Exhibit 99.1

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

American National Group, Inc.

Galveston, Texas

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of American National Group, Inc. and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for the years ended December 31, 2021 and 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years ended December 31, 2021 and 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Policyholders’ Account Balances – Valuation of embedded derivative liabilities for equity-indexed contracts — Refer to Notes 7 and 9 to the financial statements

Critical Audit Matter Description

The Company sells equity-indexed universal life and equity-indexed deferred annuity contracts with guaranteed minimum benefits, some of which contain embedded derivatives that are required to be bifurcated from a host reserve, separately accounted for, and measured at fair value. The embedded derivative represents future benefit cash flows in excess of the minimum guaranteed cash flows. As of December 31, 2021, the fair value of the embedded derivative liabilities was $833 million. Management utilizes various assumptions in order to measure the fair value of the embedded derivatives including assumptions related to lapse rate and equity volatility. These assumptions are evaluated annually by management with any changes in the estimated fair value resulting in a cumulative charge or credit to income from operations.

Given the valuation of the embedded derivative liabilities is sensitive to changes in these assumptions, the related audit effort in evaluating management’s selection of the assumptions related to the lapse rate and equity volatility required a

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high degree of auditor judgment and an increased extent of effort, including involvement of our actuarial and fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our principal audit procedures related to the lapse rate and equity volatility assumptions selected by management for the valuation of embedded derivative liabilities included the following, among others:

• We tested the effectiveness of management’s controls over the valuation of embedded derivative liabilities, including those over the development, selection, and implementation of the assumptions related to lapse rate and equity volatility.

• With the assistance of our fair value specialists, we tested the completeness and accuracy of the underlying data used to determine the equity volatility assumptions.

• We tested the completeness and accuracy of the historical company experience used to determine the lapse rate assumptions.

• With the assistance of our actuarial specialists, we evaluated the appropriateness of the assumptions, evaluated the consistency of the selected assumptions used in the Company’s valuation model, and tested the mathematical accuracy of the valuation model.

Policy and Contract Claims – Property and casualty liability for unpaid claims and claim adjustment expenses — Refer to Notes 2 and 12 to the financial statements

Critical Audit Matter Description

The Company establishes a liability for unpaid claims and claim adjustment expenses to provide for the estimated costs of paying claims under property and casualty insurance policies written by the Company. The property and casualty liability for unpaid claims is included within Policy and Contract Claims in the statements of financial position, which had a balance of $1.7 billion as of December 31, 2021. This liability, which includes estimates for both claims that have been reported and claims that have been incurred but not reported, represents the estimate of all claim and claim adjustment expenses associated with processing and settling the claims. The liability for unpaid claims is estimated using actuarial assumptions for loss development patterns that are based upon the Company’s historical experience and consider the effects of current developments, anticipated trends and risk management programs.

Given the subjectivity