |      |   | 268,372   |      |  |   | 191,041   |  
|Cash dividends to common stockholders                       |  |                          | (82,805   | ) |      |   | (82,831   | )    |  |   | (82,660   | )
|Modification of restricted stock                            |  |                          |          |   |      |   |          |      |  |   | (647      | )
|                                                            |  |                          |           |   |      |   |           |      |  |   |           |  
|Balance at end of the period                                |  |                          | 4,003,209 |   |      |   | 3,838,821 |      |  |   | 3,653,280 |  
|                                                            |  |                          |           |   |      |   |           |      |  |   |           |  
|Treasury Stock                                              |  |                          |           |   |      |   |           |      |  |   |           |  
|Balance as of January 1,                                    |  |                          | (97,441   | ) |      |   | (98,286   | )    |  |   | (98,490   | )
|Reissuance (purchases) of treasury shares                   |  |                          | (4,500    | ) |      |   | 845       |      |  |   | 204       |  
|                                                            |  |                          |           |   |      |   |           |      |  |   |           |  
|Balance at end of the period                                |  |                          | (101,941  | ) |      |   | (97,441   | )    |  |   | (98,286   | )
|                                                            |  |                          |           |   |      |   |           |      |  |   |           |  
|Noncontrolling Interest                                     |  |                          |           |   |      |   |           |      |  |   |           |  
|Balance as of January 1,                                    |  |                          | 12,757    |   |      |   | 11,491    |      |  |   | 12,947    |  
|Contributions                                               |  |                          | 981       |   |      |   | 483       |      |  |   | 16        |  
|Distributions                                               |  |                          | (2,845    | ) |      |   | (3,150    | )    |  |   | (2,988    | )
|Gain attributable to noncontrolling interest                |  |                          | 1,491     |   |      |   | 3,933     |      |  |   | 1,217     |  
|Purchase of ownership interest from noncontrolling interest |  |                          |          |   |      |   |          |      |  |   | 299       |  
|                                                            |  |                          |           |   |      |   |           |      |  |   |           |  
|Balance at end of the period                                |  |                          | 12,384    |   |      |   | 12,757    |      |  |   | 11,491    |  
|                                                            |  |                          |           |   |      |   |           |      |  |   |           |  
|Total Stockholders Equity                                  |  | $                        | 4,444,514 |   |      | $ | 4,203,331 |      |  | $ | 3,839,327 |  
|                                                            |  |                          |           |   |      |   |           |      |  |   |           |  

See accompanying notes to the consolidated financial statements.



64



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AMERICAN NATIONAL INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|-------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                 |  | Years ended December 31, |           
|                                                                                 |  | 2014                     |            |   | 2013 |   |            | 2012 | 
|OPERATING ACTIVITIES                                                             |  |                          |            |   |      |   |            |      |  |   |            |  
|Net income                                                                       |  | $                        | 248,684    |   |      | $ | 272,305    |      |  | $ | 192,258    |  
|Adjustments to reconcile net income to net cash provided by operating activities |  |                          |            |   |      |   |            |      |  |   |            |  
|Realized investment gains                                                        |  |                          | (48,062    | ) |      |   | (124,144   | )    |  |   | (90,725    | )
|Other-than-temporary impairments                                                 |  |                          | 6,640      |   |      |   | 4,591      |      |  |   | 22,517     |  
|Amortization (accretion) of premiums, discounts and loan origination fees        |  |                          | 7,294      |   |      |   | 6,052      |      |  |   | (1,528     | )
|Net capitalized interest on policy loans and mortgage loans                      |  |                          | (32,122    | ) |      |   | (28,060    | )    |  |   | (27,058    | )
|Depreciation                                                                     |  |                          | 38,414     |   |      |   | 31,176     |      |  |   | 36,573     |  
|Interest credited to policyholders account balances                             |  |                          | 353,492    |   |      |   | 426,102    |      |  |   | 416,015    |  
|Charges to policyholders account balances                                       |  |                          | (224,254   | ) |      |   | (210,224   | )    |  |   | (198,401   | )
|Deferred federal income tax expense                                              |  |                          | 19,704     |   |      |   | 34,713     |      |  |   | 23,447     |  
|Equity in (earnings) losses of unconsolidated affiliates                         |  |                          | (11,969    | ) |      |   | (9,476     | )    |  |   | 3,905      |  
|Distributions from equity method investments                                     |  |                          | 5,186      |   |      |   | 20,718     |      |  |   | 15,259     |  
|Changes in                                                                       |  |                          |            |   |      |   |            |      |  |   |            |  
|Policyholder liabilities                                                         |  |                          | 206,147    |   |      |   | 96,435     |      |  |   | 62,272     |  
|Deferred policy acquisition costs                                                |  |                          | 9,578      |   |      |   | 29,835     |      |  |   | 32,915     |  
|Reinsurance recoverables                                                         |  |                          | (13,911    | ) |      |   | 4,000      |      |  |   | (13,710    | )
|Premiums due and other receivables                                               |  |                          | (1,184     | ) |      |   | 3,517      |      |  |   | (5,008     | )
|Prepaid reinsurance premiums                                                     |  |                          | 1,850      |   |      |   | (1,043     | )    |  |   | 11,959     |  
|Accrued investment income                                                        |  |                          | 8,887      |   |      |   | 12,484     |      |  |   | 6,670      |  
|Current tax receivable/payable                                                   |  |                          | 9,838      |   |      |   | (3,929     | )    |  |   | 2,572      |  
|Liability for retirement benefits                                                |  |                          | (19,084    | ) |      |   | 8,763      |      |  |   | (13,082    | )
|Other, net                                                                       |  |                          | (8,343     | ) |      |   | (28,707    | )    |  |   | (109       | )
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                        |  |                          | 556,785    |   |      |   | 545,108    |      |  |   | 476,741    |  
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|INVESTING ACTIVITIES                                                             |  |                          |            |   |      |   |            |      |  |   |            |  
|Proceeds from sale/maturity/prepayment of                                        |  |                          |            |   |      |   |            |      |  |   |            |  
|Held-to-maturity securities                                                      |  |                          | 661,125    |   |      |   | 1,619,721  |      |  |   | 1,361,673  |  
|Available-for-sale securities                                                    |  |                          | 910,691    |   |      |   | 914,813    |      |  |   | 647,389    |  
|Investment real estate                                                           |  |                          | 63,030     |   |      |   | 84,371     |      |  |   |           |  
|Mortgage loans                                                                   |  |                          | 606,738    |   |      |   | 758,677    |      |  |   | 401,439    |  
|Policy loans                                                                     |  |                          | 55,542     |   |      |   | 58,460     |      |  |   | 57,779     |  
|Other invested assets                                                            |  |                          | 40,882     |   |      |   | 13,975     |      |  |   | 43,874     |  
|Disposals of property and equipment                                              |  |                          | 11,269     |   |      |   | 553        |      |  |   | 1,530      |  
|Distributions from unconsolidated affiliates                                     |  |                          | 41,779     |   |      |   | 25,055     |      |  |   | 51,507     |  
|Payment for the purchase/origination of                                          |  |                          |            |   |      |   |            |      |  |   |            |  
|Held-to-maturity securities                                                      |  |                          | (439,422   | ) |      |   | (1,087,447 | )    |  |   | (1,151,656 | )
|Available-for-sale securities                                                    |  |                          | (1,044,602 | ) |      |   | (1,057,004 | )    |  |   | (731,875   | )
|Investment real estate                                                           |  |                          | (51,699    | ) |      |   | (45,345    | )    |  |   | (30,450    | )
|Mortgage loans                                                                   |  |                          | (668,073   | ) |      |   | (914,740   | )    |  |   | (655,341   | )
|Policy loans                                                                     |  |                          | (29,093    | ) |      |   | (26,623    | )    |  |   | (38,067    | )
|Other invested assets                                                            |  |                          | (27,705    | ) |      |   | (18,443    | )    |  |   | (45,181    | )
|Additions to property and equipment                                              |  |                          | (31,951    | ) |      |   | (25,583    | )    |  |   | (30,838    | )
|Contributions to unconsolidated affiliates                                       |  |                          | (12,560    | ) |      |   | (122,512   | )    |  |   | (48,961    | )
|Change in short-term investments                                                 |  |                          | 64,386     |   |      |   | (182,300   | )    |  |   | 32,244     |  
|Other, net                                                                       |  |                          | 4,331      |   |      |   | (1,336     | )    |  |   | 10,156     |  
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|Net cash provided by (used in) investing activities                              |  |                          | 154,668    |   |      |   | (5,708     | )    |  |   | (124,778   | )
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|FINANCING ACTIVITIES                                                             |  |                          |            |   |      |   |            |      |  |   |            |  
|Policyholders account deposits                                                  |  |                          | 1,002,420  |   |      |   | 895,227    |      |  |   | 1,127,962  |  
|Policyholders account withdrawals                                               |  |                          | (1,532,023 | ) |      |   | (1,484,656 | )    |  |   | (1,297,889 | )
|Change in notes payable                                                          |  |                          | (5,672     | ) |      |   | (49,535    | )    |  |   | 104,490    |  
|Dividends to stockholders                                                        |  |                          | (82,805    | ) |      |   | (82,831    | )    |  |   | (82,660    | )
|Payments to noncontrolling interest                                              |  |                          | (1,864     | ) |      |   | (2,667     | )    |  |   | (2,972     | )
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|Net cash used in financing activities                                            |  |                          | (619,944   | ) |      |   | (724,462   | )    |  |   | (151,069   | )
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             |  |                          | 91,509     |   |      |   | (185,062   | )    |  |   | 200,894    |  
|Beginning of the period                                                          |  |                          | 117,946    |   |      |   | 303,008    |      |  |   | 102,114    |  
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|End of period                                                                    |  | $                        | 209,455    |   |      | $ | 117,946    |      |  | $ | 303,008    |  
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  

See accompanying notes to the consolidated financial statements.



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS

American National Insurance Company and its consolidated subsidiaries (collectively American National) offer a broad spectrum of
insurance products, including individual and group life insurance, annuities, health insurance, and property and casualty insurance. Business is conducted in 50 states, the District of Columbia, Puerto Rico, Guam and American Samoa.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

The consolidated financial statements and notes thereto have been prepared in conformity with U.S. generally accepted accounting principles
(GAAP) and are reported in U.S. currency. American National consolidates entities that are wholly-owned and those in which American National owns less than 100% but controls, as well as variable interest entities in which American
National is the primary beneficiary. Intercompany balances and transactions with consolidated entities have been eliminated. Investments in unconsolidated affiliates are accounted for using the equity method of accounting. Certain amounts in prior
years have been reclassified to conform to current year presentation.

The preparation of the consolidated financial statements in conformity with GAAP
requires the use of estimates and assumptions that affect the reported consolidated financial statement balances. Actual results could differ from those estimates.

Investments

Investment securities Bonds
classified as held-to-maturity are carried at amortized cost. Bonds classified as available-for-sale are carried at fair value. Equity securities are classified as available-for-sale and carried at fair value. After-tax net unrealized gains or
losses on available-for-sale securities are reflected in stockholders equity as a component of Accumulated Other Comprehensive Income (AOCI).

Mortgage loans on real estateare stated at unpaid principal balance, adjusted for any unamortized discount, deferred expenses, and allowances.
Accretion of discounts is recorded using the effective yield method. Interest income, prepayment fees and accretion of discounts and origination fees are reported in Net investment income in the consolidated statements of operations.
Interest income earned on impaired and non-impaired loans is accrued on the principal amount of the loan based on contractual interest rate. However, interest ceases to accrue for loans on which interest is more than 90 days past due, when the
collection of interest is not probable or when a loan is in foreclosure. Income on past due loans is reported on a cash basis. When a loan becomes current, it is placed back into accrual status. Cash receipts on impaired loans are recorded as a
reduction of principal, interest income, expense reimbursement or other manner in accordance with the loan agreement. Gains and losses from the sale of loans and changes in allowances are reported in Realized investment gains in the
consolidated statements of operations.

Each mortgage loan is evaluated quarterly and placed in a watchlist if events occur or circumstances exist that
could indicate that American National will be unable to collect all amounts due according to the contractual terms. Additionally, loans with estimated collateral value less than their balance and loans with characteristics indicative of higher than
normal credit risks are reviewed quarterly. All loans in the watchlist are analyzed individually for impairment. If a loan is concluded to be fully collectible, no loss allowance is recorded. Loans are considered impaired when, based upon current
information and events, it is probable that all amounts due under the contractual terms of the loan will be uncollectible. A specific allowance for loan losses is established for the excess carrying value of the loan over either: (i) the
present value of expected future cash flows discounted at the loans original effective interest rate, or (ii) the estimated fair value of the underlying collateral if the loan is in the process of foreclosure or otherwise collateral
dependent. Allowances are also established on groups of loans with similar characteristics, such as property types, if based on experience, it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. The allowance
is reviewed quarterly to determine if it is adequate, or if a recovery of the asset is assured and the allowance can be reduced.



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Management believes the recorded allowance is adequate and is the best estimate of probable loan losses,
including losses incurred at the reporting date but not identified by a specific loan. Managements quarterly evaluation of the allowance is based on historical loan loss experience, known and inherent risks in the portfolio, adverse situations
affecting the borrowers ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. Loans are charged off as uncollectible only when the loan is
forgiven by a legal agreement. Prior to charging off a loan, an allowance is recorded based on the estimated recoverable amount. Upon forgiveness, both the allowance and the loan balance are reduced which results in no further gain or loss.

Policy loansare carried at cost, which approximates fair value.

Investment real estate including related improvements, are stated at cost less accumulated depreciation. Depreciation is provided on a straight-line
basis over the estimated useful life of the asset (typically 15 to 50 years). Rental income is recognized on a straight-line basis over the term of the respective lease. American National classifies a property as held-for-sale if it commits to a
plan to sell a property within one year and actively markets the property in its current condition for a price that is reasonable in comparison to its estimated fair value. Real estate held-for-sale is stated at the lower of depreciated cost or
estimated fair value less expected disposition costs, and is not depreciated while it is classified as held-for-sale. American National periodically reviews its investment real estate for impairment and tests properties for recoverability whenever
events or changes in circumstances indicate the carrying amount of the asset may not be recoverable and the carrying value of the property exceeds its estimated fair value. Properties whose carrying values are greater than their undiscounted cash
flows are written down to their estimated fair value, with the impairment loss included in Realized investment gains (losses) in the consolidated statements of operations. Impairment losses are based upon the estimated fair value of real
estate, which is generally computed using the present value of expected future cash flows from the real estate discounted at a rate commensurate with the underlying risks as well as other appraisal methods. Real estate acquired upon foreclosure is
recorded at the lower of its cost, or its estimated fair value at the date of foreclosure.

Real Estate Joint Ventures and Other Limited Partnership
InterestsAmerican National uses the equity method of accounting for its investments in real estate joint ventures and other limited partnership interests in which it has more than a minor interest or influence over the investees
operations, but it does not have a controlling interest and is not the primary beneficiary. These investments are reported as Investments in unconsolidated affiliates in the consolidated statements of financial position. For certain
joint ventures, American National records its share of earnings using a lag methodology of one to three months for all instances where timely financial information is not available and the contractual right does not exist to receive such financial
information. In addition to the investees regular impairment analysis of its underlying investments, American National routinely evaluates its investments in those investees for impairments. American National considers financial and other
information provided by the investee, other known information and inherent risks in the underlying investments, as well as future capital commitments, in determining whether impairment has occurred. When an impairment is deemed to have occurred at
the joint venture level, American National recognizes its share within Equity in earnings (losses) of unconsolidated affiliates to record the investment at its fair value. When an impairment results from American Nationals separate
analysis, an adjustment is made through Net realized investment gains to record the investment at its fair value.

Short-term investmentscomprised of commercial paper, are carried at amortized cost, which approximates fair value.

Other invested assetscomprised primarily of tax
credit partnerships, CAPCO investments and mineral rights, are carried at cost, less allowance for depletion, where applicable. Other invested assets also include equity-indexed options which are carried at fair value. Impairments for other invested
assets are considered on an individual basis.

ImpairmentsAmerican National evaluates all fixed maturity securities with unrealized losses on
a quarterly basis to determine if the creditworthiness of any of those securities has deteriorated to a point where its carrying value will not be realized at maturity. For fixed maturity securities where management believes that the carrying value
will not be realized, an other-than-temporary impairment (OTTI) loss is recorded. At December 31, 2014, the unrealized losses on fixed maturity securities that were not other-than-temporarily impaired were the result of credit
spread widening. There were no delinquent coupon payments attributed to these securities at December 31, 2014.



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For all fixed maturity securities in unrealized loss positions which American National does not intend to sell
and for which it is not more-likely-than-not that it will be required to sell before its anticipated recovery, American National assesses whether the amortized cost basis of securities will be recovered by comparing the net present value of the
expected cash flows from those securities with its amortized cost basis. Management estimates the expected cash flows using historical experience information as well as market observable data, such as industry analyst reports and forecasts, sector
credit ratings and other data relevant to the collectibility of a security. The net present value of the expected cash flows from fixed maturity securities is calculated by discounting managements best estimate of expected cash flows from
those securities at the effective interest rate implicit in the fixed maturity security when acquired. If the net present value of the expected cash flows is less than the amortized cost of the fixed maturity securities, an OTTI has occurred in the
form of a credit loss. The credit loss is recognized in earnings in the amount of excess amortized cost over the net present value of the expected cash flows from the fixed maturity securities. If the fair value of the fixed maturity securities is
less than the net present value of its expected cash flows at the impairment measurement date, a non-credit loss exists which is recorded in other comprehensive income (loss) for the difference between the fair value and the net present value
of the expected cash flows.

After the recognition of an OTTI, fixed maturity securities are accounted for as if they had been purchased on the OTTI
measurement date, with a cost basis equal to their previous amortized cost less the related OTTI losses recognized in earnings. The new cost basis of an other-than-temporarily impaired security is not adjusted for subsequent increases in estimated
fair value. Should there be a significant increase in the estimate of cash flows expected to be collected from previously impaired fixed maturity securities, the increase would be accounted for prospectively by accreting it as interest income over
its remaining life.

American National evaluates all equity securities in unrealized loss positions on a quarterly basis and recognizes an OTTI loss on
those where a market price recovery is not expected in a reasonable period of time. All equity securities with unrealized losses are also evaluated for credit quality. OTTI is recognized if management believes the carrying value of securities will
not be realized, regardless of the length of time that they have had an unrealized loss.

Derivative instrumentsare purchased as hedges of a
recognized asset or liability, and are recorded on the consolidated statements of financial position at fair value. The change in fair value of derivative assets and liabilities is reported in the consolidated statements of operations as Net
investment income and Interest credited to policyholders account balances, respectively. American National does not apply hedge accounting treatment to its derivative instruments.

Cash and cash equivalents

Cash and cash equivalents
include cash on-hand and in banks, as well as amounts invested in money market funds and are reported as Cash and cash equivalents in the consolidated statements of financial position.

Property and equipment

These assets consist of buildings
occupied by American National, data processing equipment, and furniture and equipment, which are carried at cost, less accumulated depreciation. Depreciation is calculated using straight-line and accelerated methods over the estimated useful lives
of the assets (3 to 50 years).

Insurance specific assets and liabilities

Deferred policy acquisition costs (DAC) are capitalized costs related directly to the successful acquisition of new or renewal insurance
contracts. Significant costs are incurred to acquire insurance and annuity contracts, including commissions and certain underwriting, policy issuance and processing expenses.

DAC on traditional life and health products is amortized with interest over the anticipated premium-paying period of the related policies, in proportion to
the ratio of annual premium revenue expected to be received over the life of the policies. Expected premium revenue is estimated by using the same mortality, morbidity and withdrawal assumptions used in computing liabilities for future policy
benefits. DAC is reduced by a provision for possible inflation of maintenance and settlement expenses determined by means of grading interest rates.



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DAC on universal life, limited-pay and investment-type contracts is amortized as a level percentage of the
present value of anticipated gross profits from investment yields, mortality, and surrender charges. The effect of the realization of unrealized gains (losses) on DAC is recognized within AOCI in the consolidated statements of financial position as
of the reporting date. A change in interest rates could have a significant impact on DAC calculated for these contracts.

DAC associated with property and
casualty business is amortized over the coverage period of the related policies, in relation to premium revenue.

For short-duration and long-duration
contracts, DAC is grouped consistent with the manner in which insurance contracts are acquired, serviced and measured for profitability and is reviewed for recoverability based on the profitability of the underlying insurance contracts. Investment
income is not anticipated in assessing the recoverability of DAC for short-duration contracts.

Liabilities for future policy benefitsfor
traditional products have been provided on a net level premium method based on estimated investment yields, withdrawals, mortality, and other assumptions that were appropriate at the time policies were issued. Estimates used are based on historical
experience, adjusted for possible adverse deviation. These estimates are periodically reviewed and compared with actual experience. When it is determined that future expected experience differs significantly from existing assumptions, the estimates
are revised for current and future issues.

Policyholders account balancesrepresent the contract value that has accrued to the benefit of
the policyholders related to universal-life, limited-pay and investments-type contracts. These are generally equal to the accumulated deposits, plus interest credited, reduced by withdrawals, payouts, and accumulated policyholder assessments.

Reserves for claims and claim adjustment expenses (CAE) are established to provide for the estimated costs of paying claims. These reserves
include estimates for both case reserves and incurred but not reported (IBNR) claim reserves. Case reserves include the liability for reported but unpaid claims. IBNR reserves include a provision for potential development on case
reserves, losses on claims currently closed which may reopen in the future, as well as incurred but not reported claims. These reserves also include an estimate of the expense associated with settling claims, including legal and other fees and the
general expenses of administering the claims adjustment process.

ReinsuranceReinsurance recoverables are estimated amounts due to American
National from reinsurers related to paid and unpaid ceded claims and CAE and are presented net of a reserve for non-recoverability. Recoveries on our gross ultimate losses are generally determined by a review of individual large claims as well as by
estimating the ceded portion of IBNR using assumed distribution of loss by percentage retained. The most significant assumption used is the average size of the individual losses for those claims that have occurred but have not yet been reported. The
ultimate amount of the reinsurance ceded recoverable is unknown until all losses are settled.

Premiums, benefits, claims incurred and expenses

Traditional ordinary life and healthLife and accident and health premiums are recognized as revenue when due. Benefits and expenses are
associated with earned premiums to result in recognition of profits over the term of the insurance contracts.

AnnuitiesPremiums received on
limited-pay and supplemental annuity contracts involving a significant life contingency are recognized as revenue when due. Deferred annuity premiums are recorded as deposits rather than recognized as revenue. Revenues from deferred annuity
contracts are principally surrender charges and, in the case of variable annuities, administrative fees assessed to contractholders.

Universal life
and single premium whole liferevenues represent amounts assessed to policyholders. Included in revenue are mortality charges, surrender charges actually paid and earned policy service fees. Amounts included in expenses are benefits in excess of
account balances returned to policyholders.



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Property and casualtypremiums are recognized as revenue proportionately over the contract period, net of
reinsurance ceded. Claims incurred consist of actual claims and CAE paid and the change in reserves, net of reinsurance received and recoverable.

Participating insurance policies

Participating business
comprised approximately 7.4% of the life insurance in-force at December 31, 2014 and 4.9% of life premiums in 2014. Of the total participating business, 77.7% was written by Farm Family Life Insurance Company (Farm Family Life). For
the participating business excluding Farm Family Life, the allocation of dividends to participating policyowners is based upon a comparison of experienced rates of mortality, interest and expenses, as determined periodically for representative plans
of insurance, issue ages and policy durations, with the corresponding rates assumed in the calculation of premiums.

For the Farm Family Life
participating business, profits earned on participating business are reserved for the payment of dividends to policyholders, except for the stockholders share of profits on participating policies, which is limited to the greater of 10% of the
profit on participating business, or 50 cents per thousand dollars of the face amount of participating life insurance in-force. Participating policyholders interest includes the accumulated net income from participating policies reserved for
payment to such policyholders in the form of dividends (less net income allocated to stockholders as indicated above) as well as a pro rata portion of unrealized investment gains (losses), net of tax.

Federal income taxes

American National Insurance Company
and its eligible subsidiaries file a consolidated life and non-life federal income tax return. Certain subsidiaries that are consolidated for financial reporting are not eligible to be included in the consolidated federal income tax return;
accordingly, they file separate returns.

Deferred federal income tax assets and liabilities have been recognized to reflect the future tax consequences
attributable to differences between the financial statement amounts of assets and liabilities and their respective tax bases. Deferred taxes are measured using enacted tax rates expected to apply in the years in which those temporary differences are
expected to be recovered or settled.

American National recognizes tax benefits on uncertain tax positions if it is more-likely-than-not the
position based on its technical merits will be sustained by taxing authorities. American National recognizes the largest benefit that is greater than 50% likely of being ultimately realized upon settlement. Tax benefits not meeting the
more-likely-than-not threshold, if applicable, are included with Other liabilities in the consolidated statements of financial position.

Interest and penalties assessed, if applicable, are classified as Other operating expenses in the consolidated statements of operations.

Pension and postretirement benefit plans

Pension and
postretirement benefit obligations and costs are calculated using concepts in accordance with GAAP. The discount rate and the expected return on plan assets are important elements of expense and/or liability measurement, and these key assumptions
are evaluated annually. Other assumptions involve demographic factors such as retirement age, mortality, turnover and compensation.



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American National uses a discount rate to determine the present value of future benefits on the measurement date.
The guideline for setting this rate is a high-quality long-term corporate bond rate. To determine the expected long-term rate of return on plan assets, a building-block method is used. The expected rate of return on each asset is broken down into
three components: inflation, the real risk-free rate of return (i.e., the long-term estimate of future returns on default-free U.S. government securities), and the risk premium for each asset class (i.e., the expected return in excess of the
risk-free rate). Using this approach, the calculated return will fluctuate from year to year; however, it is American Nationals policy to hold this long-term assumption relatively constant.

Stock-based compensation

Stock Appreciation
RightsThe measurement of the stock appreciation rights (SARs) liability and compensation cost is based on the fair value of the grants and are remeasured each reporting period through the settlement date. The fair value of the
SARs is calculated using the Black-Scholes-Merton option-pricing model. The key assumptions used in the model include: the grant date and remeasurement date stock prices, expected life of the SARs and the risk-free rate of return. The
compensation liability related to the SAR award is included in Other liabilities in the consolidated statements of financial position.

Restricted StockThe measurement of the equity and compensation cost of restricted stock (RS) is based on the fair value of the
underlying stock at grant date. The compensation cost accrued is included in Additional paid-in capital in the consolidated statements of financial position.

Restricted Stock UnitsEffective December 31, 2012, American Nationals Board Compensation Committee modified the settlement provision
within the outstanding restricted stock units (RSU) providing the recipients of the awards the option to settle vested RSUs in either cash or American National common stock. The modification in the settlement provision changed the RSU
classification from an equity to a liability award. After the modification, the liability has been remeasured each reporting period through the vesting date and is adjusted for changes in fair value. The compensation liability related to the RSUs is
included in Other Liabilities in the consolidated statements of financial position.

Separate account assets and liabilities

Separate account assets and liabilities are funds intended to meet the investment objectives of contract holders who bear the investment risk. Investment
income and investment gains and losses from these separate funds accrue to the benefit of the contract holders. Separate accounts are established in conformity with insurance laws and are not chargeable with liabilities that arise from any other
business of American National. American National reports separately, as assets and liabilities, investments held in separate accounts and liabilities of the separate accounts if (i) such separate accounts are legally recognized;
(ii) assets supporting the contract liabilities are legally insulated from American Nationals general account liabilities; (iii) investments are directed by the contract holder; and (iv) all investment performance, net of
contract fees and assessments, is passed through to the contract holder. The assets of these accounts are carried at fair value. Deposits, net investment income and realized investment gains and losses for these accounts are excluded from revenues,
and related liability increases are excluded from benefits and expenses in the consolidated financial statements.

Litigation contingencies

American National reviews existing litigation matters and potential litigation items with counsel quarterly to determine if any adjustments to liabilities for
possible losses are necessary. Reserves for losses are established whenever they are probable and estimable based on the best estimate of the probable loss. If no one estimate within the range of possible losses is more probable than any other, a
reserve is recorded based on the lowest amount of the range.



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3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting StandardsThe Financial Accounting Standards Board (FASB) issued the following accounting
guidance relevant to American National:

Amended guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several
liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date. The guidance requires the entity to measure obligations resulting from joint and several liability arrangements as
the sum of the amount the reporting entity agreed with co-obligors to pay and any additional amounts it expects to pay on behalf of one or more co-obligors. The guidance became effective for American National on January 1, 2014 and did not have
a material effect on the Companys financial statements.

Future Adoption of New Accounting StandardsThe FASB issued the following
accounting guidance relevant to American National:

Guidance that allows investors to elect the use of proportional amortization method to account for
investments in qualified affordable housing projects, if certain conditions are met. The new guidance replaces the effective yield method and allows an investor to amortize the cost of its investment, in proportion to the tax credits and other tax
benefits it receives, to income tax expense. The guidance requires new disclosure for all investors for all investments in qualified affordable housing projects, regardless of the accounting method used for those investments. The guidance is
effective for reporting periods beginning after December 15, 2014 and is to be applied retrospectively. The impact of the adoption is not expected to be material to the Companys financial statements.

Guidance that will supersede most existing revenue recognition requirements in U.S. Generally Accepted Accounting Principles. Insurance contracts are excluded
from the scope of the new guidance. For those contracts which are impacted by the new guidance, the transaction price is attributed to the underlying performance obligations in the contract and revenue is recognized as the entity satisfies the
performance obligations and transfers control of a good or service to the customer. The guidance is effective for reporting periods beginning after December 15, 2016 and is to be applied retrospectively. Early adoption is not permitted. The
Company is in the process of evaluating the impact of adoption, which is not expected to be material to the Companys financial statements.



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4. INVESTMENTS IN SECURITIES

The cost or amortized cost and fair value of investments in securities are shown below (in thousands):



|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|--------------------------------------------------- |  | --------------------- | ---------- |  | -------------------- | - | --------- | ----------------------- |  | - | ---------- | - |  | - | ---------- | 
|                                                    |  | December 31, 2014     |           
|                                                    |  | Cost orAmortized Cost |            |  | GrossUnrealizedGains |   |           | GrossUnrealized(Losses) |  |   | Fair Value |  
|Fixed maturity securities, bonds held-to-maturity   |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|U.S. states and political subdivisions              |  |                       | 323,053    |  |                      |   | 26,800    |                         |  |   | (93        | ) |  |   | 349,760    | 
|Foreign governments                                 |  |                       | 29,130     |  |                      |   | 1,293     |                         |  |   |           |   |  |   | 30,423     | 
|Corporate debt securities                           |  |                       | 7,517,195  |  |                      |   | 424,845   |                         |  |   | (47,315    | ) |  |   | 7,894,725  | 
|Residential mortgage-backed securities              |  |                       | 336,853    |  |                      |   | 22,317    |                         |  |   | (1,535     | ) |  |   | 357,635    | 
|Collateralized debt securities                      |  |                       | 2,232      |  |                      |   | 238       |                         |  |   |           |   |  |   | 2,470      | 
|Other debt securities                               |  |                       | 16,587     |  |                      |   | 1,313     |                         |  |   |           |   |  |   | 17,900     | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Total bonds held-to-maturity                        |  |                       | 8,225,050  |  |                      |   | 476,806   |                         |  |   | (48,943    | ) |  |   | 8,652,913  | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Fixed maturity securities, bonds available-for-sale |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|U.S. treasury and government                        |  |                       | 22,415     |  |                      |   | 825       |                         |  |   | (7         | ) |  |   | 23,233     | 
|U.S. states and political subdivisions              |  |                       | 802,846    |  |                      |   | 36,151    |                         |  |   | (1,381     | ) |  |   | 837,616    | 
|Foreign governments                                 |  |                       | 5,000      |  |                      |   | 2,021     |                         |  |   |           |   |  |   | 7,021      | 
|Corporate debt securities                           |  |                       | 3,812,771  |  |                      |   | 203,048   |                         |  |   | (15,770    | ) |  |   | 4,000,049  | 
|Residential mortgage-backed securities              |  |                       | 40,988     |  |                      |   | 1,903     |                         |  |   | (492       | ) |  |   | 42,399     | 
|Collateralized debt securities                      |  |                       | 10,696     |  |                      |   | 863       |                         |  |   | (70        | ) |  |   | 11,489     | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Total bonds available-for-sale                      |  |                       | 4,694,716  |  |                      |   | 244,811   |                         |  |   | (17,720    | ) |  |   | 4,921,807  | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Equity securities                                   |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Common stock                                        |  |                       | 719,651    |  |                      |   | 774,650   |                         |  |   | (7,176     | ) |  |   | 1,487,125  | 
|Preferred stock                                     |  |                       | 19,733     |  |                      |   | 10,121    |                         |  |   | (1         | ) |  |   | 29,853     | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Total equity securities                             |  |                       | 739,384    |  |                      |   | 784,771   |                         |  |   | (7,177     | ) |  |   | 1,516,978  | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Total investments in securities                     |  | $                     | 13,659,150 |  |                      | $ | 1,506,388 |                         |  | $ | (73,840    | ) |  | $ | 15,091,698 | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 



|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|--------------------------------------------------- |  | --------------------- | ---------- |  | -------------------- | - | --------- | ----------------------- |  | - | ---------- | - |  | - | ---------- | 
|                                                    |  | December 31, 2013     |           
|                                                    |  | Cost orAmortized Cost |            |  | GrossUnrealizedGains |   |           | GrossUnrealized(Losses) |  |   | Fair Value |  
|Fixed maturity securities, bonds held-to-maturity   |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|U.S. treasury and government                        |  | $                     | 1,738      |  |                      | $ | 6         |                         |  | $ |           |   |  | $ | 1,744      | 
|U.S. states and political subdivisions              |  |                       | 346,240    |  |                      |   | 16,945    |                         |  |   | (529       | ) |  |   | 362,656    | 
|Foreign governments                                 |  |                       | 29,099     |  |                      |   | 2,505     |                         |  |   |           |   |  |   | 31,604     | 
|Corporate debt securities                           |  |                       | 7,700,559  |  |                      |   | 410,232   |                         |  |   | (116,900   | ) |  |   | 7,993,891  | 
|Residential mortgage-backed securities              |  |                       | 400,619    |  |                      |   | 20,711    |                         |  |   | (2,647     | ) |  |   | 418,683    | 
|Collateralized debt securities                      |  |                       | 2,366      |  |                      |   | 225       |                         |  |   |           |   |  |   | 2,591      | 
|Other debt securities                               |  |                       | 10,726     |  |                      |   | 1,173     |                         |  |   |           |   |  |   | 11,899     | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Total bonds held-to-maturity                        |  |                       | 8,491,347  |  |                      |   | 451,797   |                         |  |   | (120,076   | ) |  |   | 8,823,068  | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Fixed maturity securities, bonds available-for-sale |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|U.S. treasury and government                        |  |                       | 21,751     |  |                      |   | 725       |                         |  |   |           |   |  |   | 22,476     | 
|U.S. states and political subdivisions              |  |                       | 630,199    |  |                      |   | 22,118    |                         |  |   | (13,756    | ) |  |   | 638,561    | 
|Foreign governments                                 |  |                       | 5,000      |  |                      |   | 1,649     |                         |  |   |           |   |  |   | 6,649      | 
|Corporate debt securities                           |  |                       | 3,689,349  |  |                      |   | 171,717   |                         |  |   | (54,033    | ) |  |   | 3,807,033  | 
|Residential mortgage-backed securities              |  |                       | 61,135     |  |                      |   | 2,940     |                         |  |   | (1,068     | ) |  |   | 63,007     | 
|Commercial mortgage-backed securities               |  |                       | 18,223     |  |                      |   | 11,037    |                         |  |   |           |   |  |   | 29,260     | 
|Collateralized debt securities                      |  |                       | 13,884     |  |                      |   | 1,320     |                         |  |   | (18        | ) |  |   | 15,186     | 
|Other debt securities                               |  |                       | 16,850     |  |                      |   | 679       |                         |  |   | (28        | ) |  |   | 17,501     | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Total bonds available-for-sale                      |  |                       | 4,456,391  |  |                      |   | 212,185   |                         |  |   | (68,903    | ) |  |   | 4,599,673  | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Equity securities                                   |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Common stock                                        |  |                       | 717,390    |  |                      |   | 653,967   |                         |  |   | (2,362     | ) |  |   | 1,368,995  | 
|Preferred stock                                     |  |                       | 23,690     |  |                      |   | 18,301    |                         |  |   | (378       | ) |  |   | 41,613     | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Total equity securities                             |  |                       | 741,080    |  |                      |   | 672,268   |                         |  |   | (2,740     | ) |  |   | 1,410,608  | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 
|Total investments in securities                     |  | $                     | 13,688,818 |  |                      | $ | 1,336,250 |                         |  | $ | (191,719   | ) |  | $ | 14,833,349 | 
|                                                    |  |                       |            |  |                      |   |           |                         |  |   |            |   |  |   |            | 



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The amortized cost at fair value, by contractual maturity, of fixed maturity securities are shown below (in
thousands):



|                                       |  |                        |           |  |                          |   |           |                |  |   |            |  |  |   |           | 
|-------------------------------------- |  | ---------------------- | --------- |  | ------------------------ | - | --------- | -------------- |  | - | ---------- |  |  | - | --------- | 
|                                       |  | December 31, 2014      |          
|                                       |  | Bonds Held-to-Maturity |           |  | Bonds Available-for-Sale |  
|                                       |  | Amortized Cost         |           |  | Fair Value               |   |           | Amortized Cost |  |   | Fair Value | 
|Due in one year or less                |  | $                      | 954,054   |  |                          | $ | 972,392   |                |  | $ | 342,205    |  |  | $ | 350,721   | 
|Due after one year through five years  |  |                        | 1,941,258 |  |                          |   | 2,133,254 |                |  |   | 764,985    |  |  |   | 832,529   | 
|Due after five years through ten years |  |                        | 4,919,595 |  |                          |   | 5,111,697 |                |  |   | 3,065,589  |  |  |   | 3,196,339 | 
|Due after ten years                    |  |                        | 404,293   |  |                          |   | 430,582   |                |  |   | 516,937    |  |  |   | 537,231   | 
|Without single maturity date           |  |                        | 5,850     |  |                          |   | 4,988     |                |  |   | 5,000      |  |  |   | 4,987     | 
|                                       |  |                        |           |  |                          |   |           |                |  |   |            |  |  |   |           | 
|Total                                  |  | $                      | 8,225,050 |  |                          | $ | 8,652,913 |                |  | $ | 4,694,716  |  |  | $ | 4,921,807 | 
|                                       |  |                        |           |  |                          |   |           |                |  |   |            |  |  |   |           | 

Actual maturities differ from contractual maturities because borrowers may have the right to call or prepay obligations with
or without call or prepayment penalties. Residential and commercial mortgage-backed securities, which are not due at a single maturity, have been allocated to their respective categories based on the year of final contractual maturity.

Proceeds from sales of available-for-sale securities, with the related gross realized gains and losses, are shown below (in thousands):



|                                                     |  |                          |         |   |      |   |         |      |  |   |         |  
|---------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                     |  | Years ended December 31, |        
|                                                     |  | 2014                     |         |   | 2013 |   |         | 2012 | 
|Proceeds from sales of available-for-sale securities |  | $                        | 184,918 |   |      | $ | 228,159 |      |  | $ | 221,686 |  
|Gross realized gains                                 |  |                          | 38,301  |   |      |   | 43,263  |      |  |   | 52,998  |  
|Gross realized losses                                |  |                          | (3,635  | ) |      |   | (3,413  | )    |  |   | (2,009  | )

All gains and losses for securities sold throughout the year were determined using specific identification of the securities
sold. During 2014 and 2013, bonds with a carrying value of $44,781,000 and $13,492,000, respectively, were transferred from held-to-maturity to available-for-sale after a significant deterioration in the issuers creditworthiness became
evident. An unrealized gain of $1,301,000 and loss of $236,000 were established at the time of the transfers in 2014 and 2013, respectively following the transfers at fair value.

In accordance with various regulations, American National had bonds on deposit with regulating authorities with a carrying value of $51,767,000 and
$50,471,000 at December 31, 2014 and 2013, respectively. In addition, American National has pledged bonds in connection with agreements and transactions, such as financing and reinsurance agreements. The carrying value of bonds pledged was
$65,331,000 and $68,125,000 at December 31, 2014 and 2013, respectively.



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Change in net unrealized gains (losses) on securities

The components of the change in net unrealized gains (losses) on securities are shown below (in thousands):



|                                                                      |  |                          |         |   |      |   |          |      |  |   |         |  
|--------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | -------- | ---- |  | - | ------- | -
|                                                                      |  | Years ended December 31, |        
|                                                                      |  | 2014                     |         |   | 2013 |   |          | 2012 | 
|Bonds available-for-sale                                              |  | $                        | 83,809  |   |      | $ | (205,827 | )    |  | $ | 103,112 |  
|Equity securities                                                     |  |                          | 108,066 |   |      |   | 282,668  |      |  |   | 91,459  |  
|                                                                      |  |                          |         |   |      |   |          |      |  |   |         |  
|Change in net unrealized gains (losses) on securities during the year |  |                          | 191,875 |   |      |   | 76,841   |      |  |   | 194,571 |  
|Adjustments for                                                       |  |                          |         |   |      |   |          |      |  |   |         |  
|Deferred policy acquisition costs                                     |  |                          | (14,611 | ) |      |   | 59,893   |      |  |   | (40,103 | )
|Participating policyholders interest                                 |  |                          | (9,046  | ) |      |   | (2,300   | )    |  |   | (6,772  | )
|Deferred federal income tax benefit (expense)                         |  |                          | (58,004 | ) |      |   | (47,339  | )    |  |   | (51,691 | )
|                                                                      |  |                          |         |   |      |   |          |      |  |   |         |  
|Change in net unrealized gains (losses) on securities, net of tax     |  | $                        | 110,214 |   |      | $ | 87,095   |      |  | $ | 96,005  |  
|                                                                      |  |                          |         |   |      |   |          |      |  |   |         |  

The gross unrealized losses and fair value of the investment securities, aggregated by investment category and length of time
that individual securities have been in a continuous unrealized loss position, are shown below (in thousands):



|                                                    |  |                     |         |   |                   |   |           |                    |  |   |           |   |  |                    |           |  |           |   |         |   |  |   |           | 
|--------------------------------------------------- |  | ------------------- | ------- | - | ----------------- | - | --------- | ------------------ |  | - | --------- | - |  | ------------------ | --------- |  | --------- | - | ------- | - |  | - | --------- | 
|                                                    |  | December 31, 2014   |        
|                                                    |  | Less than 12 months |         |   | 12 Months or more |   |           | Total              | 
|                                                    |  | Unrealized(Losses)  |         |   | FairValue         |   |           | Unrealized(Losses) |  |   | FairValue |   |  | Unrealized(Losses) |           |  | FairValue |  
|Fixed maturity securities, bonds held-to-maturity   |  |                     |         |  
|U.S. states and political subdivisions              |  | $                   | (37     | ) |                   | $ | 3,388     |                    |  | $ | (56       | ) |  | $                  | 2,465     |  |           | $ | (93     | ) |  | $ | 5,853     | 
|Corporate debt securities                           |  |                     | (20,575 | ) |                   |   | 523,766   |                    |  |   | (26,740   | ) |  |                    | 662,362   |  |           |   | (47,315 | ) |  |   | 1,186,128 | 
|Residential mortgage-backed securities              |  |                     | (232    | ) |                   |   | 12,186    |                    |  |   | (1,303    | ) |  |                    | 31,163    |  |           |   | (1,535  | ) |  |   | 43,349    | 
|                                                    |  |                     |         |   |                   |   |           |                    |  |   |           |   |  |                    |           |  |           |   |         |   |  |   |           | 
|Total bonds held-to-maturity                        |  |                     | (20,844 | ) |                   |   | 539,340   |                    |  |   | (28,099   | ) |  |                    | 695,990   |  |           |   | (48,943 | ) |  |   | 1,235,330 | 
|                                                    |  |                     |         |   |                   |   |           |                    |  |   |           |   |  |                    |           |  |           |   |         |   |  |   |           | 
|Fixed maturity securities, bonds available-for-sale |  |                     |         |   |                   |   |           |                    |  |   |           |   |  |                    |           |  |           |   |         |   |  |   |           | 
|U.S. treasury and government                        |  |                     | (7      | ) |                   |   | 14,552    |                    |  |   |          |   |  |                    |          |  |           |   | (7      | ) |  |   | 14,552    | 
|U.S. states and political subdivisions              |  |                     | (166    | ) |                   |   | 27,719    |                    |  |   | (1,215    | ) |  |                    | 78,851    |  |           |   | (1,381  | ) |  |   | 106,570   | 
|Corporate debt securities                           |  |                     | (8,852  | ) |                   |   | 384,451   |                    |  |   | (6,918    | ) |  |                    | 288,808   |  |           |   | (15,770 | ) |  |   | 673,259   | 
|Residential mortgage-backed securities              |  |                     | (170    | ) |                   |   | 9,386     |                    |  |   | (322      | ) |  |                    | 14,042    |  |           |   | (492    | ) |  |   | 23,428    | 
|Collateralized debt securities                      |  |                     | (63     | ) |                   |   | 2,033     |                    |  |   | (7        | ) |  |                    | 339       |  |           |   | (70     | ) |  |   | 2,372     | 
|                                                    |  |                     |         |   |                   |   |           |                    |  |   |           |   |  |                    |           |  |           |   |         |   |  |   |           | 
|Total bonds available-for-sale                      |  |                     | (9,258  | ) |                   |   | 438,141   |                    |  |   | (8,462    | ) |  |                    | 382,040   |  |           |   | (17,720 | ) |  |   | 820,181   | 
|                                                    |  |                     |         |   |                   |   |           |                    |  |   |           |   |  |                    |           |  |           |   |         |   |  |   |           | 
|Equity securities                                   |  |                     |         |   |                   |   |           |                    |  |   |           |   |  |                    |           |  |           |   |         |   |  |   |           | 
|Common stock                                        |  |                     | (7,176  | ) |                   |   | 43,907    |                    |  |   |          |   |  |                    |          |  |           |   | (7,176  | ) |  |   | 43,907    | 
|Preferred stock                                     |  |                     | (1      | ) |                   |   |          |                    |  |   |          |   |  |                    |          |  |           |   | (1      | ) |  |   |          | 
|                                                    |  |                     |         |   |                   |   |           |                    |  |   |           |   |  |                    |           |  |           |   |         |   |  |   |           | 
|Total equity securities                             |  |                     | (7,177  | ) |                   |   | 43,907    |                    |  |   |          |   |  |                    |          |  |           |   | (7,177  | ) |  |   | 43,907    | 
|                                                    |  |                     |         |   |                   |   |           |                    |  |   |           |   |  |                    |           |  |           |   |         |   |  |   |           | 
|Total                                               |  | $                   | (37,279 | ) |                   | $ | 1,021,388 |                    |  | $ | (36,561   | ) |  | $                  | 1,078,030 |  |           | $ | (73,840 | ) |  | $ | 2,099,418 | 
|                                                    |  |                     |         |   |                   |   |           |                    |  |   |           |   |  |                    |           |  |           |   |         |   |  |   |           | 



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|                                                    |  |                     |          |   |                   |   |           |                    |  |   |           |   |  |                    |         |  |           |   |          |   |  |   |           | 
|--------------------------------------------------- |  | ------------------- | -------- | - | ----------------- | - | --------- | ------------------ |  | - | --------- | - |  | ------------------ | ------- |  | --------- | - | -------- | - |  | - | --------- | 
|                                                    |  | December 31, 2013   |         
|                                                    |  | Less than 12 months |          |   | 12 Months or more |   |           | Total              | 
|                                                    |  | Unrealized(Losses)  |          |   | FairValue         |   |           | Unrealized(Losses) |  |   | FairValue |   |  | Unrealized(Losses) |         |  | FairValue |  
|Fixed maturity securities, bonds held-to-maturity   |  |                     |          |  
|U.S. states and political subdivisions              |  | $                   | (529     | ) |                   | $ | 22,430    |                    |  | $ |          |   |  | $                  |        |  |           | $ | (529     | ) |  | $ | 22,430    | 
|Corporate debt securities                           |  |                     | (104,308 | ) |                   |   | 1,916,758 |                    |  |   | (12,592   | ) |  |                    | 109,603 |  |           |   | (116,900 | ) |  |   | 2,026,361 | 
|Residential mortgage-backed securities              |  |                     | (1,718   | ) |                   |   | 31,715    |                    |  |   | (929      | ) |  |                    | 13,514  |  |           |   | (2,647   | ) |  |   | 45,229    | 
|                                                    |  |                     |          |   |                   |   |           |                    |  |   |           |   |  |                    |         |  |           |   |          |   |  |   |           | 
|Total bonds held-to-maturity                        |  |                     | (106,555 | ) |                   |   | 1,970,903 |                    |  |   | (13,521   | ) |  |                    | 123,117 |  |           |   | (120,076 | ) |  |   | 2,094,020 | 
|                                                    |  |                     |          |   |                   |   |           |                    |  |   |           |   |  |                    |         |  |           |   |          |   |  |   |           | 
|Fixed maturity securities, bonds available-for-sale |  |                     |          |   |                   |   |           |                    |  |   |           |   |  |                    |         |  |           |   |          |   |  |   |           | 
|U.S. treasury and government                        |  |                     |         |   |                   |   | 725       |                    |  |   |          |   |  |                    |        |  |           |   |         |   |  |   | 725       | 
|U.S. states and political subdivisions              |  |                     | (13,271  | ) |                   |   | 168,093   |                    |  |   | (485      | ) |  |                    | 2,905   |  |           |   | (13,756  | ) |  |   | 170,998   | 
|Corporate debt securities                           |  |                     | (49,198  | ) |                   |   | 1,083,677 |                    |  |   | (4,835    | ) |  |                    | 92,004  |  |           |   | (54,033  | ) |  |   | 1,175,681 | 
|Residential mortgage-backed securities              |  |                     | (978     | ) |                   |   | 16,835    |                    |  |   | (90       | ) |  |                    | 1,872   |  |           |   | (1,068   | ) |  |   | 18,707    | 
|Collateralized debt securities                      |  |                     | (3       | ) |                   |   | 205       |                    |  |   | (15       | ) |  |                    | 587     |  |           |   | (18      | ) |  |   | 792       | 
|Other debt securities                               |  |                     | (28      | ) |                   |   | 10,027    |                    |  |   |          |   |  |                    |        |  |           |   | (28      | ) |  |   | 10,027    | 
|                                                    |  |                     |          |   |                   |   |           |                    |  |   |           |   |  |                    |         |  |           |   |          |   |  |   |           | 
|Total bonds available-for-sale                      |  |                     | (63,478  | ) |                   |   | 1,279,562 |                    |  |   | (5,425    | ) |  |                    | 97,368  |  |           |   | (68,903  | ) |  |   | 1,376,930 | 
|                                                    |  |                     |          |   |                   |   |           |                    |  |   |           |   |  |                    |         |  |           |   |          |   |  |   |           | 
|Equity securities                                   |  |                     |          |   |                   |   |           |                    |  |   |           |   |  |                    |         |  |           |   |          |   |  |   |           | 
|Common stock                                        |  |                     | (2,362   | ) |                   |   | 29,978    |                    |  |   |          |   |  |                    |        |  |           |   | (2,362   | ) |  |   | 29,978    | 
|Preferred stock                                     |  |                     | (378     | ) |                   |   | 6,123     |                    |  |   |          |   |  |                    |        |  |           |   | (378     | ) |  |   | 6,123     | 
|                                                    |  |                     |          |   |                   |   |           |                    |  |   |           |   |  |                    |         |  |           |   |          |   |  |   |           | 
|Total equity securities                             |  |                     | (2,740   | ) |                   |   | 36,101    |                    |  |   |          |   |  |                    |        |  |           |   | (2,740   | ) |  |   | 36,101    | 
|                                                    |  |                     |          |   |                   |   |           |                    |  |   |           |   |  |                    |         |  |           |   |          |   |  |   |           | 
|Total                                               |  | $                   | (172,773 | ) |                   | $ | 3,286,566 |                    |  | $ | (18,946   | ) |  | $                  | 220,485 |  |           | $ | (191,719 | ) |  | $ | 3,507,051 | 
|                                                    |  |                     |          |   |                   |   |           |                    |  |   |           |   |  |                    |         |  |           |   |          |   |  |   |           | 

As of December 31, 2014, the securities with unrealized losses were not deemed to be other-than-temporarily impaired,
including those with the duration of the unrealized losses exceeding one year. American National has the ability and intent to hold those securities until a market price recovery or maturity. Further, it is not more-likely-than-not that American
National will be required to sell them prior to recovery, and recovery is expected in a reasonable period of time. It is possible an issuers financial circumstances may be different in the future, which may lead to a different impairment
conclusion in future periods.

Credit Risk Management

Bonds distributed by credit quality rating, using both S&P and Moodys ratings, are shown below:



|             |  |              |       |   |      |  |       |  
|------------ |  | ------------ | ----- | - | ---- |  | ----- | -
|             |  | December 31, |      
|             |  | 2014         |       |   | 2013 | 
|AAA          |  |              | 5.0   | % |      |  | 4.9   | %
|AA           |  |              | 12.8  |   |      |  | 11.3  |  
|A            |  |              | 39.4  |   |      |  | 40.7  |  
|BBB          |  |              | 39.5  |   |      |  | 39.2  |  
|BB and below |  |              | 3.3   |   |      |  | 3.9   |  
|             |  |              |       |   |      |  |       |  
|Total        |  |              | 100.0 | % |      |  | 100.0 | %
|             |  |              |       |   |      |  |       |  

Equity securities by market sector distribution are shown below:



|                       |  |              |       |   |      |  |       |  
|---------------------- |  | ------------ | ----- | - | ---- |  | ----- | -
|                       |  | December 31, |      
|                       |  | 2014         |       |   | 2013 | 
|Consumer goods         |  |              | 20.4  | % |      |  | 19.8  | %
|Energy and utilities   |  |              | 13.3  |   |      |  | 15.0  |  
|Financials             |  |              | 19.1  |   |      |  | 19.3  |  
|Healthcare             |  |              | 14.0  |   |      |  | 12.7  |  
|Industrials            |  |              | 8.4   |   |      |  | 9.0   |  
|Information technology |  |              | 16.2  |   |      |  | 15.7  |  
|Other                  |  |              | 8.6   |   |      |  | 8.5   |  
|                       |  |              |       |   |      |  |       |  
|Total                  |  |              | 100.0 | % |      |  | 100.0 | %
|                       |  |              |       |   |      |  |       |  



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5. MORTGAGE LOANS

Generally, commercial mortgage loans are secured by first liens on income-producing real estate. American National attempts to maintain a
diversified portfolio by considering the property-type and location of the underlying collateral. Mortgage loans by property-type and geographic distribution are as follows:



|                   |  |              |       |   |      |  |       |  
|------------------ |  | ------------ | ----- | - | ---- |  | ----- | -
|                   |  | December 31, |      
|                   |  | 2014         |       |   | 2013 | 
|Hotel and motel    |  |              | 10.8  | % |      |  | 10.0  | %
|Industrial         |  |              | 20.9  |   |      |  | 24.9  |  
|Office             |  |              | 36.1  |   |      |  | 34.0  |  
|Retail             |  |              | 18.1  |   |      |  | 19.6  |  
|Other              |  |              | 14.1  |   |      |  | 11.5  |  
|                   |  |              |       |   |      |  |       |  
|Total              |  |              | 100.0 | % |      |  | 100.0 | %
|                   |  |              |       |   |      |  |       |  
|                   | 
|                   |  | December 31, |      
|                   |  | 2014         |       |   | 2013 | 
|East North Central |  |              | 19.4  | % |      |  | 19.3  | %
|East South Central |  |              | 5.0   |   |      |  | 6.8   |  
|Mountain           |  |              | 11.0  |   |      |  | 10.0  |  
|Pacific            |  |              | 10.8  |   |      |  | 12.3  |  
|South Atlantic     |  |              | 21.9  |   |      |  | 19.6  |  
|West South Central |  |              | 24.9  |   |      |  | 26.4  |  
|Other              |  |              | 7.0   |   |      |  | 5.6   |  
|                   |  |              |       |   |      |  |       |  
|Total              |  |              | 100.0 | % |      |  | 100.0 | %
|                   |  |              |       |   |      |  |       |  

During 2014, American National foreclosed on no loans, and during 2013, foreclosed on one loan with a recorded investment of
$5,600,000. American National sold no commercial loans in 2014, and sold one commercial loan with a recorded investment of $23,304,000 resulting in a realized gain of $115,000 in 2013.

Credit Quality

Commercial mortgage loans placed on
nonaccrual status are shown below (in thousands):



|           |  |              |        |  |      |   |       | 
|---------- |  | ------------ | ------ |  | ---- | - | ----- | 
|           |  | December 31, |       
|           |  | 2014         |        |  | 2013 |  
|Office     |  | $            | 19,327 |  |      | $ |      | 
|Industrial |  |              |       |  |      |   | 2,739 | 

The credit quality of the mortgage loan portfolio is assessed by evaluating the credit risk of each borrower. A loan is
classified as performing or non-performing based on whether all of the contractual terms of the loan have been met.



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The age analysis of past due commercial mortgage loans is shown below (in thousands):



|                                                |  |            |   |  |            |   |   |              |  |   |            |           |  |         |        |  |                |   |           |  |  |   |           | 
|----------------------------------------------- |  | ---------- | - |  | ---------- | - | - | ------------ |  | - | ---------- | --------- |  | ------- | ------ |  | -------------- | - | --------- |  |  | - | --------- | 
|                                                |  | 30-59 Days |   |  | 60-89 Days |   |   | Greater Than |  |   | Total Past |           |  |         |        |  | Total          |  
|                                                |  | Past Due   |   |  | Past Due   |   |   | 90 Days      |  |   | Due        |           |  | Current |        |  | Mortgage Loans |  
|December 31, 2014                               |  |            |   |  |            |   |   |              |  |   |            |           |  |         |        |  |                |   |           |  |  |   |           | 
|Industrial                                      |  | $          |  |  |            | $ |  |              |  | $ |           |           |  | $       |       |  |                | $ | 702,541   |  |  | $ | 702,541   | 
|Office                                          |  |            |  |  |            |   |  |              |  |   | 19,327     |           |  |         | 19,327 |  |                |   | 1,201,833 |  |  |   | 1,221,160 | 
|Retail                                          |  |            |  |  |            |   |  |              |  |   |           |           |  |         |       |  |                |   | 615,813   |  |  |   | 615,813   | 
|Other                                           |  |            |  |  |            |   |  |              |  |   |           |           |  |         |       |  |                |   | 837,932   |  |  |   | 837,932   | 
|                                                |  |            |   |  |            |   |   |              |  |   |            |           |  |         |        |  |                |   |           |  |  |   |           | 
|Total                                           |  | $          |  |  |            | $ |  |              |  | $ | 19,327     |           |  | $       | 19,327 |  |                | $ | 3,358,119 |  |  |   | 3,377,446 | 
|                                                |  |            |   |  |            |   |   |              |  |   |            |           |  |         |        |  |                |   |           |  |  |   |           | 
|Allowance for loan losses                       |  |            |   |  |            |   |   |              |  |   |            |           |  |         |        |  |                |   |           |  |  |   | 17,860    | 
|                                                |  |            |   |  |            |   |   |              |  |   |            |           |  |         |        |  |                |   |           |  |  |   |           | 
|Mortgage loans on real estate, net of allowance |  |            |   |  |            |   |   |              |  |   | $          | 3,359,586 | 
|                                                |  |            |   |  |            |   |   |              |  |   |            |           |  |         |        |  |                |   |           |  |  |   |           | 
|December 31, 2013                               |  |            |   |  |            |   |   |              |  |   |            |           |  |         |        |  |                |   |           |  |  |   |           | 
|Industrial                                      |  | $          |  |  |            | $ |  |              |  | $ | 2,739      |           |  | $       | 2,739  |  |                | $ | 821,741   |  |  | $ | 824,480   | 
|Office                                          |  |            |  |  |            |   |  |              |  |   |           |           |  |         |       |  |                |   | 1,124,818 |  |  |   | 1,124,818 | 
|Retail                                          |  |            |  |  |            |   |  |              |  |   |           |           |  |         |       |  |                |   | 651,236   |  |  |   | 651,236   | 
|Other                                           |  |            |  |  |            |   |  |              |  |   |           |           |  |         |       |  |                |   | 710,889   |  |  |   | 710,889   | 
|                                                |  |            |   |  |            |   |   |              |  |   |            |           |  |         |        |  |                |   |           |  |  |   |           | 
|Total                                           |  | $          |  |  |            | $ |  |              |  | $ | 2,739      |           |  | $       | 2,739  |  |                | $ | 3,308,684 |  |  | $ | 3,311,423 | 
|                                                |  |            |   |  |            |   |   |              |  |   |            |           |  |         |        |  |                |   |           |  |  |   |           | 
|Allowance for loan losses                       |  |            |   |  |            |   |   |              |  |   |            |           |  |         |        |  |                |   |           |  |  |   | 12,181    | 
|                                                |  |            |   |  |            |   |   |              |  |   |            |           |  |         |        |  |                |   |           |  |  |   |           | 
|Mortgage loans on real estate, net of allowance |  |            |   |  |            |   |   |              |  |   | $          | 3,299,242 | 
|                                                |  |            |   |  |            |   |   |              |  |   |            |           |  |         |        |  |                |   |           |  |  |   |           | 

Total mortgage loans are net of unamortized discounts of $658,000 and $852,000 and unamortized origination fees of $15,659,000
and $15,709,000 at December 31, 2014 and 2013, respectively. No unearned income is included in these amounts.

Allowance for Credit Losses

Loans not evaluated individually for collectibility are segregated by property-type and location, and allowance factors are applied. These factors are
developed annually and reviewed quarterly based on our historical loss experience adjusted for the expected trend in the rate of foreclosure losses. Allowance factors are higher for loans of certain property types and in certain regions based on
loss experience or a blended historical loss factor.

The change in allowance for credit losses in commercial mortgage loans is shown below (in
thousands):



|                                 |  |                |        |  |                |   |        |       |  |   |        |  
|-------------------------------- |  | -------------- | ------ |  | -------------- | - | ------ | ----- |  | - | ------ | -
|                                 |  | Collectively   |        |  | Individually   |   |        |       | 
|                                 |  | Evaluated      |        |  | Evaluated      |   |        |       | 
|                                 |  | for Impairment |        |  | for Impairment |   |        | Total | 
|Balance at December 31, 2011     |  | $              | 10,828 |  |                | $ | 493    |       |  | $ | 11,321 |  
|                                 |  |                |        |  |                |   |        |       |  |   |        |  
|Change Due to Factor Development |  |                |       |  |                |   | (2,277 | )     |  |   | (2,277 | )
|Change in allowance              |  |                | 691    |  |                |   | 2,277  |       |  |   | 2,968  |  
|                                 |  |                |        |  |                |   |        |       |  |   |        |  
|Balance at December 31, 2012     |  |                | 11,519 |  |                |   | 493    |       |  |   | 12,012 |  
|                                 |  |                |        |  |                |   |        |       |  |   |        |  
|Change in allowance              |  |                | 169    |  |                |   |       |       |  |   | 169    |  
|                                 |  |                |        |  |                |   |        |       |  |   |        |  
|Balance at December 31, 2013     |  |                | 11,688 |  |                |   | 493    |       |  |   | 12,181 |  
|                                 |  |                |        |  |                |   |        |       |  |   |        |  
|Change Due to Factor Development |  |                | 127    |  |                |   |       |       |  |   | 127    |  
|Change in allowance              |  |                | 462    |  |                |   | 5,090  |       |  |   | 5,552  |  
|                                 |  |                |        |  |                |   |        |       |  |   |        |  
|Balance at December 31, 2014     |  | $              | 12,277 |  |                | $ | 5,583  |       |  | $ | 17,860 |  
|                                 |  |                |        |  |                |   |        |       |  |   |        |  

At December 31, 2014 and 2013, the recorded investment for loans collectively evaluated for impairment was $3,321,241,000
and $3,294,236,000, respectively, and the recorded investment for loans individually evaluated for impairment was $56,205,000 and $17,188,000, respectively.



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Loans individually evaluated for impairment with and without an allowance are shown below (in thousands):



|                              |  |                          |        |  |            |   |       |            |  |   |            |  |  |            |       |  |            |   |         |  |  |   |       | 
|----------------------------- |  | ------------------------ | ------ |  | ---------- | - | ----- | ---------- |  | - | ---------- |  |  | ---------- | ----- |  | ---------- | - | ------- |  |  | - | ----- | 
|                              |  | Years ended December 31, |       
|                              |  | 2014                     |        |  | 2013       |   |       | 2012       | 
|                              |  | Average                  |        |  | Interest   |   |       | Average    |  |   | Interest   |  |  | Average    |       |  | Interest   |  
|                              |  | Recorded                 |        |  | Income     |   |       | Recorded   |  |   | Income     |  |  | Recorded   |       |  | Income     |  
|                              |  | Investment               |        |  | Recognized |   |       | Investment |  |   | Recognized |  |  | Investment |       |  | Recognized |  
|With an allowance recorded    |  |                          |        |  |            |   |       |            |  |   |            |  |  |            |       |  |            |   |         |  |  |   |       | 
|Office                        |  | $                        | 29,371 |  |            | $ | 2,203 |            |  | $ |           |  |  | $          |      |  |            | $ |        |  |  | $ |      | 
|Retail                        |  |                          |       |  |            |   |      |            |  |   | 493        |  |  |            |      |  |            |   | 493     |  |  |   |      | 
|                              |  |                          |        |  |            |   |       |            |  |   |            |  |  |            |       |  |            |   |         |  |  |   |       | 
|Total                         |  | $                        | 29,371 |  |            | $ | 2,203 |            |  | $ | 493        |  |  | $          |      |  |            | $ | 493     |  |  | $ |      | 
|                              |  |                          |        |  |            |   |       |            |  |   |            |  |  |            |       |  |            |   |         |  |  |   |       | 
|Without an allowance recorded |  |                          |        |  |            |   |       |            |  |   |            |  |  |            |       |  |            |   |         |  |  |   |       | 
|Office                        |  | $                        | 27,019 |  |            | $ | 1,728 |            |  | $ | 12,444     |  |  | $          | 809   |  |            | $ | 36,710  |  |  | $ | 2,452 | 
|Industrial                    |  |                          | 2,721  |  |            |   | 146   |            |  |   | 2,773      |  |  |            | 180   |  |            |   |        |  |  |   |      | 
|Retail                        |  |                          |       |  |            |   |      |            |  |   | 1,673      |  |  |            | 103   |  |            |   | 17,329  |  |  |   | 1,129 | 
|Other                         |  |                          |       |  |            |   |      |            |  |   |           |  |  |            |      |  |            |   | 55,551  |  |  |   | 3,758 | 
|                              |  |                          |        |  |            |   |       |            |  |   |            |  |  |            |       |  |            |   |         |  |  |   |       | 
|Total                         |  | $                        | 29,740 |  |            | $ | 1,874 |            |  | $ | 16,890     |  |  | $          | 1,092 |  |            | $ | 109,590 |  |  | $ | 7,339 | 
|                              |  |                          |        |  |            |   |       |            |  |   |            |  |  |            |       |  |            |   |         |  |  |   |       | 



|                                             |  |              |        |  |           |   |        |            |  |   |           |  |  |   |        | 
|-------------------------------------------- |  | ------------ | ------ |  | --------- | - | ------ | ---------- |  | - | --------- |  |  | - | ------ | 
|                                             |  | December 31, |       
|                                             |  | 2014         |        |  | 2013      |  
|                                             |  |              |        |  |           |   |        | Unpaid     | 
|                                             |  | Recorded     |        |  | Principal |   |        | Recorded   |  |   | Principal | 
|                                             |  | Investment   |        |  | Balance   |   |        | Investment |  |   | Balance   | 
|With an allowance recorded                   |  |              |        |  |           |   |        |            |  |   |           |  |  |   |        | 
|Office                                       |  | $            | 26,563 |  |           | $ | 31,653 |            |  | $ |          |  |  | $ |       | 
|Retail                                       |  |              |       |  |           |   | 493    |            |  |   | 493       |  |  |   | 493    | 
|                                             |  |              |        |  |           |   |        |            |  |   |           |  |  |   |        | 
|Total (related allowance of $5,090 and $493) |  | $            | 26,563 |  |           | $ | 32,146 |            |  | $ | 493       |  |  | $ | 493    | 
|                                             |  |              |        |  |           |   |        |            |  |   |           |  |  |   |        | 
|Without an allowance recorded                |  |              |        |  |           |   |        |            |  |   |           |  |  |   |        | 
|Office                                       |  | $            | 26,941 |  |           | $ | 26,941 |            |  | $ | 12,377    |  |  | $ | 12,377 | 
|Industrial                                   |  |              | 2,702  |  |           |   | 2,702  |            |  |   | 2,739     |  |  |   | 2,739  | 
|Retail                                       |  |              |       |  |           |   |       |            |  |   | 1,579     |  |  |   | 1,579  | 
|                                             |  |              |        |  |           |   |        |            |  |   |           |  |  |   |        | 
|Total                                        |  | $            | 29,643 |  |           | $ | 29,643 |            |  | $ | 16,695    |  |  | $ | 16,695 | 
|                                             |  |              |        |  |           |   |        |            |  |   |           |  |  |   |        | 

Troubled Debt Restructurings

American National has granted concessions to mortgage loan borrowers related to their ability to pay the loans which are classified as troubled debt
restructurings. Concessions are generally one of, or a combination of, a delay in payment of principal or interest, a reduction of the contractual interest rate or an extension of the maturity date. American National considers the amount, timing and
extent of concessions in determining any impairment or changes in the specific allowance for loan losses recorded in connection with a troubled debt restructuring. The carrying value after specific allowance, before and after modification in a
troubled debt restructuring, may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment.

The number of mortgage loans and recorded investment in troubled debt restructuring are as follows:



|           |  |                          |   |  |                                     |   |       |                                     |  |   |                    |  |  |                                     |   |  |                                     |   |       |  |  |   |       | 
|---------- |  | ------------------------ | - |  | ----------------------------------- | - | ----- | ----------------------------------- |  | - | ------------------ |  |  | ----------------------------------- | - |  | ----------------------------------- | - | ----- |  |  | - | ----- | 
|           |  | Years ended December 31, |  
|           |  | 2014                     |   |  | 2013                                |  
|           |  | Number ofcontracts       |   |  | Recordedinvestment pre-modification |   |       | Recordedinvestment postmodification |  |   | Numberof contracts |  |  | Recordedinvestment pre-modification |   |  | Recordedinvestment postmodification |  
|Industrial |  |                          |  |  |                                     | $ |      |                                     |  | $ |                   |  |  |                                     | 1 |  |                                     | $ | 2,739 |  |  | $ | 2,739 | 
|Office     |  |                          | 1 |  |                                     |   | 6,432 |                                     |  |   | 6,432              |  |  |                                     | 1 |  |                                     |   | 6,432 |  |  |   | 6,432 | 
|Retail     |  |                          |  |  |                                     |   |      |                                     |  |   |                   |  |  |                                     |  |  |                                     |   |      |  |  |   |      | 
|           |  |                          |   |  |                                     |   |       |                                     |  |   |                    |  |  |                                     |   |  |                                     |   |       |  |  |   |       | 
|Total      |  |                          | 1 |  |                                     | $ | 6,432 |                                     |  | $ | 6,432              |  |  |                                     | 2 |  |                                     | $ | 9,171 |  |  | $ | 9,171 | 
|           |  |                          |   |  |                                     |   |       |                                     |  |   |                    |  |  |                                     |   |  |                                     |   |       |  |  |   |       | 

There are no commitments to lend additional funds to debtors whose loans have been modified in troubled debt restructuring,
and there have been no defaults on modified loans during the periods presented.



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6. INVESTMENT REAL ESTATE

Investment real estate by property-type and geographic distribution are as follows:



|                   |  |              |       |   |      |  |       |  
|------------------ |  | ------------ | ----- | - | ---- |  | ----- | -
|                   |  | December 31, |      
|                   |  | 2014         |       |   | 2013 | 
|Industrial         |  |              | 13.0  | % |      |  | 12.3  | %
|Office             |  |              | 25.0  |   |      |  | 23.1  |  
|Retail             |  |              | 44.1  |   |      |  | 43.4  |  
|Other              |  |              | 17.9  |   |      |  | 21.2  |  
|                   |  |              |       |   |      |  |       |  
|Total              |  |              | 100.0 | % |      |  | 100.0 | %
|                   |  |              |       |   |      |  |       |  
|                   | 
|                   |  | December 31, |      
|                   |  | 2014         |       |   | 2013 | 
|East North Central |  |              | 4.5   | % |      |  | 7.8   | %
|East South Central |  |              | 4.6   |   |      |  | 5.4   |  
|Mountain           |  |              | 9.6   |   |      |  | 6.0   |  
|Pacific            |  |              | 7.1   |   |      |  | 5.5   |  
|South Atlantic     |  |              | 12.2  |   |      |  | 13.4  |  
|West South Central |  |              | 55.6  |   |      |  | 59.0  |  
|Other              |  |              | 6.4   |   |      |  | 2.9   |  
|                   |  |              |       |   |      |  |       |  
|Total              |  |              | 100.0 | % |      |  | 100.0 | %
|                   |  |              |       |   |      |  |       |  

American National and its wholly-owned subsidiaries regularly invest in real estate partnerships and joint ventures. American
National frequently participates in the design of these entities with the sponsor, but in most cases, its involvement is limited to financing. Through analysis performed by American National, some of these partnerships and joint ventures have been
determined to be variable interest entities (VIEs). In certain instances, in addition to an economic interest in the entity, American National holds the power to direct the most significant activities of the entity and is deemed the
primary beneficiary or consolidator of the entity. The assets of the consolidated VIEs are restricted and must first be used to settle their liabilities. Creditors or beneficial interest holders of these VIEs have no recourse to the general credit
of American National, as American Nationals obligation is limited to the amount of its committed investment. American National has not provided financial or other support to the VIEs in the form of liquidity arrangements, guarantees, or other
commitments to third parties that may affect the fair value or risk of its variable interest in the VIEs in 2014 or 2013.

The assets and liabilities
relating to the VIEs included in the consolidated financial statements are as follows (in thousands):



|                                       |  |              |         |  |      |   |         | 
|-------------------------------------- |  | ------------ | ------- |  | ---- | - | ------- | 
|                                       |  | December 31, |        
|                                       |  | 2014         |         |  | 2013 |  
|Investment real estate                 |  | $            | 140,032 |  |      | $ | 123,624 | 
|Short-term investments                 |  |              | 1       |  |      |   |        | 
|Cash and cash equivalents              |  |              | 2,495   |  |      |   | 2,154   | 
|Accrued investment income              |  |              | 683     |  |      |   | 2,197   | 
|Other receivables                      |  |              | 7,999   |  |      |   | 8,488   | 
|Other assets                           |  |              | 8,483   |  |      |   | 6,016   | 
|                                       |  |              |         |  |      |   |         | 
|Total assets of consolidated VIEs      |  | $            | 159,693 |  |      | $ | 142,479 | 
|                                       |  |              |         |  |      |   |         | 
|Notes payable                          |  | $            | 108,177 |  |      | $ | 113,849 | 
|Other liabilities                      |  |              | 8,954   |  |      |   | 6,680   | 
|                                       |  |              |         |  |      |   |         | 
|Total liabilities of consolidated VIEs |  | $            | 117,131 |  |      | $ | 120,529 | 
|                                       |  |              |         |  |      |   |         | 



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The notes payable in the consolidated statements of financial position pertain to the borrowings of the
consolidated VIEs. The liability of American National Insurance Company relating to notes payable of the consolidated VIEs is limited to the amount of its direct or indirect investment in the respective ventures, which totaled $15,016,000 and
$12,782,000 at December 31, 2014 and 2013, respectively. The current portion of notes payable was $0 and $3,199,000 at December 31, 2014 and 2013, respectively. The total long-term portion of notes payable consists of three notes with the
following interest rates: 4.0%, and adjusted LIBOR plus LIBOR margin. Of the long-term notes payable, $9,375,000 will mature in 2016, with the remainder maturing beyond 5 years.

For other VIEs in which American National is a partner, it is not the primary beneficiary and these entities were not consolidated, as the major decisions
that most significantly impact the economic activities of the VIE require unanimous consent of all partners. The following table presents the carrying amount and maximum exposure to loss relating to unconsolidated VIEs (in thousands):



|                                        |  |              |         |  |          |   |         |          |  |   |          |  |  |   |         | 
|--------------------------------------- |  | ------------ | ------- |  | -------- | - | ------- | -------- |  | - | -------- |  |  | - | ------- | 
|                                        |  | December 31, |        
|                                        |  | 2014         |         |  | 2013     |  
|                                        |  |              |         |  | Maximum  |   |         |          |  |   | Maximum  | 
|                                        |  | Carrying     |         |  | Exposure |   |         | Carrying |  |   | Exposure | 
|                                        |  | Amount       |         |  | to Loss  |   |         | Amount   |  |   | to Loss  | 
|Investment in unconsolidated affiliates |  | $            | 157,620 |  |          | $ | 157,620 |          |  | $ | 195,794  |  |  | $ | 195,794 | 
|Mortgage loans                          |  |              | 172,408 |  |          |   | 172,408 |          |  |   | 101,648  |  |  |   | 101,648 | 
|Accrued investment income               |  |              | 721     |  |          |   | 721     |          |  |   | 454      |  |  |   | 454     | 

As of December 31, 2014, a real estate investment with a carrying value of $4,041,000 was classified as held for sale.

7. DERIVATIVE INSTRUMENTS

American National purchases over-the-counter equity-indexed options as economic hedges against fluctuations in the equity markets to which
equity-indexed products are exposed. Equity-indexed contracts include a fixed host universal-life insurance or annuity contract and an equity-indexed embedded derivative. The detail of derivative instruments is shown below (in thousands, except
number of instruments):



|                                                  |  |                                                               |  |              |                 |  |      |                     |           |  |                      |   |         |                 |  |  |                     |  |  |   |         |  |  |   |         | 
|------------------------------------------------- |  | ------------------------------------------------------------- |  | ------------ | --------------- |  | ---- | ------------------- | --------- |  | -------------------- | - | ------- | --------------- |  |  | ------------------- |  |  | - | ------- |  |  | - | ------- | 
|                                                  |  |                                                               |  | December 31, |                
|Derivatives Not Designated as Hedging Instruments |  | Location in the
Consolidated Statements of Financial Position |  | 2014         |                 |  | 2013 |                    
|                                                  |  | Number ofInstruments                                          |  |              | NotionalAmounts |  |      | EstimatedFair Value |           |  | Number ofInstruments |   |         | NotionalAmounts |  |  | EstimatedFair Value | 
|Equity-indexed options                            |  | Other invested assets                                         |  |              | 436             |  |      | $                   | 1,095,300 |  |                      | $ | 189,449 |                 |  |  | 394                 |  |  | $ | 951,400 |  |  | $ | 164,753 | 
|Equity-indexed embedded derivative                |  | Policyholders account balances                               |  |              | 42,287          |  |      |                     | 961,300   |  |                      |   | 208,187 |                 |  |  | 33,579              |  |  |   | 819,200 |  |  |   | 148,435 | 



|                                                  |  |                                                       |  |                                                    |         |   |  |      |         |   |  |   |         |  
|------------------------------------------------- |  | ----------------------------------------------------- |  | -------------------------------------------------- | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|Derivatives Not Designated as Hedging Instruments |  | Location in the Consolidated Statements of
Operations |  | Gains (Losses) Recognized in Income on Derivatives |        
|                                                  |  | Years ended December 31,                              | 
|                                                  |  | 2014                                                  |  |                                                    | 2013    |   |  | 2012 |        
|Equity-indexed options                            |  | Net investment income                                 |  | $                                                  | 52,071  |   |  | $    | 83,307  |   |  | $ | 18,931  |  
|Equity-indexed embedded derivative                |  | Interest credited to policyholders account balances  |  |                                                    | (32,071 | ) |  |      | (67,177 | ) |  |   | (13,528 | )



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8. NET INVESTMENT INCOME AND REALIZED INVESTMENT GAINS

Net investment income is shown below (in thousands):



|                      |  |                          |         |  |      |   |           |      |  |   |         | 
|--------------------- |  | ------------------------ | ------- |  | ---- | - | --------- | ---- |  | - | ------- | 
|                      |  | Years ended December 31, |        
|                      |  | 2014                     |         |  | 2013 |   |           | 2012 | 
|Bonds                 |  | $                        | 596,013 |  |      | $ | 631,561   |      |  | $ | 680,552 | 
|Equity securities     |  |                          | 35,324  |  |      |   | 30,668    |      |  |   | 29,085  | 
|Mortgage loans        |  |                          | 204,499 |  |      |   | 221,773   |      |  |   | 205,067 | 
|Real estate           |  |                          | 10,823  |  |      |   | 11,504    |      |  |   | 14,041  | 
|Options               |  |                          | 52,071  |  |      |   | 83,307    |      |  |   | 18,931  | 
|Other invested assets |  |                          | 34,128  |  |      |   | 37,997    |      |  |   | 37,722  | 
|                      |  |                          |         |  |      |   |           |      |  |   |         | 
|Total                 |  | $                        | 932,858 |  |      | $ | 1,016,810 |      |  | $ | 985,398 | 
|                      |  |                          |         |  |      |   |           |      |  |   |         | 

Realized investment gains (losses) are shown below (in thousands):



|                      |  |                          |        |   |      |   |         |      |  |   |        |  
|--------------------- |  | ------------------------ | ------ | - | ---- | - | ------- | ---- |  | - | ------ | -
|                      |  | Years ended December 31, |       
|                      |  | 2014                     |        |   | 2013 |   |         | 2012 | 
|Bonds                 |  | $                        | 25,580 |   |      | $ | 25,577  |      |  | $ | 41,817 |  
|Equity securities     |  |                          | 22,089 |   |      |   | 35,322  |      |  |   | 35,047 |  
|Mortgage loans        |  |                          | (5,679 | ) |      |   | 834     |      |  |   | (361   | )
|Real estate           |  |                          | 7,035  |   |      |   | 62,531  |      |  |   | 13,049 |  
|Other invested assets |  |                          | (963   | ) |      |   | (120    | )    |  |   | 1,173  |  
|                      |  |                          |        |   |      |   |         |      |  |   |        |  
|Total                 |  | $                        | 48,062 |   |      | $ | 124,144 |      |  | $ | 90,725 |  
|                      |  |                          |        |   |      |   |         |      |  |   |        |  

Other-temporary-impairment losses are shown below (in thousands):



|                  |  |                          |        |   |      |   |        |      |  |   |         |  
|----------------- |  | ------------------------ | ------ | - | ---- | - | ------ | ---- |  | - | ------- | -
|                  |  | Years ended December 31, |       
|                  |  | 2014                     |        |   | 2013 |   |        | 2012 | 
|Bonds             |  | $                        | (41    | ) |      | $ |       |      |  | $ | (12,658 | )
|Equity securities |  |                          | (6,599 | ) |      |   | (4,591 | )    |  |   | (9,859  | )
|                  |  |                          |        |   |      |   |        |      |  |   |         |  
|Total             |  | $                        | (6,640 | ) |      | $ | (4,591 | )    |  | $ | (22,517 | )
|                  |  |                          |        |   |      |   |        |      |  |   |         |  



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9. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount and fair value of financial instruments are shown below (in thousands):



|                                                           |  |              |            |  |            |   |            |          |  |   |            |  |  |   |            | 
|---------------------------------------------------------- |  | ------------ | ---------- |  | ---------- | - | ---------- | -------- |  | - | ---------- |  |  | - | ---------- | 
|                                                           |  | December 31, |           
|                                                           |  | 2014         |            |  | 2013       |  
|                                                           |  | Carrying     |            |  |            |   |            | Carrying |  |   |            | 
|                                                           |  | Amount       |            |  | Fair Value |   |            | Amount   |  |   | Fair Value | 
|Financial assets                                           |  |              |            | 
|Fixed maturity securities, bonds held-to-maturity          |  | $            | 8,225,050  |  |            | $ | 8,652,913  |          |  | $ | 8,491,347  |  |  | $ | 8,823,068  | 
|Fixed maturity securities, bonds available-for-sale        |  |              | 4,921,807  |  |            |   | 4,921,807  |          |  |   | 4,599,673  |  |  |   | 4,599,673  | 
|Equity securities                                          |  |              | 1,516,978  |  |            |   | 1,516,978  |          |  |   | 1,410,608  |  |  |   | 1,410,608  | 
|Equity-indexed options                                     |  |              | 189,449    |  |            |   | 189,449    |          |  |   | 164,753    |  |  |   | 164,753    | 
|Mortgage loans on real estate, net of allowance            |  |              | 3,359,586  |  |            |   | 3,618,944  |          |  |   | 3,299,242  |  |  |   | 3,470,663  | 
|Policy loans                                               |  |              | 405,979    |  |            |   | 405,979    |          |  |   | 397,407    |  |  |   | 397,407    | 
|Short-term investments                                     |  |              | 431,000    |  |            |   | 431,000    |          |  |   | 495,386    |  |  |   | 495,386    | 
|Separate account assets                                    |  |              | 1,001,515  |  |            |   | 1,001,515  |          |  |   | 970,954    |  |  |   | 970,954    | 
|                                                           |  |              |            |  |            |   |            |          |  |   |            |  |  |   |            | 
|Total financial assets                                     |  | $            | 20,051,364 |  |            | $ | 20,738,585 |          |  | $ | 19,829,370 |  |  | $ | 20,332,512 | 
|                                                           |  |              |            |  |            |   |            |          |  |   |            |  |  |   |            | 
|Financial liabilities                                      |  |              |            |  |            |   |            |          |  |   |            |  |  |   |            | 
|Investment contracts                                       |  | $            | 8,894,747  |  |            | $ | 8,894,747  |          |  | $ | 9,423,122  |  |  | $ | 9,423,122  | 
|Embedded derivative liability for equity-indexed contracts |  |              | 208,187    |  |            |   | 208,187    |          |  |   | 148,435    |  |  |   | 148,435    | 
|Notes payable                                              |  |              | 108,177    |  |            |   | 108,177    |          |  |   | 113,849    |  |  |   | 113,849    | 
|Separate account liabilities                               |  |              | 1,001,515  |  |            |   | 1,001,515  |          |  |   | 970,954    |  |  |   | 970,954    | 
|                                                           |  |              |            |  |            |   |            |          |  |   |            |  |  |   |            | 
|Total financial liabilities                                |  | $            | 10,212,626 |  |            | $ | 10,212,626 |          |  | $ | 10,656,360 |  |  | $ | 10,656,360 | 
|                                                           |  |              |            |  |            |   |            |          |  |   |            |  |  |   |            | 

Summary

Fair value is
defined as the price that would be received to sell an asset or paid to transfer a liability. A fair value hierarchy is used to determine fair value based on a hypothetical transaction at the measurement date from the perspective of a market
participant. American National has evaluated the types of securities in its investment portfolio to determine an appropriate hierarchy level based upon trading activity and the observability of market inputs. The classification of assets or
liabilities within the fair value hierarchy is based on the lowest level of significant input to its valuation. The input levels are defined as follows:



|Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities.
|------- | -------------------------------------------------------------------------------



|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.
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Fixed Maturity Securities and Equity
OptionsAmerican National utilizes a pricing service to estimate fair value measurements. The estimates of fair value for most fixed maturity securities, including municipal bonds, provided by the pricing service are disclosed as Level 2
measurements as the estimates are based on observable market information rather than market quotes.



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The pricing service utilizes market quotations for fixed maturity securities that have quoted prices in active
markets. Since fixed maturity securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value measurements for these securities using its proprietary pricing applications, which include available relevant
market information, benchmark curves, benchmarking of like securities, sector groupings and matrix pricing. Additionally, an option adjusted spread model is used to develop prepayment and interest rate scenarios.

The pricing service evaluates each asset class based on relevant market information, credit information, perceived market movements and sector news. The
market inputs utilized in the pricing evaluation, listed in the approximate order of priority, include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data,
and economic events. The extent of the use of each market input depends on the asset class and the market conditions. Depending on the security, the priority of the use of inputs may change or some market inputs may not be relevant. For some
securities, additional inputs may be necessary.

American National has reviewed the inputs and methodology used and the techniques applied by the pricing
service to produce quotes that represent the fair value of a specific security. The review confirms that the pricing service is utilizing information from observable transactions or a technique that represents a market participants
assumptions. American National does not adjust quotes received from the pricing service. The pricing service utilized by American National has indicated that they will only produce an estimate of fair value if there is objectively verifiable
information available.

American National holds a small amount of private placement debt and fixed maturity securities that have characteristics that make
them unsuitable for matrix pricing. For these securities, a quote from an independent broker (typically a market maker) is obtained. Due to the disclaimers on the quotes that indicate that the price is indicative only, American National includes
these fair value estimates in Level 3.

For securities priced using a quote from an independent broker, such as the equity options and certain fixed
maturity securities, American National uses a market-based fair value analysis to validate the reasonableness of prices received from an independent broker. Price variances above a certain threshold are analyzed further to determine if any pricing
issue exists. This analysis is performed quarterly.

Equity SecuritiesFor publicly-traded equity securities, prices are received from a
nationally recognized pricing service that are based on observable market transactions, and these securities are classified as Level 1 measurements. For certain preferred stock, current market quotes in active markets are unavailable. In these
instances, an estimate of fair value is received from the pricing service. The service utilizes similar methodologies to price preferred stocks as it does for fixed maturity securities. These estimates are disclosed as Level 2 measurements. American
National tests the accuracy of the information provided by reference to other services regularly.

Mortgage LoansThe fair value of mortgage
loans is estimated using discounted cash flow analyses on a loan by loan basis by applying a discount rate to expected cash flows from future installment and balloon payments. The discount rate takes into account general market trends and specific
credit risk trends for the individual loan. Factors used to arrive at the discount rate include inputs from spreads based on U.S. Treasury notes and the loans credit quality, region, property type, lien priority, payment type and current
status.

Embedded DerivativeThe embedded derivative liability for equity-indexed contracts is measured at fair value and is recalculated each
reporting period using equity option pricing models. To validate the assumptions used to price the embedded derivative liability, American National measures and compares embedded derivative returns against the returns of equity options held to hedge
the liability cash flows.

The significant unobservable input used to calculate the fair value of the embedded derivatives is equity option implied
volatility. An increase in implied volatility will result in an increase in the value of the equity-indexed embedded derivatives, all other things being equal. At December 31, 2014 and 2013, the one year implied volatility used to estimate
embedded derivative value was 17.3% and 15.0%, respectively.



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Other Financial InstrumentsOther financial instruments classified as Level 3 measurements, as there
is little or no market activity, are as follows:

Policy loansThe carrying value of policy loans is the outstanding balance
plus any accrued interest. Due to the collateralized nature of policy loans that it cannot be separated from the policy contract and the unpredictable timing of repayments and that settlement is at outstanding value, American National believes the
carrying value of policy loans approximates fair value.

Investment contractsThe carrying value of investment contracts is equivalent
to the accrued account balance. The accrued account balance consists of deposits, net of withdrawals, plus or minus interest credited, fees and charges assessed and other adjustments. American National believes that the carrying value of investment
contracts approximates fair value because the majority of these contracts interest rates reset to current rates offered at anniversary.

Notes payableNotes payable are carried at outstanding principal balance. The carrying value of the notes payable approximates fair value
because the underlying interest rates approximate market rates at the balance sheet date.



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Quantitative Disclosures

The fair value hierarchy measurements of the financial instruments are shown below (in thousands):



|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|---------------------------------------------------------- |  | ---------------------------------------------- | ---------- |  | ------- | - | --------- | ------- |  | - | ---------- |  |  | - | --------- | 
|                                                           |  | Fair Value Measurement as of December 31, 2014 |           
|                                                           |  | Total Fair Value                               |            |  | Level 1 |   |           | Level 2 |  |   | Level 3    | 
|Financial assets                                           |  |                                                |            | 
|Fixed maturity securities, bonds held-to-maturity          |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|U.S. states and political subdivisions                     |  | $                                              | 349,760    |  |         | $ |          |         |  | $ | 349,760    |  |  | $ |          | 
|Foreign governments                                        |  |                                                | 30,423     |  |         |   |          |         |  |   | 30,423     |  |  |   |          | 
|Corporate debt securities                                  |  |                                                | 7,894,725  |  |         |   |          |         |  |   | 7,833,564  |  |  |   | 61,161    | 
|Residential mortgage-backed securities                     |  |                                                | 357,635    |  |         |   |          |         |  |   | 356,670    |  |  |   | 965       | 
|Collateralized debt securities                             |  |                                                | 2,470      |  |         |   |          |         |  |   |           |  |  |   | 2,470     | 
|Other debt securities                                      |  |                                                | 17,900     |  |         |   |          |         |  |   | 12,975     |  |  |   | 4,925     | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Total bonds held-to-maturity                               |  |                                                | 8,652,913  |  |         |   |          |         |  |   | 8,583,392  |  |  |   | 69,521    | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Fixed maturity securities, bonds available-for-sale        |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|U.S. treasury and government                               |  |                                                | 23,233     |  |         |   |          |         |  |   | 23,233     |  |  |   |          | 
|U.S. states and political subdivisions                     |  |                                                | 837,616    |  |         |   |          |         |  |   | 835,106    |  |  |   | 2,510     | 
|Foreign governments                                        |  |                                                | 7,021      |  |         |   |          |         |  |   | 7,021      |  |  |   |          | 
|Corporate debt securities                                  |  |                                                | 4,000,049  |  |         |   |          |         |  |   | 3,941,925  |  |  |   | 58,124    | 
|Residential mortgage-backed securities                     |  |                                                | 42,399     |  |         |   |          |         |  |   | 40,473     |  |  |   | 1,926     | 
|Collateralized debt securities                             |  |                                                | 11,489     |  |         |   |          |         |  |   | 9,616      |  |  |   | 1,873     | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Total bonds available-for-sale                             |  |                                                | 4,921,807  |  |         |   |          |         |  |   | 4,857,374  |  |  |   | 64,433    | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Equity securities                                          |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Common stock                                               |  |                                                | 1,487,125  |  |         |   | 1,487,125 |         |  |   |           |  |  |   |          | 
|Preferred stock                                            |  |                                                | 29,853     |  |         |   | 29,853    |         |  |   |           |  |  |   |          | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Total equity securities                                    |  |                                                | 1,516,978  |  |         |   | 1,516,978 |         |  |   |           |  |  |   |          | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Options                                                    |  |                                                | 189,449    |  |         |   |          |         |  |   |           |  |  |   | 189,449   | 
|Mortgage loans on real estate                              |  |                                                | 3,618,944  |  |         |   |          |         |  |   | 3,618,944  |  |  |   |          | 
|Policy loans                                               |  |                                                | 405,979    |  |         |   |          |         |  |   |           |  |  |   | 405,979   | 
|Short-term investments                                     |  |                                                | 431,000    |  |         |   |          |         |  |   | 431,000    |  |  |   |          | 
|Separate account assets                                    |  |                                                | 1,001,515  |  |         |   |          |         |  |   | 1,001,515  |  |  |   |          | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Total financial assets                                     |  | $                                              | 20,738,585 |  |         | $ | 1,516,978 |         |  | $ | 18,492,225 |  |  | $ | 729,382   | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Financial liabilities                                      |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Investment contracts                                       |  | $                                              | 8,894,747  |  |         | $ |          |         |  | $ |           |  |  | $ | 8,894,747 | 
|Embedded derivative liability for equity-indexed contracts |  |                                                | 208,187    |  |         |   |          |         |  |   |           |  |  |   | 208,187   | 
|Notes payable                                              |  |                                                | 108,177    |  |         |   |          |         |  |   |           |  |  |   | 108,177   | 
|Separate account liabilities                               |  |                                                | 1,001,515  |  |         |   |          |         |  |   | 1,001,515  |  |  |   |          | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Total financial liabilities                                |  | $                                              | 10,212,626 |  |         | $ |          |         |  | $ | 1,001,515  |  |  | $ | 9,211,111 | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 



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|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|---------------------------------------------------------- |  | ---------------------------------------------- | ---------- |  | ------- | - | --------- | ------- |  | - | ---------- |  |  | - | --------- | 
|                                                           |  | Fair Value Measurement as of December 31, 2013 |           
|                                                           |  | Total Fair Value                               |            |  | Level 1 |   |           | Level 2 |  |   | Level 3    | 
|Financial assets                                           |  |                                                |            | 
|Fixed maturity securities, bonds held-to-maturity          |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|U.S. treasury and government                               |  | $                                              | 1,743      |  |         | $ |          |         |  | $ | 1,743      |  |  | $ |          | 
|U.S. states and political subdivisions                     |  |                                                | 362,657    |  |         |   |          |         |  |   | 362,657    |  |  |   |          | 
|Foreign governments                                        |  |                                                | 31,605     |  |         |   |          |         |  |   | 31,605     |  |  |   |          | 
|Corporate debt securities                                  |  |                                                | 7,993,891  |  |         |   |          |         |  |   | 7,950,418  |  |  |   | 43,473    | 
|Residential mortgage-backed securities                     |  |                                                | 418,682    |  |         |   |          |         |  |   | 417,687    |  |  |   | 995       | 
|Collateralized debt securities                             |  |                                                | 2,591      |  |         |   |          |         |  |   |           |  |  |   | 2,591     | 
|Other debt securities                                      |  |                                                | 11,899     |  |         |   |          |         |  |   | 11,899     |  |  |   |          | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Total bonds held-to-maturity                               |  |                                                | 8,823,068  |  |         |   |          |         |  |   | 8,776,009  |  |  |   | 47,059    | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Fixed maturity securities, bonds available-for-sale        |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|U.S. treasury and government                               |  |                                                | 22,477     |  |         |   |          |         |  |   | 22,477     |  |  |   |          | 
|U.S. states and political subdivisions                     |  |                                                | 638,560    |  |         |   |          |         |  |   | 636,040    |  |  |   | 2,520     | 
|Foreign governments                                        |  |                                                | 6,649      |  |         |   |          |         |  |   | 6,649      |  |  |   |          | 
|Corporate debt securities                                  |  |                                                | 3,807,033  |  |         |   |          |         |  |   | 3,794,809  |  |  |   | 12,224    | 
|Residential mortgage-backed securities                     |  |                                                | 63,007     |  |         |   |          |         |  |   | 60,841     |  |  |   | 2,166     | 
|Commercial mortgage-backed securities                      |  |                                                | 29,260     |  |         |   |          |         |  |   |           |  |  |   | 29,260    | 
|Collateralized debt securities                             |  |                                                | 15,186     |  |         |   |          |         |  |   | 13,052     |  |  |   | 2,134     | 
|Other debt securities                                      |  |                                                | 17,501     |  |         |   |          |         |  |   | 17,501     |  |  |   |          | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Total bonds available-for-sale                             |  |                                                | 4,599,673  |  |         |   |          |         |  |   | 4,551,369  |  |  |   | 48,304    | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Equity securities                                          |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Common stock                                               |  |                                                | 1,368,995  |  |         |   | 1,368,995 |         |  |   |           |  |  |   |          | 
|Preferred stock                                            |  |                                                | 41,613     |  |         |   | 41,613    |         |  |   |           |  |  |   |          | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Total equity securities                                    |  |                                                | 1,410,608  |  |         |   | 1,410,608 |         |  |   |           |  |  |   |          | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Options                                                    |  |                                                | 164,753    |  |         |   |          |         |  |   |           |  |  |   | 164,753   | 
|Mortgage loans on real estate                              |  |                                                | 3,470,663  |  |         |   |          |         |  |   | 3,470,663  |  |  |   |          | 
|Policy loans                                               |  |                                                | 397,407    |  |         |   |          |         |  |   |           |  |  |   | 397,407   | 
|Short-term investments                                     |  |                                                | 495,386    |  |         |   |          |         |  |   | 495,386    |  |  |   |          | 
|Separate account assets                                    |  |                                                | 970,954    |  |         |   |          |         |  |   | 970,954    |  |  |   |          | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Total financial assets                                     |  | $                                              | 20,332,512 |  |         | $ | 1,410,608 |         |  | $ | 18,264,381 |  |  | $ | 657,523   | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Financial liabilities                                      |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Investment contracts                                       |  | $                                              | 9,423,122  |  |         | $ |          |         |  | $ |           |  |  | $ | 9,423,122 | 
|Embedded derivative liability for equity-indexed contracts |  |                                                | 148,435    |  |         |   |          |         |  |   |           |  |  |   | 148,435   | 
|Notes payable                                              |  |                                                | 113,849    |  |         |   |          |         |  |   |           |  |  |   | 113,849   | 
|Separate account liabilities                               |  |                                                | 970,954    |  |         |   |          |         |  |   | 970,954    |  |  |   |          | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 
|Total financial liabilities                                |  | $                                              | 10,656,360 |  |         | $ |          |         |  | $ | 970,954    |  |  | $ | 9,685,406 | 
|                                                           |  |                                                |            |  |         |   |           |         |  |   |            |  |  |   |           | 



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For financial instruments measured at fair value on a recurring basis using Level 3 inputs during the period, a
reconciliation of the beginning and ending balances is shown below (in thousands):



|                                                                                             |  |            |         |   |           |   |         |            |  |   |         |  
|-------------------------------------------------------------------------------------------- |  | ---------- | ------- | - | --------- | - | ------- | ---------- |  | - | ------- | -
|                                                                                             |  | Assets     |         |   | Liability |  
|                                                                                             |  |            |         |   | Equity-   |   |         |            | 
|                                                                                             |  | Investment |         |   | Indexed   |   |         | Embedded   | 
|                                                                                             |  | Securities |         |   | Options   |   |         | Derivative | 
|Balance at December 31, 2011                                                                 |  | $          | 15,815  |   |           | $ | 65,188  |            |  | $ | 63,275  |  
|                                                                                             |  |            |        
|Total realized and unrealized investment gains/losses                                        |  |            |         |   |           |   |         |            |  |   |         |  
|included in other comprehensive income                                                       |  |            | 24,267  |   |           |   |        |            |  |   |        |  
|Net fair value change included in realized gains/losses                                      |  |            | (11,485 | ) |           |   |        |            |  |   |        |  
|Net gain (loss) for derivatives included in net investment income                            |  |            |        |   |           |   | 12,372  |            |  |   |        |  
|Net change included in interest credited                                                     |  |            |        |   |           |   |        |            |  |   | 13,528  |  
|Purchases, sales and settlements or maturities                                               |  |            |         |   |           |   |         |            |  |   |         |  
|Purchases                                                                                    |  |            | 32,141  |   |           |   | 14,684  |            |  |   |        |  
|Sales                                                                                        |  |            |        |   |           |   |        |            |  |   |        |  
|Settlements or maturities                                                                    |  |            | (1,795  | ) |           |   | (9,619  | )          |  |   |        |  
|Premiums less benefits                                                                       |  |            |        |   |           |   |        |            |  |   | (1,771  | )
|Transfers from held to maturity                                                              |  |            | 13,118  |   |           |   |         |            |  |   |         |  
|Gross transfers into Level 3                                                                 |  |            | 34,975  |   |           |   |        |            |  |   |        |  
|                                                                                             |  |            |         |   |           |   |         |            |  |   |         |  
|Balance at December 31, 2012                                                                 |  |            | 107,036 |   |           |   | 82,625  |            |  |   | 75,032  |  
|                                                                                             |  |            |         |   |           |   |         |            |  |   |         |  
|Total realized and unrealized investment gains/losses included in other comprehensive income |  |            | 9,355   |   |           |   |        |            |  |   |        |  
|Net fair value change included in realized gains/losses                                      |  |            | 1,082   |   |           |   |        |            |  |   |        |  
|Net gain (loss) for derivatives included in net investment income                            |  |            |        |   |           |   | 76,268  |            |  |   |        |  
|Net change included in interest credited                                                     |  |            |        |   |           |   |        |            |  |   | 67,177  |  
|Purchases, sales and settlements or maturities                                               |  |            |         |   |           |   |         |            |  |   |         |  
|Purchases                                                                                    |  |            | 2,153   |   |           |   | 15,906  |            |  |   |        |  
|Sales                                                                                        |  |            | (10,452 | ) |           |   |        |            |  |   |        |  
|Settlements or maturities                                                                    |  |            | (7,268  | ) |           |   | (10,046 | )          |  |   |        |  
|Premiums less benefits                                                                       |  |            |        |   |           |   |        |            |  |   | 6,226   |  
|Gross transfers out of Level 3                                                               |  |            | (53,602 | ) |           |   |        |            |  |   |        |  
|                                                                                             |  |            |         |   |           |   |         |            |  |   |         |  
|Balance at December 31, 2013                                                                 |  |            | 48,304  |   |           |   | 164,753 |            |  |   | 148,435 |  
|                                                                                             |  |            |         |   |           |   |         |            |  |   |         |  
|Total realized and unrealized investment gains/losses included in other comprehensive income |  |            | (11,746 | ) |           |   |        |            |  |   |        |  
|Net fair value change included in realized gains/losses                                      |  |            | 13,056  |   |           |   |        |            |  |   |        |  
|Net gain (loss) for derivatives included in net investment income                            |  |            |        |   |           |   | 44,492  |            |  |   |        |  
|Net change included in interest credited                                                     |  |            |        |   |           |   |        |            |  |   | 32,071  |  
|Purchases, sales and settlements or maturities                                               |  |            |         |   |           |   |         |            |  |   |         |  
|Purchases                                                                                    |  |            |        |   |           |   | 16,844  |            |  |   |        |  
|Sales                                                                                        |  |            | (37,803 | ) |           |   |        |            |  |   |        |  
|Settlements or maturities                                                                    |  |            | (10     | ) |           |   | (36,640 | )          |  |   |        |  
|Premiums less benefits                                                                       |  |            |        |   |           |   |        |            |  |   | 27,681  |  
|Gross transfers into Level 3                                                                 |  |            | 54,241  |   |           |   |        |            |  |   |        |  
|Gross transfers out of Level 3                                                               |  |            | (1,609  | ) |           |   |        |            |  |   |        |  
|                                                                                             |  |            |         |   |           |   |         |            |  |   |         |  
|Balance at December 31, 2014                                                                 |  | $          | 64,433  |   |           | $ | 189,449 |            |  | $ | 208,187 |  
|                                                                                             |  |            |         |   |           |   |         |            |  |   |         |  

Within the net gain (loss) for derivatives included in net investment income were an unrealized gain/loss of $24,108,000,
$72,071,000 and of $8,710,000 relating to assets still held at December 31, 2014, 2013, and 2012, respectively.

There were no transfers between
Level 1 and Level 2 fair value hierarchies. The transfers into Level 3 were the result of existing securities no longer being priced by the third-party pricing service at the end of the period. American Nationals valuation of these securities
involves judgment regarding assumptions market participants would use including quotes from independent brokers. The transfers out of Level 3 were securities being priced by a third-party service at the end of the period, using inputs that are
observable or derived from market data, which resulted in classification of these assets as Level 2.



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10. DEFERRED POLICY ACQUISITION COSTS

Deferred policy acquisition costs are shown below (in thousands):



|                                                                      |  |      |         |   |         |   |         |          |  |   |            |   |  |       |          |   |  |   |           |  
|--------------------------------------------------------------------- |  | ---- | ------- | - | ------- | - | ------- | -------- |  | - | ---------- | - |  | ----- | -------- | - |  | - | --------- | -
|                                                                      |  |      |         |   |         |   |         | Accident |  |   | Property & |   |  |       |         
|                                                                      |  | Life |         |   | Annuity |   |         | & Health |  |   | Casualty   |   |  | Total |         
|Balance at December 31, 2011                                          |  | $    | 651,580 |   |         | $ | 463,036 |          |  | $ | 55,096     |   |  | $     | 150,981  |   |  | $ | 1,320,693 |  
|                                                                      |  |      |         |   |         |   |         |          |  |   |            |   |  |       |          |   |  |   |           |  
|Additions                                                             |  |      | 80,877  |   |         |   | 68,799  |          |  |   | 11,018     |   |  |       | 215,281  |   |  |   | 375,975   |  
|Amortization                                                          |  |      | (73,710 | ) |         |   | (90,523 | )        |  |   | (16,908    | ) |  |       | (227,749 | ) |  |   | (408,890  | )
|Effect of change in unrealized gains on available-for-sale securities |  |      | (5,331  | ) |         |   | (34,772 | )        |  |   |           |   |  |       |         |   |  |   | (40,103   | )
|                                                                      |  |      |         |   |         |   |         |          |  |   |            |   |  |       |          |   |  |   |           |  
|Net change                                                            |  |      | 1,836   |   |         |   | (56,496 | )        |  |   | (5,890     | ) |  |       | (12,468  | ) |  |   | (73,018   | )
|                                                                      |  |      |         |   |         |   |         |          |  |   |            |   |  |       |          |   |  |   |           |  
|Balance at December 31, 2012                                          |  |      | 653,416 |   |         |   | 406,540 |          |  |   | 49,206     |   |  |       | 138,513  |   |  |   | 1,247,675 |  
|                                                                      |  |      |         |   |         |   |         |          |  |   |            |   |  |       |          |   |  |   |           |  
|Additions                                                             |  |      | 107,410 |   |         |   | 49,397  |          |  |   | 13,263     |   |  |       | 208,889  |   |  |   | 378,959   |  
|Amortization                                                          |  |      | (82,658 | ) |         |   | (85,756 | )        |  |   | (15,249    | ) |  |       | (225,131 | ) |  |   | (408,794  | )
|Effect of change in unrealized gains on available-for-sale securities |  |      | 5,916   |   |         |   | 53,977  |          |  |   |           |   |  |       |         |   |  |   | 59,893    |  
|                                                                      |  |      |         |   |         |   |         |          |  |   |            |   |  |       |          |   |  |   |           |  
|Net change                                                            |  |      | 30,668  |   |         |   | 17,618  |          |  |   | (1,986     | ) |  |       | (16,242  | ) |  |   | 30,058    |  
|                                                                      |  |      |         |   |         |   |         |          |  |   |            |   |  |       |          |   |  |   |           |  
|Balance at December 31, 2013                                          |  |      | 684,084 |   |         |   | 424,158 |          |  |   | 47,220     |   |  |       | 122,271  |   |  |   | 1,277,733 |  
|                                                                      |  |      |         |   |         |   |         |          |  |   |            |   |  |       |          |   |  |   |           |  
|Additions                                                             |  |      | 110,195 |   |         |   | 47,400  |          |  |   | 19,530     |   |  |       | 213,237  |   |  |   | 390,362   |  
|Amortization                                                          |  |      | (78,181 | ) |         |   | (79,135 | )        |  |   | (18,966    | ) |  |       | (223,658 | ) |  |   | (399,940  | )
|Effect of change in unrealized gains on available-for-sale securities |  |      | (4,629  | ) |         |   | (9,982  | )        |  |   |           |   |  |       |         |   |  |   | (14,611   | )
|                                                                      |  |      |         |   |         |   |         |          |  |   |            |   |  |       |          |   |  |   |           |  
|Net change                                                            |  |      | 27,385  |   |         |   | (41,717 | )        |  |   | 564        |   |  |       | (10,421  | ) |  |   | (24,189   | )
|                                                                      |  |      |         |   |         |   |         |          |  |   |            |   |  |       |          |   |  |   |           |  
|Balance at December 31, 2014                                          |  | $    | 711,469 |   |         | $ | 382,441 |          |  | $ | 47,784     |   |  | $     | 111,850  |   |  | $ | 1,253,544 |  
|                                                                      |  |      |         |   |         |   |         |          |  |   |            |   |  |       |          |   |  |   |           |  

Commissions comprise the majority of the additions to deferred policy acquisition costs for each year.

11. LIABILITY FOR FUTURE POLICY BENEFITS AND POLICYHOLDER ACCOUNT BALANCES

American National establishes liabilities for amounts payable under insurance and annuity policies. Generally, amounts are payable over an
extended period of time and related liabilities are calculated as the present value of expected benefit payments reduced by the present value of expected premiums. Such liabilities are established on a block of business based on methods and
underlying assumptions in accordance with GAAP and applicable actuarial standards. Principal assumptions used in the establishment of liabilities for future policy benefits are mortality, morbidity, policy lapse, renewal, retirement, disability
incidence, disability termination, investment return, inflation, expenses, and other contingent events as appropriate to the respective product type.

Future policy benefits for non-participating traditional life insurance are equal to the aggregate of the present value of expected benefit payments and
related expenses less the present value of expected net premiums. Assumptions as to mortality and persistency are based upon American Nationals experience when the basis of the liability is established. Interest rates for the aggregate future
policy benefit liabilities range from 3.0% to 8.0%.

Future policy benefit liabilities for participating traditional life insurance are equal to the
aggregate of (i) net level premium reserves for death and endowment policy benefits (calculated based upon the non-forfeiture interest rate, ranging from 2.5% to 5.5%) and mortality rates guaranteed in calculating the cash surrender values
described in such contracts; and (ii) the liability for terminal dividends.

Future policy benefit liabilities for individual fixed deferred
annuities after annuitization and single premium immediate annuities are equal to the present value of expected future payments. The interest rate used in establishing such liabilities range from 3.0% to 5.6% for all policies in-force.

Future policy benefit liabilities for non-medical health insurance are calculated using the net level premium method and assumptions as to future morbidity,
withdrawals and interest, which provide a margin for adverse deviation. Interest rates used in establishing such liabilities range from 3.5% to 8.0%.



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Future policy benefit liabilities for disabled lives are estimated using the present value of benefits method and
experience assumptions as to claim terminations, expenses and interest. Interest rates used in establishing such liabilities range from 3.0% to 4.5%.

Liabilities for universal life secondary guarantees and paid-up guarantees are determined by estimating the expected value of death benefits payable when the
account balance is projected to be zero and recognizing those benefits ratably over the accumulation period based on total expected assessments. American National regularly evaluates estimates used and adjusts the additional liability balances with
a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used in estimating the secondary and paid-up guarantee liabilities are consistent with those
used for amortizing DAC, and are thus subject to the same variability and risk. The assumptions of investment performance and volatility for variable products are consistent with historical Standard & Poors experience. The benefits
used in calculating the liabilities are based on the average benefits payable over a range of scenarios.

American National periodically reviews its
estimates of actuarial liabilities for future policy benefits and compares them with its actual experience. Differences between actual experience and the assumptions used in pricing these policies, guarantees and riders and in the establishment of
the related liabilities result in variances in profit and could result in losses. The effects of changes in such estimated liabilities are included in the results of operations in the period in which the changes occur.

Policyholder account balances relate to investment-type contracts and universal life-type policies. Investment-type contracts principally include traditional
individual fixed annuities in the accumulation phase and non-variable group annuity contracts. Policyholder account balances are equal to (i) policy account values, which consist of an accumulation of gross premium payments; (ii) credited
interest, ranging from 1.0% to 8.0% (some annuities have enhanced first year crediting rates ranging from 1.0% to 7.0%), less expenses, mortality charges, and withdrawals; and (iii) fair value adjustments.

12. LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES

The liability for unpaid claims and claim adjustment expenses (claims) for accident and health, and property and casualty
insurance is included in the Policy and contract claims in the consolidated statements of financial position and represents the amount estimated for claims that have been reported but not settled and IBNR claims. Liability for unpaid
claims are estimated based upon American Nationals historical experience and actuarial assumptions that consider the effects of current developments, anticipated trends and risk management programs, reduced for anticipated salvage and
subrogation. The effects of the changes are included in the consolidated results of operations in the period in which the changes occur.

Information
regarding the liability for unpaid claims is shown below (in thousands):



|                                 |  |                          |           |   |      |   |           |      |  |   |           |  
|-------------------------------- |  | ------------------------ | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                 |  | Years ended December 31, |          
|                                 |  | 2014                     |           |   | 2013 |   |           | 2012 | 
|Unpaid claims balance, beginning |  | $                        | 1,096,301 |   |      | $ | 1,168,047 |      |  | $ | 1,180,259 |  
|Less reinsurance recoverables    |  |                          | 215,164   |   |      |   | 256,885   |      |  |   | 235,174   |  
|                                 |  |                          |           |   |      |   |           |      |  |   |           |  
|Net beginning balance            |  |                          | 881,137   |   |      |   | 911,162   |      |  |   | 945,085   |  
|                                 |  |                          |           |   |      |   |           |      |  |   |           |  
|Incurred related to              |  |                          |           |   |      |   |           |      |  |   |           |  
|Current                          |  |                          | 940,466   |   |      |   | 938,620   |      |  |   | 1,001,915 |  
|Prior years                      |  |                          | (44,806   | ) |      |   | (46,872   | )    |  |   | (48,688   | )
|                                 |  |                          |           |   |      |   |           |      |  |   |           |  
|Total incurred claims            |  |                          | 895,660   |   |      |   | 891,748   |      |  |   | 953,227   |  
|                                 |  |                          |           |   |      |   |           |      |  |   |           |  
|Paid claims related to           |  |                          |           |   |      |   |           |      |  |   |           |  
|Current                          |  |                          | 561,887   |   |      |   | 578,831   |      |  |   | 620,739   |  
|Prior years                      |  |                          | 328,422   |   |      |   | 342,942   |      |  |   | 366,411   |  
|                                 |  |                          |           |   |      |   |           |      |  |   |           |  
|Total paid claims                |  |                          | 890,309   |   |      |   | 921,773   |      |  |   | 987,150   |  
|                                 |  |                          |           |   |      |   |           |      |  |   |           |  
|Net balance                      |  |                          | 886,488   |   |      |   | 881,137   |      |  |   | 911,162   |  
|Plus reinsurance recoverables    |  |                          | 245,906   |   |      |   | 215,164   |      |  |   | 256,885   |  
|                                 |  |                          |           |   |      |   |           |      |  |   |           |  
|Unpaid claims balance, ending    |  | $                        | 1,132,394 |   |      | $ | 1,096,301 |      |  | $ | 1,168,047 |  
|                                 |  |                          |           |   |      |   |           |      |  |   |           |  



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The net and gross reserve calculations have shown favorable development for the last several years as a result of
favorable loss emergence compared to what was implied by the loss development patterns used in the original estimation of losses in prior years. Estimates for ultimate incurred claims attributable to insured events of prior years decreased by
approximately $44,806,000 in 2014, $46,872,000 in 2013, and $48,688,000 in 2012.

13. REINSURANCE

American National reinsures portions of certain life insurance policies to provide a greater diversification of risk and manage exposure on
larger risks. For the issue ages zero to 65, the maximum amount that would be retained by one life insurance company (American National) would be $1,500,000 individual life, $250,000 individual accidental death, $100,000 group life, and $125,000
credit life (total $1,975,000). If individual, group and credit insurance were all in force at the same time, the maximum risk on any one life could be $3,225,000. For the issue ages 66 and over, the maximum amount that would be retained by one life
insurance company (American National) would be $700,000 individual life, $250,000 individual accidental death, $100,000 group life, and $125,000 credit life (total $1,175,000). If individual, group and credit insurance were all in force at the same
time, the maximum risk on any one life could be $2,425,000.

For the Property and Casualty segment, American National retains the first $1,000,000 of loss
per risk. Reinsurance then covers the next $5,000,000 of property and liability losses per risk. For 2014, additional excess property per risk coverage was purchased to cover risks up to $15,000,000, and excess casualty clash coverage was purchased
to cover losses up to $50,000,000. For 2015, the additional excess property per risk coverage was extended to cover risks up to $20,000,000, and the excess casualty clash coverage was extended to cover losses up to $60,000,000. Excess casualty clash
covers losses incurred as a result of one casualty event involving multiple policies, excess policy limits, and extra contractual obligations. Facultative reinsurance cover is purchased for individual risks attaching at $20,000,000, as needed.
Corporate catastrophe coverage is also in place for losses up to a $500,000,000 event. Catastrophe aggregate reinsurance coverage is also purchased. This coverage is provided by two contracts. The first contract provides for $30,000,000 of coverage
after $90,000,000 of aggregated catastrophe losses has been reached. The first $10,000,000 of each catastrophe loss contributes to the $90,000,000 aggregation of losses. This catastrophe aggregate reinsurance coverage was placed at 95% for 2014 and
increased to 97.5% for 2015. The second aggregate contract is a new Stretch & Aggregate cover. It consists of a $35,000,000 annual limit available either wholly or in part across two layers. The first layer is 8.75% of $400,000,000 excess
of $100,000,000 on an occurrence basis. The second layer provides aggregate protection. Subject loss is $35,000,000 excess of $5,000,000 of each catastrophe. Recoveries follow satisfaction of a $45,000,000 annual aggregate deductible. At the
beginning of 2014, the Stretch & Aggregate cover was placed at 71.43% for losses occurring during 2014. This cover was commuted effective July 1, 2014 and replaced at 100% for losses occurring from July 1, 2014 to June 30,
2015.

American National remains primarily liable with respect to any reinsurance ceded, and would bear the entire loss if the reinsurer were to be unable
to meet their obligations under any reinsurance treaties. American National had amounts recoverable from reinsurers of $428,654,000 and $414,743,000 at December 31, 2014 and 2013, respectively. None of the amount outstanding at
December 31, 2014 is the subject of litigation or is in dispute with the reinsurers involved. Management believes the unfavorable resolution of any dispute that may arise would not have a material impact on American Nationals consolidated
financial statements.

The amounts in the consolidated financial statements include the impact of reinsurance. Information regarding the effect of
reinsurance is shown below (in thousands):



|                                                  |  |                          |           |   |      |   |           |      |  |   |           |  
|------------------------------------------------- |  | ------------------------ | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                  |  | Years ended December 31, |          
|                                                  |  | 2014                     |           |   | 2013 |   |           | 2012 | 
|Direct premiums                                   |  | $                        | 2,049,447 |   |      | $ | 1,970,400 |      |  | $ | 1,971,078 |  
|Reinsurance premiums assumed from other companies |  |                          | 227,076   |   |      |   | 189,067   |      |  |   | 159,518   |  
|Reinsurance premiums ceded to other companies     |  |                          | (460,552  | ) |      |   | (423,941  | )    |  |   | (426,423  | )
|                                                  |  |                          |           |   |      |   |           |      |  |   |           |  
|Net premiums                                      |  | $                        | 1,815,971 |   |      | $ | 1,735,526 |      |  | $ | 1,704,173 |  
|                                                  |  |                          |           |   |      |   |           |      |  |   |           |  



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Life insurance in-force and related reinsurance amounts are shown below (in thousands):



|                                               |  |              |             |   |      |   |             |      |  |   |             |  
|---------------------------------------------- |  | ------------ | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                               |  | December 31, |            
|                                               |  | 2014         |             |   | 2013 |   |             | 2012 | 
|Direct life insurance in-force                 |  | $            | 85,570,057  |   |      | $ | 80,038,270  |      |  | $ | 72,884,984  |  
|Reinsurance risks assumed from other companies |  |              | 6,007       |   |      |   | 32,019      |      |  |   | 103,576     |  
|Reinsurance risks ceded to other companies     |  |              | (30,007,131 | ) |      |   | (30,577,123 | )    |  |   | (30,477,364 | )
|                                               |  |              |             |   |      |   |             |      |  |   |             |  
|Net life insurance in-force                    |  | $            | 55,568,933  |   |      | $ | 49,493,166  |      |  | $ | 42,511,196  |  
|                                               |  |              |             |   |      |   |             |      |  |   |             |  

14. FEDERAL INCOME TAXES

A reconciliation of the effective tax rate to the statutory federal tax rate is shown below (in thousands, except percentages):



|                               |  |                          |         |   |      |  |      |        |  |   |         |   |  |        |      |   |      |   |        |   |  |  |      |  
|------------------------------ |  | ------------------------ | ------- | - | ---- |  | ---- | ------ |  | - | ------- | - |  | ------ | ---- | - | ---- | - | ------ | - |  |  | ---- | -
|                               |  | Years ended December 31, |        
|                               |  | 2014                     |         |   | 2013 |  |      | 2012   | 
|                               |  | Amount                   |         |   | Rate |  |      | Amount |  |   | Rate    |   |  | Amount |      |   | Rate |  
|Income tax on pre-tax income   |  | $                        | 115,061 |   |      |  | 35.0 | %      |  | $ | 126,865 |   |  |        | 35.0 | % |      | $ | 95,111 |   |  |  | 35.0 | %
|Tax-exempt investment income   |  |                          | (6,680  | ) |      |  | (2.0 | )      |  |   | (6,366  | ) |  |        | (1.8 | ) |      |   | (7,364 | ) |  |  | (2.7 | )
|Dividend exclusion             |  |                          | (7,620  | ) |      |  | (2.3 | )      |  |   | (6,928  | ) |  |        | (1.9 | ) |      |   | (6,323 | ) |  |  | (2.3 | )
|Miscellaneous tax credits, net |  |                          | (7,888  | ) |      |  | (2.4 | )      |  |   | (7,757  | ) |  |        | (2.1 | ) |      |   | (8,106 | ) |  |  | (3.0 | )
|Other items, net               |  |                          | (842    | ) |      |  | (0.3 | )      |  |   | (6,173  | ) |  |        | (1.7 | ) |      |   | 2,264  |   |  |  | 0.8  |  
|                               |  |                          |         |   |      |  |      |        |  |   |         |   |  |        |      |   |      |   |        |   |  |  |      |  
|Total                          |  | $                        | 92,031  |   |      |  | 28.0 | %      |  | $ | 99,641  |   |  |        | 27.5 | % |      | $ | 75,582 |   |  |  | 27.8 | %
|                               |  |                          |         |   |      |  |      |        |  |   |         |   |  |        |      |   |      |   |        |   |  |  |      |  

American National made payments of $61,821,000, $73,993,000 and $46,939,000 during 2014, 2013, and 2012, respectively.

The tax effects of temporary differences that gave rise to the deferred tax assets and liabilities are shown below (in thousands):



|                                                                                                        |  |              |          |   |      |   |          |  
|------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | - | ---- | - | -------- | -
|                                                                                                        |  | December 31, |         
|                                                                                                        |  | 2014         |          |   | 2013 |  
|DEFERRED TAX ASSETS:                                                                                    |  |              |          |   |     
|Marketable securities, principally due to impairment losses                                             |  | $            | 58,375   |   |      | $ | 70,816   |  
|Investment in bonds, principally due to differences between GAAP and tax basis                          |  |              | 1,897    |   |      |   |         |  
|Investment in real estate and other invested assets, principally due to investment valuation allowances |  |              | 12,280   |   |      |   | 7,888    |  
|Policyholder funds, principally due to policy reserve discount                                          |  |              | 205,821  |   |      |   | 206,775  |  
|Policyholder funds, principally due to unearned premium reserve                                         |  |              | 32,153   |   |      |   | 30,871   |  
|Participating policyholders surplus                                                                    |  |              | 46,672   |   |      |   | 42,701   |  
|Pension                                                                                                 |  |              | 73,604   |   |      |   | 59,174   |  
|Commissions and other expenses                                                                          |  |              | 6,998    |   |      |   | 8,024    |  
|Tax carryforwards                                                                                       |  |              | 1,651    |   |      |   | 10,843   |  
|                                                                                                        |  |              |          |   |      |   |          |  
|Gross deferred tax assets                                                                               |  |              | 439,451  |   |      |   | 437,092  |  
|                                                                                                        |  |              |          |   |      |   |          |  
|DEFERRED TAX LIABILITIES:                                                                               |  |              |          |   |      |   |          |  
|Marketable securities, principally due to net unrealized gains                                          |  |              | 361,352  |   |      |   | 284,503  |  
|Investment in bonds, principally due to differences between GAAP and tax basis                          |  |              |         |   |      |   | 5,249    |  
|Deferred policy acquisition costs, due to difference between GAAP and tax amortization methods          |  |              | 331,274  |   |      |   | 326,855  |  
|Property, plant and equipment, principally due to difference between                                    |  |              |          |   |      |   |          |  
|GAAP and tax depreciation methods                                                                       |  |              | 16,995   |   |      |   | 17,262   |  
|Other Liabilities                                                                                       |  |              | 19,942   |   |      |   | 23,651   |  
|                                                                                                        |  |              |          |   |      |   |          |  
|Gross deferred tax liabilities                                                                          |  |              | 729,563  |   |      |   | 657,520  |  
|                                                                                                        |  |              |          |   |      |   |          |  
|Total net deferred tax                                                                                  |  | $            | (290,112 | ) |      | $ | (220,428 | )
|                                                                                                        |  |              |          |   |      |   |          |  



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Management believes that a sufficient level of taxable income will be achieved over time to utilize the deferred
tax assets in the consolidated federal tax return; therefore, no valuation allowance was recorded as of December 31, 2014 and 2013. However, if not utilized beforehand, approximately $1,651,000 in ordinary loss tax carryforwards will expire on
December 31, 2033.

The statute of limitations for the examination of federal income tax returns by the Internal Revenue Service for years 2006 to
2009 has been extended. In the opinion of management, all prior year deficiencies have been paid or adequate provisions have been made for any tax deficiencies that may be upheld. No provision for penalties was established, and no interest expense
was incurred for 2014 or 2013, relating to uncertain tax positions. Management does not believe there are any uncertain tax benefits that could be recognized within the next twelve months that would decrease American Nationals effective tax
rate.



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15. ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of and changes in the accumulated other comprehensive income (AOCI), and the related tax effects, are shown below
(in thousands):



|                                                                                                                  |  |                                           |         |   |                                       |   |          |                            |  |   |        |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------- | ------- | - | ------------------------------------- | - | -------- | -------------------------- |  | - | ------ | - |  | - | ------- | -
|                                                                                                                  |  | Net UnrealizedGains/(Losses)on Securities |         |   | DefinedBenefitPension PlanAdjustments |   |          | ForeignCurrencyAdjustments |  |   | AOCI   |  
|Balance at December 31, 2011                                                                                      |  | $                                         | 274,837 |   |                                       | $ | (115,485 | )                          |  | $ | 51     |   |  | $ | 159,403 |  
|                                                                                                                  |  |                                           |         |   |                                       |   |          |                            |  |   |        |   |  |   |         |  
|Amounts reclassified from AOCI (net of tax benefit $11,700 and expense $5,572)                                    |  |                                           | (21,718 | ) |                                       |   | 10,349   |                            |  |   |       |   |  |   | (11,369 | )
|Unrealized holding gains arising during the period (net of tax expense $79,796)                                   |  |                                           | 148,193 |   |                                       |   |          |                            |  |   |        |   |  |   | 148,193 |  
|Unrealized adjustment to DAC (net of tax benefit $14,035)                                                         |  |                                           | (26,068 | ) |                                       |   |          |                            |  |   |        |   |  |   | (26,068 | )
|Unrealized gains on investments attributable to participating policyholders interest (net of tax benefit $2,370) |  |                                           | (4,402  | ) |                                       |   |          |                            |  |   |        |   |  |   | (4,402  | )
|Actuarial loss arising during the period (net of tax benefit of $12,851)                                          |  |                                           |         |   |                                       |   | (23,867  | )                          |  |   |        |   |  |   | (23,867 | )
|Foreign currency adjustment (net of tax expense $65)                                                              |  |                                           |         |   |                                       |   |          |                            |  |   | 120    |   |  |   | 120     |  
|                                                                                                                  |  |                                           |         |   |                                       |   |          |                            |  |   |        |   |  |   |         |  
|Balance at December 31, 2012                                                                                      |  |                                           | 370,842 |   |                                       |   | (129,003 | )                          |  |   | 171    |   |  |   | 242,010 |  
|                                                                                                                  |  |                                           |         |   |                                       |   |          |                            |  |   |        |   |  |   |         |  
|Amounts reclassified from AOCI (net of tax benefit $14,757 and expense $6,204)                                    |  |                                           | (27,407 | ) |                                       |   | 11,522   |                            |  |   |       |   |  |   | (15,885 | )
|Unrealized holding gains arising during the period (net of tax expense $41,970)                                   |  |                                           | 77,035  |   |                                       |   |          |                            |  |   |        |   |  |   | 77,035  |  
|Unrealized adjustment to DAC (net of tax expense $20,931)                                                         |  |                                           | 38,962  |   |                                       |   |          |                            |  |   |        |   |  |   | 38,962  |  
|Unrealized gains on investments attributable to participating policyholders interest (net of tax benefit $805)   |  |                                           | (1,495  | ) |                                       |   |          |                            |  |   |        |   |  |   | (1,495  | )
|Actuarial gain arising during the period (net of tax expense of $39,630)                                          |  |                                           |         |   |                                       |   | 73,597   |                            |  |   |        |   |  |   | 73,597  |  
|Foreign currency adjustment (net of tax benefit $276)                                                             |  |                                           |         |   |                                       |   |          |                            |  |   | (512   | ) |  |   | (512    | )
|                                                                                                                  |  |                                           |         |   |                                       |   |          |                            |  |   |        |   |  |   |         |  
|Balance at December 31, 2013                                                                                      |  |                                           | 457,937 |   |                                       |   | (43,884  | )                          |  |   | (341   | ) |  |   | 413,712 |  
|                                                                                                                  |  |                                           |         |   |                                       |   |          |                            |  |   |        |   |  |   |         |  
|Amounts reclassified from AOCI (net of tax benefit $12,379 and expense $1,547)                                    |  |                                           | (22,990 | ) |                                       |   | 2,873    |                            |  |   |       |   |  |   | (20,117 | )
|Unrealized holding gains arising during the period (net of tax expense $79,535)                                   |  |                                           | 147,709 |   |                                       |   |          |                            |  |   |        |   |  |   | 147,709 |  
|Unrealized adjustment to DAC (net of tax benefit $5,986)                                                          |  |                                           | (8,625  | ) |                                       |   |          |                            |  |   |        |   |  |   | (8,625  | )
|Unrealized gains on investments attributable to participating policyholders interest (net of tax benefit $3,166) |  |                                           | (5,880  | ) |                                       |   |          |                            |  |   |        |   |  |   | (5,880  | )
|Actuarial loss arising during the period (net of tax benefit of $18,880)                                          |  |                                           |         |   |                                       |   | (35,063  | )                          |  |   |        |   |  |   | (35,063 | )
|Foreign currency adjustment (net of tax benefit $514)                                                             |  |                                           |         |   |                                       |   |          |                            |  |   | (954   | ) |  |   | (954    | )
|                                                                                                                  |  |                                           |         |   |                                       |   |          |                            |  |   |        |   |  |   |         |  
|Balance at December 31, 2014                                                                                      |  | $                                         | 568,151 |   |                                       | $ | (76,074  | )                          |  | $ | (1,295 | ) |  | $ | 490,782 |  
|                                                                                                                  |  |                                           |         |   |                                       |   |          |                            |  |   |        |   |  |   |         |  



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16. STOCKHOLDERS EQUITY AND NONCONTROLLING INTERESTS

American National has one class of common stock with a par value of $1.00 per share and 50,000,000 authorized shares. The amounts
outstanding at the dates indicated are shown below:



|                                |  |                          |            |   |      |  |            |      |  |  |            |  
|------------------------------- |  | ------------------------ | ---------- | - | ---- |  | ---------- | ---- |  |  | ---------- | -
|                                |  | Years ended December 31, |           
|                                |  | 2014                     |            |   | 2013 |  |            | 2012 | 
|Common stock                    |  |                          |            |   |      |  |            |      |  |  |            |  
|Shares issued                   |  |                          | 30,832,449 |   |      |  | 30,832,449 |      |  |  | 30,832,449 |  
|Treasury shares                 |  |                          | (3,960,507 | ) |      |  | (3,937,261 | )    |  |  | (3,995,785 | )
|                                |  |                          |            |   |      |  |            |      |  |  |            |  
|Outstanding shares              |  |                          | 26,871,942 |   |      |  | 26,895,188 |      |  |  | 26,836,664 |  
|Restricted shares               |  |                          | (142,667   | ) |      |  | (190,667   | )    |  |  | (185,334   | )
|                                |  |                          |            |   |      |  |            |      |  |  |            |  
|Unrestricted outstanding shares |  |                          | 26,729,275 |   |      |  | 26,704,521 |      |  |  | 26,651,330 |  
|                                |  |                          |            |   |      |  |            |      |  |  |            |  

Stock-based compensation

American National has one stock-based compensation plan, which allows for grants of Non-Qualified Stock Options, Stock Appreciation Rights (SAR),
Restricted Stock (RS) Awards, Restricted Stock Units (RSU), Performance Awards, Incentive Awards or any combination thereof. This plan is administered by the American National Board Compensation Committee. The Board
Compensation Committee makes incentive awards under this plan to our executives after meeting established performance objectives. All awards are subject to review and approval by the committee and the Board of Directors, both at the time of setting
applicable performance objectives and at the time of payment of the awards. The number of shares available for grants under the plan cannot exceed 2,900,000 shares, and no more than 200,000 shares may be granted to any one individual in any calendar
year. Grants are made to certain officers and directors as compensation and to align their interests with those of other shareholders.

SAR, RS and RSU
information for the periods indicated is shown below:



|                                 |  |        |         |   |                 |   |        |          |  |  |                  |   |  |       |        |  |                 |  |         |   |  |   |        | 
|-------------------------------- |  | ------ | ------- | - | --------------- | - | ------ | -------- |  |  | ---------------- | - |  | ----- | ------ |  | --------------- |  | ------- | - |  | - | ------ | 
|                                 |  | SAR    |         |   | RS Shares       |   |        | RS Units | 
|                                 |  |        |         |   | Weighted-       |   |        |          |  |  | Weighted-Average |   |  |       |        |  | Weighted-       | 
|                                 |  |        |         |   | Average Grant   |   |        |          |  |  | Grant Date Fair  |   |  |       |        |  | Average Grant   | 
|                                 |  | Shares |         |   | Date Fair Value |   |        | Shares   |  |  | Value            |   |  | Units |        |  | Date Fair Value | 
|Outstanding at December 31, 2011 |  |        | 126,769 |   |                 | $ | 110.08 |          |  |  | 261,334          |   |  | $     | 102.98 |  |                 |  | 69,566  |   |  | $ | 83.56  | 
|Granted                          |  |        |        |   |                 |   |       |          |  |  |                 |   |  |       |       |  |                 |  | 75,355  |   |  |   | 71.69  | 
|Exercised                        |  |        | (200    | ) |                 |   | 66.76  |          |  |  | (76,000          | ) |  |       | 88.00  |  |                 |  | (17,380 | ) |  |   | 94.47  | 
|Forfeited                        |  |        | (3,510  | ) |                 |   | 114.02 |          |  |  |                 |   |  |       |       |  |                 |  | (482    | ) |  |   | 74.85  | 
|Expired                          |  |        | (14,108 | ) |                 |   | 100.14 |          |  |  |                 |   |  |       |       |  |                 |  |        |   |  |   |       | 
|                                 |  |        |         |   |                 |   |        |          |  |  |                  |   |  |       |        |  |                 |  |         |   |  |   |        | 
|Outstanding at December 31, 2012 |  |        | 108,951 |   |                 |   | 111.31 |          |  |  | 185,334          |   |  |       | 109.13 |  |                 |  | 127,059 |   |  |   | 75.06  | 
|                                 |  |        |         |   |                 |   |        |          |  |  |                  |   |  |       |        |  |                 |  |         |   |  |   |        | 
|Granted                          |  |        |        |   |                 |   |       |          |  |  | 10,000           |   |  |       | 80.05  |  |                 |  | 71,084  |   |  |   | 80.05  | 
|Exercised                        |  |        | (19,849 | ) |                 |   | 103.61 |          |  |  | (4,667           | ) |  |       | 111.60 |  |                 |  | (76,378 | ) |  |   | 77.04  | 
|Forfeited                        |  |        | (334    | ) |                 |   | 96.53  |          |  |  |                 |   |  |       |       |  |                 |  | (396    | ) |  |   | 77.20  | 
|Expired                          |  |        | (14,333 | ) |                 |   | 107.93 |          |  |  |                 |   |  |       |       |  |                 |  |        |   |  |   |       | 
|                                 |  |        |         |   |                 |   |        |          |  |  |                  |   |  |       |        |  |                 |  |         |   |  |   |        | 
|Outstanding at December 31, 2013 |  |        | 74,435  |   |                 |   | 114.08 |          |  |  | 190,667          |   |  |       | 107.54 |  |                 |  | 121,369 |   |  |   | 76.23  | 
|                                 |  |        |         |   |                 |   |        |          |  |  |                  |   |  |       |        |  |                 |  |         |   |  |   |        | 
|Granted                          |  |        |        |   |                 |   |       |          |  |  |                 |   |  |       |       |  |                 |  | 66,383  |   |  |   | 113.49 | 
|Exercised                        |  |        | (3,226  | ) |                 |   | 95.54  |          |  |  | (48,000          | ) |  |       | 108.00 |  |                 |  | (59,438 | ) |  |   | 76.53  | 
|Forfeited                        |  |        |        |   |                 |   |       |          |  |  |                 |   |  |       |       |  |                 |  | (100    | ) |  |   | 113.49 | 
|Expired                          |  |        | (16,279 | ) |                 |   | 115.11 |          |  |  |                 |   |  |       |       |  |                 |  |        |   |  |   |       | 
|                                 |  |        |         |   |                 |   |        |          |  |  |                  |   |  |       |        |  |                 |  |         |   |  |   |        | 
|Outstanding at December 31, 2014 |  |        | 54,930  |   |                 |   | 114.86 |          |  |  | 142,667          |   |  |       | 107.39 |  |                 |  | 128,214 |   |  |   | 95.82  | 
|                                 |  |        |         |   |                 |   |        |          |  |  |                  |   |  |       |        |  |                 |  |         |   |  |   |        | 



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|                                                       |  |     |         |   |           |   |           |          |  |   |            | 
|------------------------------------------------------ |  | --- | ------- | - | --------- | - | --------- | -------- |  | - | ---------- | 
|                                                       |  | SAR |         |   | RS Shares |   |           | RS Units | 
|Weighted-average contractual remaining life (in years) |  |     | 1.78    |   |           |   | 4.02      |          |  |   | 1.78       | 
|Exercisable shares                                     |  |     | 54,747  |   |           |   | N/A       |          |  |   |           | 
|Weighted-average exercise price                        |  | $   | 114.86  |   |           | $ | 107.39    |          |  | $ | 95.82      | 
|Weighted-average exercise price exercisable shares     |  |     | 114.88  |   |           |   | N/A       |          |  |   | N/A        | 
|Compensation expense (credits)                         |  |     |         |   |           |   |           |          |  |   |            | 
|Year ended December 31, 2014                           |  | $   | (23,000 | ) |           | $ | 2,963,000 |          |  | $ | 7,710,000  | 
|Year ended December 31, 2013                           |  | $   | 374,000 |   |           | $ | 2,219,000 |          |  | $ | 12,342,000 | 
|Year ended December 31, 2012                           |  |     | (6,000  | ) |           |   | 2,418,000 |          |  |   | 7,752,000  | 
|Fair value of liability award                          |  |     |         |   |           |   |           |          |  |   |            | 
|December 31, 2014                                      |  |     | 167,000 |   |           |   | N/A       |          |  |   | 16,301,000 | 
|December 31, 2013                                      |  |     | 376,000 |   |           |   | N/A       |          |  |   | 15,018,000 | 

The SARs give the holder the right to cash compensation based on the difference between the stock price on the grant date and
the stock price on the exercise date. The SARs vest at a rate of 20% per year for five years and expire five years after vesting.

Effective
December 31, 2012, the settlement provision within outstanding RSU awards was modified to allow the recipient of the awards to settle the vested RSUs in either cash or American Nationals common stock. This change in the settlement
provision is expected to apply to all future issuance of RSU awards. Prior to the modification, vested RSUs were converted to American Nationals common stock on a one-for-one basis. This modification changes the award classification from an
equity to a liability award. At the date of modification, American National recorded a liability of $7,974,000 with a corresponding reduction in additional paid-in capital. The liability will be re-measured and adjusted for changes in the fair value
each reporting period through the vesting date. RSUs generally vest after a three-year graded vesting requirement. Certain awards vest over a shorter period as a result of retirement provisions. The modification, which was applied consistently to
all participants, resulted in an incremental cost of $5,691,000 and $5,232,000 for the years ended December 31, 2014 and 2013, respectively.

RS
Awards entitle the participant to full dividend and voting rights. Each award has the value of one share of restricted stock and vests 10 years from the grant date. Unvested shares are restricted as to disposition, and are subject to forfeiture
under certain circumstances. Compensation expense is recognized over the vesting period. The restrictions on these awards lapse after 10 years, and these awards feature a graded vesting schedule in the case of the retirement of an award holder.
Restricted stock for 350,334 shares has been granted at an exercise price of zero, of which 142,667 shares are unvested.

Earnings per share

Basic earnings per share were calculated using a weighted average number of shares outstanding. The Restricted Stock awards and units resulted in diluted
earnings per share as follows (in thousands, except share-related data):



|                                             |  |                          |            |  |      |   |            |      |  |   |            | 
|-------------------------------------------- |  | ------------------------ | ---------- |  | ---- | - | ---------- | ---- |  | - | ---------- | 
|                                             |  | Years ended December 31, |           
|                                             |  | 2014                     |            |  | 2013 |   |            | 2012 | 
|Weighted average shares outstanding          |  |                          | 26,802,841 |  |      |   | 26,791,900 |      |  |   | 26,714,865 | 
|Incremental shares from RS awards and RSUs   |  |                          | 115,829    |  |      |   | 122,691    |      |  |   | 148,809    | 
|                                             |  |                          |            |  |      |   |            |      |  |   |            | 
|Total shares for diluted calculations        |  |                          | 26,918,670 |  |      |   | 26,914,591 |      |  |   | 26,863,674 | 
|                                             |  |                          |            |  |      |   |            |      |  |   |            | 
|Net income attributable to American National |  | $                        | 247,193    |  |      | $ | 268,372    |      |  | $ | 191,041    | 
|Basic earnings per share                     |  | $                        | 9.22       |  |      | $ | 10.02      |      |  | $ | 7.15       | 
|Diluted earnings per share                   |  |                          | 9.18       |  |      |   | 9.97       |      |  |   | 7.11       | 



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Statutory Capital and Surplus

Risk Based Capital (RBC) requirements are measures insurance regulators use to evaluate the capital adequacy of American National Insurance Company
and its insurance subsidiaries. RBC is calculated using formulas applied to certain financial balances and activities that consider, among other things, risks related to the type and quality of the invested assets, insurance risks associated with an
insurers products and liabilities, interest rate risks and general business risks. Insurance companies that do not maintain capital and surplus at a level at least 200% of the authorized control level RBC are required to take certain actions.
At December 31, 2014 and 2013, American National Insurance Companys statutory capital and surplus was $2,879,154,000 and $2,667,858,000, respectively. Additionally, each of the insurance subsidiaries had statutory capital and surplus at
December 31, 2014 and 2013, substantially above each individual subsidiarys authorized control level RBC.

American Nationals insurance
subsidiaries prepare statutory-basis financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of the state of domicile which include certain components of the National Association of
Insurance Commissioners Codification of Statutory Accounting Principles (NAIC Codification). NAIC Codification is intended to standardize regulatory accounting and reporting to state insurance departments. However, statutory
accounting practices continue to be established by individual state laws and permitted practices. Modifications by the various state insurance departments may impact the statutory capital and surplus of American National Insurance Company and its
insurance subsidiaries.

Statutory accounting differs from GAAP primarily by charging policy acquisition costs to expense as incurred, establishing future
policy benefit liabilities using different actuarial assumptions, and valuing securities on a different basis. In addition, certain assets are not admitted under statutory accounting principles and are charged directly to surplus.

One of American Nationals insurance subsidiaries has been granted a permitted practice from the Missouri Department of Insurance to record as the
valuation of its investment in a wholly-owned subsidiary that is the attorney-in-fact for a Texas domiciled insurer, the statutory capital and surplus of the Texas domiciled insurer. This permitted practice increases the statutory capital and
surplus of both American National Insurance Company and the Missouri domiciled insurance subsidiary by $62,807,000 and $58,207,000 at December 31, 2014 and 2013, respectively. Additionally, the statutory capital and surplus of both American
National Insurance Company and the Missouri domiciled insurance subsidiary would have remained substantially above the company action level RBC had it not used the permitted practice.

The statutory capital and surplus and net income (loss) of our life and property and casualty insurance entities in accordance with statutory accounting
practices are shown below (in thousands):



|                                         |  |              |           |  |      |   |           | 
|---------------------------------------- |  | ------------ | --------- |  | ---- | - | --------- | 
|                                         |  | December 31, |          
|                                         |  | 2014         |           |  | 2013 |  
|Statutory capital and surplus            |  |              |           |  |      |   |           | 
|Life insurance entities                  |  | $            | 1,904,128 |  |      | $ | 1,771,999 | 
|Property and casualty insurance entities |  |              | 984,155   |  |      |   | 904,557   | 



|                                         |  |                          |         |  |      |   |         |      |  |   |         | 
|---------------------------------------- |  | ------------------------ | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                         |  | Years ended December 31, |        
|                                         |  | 2014                     |         |  | 2013 |   |         | 2012 | 
|Statutory net income                     |  |                          |         |  |      |   |         |      |  |   |         | 
|Life insurance entities                  |  | $                        | 169,823 |  |      | $ | 191,932 |      |  | $ | 233,621 | 
|Property and casualty insurance entities |  |                          | 73,076  |  |      |   | 61,737  |      |  |   | 43,449  | 



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Dividends

American National Insurance Companys payment of dividends to stockholders is restricted by statutory regulations. The restrictions require life insurance
companies to maintain minimum amounts of capital and surplus, and in the absence of special approval, limit the payment of dividends to the greater of prior year statutory net income from operations on an annual, non-cumulative basis, or 10% of
prior year statutory surplus. Under Texas insurance law, American National Insurance Company is permitted to pay total dividends of $287,915,000 during 2015, without prior approval of the Texas Department of Insurance. Similar restrictions on
amounts that can transfer in the form of dividends, loans, or advances to American National Insurance Company apply to its insurance subsidiaries.

Noncontrolling interests

American National County Mutual
Insurance Company (County Mutual) is a mutual insurance company that is owned by its policyholders. American National has a management agreement that effectively gives it control of County Mutual. As a result, County Mutual is included
in the consolidated financial statements of American National. Policyholder interests in the financial position of County Mutual are reflected as noncontrolling interest of $6,750,000 at December 31, 2014 and 2013.

American National Insurance Company and its subsidiaries exercise significant control or ownership of various joint ventures, resulting in their consolidation
into American Nationals consolidated financial statements. The interests of the other partners in the consolidated joint ventures are shown as noncontrolling interests of $5,634,000 and $6,007,000 at December 31, 2014 and 2013,
respectively.

During 2012, American National increased its ownership interest with a consolidated joint venture. The effect of the change in ownership
interest of American National is shown below (in thousands):



|                                                                                                  |  |              |         |  |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------- |  | ------------ | ------- |  | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                  |  | December 31, |        
|                                                                                                  |  | 2014         |         |  | 2013 |   |         | 2012 | 
|Net income attributable to American National                                                      |  | $            | 247,193 |  |      | $ | 268,372 |      |  | $ | 191,041 |  
|                                                                                                  |  |              |         |  |      |   |         |      |  |   |         |  
|Decrease in American Nationals paid-in capital for purchase of additional interest               |  |              |        |  |      |   |        |      |  |   | (1,892  | )
|                                                                                                  |  |              |         |  |      |   |         |      |  |   |         |  
|Net transfers to noncontrolling interest                                                          |  |              |        |  |      |   |        |      |  |   | (1,892  | )
|Change from net income attributable to American National and transfers to noncontrolling interest |  | $            | 247,193 |  |      | $ | 268,372 |      |  | $ | 189,149 |  
|                                                                                                  |  |              |         |  |      |   |         |      |  |   |         |  



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17. SEGMENT INFORMATION

Management organizes the business into five operating segments:



| |  |  | Lifemarkets whole, term, universal, indexed and variable life insurance on a national basis primarily through career and multiple-line agents, as well as independent agents and direct marketing channels.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Annuityoffers fixed, indexed, and variable annuity products. These products are primarily sold through independent agents, brokers, and financial institutions, along with multiple-line and career agents.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Healthprimary lines of business are Medicare supplement, stop loss, other supplemental health products and credit disability insurance. Health products are typically distributed through independent agents and
managing general underwriters.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Property and Casualtywrites personal, agricultural and commercial coverages and credit-related property insurance. These products are primarily sold through multiple-line and independent agents.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Corporate and Otherconsists of net investment income from investments not allocated to the insurance segments and revenues from non-insurance operations.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------

The accounting policies of the segments are the same as those described in Note 2 to the consolidated financial statements. All revenue and expense amounts
specifically attributable to policy transactions are recorded directly to the appropriate operating segment. Revenues and expenses not specifically attributable to policy transactions are allocated to each segment as follows:



| |  |  | Recurring income from bonds and mortgage loans is allocated based on the assets allocated to each line of business at the average yield available from these assets.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Net investment income from all other assets is allocated to the insurance segments in accordance with the amount of capital allocated to each segment, with the remainder recorded in the Corporate and Other business
segment.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expenses are allocated based upon various factors, including premium and commission ratios within the respective operating segments.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------

The following summarizes results of operations by operating segments (in thousands):



|                                                                                                                          |  |                          |            |  |      |   |            |      |  |   |            | 
|------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- |  | ---- | - | ---------- | ---- |  | - | ---------- | 
|                                                                                                                          |  | Years ended December 31, |           
|                                                                                                                          |  | 2014                     |            |  | 2013 |   |            | 2012 | 
|Income from continuing operations before federal income taxes, and equity in earnings/losses of unconsolidated affiliates |  |                          |            |  |      |   |            |      |  |   |            | 
|Life                                                                                                                      |  | $                        | 43,352     |  |      | $ | 19,627     |      |  | $ | 34,251     | 
|Annuity                                                                                                                   |  |                          | 95,736     |  |      |   | 95,887     |      |  |   | 96,501     | 
|Health                                                                                                                    |  |                          | 25,559     |  |      |   | 25,255     |      |  |   | 18,046     | 
|Property and casualty                                                                                                     |  |                          | 89,632     |  |      |   | 74,068     |      |  |   | 45,425     | 
|Corporate and other                                                                                                       |  |                          | 74,467     |  |      |   | 147,633    |      |  |   | 77,522     | 
|                                                                                                                          |  |                          |            |  |      |   |            |      |  |   |            | 
|Total                                                                                                                     |  | $                        | 328,746    |  |      | $ | 362,470    |      |  | $ | 271,745    | 
|                                                                                                                          |  |                          |            |  |      |   |            |      |  |   |            | 
|Total Assets                                                                                                              |  |                          |            |  |      |   |            |      |  |   |            | 
|Life                                                                                                                      |  | $                        | 5,573,882  |  |      | $ | 5,375,602  |      |  | $ | 5,130,612  | 
|Annuity                                                                                                                   |  |                          | 10,766,619 |  |      |   | 11,104,180 |      |  |   | 11,802,579 | 
|Health                                                                                                                    |  |                          | 526,344    |  |      |   | 500,475    |      |  |   | 498,510    | 
|Property and casualty                                                                                                     |  |                          | 2,000,494  |  |      |   | 2,127,525  |      |  |   | 2,220,898  | 
|Corporate and other                                                                                                       |  |                          | 4,684,697  |  |      |   | 4,217,101  |      |  |   | 3,454,475  | 
|                                                                                                                          |  |                          |            |  |      |   |            |      |  |   |            | 
|Total                                                                                                                     |  | $                        | 23,552,036 |  |      | $ | 23,324,883 |      |  | $ | 23,107,074 | 
|                                                                                                                          |  |                          |            |  |      |   |            |      |  |   |            | 



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18. PENSION AND POSTRETIREMENT BENEFITS

Pension benefits

On October 31,
2013, American National adopted certain amendments to freeze all of its remaining unfrozen defined benefit pension plans as of December 31, 2013. Prior to the plan amendments, American National had a qualified defined benefit pension plan
covering virtually all employees and two non-qualified defined benefit pension plans covering executives. Effective December 31, 2013, no additional benefits accrued through these plans for additional years of service credit or future salary
increase credit, and no new participants were added to the plans. Benefits earned by eligible employees prior to the effective date of the plan amendments have not been affected. The plan amendments did not result in any curtailment gain or loss.

The tax-qualified plan has three separate noncontributory programs. One of the programs covers Career Sales and Service Division agents and
managers. The other two programs cover salaried and management employees and corporate clerical employees subject to a collective bargaining agreement. The program covering salaried and management employees provides pension benefits that
are based on years of service and the employees compensation during the five years before retirement. The programs covering hourly employees and agents generally provide benefits that are based on the employees career average earnings
and years of service. The three non-tax-qualified pension plans cover key executive employees and restore benefits that would otherwise be curtailed by statutory limits on qualified plan benefits. In addition, American National also has one
frozen, tax-qualified, defined-benefit pension plan covering employees of the Farm Family companies hired prior to January 1, 1997. Effective January 1, 1997, benefits through this plan were frozen, and no new participants have been added.

Amounts recognized in the consolidated statements of financial position consist of (in thousands):



|                                              |  |      |          |   |      |   |          |  
|--------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                              |  | 2014 |          |   | 2013 |  
|Reconciliation of benefit obligation          |  |      |          |   |      |   |          |  
|Obligation at January 1,                      |  | $    | 458,270  |   |      | $ | 535,313  |  
|Service cost benefits earned during period    |  |      | 111      |   |      |   | 19,873   |  
|Interest cost on projected benefit obligation |  |      | 20,612   |   |      |   | 20,277   |  
|Plan amendments                               |  |      |         |   |      |   | (36,001  | )
|Actuarial (gain) loss                         |  |      | 61,906   |   |      |   | (53,371  | )
|Benefits paid                                 |  |      | (27,748  | ) |      |   | (27,821  | )
|                                              |  |      |          |   |      |   |          |  
|Obligation at December 31,                    |  |      | 513,151  |   |      |   | 458,270  |  
|                                              |  |      |          |   |      |   |          |  
|Reconciliation of fair value of plan assets   |  |      |          |   |      |   |          |  
|Fair value of plan assets at January 1,       |  |      | 302,467  |   |      |   | 276,014  |  
|Actual return on plan assets                  |  |      | 28,363   |   |      |   | 44,209   |  
|Employer contributions                        |  |      | 21,097   |   |      |   | 10,065   |  
|Benefits paid                                 |  |      | (27,748  | ) |      |   | (27,821  | )
|                                              |  |      |          |   |      |   |          |  
|Fair value of plan assets at December 31,     |  |      | 324,179  |   |      |   | 302,467  |  
|                                              |  |      |          |   |      |   |          |  
|Funded status at December 31,                 |  | $    | (188,972 | ) |      | $ | (155,803 | )
|                                              |  |      |          |   |      |   |          |  

The components of net periodic benefit cost for the defined benefit pension plans are shown below (in thousands):



|                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|---------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                   |  | Years ended December 31, |        
|                                   |  | 2014                     |         |   | 2013 |   |         | 2012 | 
|Service cost                       |  | $                        | 111     |   |      | $ | 19,873  |      |  | $ | 17,596  |  
|Interest cost                      |  |                          | 20,612  |   |      |   | 20,277  |      |  |   | 20,579  |  
|Expected return on plan assets     |  |                          | (20,402 | ) |      |   | (20,354 | )    |  |   | (18,499 | )
|Amortization of net actuarial loss |  |                          | 4,421   |   |      |   | 17,726  |      |  |   | 15,921  |  
|                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Net periodic benefit cost          |  | $                        | 4,742   |   |      | $ | 37,522  |      |  | $ | 35,597  |  
|                                   |  |                          |         |   |      |   |         |      |  |   |         |  



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Amounts related to the defined benefit pension plans recognized as a component of OCI are shown below (in
thousands):



|                                              |  |                          |         |   |      |   |         |      |  |   |         |  
|--------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                              |  | Years ended December 31, |        
|                                              |  | 2014                     |         |   | 2013 |   |         | 2012 | 
|Actuarial gain (loss)                         |  | $                        | (49,523 | ) |      | $ | 130,953 |      |  | $ | (20,797 | )
|Deferred tax expense (benefit)                |  |                          | 17,333  |   |      |   | (45,834 | )    |  |   | 7,279   |  
|                                              |  |                          |         |   |      |   |         |      |  |   |         |  
|Other comprehensive income (loss), net of tax |  | $                        | (32,190 | ) |      | $ | 85,119  |      |  | $ | (13,518 | )
|                                              |  |                          |         |   |      |   |         |      |  |   |         |  

The estimated actuarial loss for the plan that will be amortized out of AOCI into the net periodic benefit cost over the next
fiscal year is $9,460,000. Amounts recognized as a component of AOCI that have not been recognized as a component of the combined net periodic benefit cost of the defined benefit pension plans, are shown below (in thousands):



|                         |  |                          |          |   |      |   |         |  
|------------------------ |  | ------------------------ | -------- | - | ---- | - | ------- | -
|                         |  | Years ended December 31, |         
|                         |  | 2014                     |          |   | 2013 |  
|Net actuarial loss       |  | $                        | (117,036 | ) |      | $ | (67,513 | )
|Deferred tax benefit     |  |                          | 40,962   |   |      |   | 23,629  |  
|                         |  |                          |          |   |      |   |         |  
|Amounts included in AOCI |  | $                        | (76,074  | ) |      | $ | (43,884 | )
|                         |  |                          |          |   |      |   |         |  

The weighted average assumptions used are shown below:



|                              |  |                                                               |      |   |                                             |  |      |  
|----------------------------- |  | ------------------------------------------------------------- | ---- | - | ------------------------------------------- |  | ---- | -
|                              |  | Used for Net BenefitCost in Fiscal Year1/1/2014 to 12/31/2014 |      |   | Used for BenefitObligationsas of 12/31/2014 | 
|Discount rate                 |  |                                                               | 4.60 | % |                                             |  | 3.70 | %
|Rate of compensation increase |  |                                                               | 0.00 |   |                                             |  | 0.00 |  
|Long-term rate of return      |  |                                                               | 7.45 |   |                                             |  | 7.45 |  

American Nationals funding policy for the qualified pension plans is to make annual contributions to meet the minimum
funding standards of ERISA. The unfunded plans will be funded out of general corporate assets when necessary. American National contributed $21,097,000, $10,065,000, and $48,531,000 to the qualified pension plan in 2014, 2013 and 2012, respectively.
American National and its affiliates expect to contribute $10,100,000 to its qualified pension plan in 2015.

The following table shows pension benefit
payments, which reflect expected future service as appropriate, that are expected to be paid (in thousands):



|          |  |  |         | 
|--------- |  |  | ------- | 
|2015      |  |  | 29,660  | 
|2016      |  |  | 38,201  | 
|2017      |  |  | 30,339  | 
|2018      |  |  | 32,562  | 
|2019      |  |  | 29,735  | 
|2020-2022 |  |  | 162,306 | 



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American National utilizes third-party pricing services to estimate fair value measurements of its pension plan
assets. Refer to Note 9 for further information concerning the valuation methodologies and related inputs utilized by the third-party pricing services. The fair values of the pension plan assets by asset category are shown below (in thousands):



|                                       |  |                   |         |  |         |   |         |         |  |   |         |  |  |   |   | 
|-------------------------------------- |  | ----------------- | ------- |  | ------- | - | ------- | ------- |  | - | ------- |  |  | - | - | 
|                                       |  | December 31, 2014 |        
|                                       |  | Total             |         |  | Level 1 |   |         | Level 2 |  |   | Level 3 | 
|Asset Category                         |  |                   |         |  |         |   |         |         |  |   |         |  |  |   |   | 
|Corporate debt securities              |  | $                 | 53,768  |  |         | $ |        |         |  | $ | 53,768  |  |  | $ |  | 
|Residential mortgage-backed securities |  |                   | 887     |  |         |   |        |         |  |   | 887     |  |  |   |  | 
|Mutual fund                            |  |                   | 9,591   |  |         |   | 9,591   |         |  |   |        |  |  |   |  | 
|Equity securities by sector            |  |                   |         |  |         |   |         |         |  |   |         |  |  |   |   | 
|Consumer goods                         |  |                   | 51,586  |  |         |   | 51,586  |         |  |   |        |  |  |   |  | 
|Energy and utilities                   |  |                   | 32,287  |  |         |   | 32,287  |         |  |   |        |  |  |   |  | 
|Financials                             |  |                   | 43,186  |  |         |   | 43,186  |         |  |   |        |  |  |   |  | 
|Healthcare                             |  |                   | 28,256  |  |         |   | 28,256  |         |  |   |        |  |  |   |  | 
|Industrials                            |  |                   | 16,145  |  |         |   | 16,145  |         |  |   |        |  |  |   |  | 
|Information technology                 |  |                   | 30,157  |  |         |   | 30,157  |         |  |   |        |  |  |   |  | 
|Other                                  |  |                   | 31,094  |  |         |   | 31,094  |         |  |   |        |  |  |   |  | 
|Commercial paper                       |  |                   | 21,053  |  |         |   |        |         |  |   | 21,053  |  |  |   |  | 
|Unallocated group annuity contract     |  |                   | 6,053   |  |         |   |        |         |  |   | 6,053   |  |  |   |  | 
|Other                                  |  |                   | 116     |  |         |   | 28      |         |  |   | 88      |  |  |   |  | 
|                                       |  |                   |         |  |         |   |         |         |  |   |         |  |  |   |   | 
|Total                                  |  | $                 | 324,179 |  |         | $ | 242,330 |         |  | $ | 81,849  |  |  | $ |  | 
|                                       |  |                   |         |  |         |   |         |         |  |   |         |  |  |   |   | 

The investment policy for the retirement plan assets is designed to provide the highest return possible commensurate with
sound and prudent underwriting practices. The investment diversification goals are to have investments in cash and cash equivalents as necessary for liquidity, debt securities up to 100% and equity securities up to 60% of the total invested plan
assets. The amount invested in any particular investment is limited based on credit quality, and no single investment may at the time of purchase be more than 5% of the total invested assets.

The corporate debt securities category are investment grade bonds of U.S and foreign issuers denominated and payable in U.S. dollars from diverse industries,
with a maturity of 1 to 30 years. Foreign bonds in the aggregate shall not exceed 20% of the bond portfolio. Residential mortgage-backed securities represent asset-backed securities with a maturity date 1 to 30 years with a rating of NAIC 1
or 2.

Equity portfolio managers have discretion to choose the degree of concentration in various issues and industry sectors for the equity
securities. Permitted securities are those for which there is an active market providing liquidity for the specific security.

Commercial paper
investments generally have a credit rating of A-2 Moodys or P-2 by Standard & Poors with at least BBB rating on the issuers outstanding debt, or selected issuers with no outstanding debt.

Postretirement life and health benefits

American
National provides certain health and dental benefits to a closed block of retirees and their dependents who met certain age and length of service requirements as of December 31, 1993. The primary retiree health benefit plan provides Medicare
Supplemental and prescription drug benefits. The plan is contributory, with American Nationals contribution limited to $40 per month for retirees and spouses with any additional contributions necessary, being made by the retirees. Under
American Nationals various group benefit plans for active employees, life insurance benefits are provided upon retirement for eligible participants who meet certain age and length of service requirements. Effective June 1, 2014 Farm
Family moved their life insurance coverage from a third party vendor to American National.

The accrued postretirement benefit obligation, included in the
liability for retirement benefits, was $6,740,000 and $5,050,000 at December 31, 2014 and 2013, respectively. These amounts were approximately equal to the unfunded accumulated postretirement benefit obligation. Since American Nationals
contributions to the cost of the retiree benefit plans are fixed, the health care cost trend rate will have no effect on the future expense or the accumulated postretirement benefit obligation.



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Savings plans

American National sponsors one defined contribution (401(k) plan) for all employees. The 401(k) plan allows employees to contribute up to the maximum
allowable amount as determined by the IRS. Prior to January 1, 2014, American National did not contribute the 401(k) plan. The expense associated with this plan was $12,350,000 for 2014. Effective July 8, 2014 the incentive savings plan
for Farm Family was merged into American National Plan. The expense associated with the Farm Family Plan was $918,000, $1,900,000 and $1,400,000 for 2014, 2013 and 2012, respectively.

19. COMMITMENTS AND CONTINGENCIES

Commitments

American National and its
subsidiaries lease insurance sales office space in various cities. The remaining long-term lease commitments at December 31, 2014, were approximately $1,883,000.

American National had aggregate commitments at December 31, 2014, to purchase, expand or improve real estate, to fund fixed interest rate mortgage loans,
and to purchase other invested assets of $475,295,000 of which $323,710,000 is expected to be funded in 2015. The remaining $151,585,000 will be funded in 2016 and beyond.

In September 2014, American National renewed an existing $100,000,000 short-term variable rate borrowing facility containing a $55,000,000 sub-feature for the
issuance of letters of credit. Borrowings under the facility are at the discretion of the lender and would be used only for funding working capital requirements. The combination of borrowings and outstanding letters of credit cannot exceed
$100,000,000 at any time. As of December 31, 2014 and 2013, the outstanding letters of credit were $12,214,000 and $15,560,000, respectively, and there were no borrowings on this facility to meet liquidity requirements. This facility expires on
October 30, 2015. American National expects it will be renewed on substantially equivalent terms upon expiration.

Guarantees

American National has guaranteed bank loans for customers of a third-party marketing operation. The bank loans are used to fund premium payments on life
insurance policies issued by American National. The loans are secured by the cash values of the life insurance policies. If the customer were to default on the bank loan, American National would be obligated to pay off the loans. As the cash values
of the life insurance policies always equal or exceed the balance of the loans, management does not foresee any loss on these guarantees. The total amount of the guarantees outstanding as of December 31, 2014, was approximately $206,376,000,
while the total cash value of the related life insurance policies was approximately $209,848,000.

Litigation

American National and certain subsidiaries, in common with the insurance industry in general, are defendants in various lawsuits concerning alleged breaches of
contracts, various employment matters, allegedly deceptive insurance sales and marketing practices, and miscellaneous other causes of action arising in the ordinary course of operations. Certain of these lawsuits include claims for compensatory and
punitive damages. We provide accruals for these items to the extent we deem the losses probable and reasonably estimable. After reviewing these matters with legal counsel, based upon information presently available, management is of the opinion that
the ultimate resultant liability, if any, would not have a material adverse effect on American Nationals consolidated financial position, liquidity or results of operations; however, assessing the eventual outcome of litigation necessarily
involves forward-looking speculation as to judgments to be made by judges, juries and appellate courts in the future. Such speculation warrants caution, as the frequency of large damage awards, which bear little or no relation to the economic
damages incurred by plaintiffs in some jurisdictions, continues to create the potential for an unpredictable judgment in any given lawsuit. These lawsuits are in various stages of development, and future facts and circumstances could result in
managements changing its conclusions. It is possible that, if the defenses in these lawsuits are not successful, and the judgments are greater than management can anticipate, the resulting liability could have a material impact on our
consolidated financial position, liquidity or results of operations. With respect to the existing litigation, management currently believes that the possibility of a material judgment adverse to American National is remote and no estimate of range
can be made for loss contingencies that are at least reasonably possible but not accrued.



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20. RELATED PARTY TRANSACTIONS

American National has entered into recurring transactions and agreements with certain related parties. These include mortgage loans,
management contracts, agency commission contracts, marketing agreements, accident and health insurance contracts and legal services. The impact on the consolidated financial statements of the significant related party transactions is shown below (in
thousands):



|                           |  |                                   |  |                               |        |  |                                        |   |       |      |  |   |       |   |  |   |       |  
|-------------------------- |  | --------------------------------- |  | ----------------------------- | ------ |  | -------------------------------------- | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                           |  |                                   |  | Dollar Amount of Transactions |        |  | Amount due to/(from) American National |  
|                           |  |                                   |  | Years ended December 31,      |        |  | December 31,                           |  
|Related Party              |  | Financial Statement Line Impacted |  | 2014                          |        |  | 2013                                   |   |       | 2014 |  |   | 2013  |  
|Gal-Tex Hotel Corporation  |  | Mortgage loan on real estate      |  | $                             | 1,234  |  |                                        | $ | 1,148 |      |  | $ | 6,508 |   |  | $ | 7,742 |  
|Gal-Tex Hotel Corporation  |  | Net investment income             |  |                               | 521    |  |                                        |   | 607   |      |  |   | 39    |   |  |   | 47    |  
|Greer, Herz and Adams, LLP |  | Other operating expenses          |  |                               | 10,146 |  |                                        |   | 9,557 |      |  |   | (309  | ) |  |   | (284  | )

Mortgage Loans to Gal-Tex Hotel Corporation (Gal-Tex): American National holds a first mortgage loan
originated in 1999, with an interest rate of 7.25% and final maturity date of April 1, 2019 issued to Gal-Tex, which is collateralized by a hotel property in San Antonio, Texas. This loan is current as to principal and interest payments.

Transactions with Greer, Herz & Adams, L.L.P.: Irwin M. Herz, Jr. is an American National advisory director and a Partner with Greer, Herz
Adams, L.L.P., which serves as American Nationals General Counsel.

21. SELECTED QUARTERLY FINANCIAL DATA

The unaudited selected quarterly financial data is shown below (in thousands, except per share data):



|                                                                                     |  |                    |         |   |          |   |         |               |  |   |              |   |  |      |         |  |      |   |         |      |  |   |         |  |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------------------ |  | ------------------ | ------- | - | -------- | - | ------- | ------------- |  | - | ------------ | - |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | - | ------- | - |  | - | ------- | -
|                                                                                     |  | Three months ended |        
|                                                                                     |  | March 31,          |         |   | June 30, |   |         | September 30, |  |   | December 31, |  
|                                                                                     |  | 2014               |         |   | 2013     |   |         | 2014          |  |   | 2013         |   |  | 2014 |         |  | 2013 |   |         | 2014 |  |   | 2013    | 
|Total premiums and other revenues                                                    |  | $                  | 772,436 |   |          | $ | 745,045 |               |  | $ | 754,786      |   |  | $    | 773,660 |  |      | $ | 746,170 |      |  | $ | 785,504 |  |  | $ | 777,198 |   |  | $ | 815,001 |  
|Total benefits, losses and expenses                                                  |  |                    | 697,968 |   |          |   | 682,897 |               |  |   | 688,864      |   |  |      | 689,450 |  |      |   | 651,395 |      |  |   | 664,640 |  |  |   | 683,617 |   |  |   | 719,753 |  
|Income before federal income tax and equity in earnings of unconsolidated affiliates |  |                    | 74,468  |   |          |   | 62,148  |               |  |   | 65,922       |   |  |      | 84,210  |  |      |   | 94,775  |      |  |   | 120,864 |  |  |   | 93,581  |   |  |   | 95,248  |  
|Provision for federal income taxes                                                   |  |                    | 21,487  |   |          |   | 11,317  |               |  |   | 21,558       |   |  |      | 24,803  |  |      |   | 26,749  |      |  |   | 35,759  |  |  |   | 22,237  |   |  |   | 27,762  |  
|Equity in earnings (losses) of unconsolidated affiliates, net of tax                 |  |                    | (859    | ) |          |   | 8,577   |               |  |   | 12,659       |   |  |      | 1,076   |  |      |   | 2,735   |      |  |   | 121     |  |  |   | (2,566  | ) |  |   | (298    | )
|Net income                                                                           |  |                    | 52,122  |   |          |   | 59,408  |               |  |   | 57,023       |   |  |      | 60,483  |  |      |   | 70,761  |      |  |   | 85,226  |  |  |   | 68,778  |   |  |   | 67,188  |  
|Net income (loss) attributable to noncontrolling interest                            |  |                    | (756    | ) |          |   | (563    | )             |  |   | (238         | ) |  |      | 2,314   |  |      |   | 2,877   |      |  |   | 2,613   |  |  |   | (392    | ) |  |   | (431    | )
|Net income attributable to American National                                         |  |                    | 52,878  |   |          |   | 59,971  |               |  |   | 57,261       |   |  |      | 58,169  |  |      |   | 67,884  |      |  |   | 82,613  |  |  |   | 69,170  |   |  |   | 67,619  |  
|                                                                                     |  |                    |         |   |          |   |         |              
|Earnings per share attributable to American National                                 |  |                    |         |   |          |   |         |               |  |   |              |   |  |      |         |  |      |   |         |      |  |   |         |  |  |   |         |   |  |   |         |  
|Basic                                                                                |  |                    | 1.97    |   |          |   | 2.24    |               |  |   | 2.14         |   |  |      | 2.17    |  |      |   | 2.53    |      |  |   | 3.08    |  |  |   | 2.58    |   |  |   | 2.53    |  
|Diluted                                                                              |  |                    | 1.96    |   |          |   | 2.23    |               |  |   | 2.12         |   |  |      | 2.16    |  |      |   | 2.52    |      |  |   | 3.07    |  |  |   | 2.57    |   |  |   | 2.51    |  



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|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

None



|ITEM 9A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

The Company maintains disclosure controls and procedures (as that term is
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)) that are designed to ensure that information required to be disclosed in the Companys reports under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and that such information is accumulated and communicated to the Companys management, including its Chief
Executive Officer and Corporate Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Any controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. The Companys management, with the participation of the Companys Chief Executive Officer and
Corporate Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Companys disclosure controls and procedures as of December 31, 2014. Based upon that evaluation and subject to the foregoing, the
Companys Chief Executive Officer and Corporate Chief Financial Officer concluded that, as of December 31, 2014, the design and operation of the Companys disclosure controls and procedures were effective to accomplish their
objectives at the reasonable assurance level.

Management has monitored the internal controls over financial reporting, including any material changes to
the internal control over financial reporting. There were no changes in the Companys internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the
year-to-date ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.

Managements report on internal controls over financial reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f)
and 15d-15(f) under the Exchange Act. The Companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial
statements for external purposes in accordance with accounting principles generally accepted in the United States of America. The Companys internal control over financial reporting includes those policies and procedures that:



| |  |  | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of
America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could have a material effect on the consolidated financial
statements.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In
addition, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.



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Management assessed the effectiveness of the Companys internal control over financial reporting as
of December 31, 2014. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (1992).

Based on the Companys assessment of internal control over financial reporting, management has concluded that, as of December 31, 2014, the
Companys internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and preparation of consolidated financial statements for external purposes in accordance with
generally accepted accounting principles.

The effectiveness of the Companys internal control over financial reporting as of December 31, 2014,
has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report.

Changes in internal control over
financial reporting

There have been no changes in the Companys internal control over financial reporting that occurred during the period ended
December 31, 2014, that have materially affected, or are reasonably likely to materially affect, such internal control over financial reporting. The Companys internal controls exist within a dynamic environment and the Company continually
strives to improve its internal controls and procedures to enhance the quality of its financial reporting.



|ITEM 9B. | OTHER INFORMATION
|-------- | -----------------

None.



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PART III



|ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|-------- | ------------------------------------------------------

The information required by this item is
incorporated by reference from our definitive proxy statement for our Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 2014.



|ITEM 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------

The information required by this item is incorporated by reference from our
definitive proxy statement for our Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 2014.



|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------

The
information required by this item is incorporated by reference from our definitive proxy statement for our Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 2014.



|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|-------- | ------------------------------------------------------------------------

The information required by
this item is incorporated by reference from our definitive proxy statement for our Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 2014.



|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

The information required by this item is incorporated by
reference from our definitive proxy statement for our Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 2014.



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PART IV



|Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|-------- | ------------------------------------------



|                                                                                                                                                          |  |  |      | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|(a)(1) Financial Statements(See Item 8: Financial Statements and Supplementary Data)                                                                     | 
|                                                                                                                                                          | 
|(a)(2) Supplementary Data and Financial Statement Schedulesare attached hereto at the following pages                                                    |  |  | Page | 
|I  Summary of Investments  Other than Investments in Related Parties                                                                                    |  |  | 112  | 
|II  Condensed Financial Information of Registrant                                                                                                        |  |  | 113  | 
|III  Supplementary Insurance Information                                                                                                                 |  |  | 116  | 
|IV  Reinsurance Information                                                                                                                              |  |  | 117  | 
|V  Valuation and Qualifying Accounts                                                                                                                     |  |  | 117  | 
|                                                                                                                                                          | 
|All other schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes. |  |  |      | 

(b) Exhibits



|              |  |                                                                                                                                                                                                                                                       
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Basic Documents                                                                                                                                                                                                                                       
|              | 
|3.1           |  | Restated Articles of Incorporation, as amended (incorporated by reference to Exhibit No. 3.1 to the registrants Registration Statement on Form 10-12B filed April 10, 2009).                                                                         
|              | 
|3.2           |  | Amended and Restated Bylaws (incorporated by reference to Exhibit No. 3.2 to the registrants Current Report on Form 8-K filed May 2, 2012).                                                                                                          
|              | 
|4.1           |  | Specimen copy of Stock Certificate (incorporated by reference to Exhibit No. 4.1 to the registrants Registration Statement on Form 10-12B filed April 10, 2009).                                                                                     
|              | 
|10.1*         |  | American National Insurance Company Amended and Restated 1999 Stock and Incentive Plan (the Stock and Incentive Plan)(incorporated by reference to Exhibit No. 10.2 to the registrants Registration Statement on Form
10-12B filed April 10, 2009).
|              | 
|10.2*         |  | Form of Restricted Stock Agreement for Directors under the Stock and Incentive Plan (incorporated by reference to Exhibit No. 10.3 to the registrants Registration Statement on Form 10-12B filed April 10, 2009).                                   
|              | 
|10.3*         |  | Form of Restricted Stock Agreement for Employees (incorporated by reference to Exhibit No. 10.4 to the registrants Registration Statement on Form 10-12B filed April 10, 2009).                                                                      
|              | 
|10.4*         |  | Form of Stock Appreciation Rights Agreement under the Stock and Incentive Plan (grants on or after May 3, 2010)(incorporated by reference to Exhibit No. 10.5 to the registrants Annual Report on Form 10-K filed
March 2, 2011).                    
|              | 
|10.5*         |  | Form of Stock Appreciation Rights Agreement under the Stock and Incentive Plan (grants prior to May 3, 2010)(incorporated by reference to Exhibit No. 10.5 to the registrants Registration Statement on Form 10-12B filed
April 10, 2009).           



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|       |  |                                                                                                                                                                                                                                                    
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | 
|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 10-12B filed April 10,
2009).                    
|       | 
|10.7*  |  | Amendment to the American National Insurance Company Nonqualified Retirement Plan of Certain Salaried Employees (incorporated by reference to Exhibit No. 10.2 to the registrants amended Current Report on Form 8-K/A filed on
November 6, 2013).
|       | 
|10.8*  |  | American National Insurance Company Nonqualified Retirement Plan (incorporated by reference to Exhibit No. 10.7 to the registrants Registration Statement on Form 10-12B filed April 10, 2009).                                                   
|       | 
|10.9*  |  | Amendment No. 4 to the American National Insurance Company Nonqualified Retirement Plan (incorporated by reference to Exhibit No. 10.8 to the registrants Annual Report on Form 10-K filed March 2, 2011).                                        
|       | 
|10.10* |  | Amendment No. 5 to the American National Insurance Company Nonqualified Retirement Plan (incorporated by reference to Exhibit No. 10.1 to the registrants amended Current Report on Form 8-K/A filed on November 6,
2013).                        
|       | 
|10.11* |  | Form of Restricted Stock Unit Agreement for Officers under the Stock and Incentive Plan (grants on or after March 4, 2011) (incorporated by reference to Exhibit No. 10.1 to the registrants Quarterly Report on Form 10-Q
filed May 6, 2011).    
|       | 
|10.12* |  | Form of Restricted Stock Unit Agreement for Directors under the Stock and Incentive Plan (incorporated by reference to Exhibit No. 10.2 to the registrants Quarterly Report on Form 10-Q filed May 6, 2011).                                      
|       | 
|10.13* |  | Form of Restricted Stock Unit Agreement for Officers under the Stock and Incentive Plan (grants prior to March 4, 2011) (incorporated by reference to Exhibit No. 10.9 to the registrants Annual Report on Form 10-K filed
March 2, 2011).        
|       | 
|10.14* |  | American National Family of Companies Executive Supplemental Savings Plan (incorporated by reference to Exhibit No. 10.3 to the registrants amended Current Report on Form 8-K/A filed on November 6, 2013).                                      
|       | 
|21     |  | Subsidiaries (filed herewith).                                                                                                                                                                                                                     
|       | 
|23     |  | Consent of KPMG LLP (filed herewith).                                                                                                                                                                                                              
|       | 
|31.1   |  | Certification of the principal executive officer pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 (filed herewith).                                                                                                                      
|       | 
|31.2   |  | Certification of the principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                                                       
|       | 
|32.1   |  | Certification of the principal executive officer and principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                       



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|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 
|101 |  | The following financial information from American National Insurance Companys Annual Report on Form 10-K for the year ended December 31, 2014 formatted in eXtensible Business Reporting Language (XBRL):
(i) Consolidated Statements of Financial Position, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Changes in Stockholders Equity,
(v) Consolidated Statements of Cash Flows, and (vi) Notes to the Consolidated Financial Statements.



|* | Management contract or compensatory plan or arrangement.
|- | --------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



AMERICAN NATIONAL INSURANCECOMPANYBy:

/s/ Robert L. MoodyName:

Robert L. MoodyTitle:

Chairman of the Board & Chief Executive Officer


Date: February 26, 2015

Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated.



|                       |  |  |  |                                   |  |                  
|---------------------- |  |  |  | --------------------------------- |  | -----------------
|Signature              |  |  |  | Title                             |  | Date             
|                       |  |  | 
|/s/ Robert L. Moody    |  |  |  | Chairman of the Board &           |  | February 26, 2015
|Robert L. Moody        |  |  |  | Chief Executive Officer           |  |                  
|                       |  |  |  | (principal executive officer)     |  |                  
|                       |  |  | 
|/s/ John J. Dunn, Jr.  |  |  |  | Executive Vice President,         |  | February 26, 2015
|John J. Dunn, Jr.      |  |  |  | Corporate Chief Financial Officer |  |                  
|                       |  |  |  | (principal financial officer)     |  |                  
|                       |  |  | 
|/s/ Arthur O. Dummer   |  |  |  | Director                          |  | February 26, 2015
|Arthur O. Dummer       |  |  |  |                                   |  |                  
|                       |  |  | 
|/s/ James E. Pozzi     |  |  |  | Director                          |  | February 26, 2015
|James E. Pozzi         |  |  |  |                                   |  |                  
|                       |  |  | 
|/s/ Russell S. Moody   |  |  |  | Director                          |  | February 26, 2015
|Russell S. Moody       |  |  |  |                                   |  |                  
|                       |  |  | 
|/s/ James D. Yarbrough |  |  |  | Director                          |  | February 26, 2015
|James D. Yarbrough     |  |  |  |                                   |  |                  
|                       |  |  | 
|/s/ E.J. Pederson      |  |  |  | Director                          |  | February 26, 2015
|E.J. Pederson          |  |  |  |                                   |  |                  



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AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES

(in thousands)



|                                                        |  |                    |            |  |            |   |            |                    |  |   |            | 
|------------------------------------------------------- |  | ------------------ | ---------- |  | ---------- | - | ---------- | ------------------ |  | - | ---------- | 
|                                                        |  | December 31, 2014  |           
|                                                        |  |                    |            |  |            |   |            | Amount at Which    | 
|                                                        |  |                    |            |  |            |   |            | Shown in the       | 
|                                                        |  |                    |            |  |            |   |            | Consolidated       | 
|                                                        |  | Cost or            |            |  | Estimated  |   |            | Statement of       | 
|Type of Investment                                      |  | Amortized Cost (1) |            |  | Fair Value |   |            | Financial Position | 
|Fixed maturities                                        |  |                    |            |  |            |   |            |                    |  |   |            | 
|Bonds held-to-maturity                                  |  |                    |            |  |            |   |            |                    |  |   |            | 
|U.S. states and political subdivisions                  |  | $                  | 323,053    |  |            | $ | 349,760    |                    |  | $ | 323,053    | 
|Foreign governments                                     |  |                    | 29,130     |  |            |   | 30,423     |                    |  |   | 29,130     | 
|Corporate debt securities                               |  |                    | 7,517,195  |  |            |   | 7,894,725  |                    |  |   | 7,517,195  | 
|Residential mortgage-backed securities                  |  |                    | 336,853    |  |            |   | 357,635    |                    |  |   | 336,853    | 
|Collateralized debt securities                          |  |                    | 2,232      |  |            |   | 2,470      |                    |  |   | 2,232      | 
|Other debt securities                                   |  |                    | 16,587     |  |            |   | 17,900     |                    |  |   | 16,587     | 
|Bonds available-for-sale                                |  |                    |            |  |            |   |            |                    |  |   |            | 
|U.S. treasury government                                |  |                    | 22,415     |  |            |   | 23,233     |                    |  |   | 23,233     | 
|U.S. states and political subdivisions                  |  |                    | 802,846    |  |            |   | 837,616    |                    |  |   | 837,616    | 
|Foreign governments                                     |  |                    | 5,000      |  |            |   | 7,021      |                    |  |   | 7,021      | 
|Corporate debt securities                               |  |                    | 3,812,771  |  |            |   | 4,000,049  |                    |  |   | 4,000,049  | 
|Residential mortgage-backed securities                  |  |                    | 40,988     |  |            |   | 42,399     |                    |  |   | 42,399     | 
|Collateralized debt securities                          |  |                    | 10,696     |  |            |   | 11,489     |                    |  |   | 11,489     | 
|Equity securities                                       |  |                    |            |  |            |   |            |                    |  |   |            | 
|Common stocks                                           |  |                    |            |  |            |   |            |                    |  |   |            | 
|Consumer goods                                          |  |                    | 139,683    |  |            |   | 308,915    |                    |  |   | 308,915    | 
|Energy and utilities                                    |  |                    | 127,071    |  |            |   | 199,344    |                    |  |   | 199,344    | 
|Finance                                                 |  |                    | 127,443    |  |            |   | 266,608    |                    |  |   | 266,608    | 
|Healthcare                                              |  |                    | 74,947     |  |            |   | 212,438    |                    |  |   | 212,438    | 
|Industrials                                             |  |                    | 50,608     |  |            |   | 126,737    |                    |  |   | 126,737    | 
|Information technology                                  |  |                    | 116,956    |  |            |   | 246,229    |                    |  |   | 246,229    | 
|Other                                                   |  |                    | 82,943     |  |            |   | 126,853    |                    |  |   | 126,853    | 
|Preferred stocks                                        |  |                    | 19,733     |  |            |   | 29,854     |                    |  |   | 29,854     | 
|Other Investments                                       |  |                    |            |  |            |   |            |                    |  |   |            | 
|Mortgage loans on real estate, net of allowance         |  |                    | 3,359,586  |  |            |   | 3,618,944  |                    |  |   | 3,359,586  | 
|Investment real estate, net of accumulated depreciation |  |                    | 435,876    |  |            |   |            |                    |  |   | 435,876    | 
|Real estate acquired in satisfaction of debt            |  |                    | 43,186     |  |            |   |            |                    |  |   | 43,186     | 
|Policy loans                                            |  |                    | 405,979    |  |            |   | 405,979    |                    |  |   | 405,979    | 
|Options                                                 |  |                    | 100,839    |  |            |   | 189,449    |                    |  |   | 189,449    | 
|Other long-term investments                             |  |                    | 30,806     |  |            |   |            |                    |  |   | 30,806     | 
|Short-term investments                                  |  |                    | 431,000    |  |            |   | 431,000    |                    |  |   | 431,000    | 
|                                                        |  |                    |            |  |            |   |            |                    |  |   |            | 
|Total investments                                       |  | $                  | 18,466,422 |  |            | $ | 19,737,070 |                    |  | $ | 19,559,717 | 
|                                                        |  |                    |            |  |            |   |            |                    |  |   |            | 



|(1) | Original cost of equity securities and, as to fixed maturity securities, original cost reduced by repayments and valuation write-downs and adjusted for amortization of premiums or accrual of discounts.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See accompanying Report of Independent Registered Public Accounting Firm.



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AMERICAN NATIONAL INSURANCE COMPANY (Parent Company Only)

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(In thousands)



|                                                |  |              |            |   |      |   |            |  
|----------------------------------------------- |  | ------------ | ---------- | - | ---- | - | ---------- | -
|                                                |  | December 31, |           
|Condensed Statements of Financial Position      |  | 2014         |            |   | 2013 |  
|Assets                                          |  |              |            |   |      |   |            |  
|Fixed maturity securities                       |  | $            | 9,567,848  |   |      | $ | 9,712,509  |  
|Mortgage loans on real estate, net of allowance |  |              | 3,266,361  |   |      |   | 3,210,945  |  
|Other invested assets                           |  |              | 1,858,444  |   |      |   | 1,895,764  |  
|Investment in subsidiaries                      |  |              | 2,308,725  |   |      |   | 2,089,903  |  
|Deferred policy acquisition costs               |  |              | 1,023,778  |   |      |   | 1,041,472  |  
|Separate account assets                         |  |              | 1,001,515  |   |      |   | 970,954    |  
|Other assets                                    |  |              | 629,531    |   |      |   | 608,773    |  
|                                                |  |              |            |   |      |   |            |  
|Total assets                                    |  | $            | 19,656,202 |   |      | $ | 19,530,320 |  
|                                                |  |              |            |   |      |   |            |  
|Liabilities                                     |  |              |            |   |      |   |            |  
|Policy liabilities                              |  | $            | 3,649,554  |   |      | $ | 3,494,989  |  
|Policyholders account balances                 |  |              | 9,975,383  |   |      |   | 10,398,409 |  
|Separate account liabilities                    |  |              | 1,001,515  |   |      |   | 970,954    |  
|Other liabilities                               |  |              | 597,617    |   |      |   | 475,394    |  
|                                                |  |              |            |   |      |   |            |  
|Total liabilities                               |  |              | 15,224,069 |   |      |   | 15,339,746 |  
|                                                |  |              |            |   |      |   |            |  
|Shareholders equity                            |  |              |            |   |      |   |            |  
|Common stock                                    |  |              | 30,832     |   |      |   | 30,832     |  
|Additional paid-in capital                      |  |              | 9,248      |   |      |   | 4,650      |  
|Accumulated other comprehensive income          |  |              | 490,783    |   |      |   | 413,712    |  
|Retained earnings                               |  |              | 4,003,211  |   |      |   | 3,838,821  |  
|Treasury stock, at cost                         |  |              | (101,941   | ) |      |   | (97,441    | )
|                                                |  |              |            |   |      |   |            |  
|Total stockholders equity                      |  |              | 4,432,133  |   |      |   | 4,190,574  |  
|                                                |  |              |            |   |      |   |            |  
|Total liabilities and stockholders equity      |  | $            | 19,656,202 |   |      | $ | 19,530,320 |  
|                                                |  |              |            |   |      |   |            |  

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.



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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                                                                 |  | 2014                     |           |   | 2013 |   |           | 2012 | 
|Premiums and other revenues                                                                        |  |                          |           |   |      |   |           |      | 
|Premiums and policy revenues                                                                       |  | $                        | 786,823   |   |      | $ | 734,506   |      |  | $ | 685,529   |  
|Net investment income                                                                              |  |                          | 772,355   |   |      |   | 861,354   |      |  |   | 837,503   |  
|Net realized investment gain                                                                       |  |                          | 18,702    |   |      |   | 73,791    |      |  |   | 46,936    |  
|Other-than-temporary impairments                                                                   |  |                          | (41       | ) |      |   |          |      |  |   | (12,825   | )
|Other income                                                                                       |  |                          | 10,803    |   |      |   | 12,083    |      |  |   | 10,016    |  
|                                                                                                   |  |                          |           |   |      |   |           |      |  |   |           |  
|Total premiums and other revenues                                                                  |  |                          | 1,588,642 |   |      |   | 1,681,734 |      |  |   | 1,567,159 |  
|                                                                                                   |  |                          |           |   |      |   |           |      |  |   |           |  
|Benefits, losses and expenses                                                                      |  |                          |           |   |      |   |           |      |  |   |           |  
|Policyholder benefits                                                                              |  |                          | 574,975   |   |      |   | 520,806   |      |  |   | 487,387   |  
|Other operating expenses                                                                           |  |                          | 812,762   |   |      |   | 913,914   |      |  |   | 873,119   |  
|                                                                                                   |  |                          |           |   |      |   |           |      |  |   |           |  
|Total benefits, losses and expenses                                                                |  |                          | 1,387,737 |   |      |   | 1,434,720 |      |  |   | 1,360,506 |  
|                                                                                                   |  |                          |           |   |      |   |           |      |  |   |           |  
|Income from continuing operations before federal income tax and equity in earnings of subsidiaries |  |                          | 200,905   |   |      |   | 247,014   |      |  |   | 206,653   |  
|                                                                                                   |  |                          |           |   |      |   |           |      |  |   |           |  
|Provision for federal income taxes                                                                 |  |                          | 62,978    |   |      |   | 50,927    |      |  |   | 72,144    |  
|Equity in earnings of subsidiaries, net of tax                                                     |  |                          | 109,266   |   |      |   | 72,285    |      |  |   | 56,532    |  
|                                                                                                   |  |                          |           |   |      |   |           |      |  |   |           |  
|Net income                                                                                         |  | $                        | 247,193   |   |      | $ | 268,372   |      |  | $ | 191,041   |  
|                                                                                                   |  |                          |           |   |      |   |           |      |  |   |           |  

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.



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AMERICAN NATIONAL INSURANCE COMPANY (Parent Company Only)

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(in thousands)



|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|-------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                 |  | Years ended December 31, |           
|Condensed Statements of Cash Flows                                               |  | 2014                     |            |   | 2013 |   |            | 2012 | 
|OPERATING ACTIVITIES                                                             |  |                          |            |   |      |   |            |      |  |   |            |  
|Net income                                                                       |  | $                        | 247,193    |   |      | $ | 268,372    |      |  | $ | 191,041    |  
|Adjustments to reconcile net income to net cash provided by operating activities |  |                          |            |   |      |   |            |      |  |   |            |  
|Realized investments gains                                                       |  |                          | (18,702    | ) |      |   | (73,791    | )    |  |   | (46,936    | )
|Other-than-temporary impairments                                                 |  |                          | 41         |   |      |   |           |      |  |   | 12,825     |  
|Amortization (accretion) of premiums, discounts and loan origination fees        |  |                          | 3,581      |   |      |   | 1,216      |      |  |   | (7,433     | )
|Net capitalized interest on policy loans and mortgage loans                      |  |                          | (27,922    | ) |      |   | (23,864    | )    |  |   | (22,049    | )
|Depreciation                                                                     |  |                          | 21,822     |   |      |   | 18,618     |      |  |   | 21,209     |  
|Interest credited to policyholders account balances                             |  |                          | 324,325    |   |      |   | 395,013    |      |  |   | 385,603    |  
|Charges to policyholders account balances                                       |  |                          | (212,690   | ) |      |   | (199,285   | )    |  |   | (188,009   | )
|Deferred federal income tax (benefit) expense                                    |  |                          | 16,954     |   |      |   | (15,245    | )    |  |   | 14,336     |  
|Net income of subsidiaries                                                       |  |                          | (108,133   | ) |      |   | (63,762    | )    |  |   | (51,716    | )
|Equity in earnings of affiliates                                                 |  |                          | 3,800      |   |      |   | (8,523     | )    |  |   | (4,816     | )
|Distributions from equity method investments                                     |  |                          | 408        |   |      |   | 2,411      |      |  |   | 1,686      |  
|Changes in                                                                       |  |                          |            |   |      |   |            |      |  |   |            |  
|Accrued investment income                                                        |  |                          | 9,801      |   |      |   | 9,336      |      |  |   | 5,916      |  
|Reinsurance recoverables                                                         |  |                          | 2,312      |   |      |   | (1,025     | )    |  |   | 3,579      |  
|Prepaid reinsurance premiums                                                     |  |                          | 2,318      |   |      |   | 7,575      |      |  |   | 15,139     |  
|Premiums due and other receivables                                               |  |                          | 3,873      |   |      |   | 9,531      |      |  |   | 4,762      |  
|Deferred policy acquisition costs                                                |  |                          | 7,560      |   |      |   | 28,216     |      |  |   | 24,596     |  
|Policyholder liabilities                                                         |  |                          | 155,166    |   |      |   | 38,188     |      |  |   | 55,594     |  
|Liability for retirement benefits                                                |  |                          | (12,552    | ) |      |   | 12,656     |      |  |   | (1,567     | )
|Current tax receivable/payable                                                   |  |                          | 8,181      |   |      |   | 9,936      |      |  |   | (109,736   | )
|Other, net                                                                       |  |                          | (33,075    | ) |      |   | (9,993     | )    |  |   | 3,725      |  
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                        |  |                          | 394,261    |   |      |   | 405,580    |      |  |   | 307,749    |  
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|INVESTING ACTIVITIES                                                             |  |                          |            |   |      |   |            |      |  |   |            |  
|Proceeds from sale/maturity/prepayment of                                        |  |                          |            |   |      |   |            |      |  |   |            |  
|Held-to-maturity securities                                                      |  |                          | 452,846    |   |      |   | 1,207,038  |      |  |   | 980,794    |  
|Available for sale securities                                                    |  |                          | 625,563    |   |      |   | 599,228    |      |  |   | 446,706    |  
|Investment real estate                                                           |  |                          | 53,859     |   |      |   | 8,006      |      |  |   |           |  
|Mortgage loans                                                                   |  |                          | 578,098    |   |      |   | 756,554    |      |  |   | 475,885    |  
|Policy loans                                                                     |  |                          | 45,732     |   |      |   | 47,018     |      |  |   | 47,068     |  
|Other invested assets                                                            |  |                          | 40,791     |   |      |   | 88,883     |      |  |   | 43,410     |  
|Disposals of property and equipment                                              |  |                          | 43,869     |   |      |   | 270        |      |  |   |           |  
|Distributions from affiliates and subsidiaries                                   |  |                          | 439        |   |      |   | 10,581     |      |  |   | 15,469     |  
|Payment for the purchase/origination of                                          |  |                          |            |   |      |   |            |      |  |   |            |  
|Held-to-maturity securities                                                      |  |                          | (287,694   | ) |      |   | (701,776   | )    |  |   | (891,257   | )
|Available for sale securities                                                    |  |                          | (572,299   | ) |      |   | (556,940   | )    |  |   | (382,652   | )
|Investment real estate                                                           |  |                          | (23,959    | ) |      |   | (28,882    | )    |  |   | (18,281    | )
|Mortgage loans                                                                   |  |                          | (633,401   | ) |      |   | (908,512   | )    |  |   | (642,227   | )
|Policy loans                                                                     |  |                          | (23,621    | ) |      |   | (21,682    | )    |  |   | (29,676    | )
|Other invested assets                                                            |  |                          | (43,423    | ) |      |   | (46,168    | )    |  |   | (45,206    | )
|Additions to property and equipment                                              |  |                          | (56,651    | ) |      |   | (5,991     | )    |  |   | (16,714    | )
|Contributions to unconsolidated affiliates                                       |  |                          | (1,035     | ) |      |   | (949       | )    |  |   | (5,207     | )
|Change in short-term investments                                                 |  |                          | 4,518      |   |      |   | (401,682   | )    |  |   | 244,931    |  
|Change in investment in subsidiaries                                             |  |                          |           |   |      |   |           |      |  |   | (33,338    | )
|Other, net                                                                       |  |                          | 24,636     |   |      |   | 1,642      |      |  |   | (388       | )
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|Net cash provided by investing activities                                        |  |                          | 228,268    |   |      |   | 46,638     |      |  |   | 189,317    |  
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|FINANCING ACTIVITIES                                                             |  |                          |            |   |      |   |            |      |  |   |            |  
|Policyholders account deposits                                                  |  |                          | 941,400    |   |      |   | 835,942    |      |  |   | 1,056,526  |  
|Policyholders account withdrawals                                               |  |                          | (1,479,004 | ) |      |   | (1,420,675 | )    |  |   | (1,244,382 | )
|Dividends to stockholders                                                        |  |                          | (82,805    | ) |      |   | (82,831    | )    |  |   | (82,657    | )
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|Net cash used in financing activities                                            |  |                          | (620,409   | ) |      |   | (667,564   | )    |  |   | (270,513   | )
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             |  |                          | 2,120      |   |      |   | (215,346   | )    |  |   | 226,553    |  
|Beginning of the year                                                            |  |                          | 46,326     |   |      |   | 261,672    |      |  |   | 35,119     |  
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  
|End of year                                                                      |  | $                        | 48,446     |   |      | $ | 46,326     |      |  | $ | 261,672    |  
|                                                                                 |  |                          |            |   |      |   |            |      |  |   |            |  

The condensed financial statements should be read in conjunction with the consolidated financial statements and notes
therein.

See accompanying notes to the consolidated financial statements.



115



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AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION

(in
thousands)



|                    |  |             |           |  |                          |   |            |          |  |   |         |  |  |            |           |  |                |   |           |              |  |   |              |  |  |          |         |  |  |   |         |  |  |   |           | 
|------------------- |  | ----------- | --------- |  | ------------------------ | - | ---------- | -------- |  | - | ------- |  |  | ---------- | --------- |  | -------------- | - | --------- | ------------ |  | - | ------------ |  |  | -------- | ------- |  |  | - | ------- |  |  | - | --------- | 
|                    |  |             |           |  | Future Policy            |   |            |          |  |   |         |  |  |            |           |  |                |   |           |              |  |   |              |  |  |          |        
|                    |  |             |           |  | Benefits, Policyholders |   |            |          |  |   |         |  |  |            |           |  |                |   |           |              |  |   |              |  |  |          |        
|                    |  |             |           |  | Account Balances         |   |            |          |  |   |         |  |  |            |           |  | Benefits,      |   |           | Amortization |  |   |              |  |  |          |        
|                    |  | Deferred    |           |  | Benefits, Policy and     |   |            |          |  |   |         |  |  |            |           |  | Claims, Losses |   |           | of Deferred  |  |   |              |  |  |          |        
|                    |  | Policy      |           |  | Contract Claims          |   |            |          |  |   |         |  |  | Net        |           |  | and            |   |           | Policy       |  |   | Other        |  |  |          |        
|                    |  | Acquisition |           |  | and Other                |   |            | Unearned |  |   | Premium |  |  | Investment |           |  | Settlement     |   |           | Acquisition  |  |   | Operating    |  |  | Premiums |        
|Segment             |  | Cost        |           |  | Policyholder Funds       |   |            | Premiums |  |   | Revenue |  |  | Income (1) |           |  | Expenses       |   |           | Costs        |  |   | Expenses (2) |  |  | Written  |        
|2014                |  |             |           |  |                          |   |            |          |  |   |         |  |  |            |           |  |                |   |           |              |  |   |              |  |  |          |         |  |  |   |         |  |  |   |           | 
|Life                |  | $           | 711,469   |  |                          | $ | 4,728,166  |          |  | $ | 35,524  |  |  | $          | 307,771   |  |                | $ | 232,389   |              |  | $ | 351,271      |  |  | $        | 78,181  |  |  | $ | 194,927 |  |  | $ |          | 
|Annuity             |  |             | 382,441   |  |                          |   | 10,286,205 |          |  |   |        |  |  |            | 190,357   |  |                |   | 545,887   |              |  |   | 234,173      |  |  |          | 79,135  |  |  |   | 56,487  |  |  |   |          | 
|Health              |  |             | 47,784    |  |                          |   | 353,155    |          |  |   | 46,137  |  |  |            | 216,868   |  |                |   | 11,692    |              |  |   | 144,799      |  |  |          | 18,966  |  |  |   | 43,261  |  |  |   |          | 
|Property & Casualty |  |             | 111,850   |  |                          |   | 890,901    |          |  |   | 673,390 |  |  |            | 1,100,975 |  |                |   | 58,843    |              |  |   | 745,540      |  |  |          | 223,658 |  |  |   | 130,655 |  |  |   | 1,109,029 | 
|Corportate & Other  |  |             |          |  |                          |   |           |          |  |   |        |  |  |            |          |  |                |   | 84,047    |              |  |   |             |  |  |          |        |  |  |   | 60,535  |  |  |   |          | 
|                    |  |             |           |  |                          |   |            |          |  |   |         |  |  |            |           |  |                |   |           |              |  |   |              |  |  |          |         |  |  |   |         |  |  |   |           | 
|Total               |  | $           | 1,253,544 |  |                          | $ | 16,258,427 |          |  | $ | 755,051 |  |  | $          | 1,815,971 |  |                | $ | 932,858   |              |  | $ | 1,475,783    |  |  | $        | 399,940 |  |  | $ | 485,865 |  |  | $ | 1,109,029 | 
|                    |  |             |           |  |                          |   |            |          |  |   |         |  |  |            |           |  |                |   |           |              |  |   |              |  |  |          |         |  |  |   |         |  |  |   |           | 
|2013                |  |             |           |  |                          |   |            |          |  |   |         |  |  |            |           |  |                |   |           |              |  |   |              |  |  |          |         |  |  |   |         |  |  |   |           | 
|Life                |  | $           | 684,084   |  |                          | $ | 4,567,772  |          |  | $ | 35,935  |  |  | $          | 293,173   |  |                | $ | 230,763   |              |  | $ | 345,566      |  |  | $        | 82,658  |  |  | $ | 207,520 |  |  | $ |          | 
|Annuity             |  |             | 424,158   |  |                          |   | 10,641,769 |          |  |   |        |  |  |            | 155,162   |  |                |   | 632,536   |              |  |   | 193,840      |  |  |          | 85,756  |  |  |   | 63,326  |  |  |   |          | 
|Health              |  |             | 47,220    |  |                          |   | 352,412    |          |  |   | 48,269  |  |  |            | 212,931   |  |                |   | 11,314    |              |  |   | 139,762      |  |  |          | 15,249  |  |  |   | 46,646  |  |  |   |          | 
|Property & Casualty |  |             | 122,271   |  |                          |   | 896,819    |          |  |   | 655,674 |  |  |            | 1,074,260 |  |                |   | 66,632    |              |  |   | 746,636      |  |  |          | 225,131 |  |  |   | 128,437 |  |  |   | 1,069,694 | 
|Corportate & Other  |  |             |          |  |                          |   |           |          |  |   |        |  |  |            |          |  |                |   | 75,565    |              |  |   |             |  |  |          |        |  |  |   | 57,122  |  |  |   |          | 
|                    |  |             |           |  |                          |   |            |          |  |   |         |  |  |            |           |  |                |   |           |              |  |   |              |  |  |          |         |  |  |   |         |  |  |   |           | 
|Total               |  | $           | 1,277,733 |  |                          | $ | 16,458,772 |          |  | $ | 739,878 |  |  | $          | 1,735,526 |  |                | $ | 1,016,810 |              |  | $ | 1,425,804    |  |  | $        | 408,794 |  |  | $ | 503,051 |  |  | $ | 1,069,694 | 
|                    |  |             |           |  |                          |   |            |          |  |   |         |  |  |            |           |  |                |   |           |              |  |   |              |  |  |          |         |  |  |   |         |  |  |   |           | 
|2012                |  |             |           |  |                          |   |            |          |  |   |         |  |  |            |           |  |                |   |           |              |  |   |              |  |  |          |         |  |  |   |         |  |  |   |           | 
|Life                |  | $           | 653,416   |  |                          | $ | 4,407,753  |          |  | $ | 36,056  |  |  | $          | 281,621   |  |                | $ | 235,712   |              |  | $ | 340,003      |  |  | $        | 73,710  |  |  | $ | 183,040 |  |  | $ |          | 
|Annuity             |  |             | 406,540   |  |                          |   | 11,035,348 |          |  |   |        |  |  |            | 116,393   |  |                |   | 603,349   |              |  |   | 156,619      |  |  |          | 90,523  |  |  |   | 45,317  |  |  |   |          | 
|Health              |  |             | 49,206    |  |                          |   | 376,173    |          |  |   | 50,366  |  |  |            | 223,773   |  |                |   | 11,789    |              |  |   | 155,825      |  |  |          | 16,908  |  |  |   | 44,966  |  |  |   |          | 
|Property & Casualty |  |             | 138,513   |  |                          |   | 896,660    |          |  |   | 671,110 |  |  |            | 1,082,386 |  |                |   | 69,604    |              |  |   | 793,281      |  |  |          | 227,749 |  |  |   | 120,888 |  |  |   | 1,047,211 | 
|Corportate & Other  |  |             |          |  |                          |   |           |          |  |   |        |  |  |            |          |  |                |   | 64,944    |              |  |   |             |  |  |          |        |  |  |   | 61,535  |  |  |   |          | 
|                    |  |             |           |  |                          |   |            |          |  |   |         |  |  |            |           |  |                |   |           |              |  |   |              |  |  |          |         |  |  |   |         |  |  |   |           | 
|Total               |  | $           | 1,247,675 |  |                          | $ | 16,715,934 |          |  | $ | 757,532 |  |  | $          | 1,704,173 |  |                | $ | 985,398   |              |  | $ | 1,445,728    |  |  | $        | 408,890 |  |  | $ | 455,746 |  |  | $ | 1,047,211 | 
|                    |  |             |           |  |                          |   |            |          |  |   |         |  |  |            |           |  |                |   |           |              |  |   |              |  |  |          |         |  |  |   |         |  |  |   |           | 



|(1) | Net investment income from fixed income assets (bonds and mortgage loans on real estate) is allocated to insurance lines based on the funds generated by each line at the average yield available from these fixed income
assets at the time such funds become available. Net investment income from policy loans is allocated to the insurance lines according to the amount of loans made by each line. Net investment income from all other assets is allocated to the insurance
lines as necessary to support the equity assigned to that line with the remainder allocated to capital & surplus.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Identifiable expenses are charged directly to the appropriate line of business. The remaining expenses are allocated to the lines based upon various factors including premium ratio within the respective lines.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See accompanying Report of Independent Registered Public Accounting Firm.



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##### Table of Contents

AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE IV - REINSURANCE

(in thousands)



|                             |  |        |            |  |           |   |            |            |  |   |         |  |  |                |            |  |  |  |       |  
|---------------------------- |  | ------ | ---------- |  | --------- | - | ---------- | ---------- |  | - | ------- |  |  | -------------- | ---------- |  |  |  | ----- | -
|                             |  |        |            |  | Ceded to  |   |            | Assumed    |  |   |         |  |  | Percentage of  |           
|                             |  | Direct |            |  | Other     |   |            | from Other |  |   | Net     |  |  | Amount         |           
|                             |  | Amount |            |  | Companies |   |            | Companies  |  |   | Amount  |  |  | Assumed to Net |           
|Year Ended December 31, 2014 |  |        |            |  |           |   |            |            |  |   |         |  |  |                |           
|Life insurance in-force      |  | $      | 85,570,057 |  |           | $ | 30,007,131 |            |  | $ | 6,007   |  |  | $              | 55,568,933 |  |  |  | 0.0   | %
|                             |  |        |            |  |           |   |            |            |  |   |         |  |  |                |            |  |  |  |       |  
|Premiums earned              |  |        |            |  |           |   |            |            |  |   |         |  |  |                |            |  |  |  |       |  
|Life and annuity             |  | $      | 594,568    |  |           | $ | 96,577     |            |  | $ | 137     |  |  | $              | 498,128    |  |  |  | 0.0   |  
|Accident and health          |  |        | 271,004    |  |           |   | 274,368    |            |  |   | 220,232 |  |  |                | 216,868    |  |  |  | 101.6 |  
|Property and casualty        |  |        | 1,183,875  |  |           |   | 89,607     |            |  |   | 6,707   |  |  |                | 1,100,975  |  |  |  | 0.6   |  
|                             |  |        |            |  |           |   |            |            |  |   |         |  |  |                |            |  |  |  |       |  
|Total premiums               |  | $      | 2,049,447  |  |           | $ | 460,552    |            |  | $ | 227,076 |  |  | $              | 1,815,971  |  |  |  | 12.5  |  
|                             |  |        |            |  |           |   |            |            |  |   |         |  |  |                |            |  |  |  |       |  
|                             |  |        |            |  |          
|Year Ended December 31, 2013 |  |        |            |  |           |   |            |            |  |   |         |  |  |                |           
|Life insurance in-force      |  | $      | 80,038,270 |  |           | $ | 30,577,123 |            |  | $ | 32,019  |  |  | $              | 49,493,166 |  |  |  | 0.1   |  
|                             |  |        |            |  |           |   |            |            |  |   |         |  |  |                |            |  |  |  |       |  
|Premiums earned              |  |        |            |  |           |   |            |            |  |   |         |  |  |                |            |  |  |  |       |  
|Life and annuity             |  | $      | 541,025    |  |           | $ | 93,240     |            |  | $ | 550     |  |  | $              | 448,335    |  |  |  | 0.1   |  
|Accident and health          |  |        | 271,847    |  |           |   | 240,505    |            |  |   | 181,589 |  |  |                | 212,931    |  |  |  | 85.3  |  
|Property and casualty        |  |        | 1,157,528  |  |           |   | 90,196     |            |  |   | 6,928   |  |  |                | 1,074,260  |  |  |  | 0.6   |  
|                             |  |        |            |  |           |   |            |            |  |   |         |  |  |                |            |  |  |  |       |  
|Total premiums               |  | $      | 1,970,400  |  |           | $ | 423,941    |            |  | $ | 189,067 |  |  | $              | 1,735,526  |  |  |  | 10.9  |  
|                             |  |        |            |  |           |   |            |            |  |   |         |  |  |                |            |  |  |  |       |  
|                             |  |        |            |  |          
|Year Ended December 31, 2012 |  |        |            |  |           |   |            |            |  |   |         |  |  |                |           
|Life insurance in-force      |  | $      | 72,884,984 |  |           | $ | 30,477,364 |            |  | $ | 103,576 |  |  | $              | 42,511,196 |  |  |  | 0.2   |  
|                             |  |        |            |  |           |   |            |            |  |   |         |  |  |                |            |  |  |  |       |  
|Premiums earned              |  |        |            |  |           |   |            |            |  |   |         |  |  |                |            |  |  |  |       |  
|Life and annuity             |  | $      | 488,891    |  |           | $ | 93,066     |            |  | $ | 2,189   |  |  | $              | 398,014    |  |  |  | 0.5   |  
|Accident and health          |  |        | 269,373    |  |           |   | 197,759    |            |  |   | 152,159 |  |  |                | 223,773    |  |  |  | 68.0  |  
|Property and casualty        |  |        | 1,212,814  |  |           |   | 135,598    |            |  |   | 5,170   |  |  |                | 1,082,386  |  |  |  | 0.5   |  
|                             |  |        |            |  |           |   |            |            |  |   |         |  |  |                |            |  |  |  |       |  
|Total premiums               |  | $      | 1,971,078  |  |           | $ | 426,423    |            |  | $ | 159,518 |  |  | $              | 1,704,173  |  |  |  | 9.4   | %
|                             |  |        |            |  |           |   |            |            |  |   |         |  |  |                |            |  |  |  |       |  

See accompanying Report of Independent Registered Public Accounting Firm.

AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS

(IN
THOUSANDS)



|                                 |  |              |        |  |            |   |       |             |  |   |              |   |  |            |    |   |  |   |        | 
|-------------------------------- |  | ------------ | ------ |  | ---------- | - | ----- | ----------- |  | - | ------------ | - |  | ---------- | -- | - |  | - | ------ | 
|                                 |  |              |        |  | Additions  |   |       | Deductions  |  |   |              |  
|                                 |  | Balance at   |        |  |            |   |       |             |  |   |              |   |  | Balance at |   
|                                 |  | Beginning of |        |  | Charged to |   |       |             |  |   | Change in    |   |  | End of     |   
|                                 |  | Period       |        |  | Expense    |   |       | Written off |  |   | Estimate (1) |   |  | Period     |   
|2014                             |  |              |        |  |            |   |       |             |  |   |              |   |  |            |    |   |  |   |        | 
|Investment valuation allowances: |  |              |        |  |            |   |       |             |  |   |              |   |  |            |    |   |  |   |        | 
|Mortgage loans on real estate    |  | $            | 12,181 |  |            | $ | 5,679 |             |  | $ |             |   |  | $          |   |   |  | $ | 17,860 | 
|                                 |  |              |        |  |            |   |       |             |  |   |              |   |  |            |    |   |  |   |        | 
|2013                             |  |              |        |  |            |   |       |             |  |   |              |   |  |            |    |   |  |   |        | 
|Investment valuation allowances: |  |              |        |  |            |   |       |             |  |   |              |   |  |            |    |   |  |   |        | 
|Mortgage loans on real estate    |  | $            | 12,012 |  |            | $ | 171   |             |  | $ |             |   |  | $          | (2 | ) |  | $ | 12,181 | 
|                                 |  |              |        |  |            |   |       |             |  |   |              |   |  |            |    |   |  |   |        | 
|2012                             |  |              |        |  |            |   |       |             |  |   |              |   |  |            |    |   |  |   |        | 
|Investment valuation allowances: |  |              |        |  |            |   |       |             |  |   |              |   |  |            |    |   |  |   |        | 
|Mortgage loans on real estate    |  | $            | 11,321 |  |            | $ | 2,973 |             |  | $ | (2,277       | ) |  | $          | (5 | ) |  | $ | 12,012 | 
|                                 |  |              |        |  |            |   |       |             |  |   |              |   |  |            |    |   |  |   |        | 



|(1) | Decrease in the required valuation allowance for mortgage loans as a result of changes to the estimate in calculating the mortgage loan allowance based on enhanced methodology.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See accompanying Report of Independent Registered Public Accounting Firm.



117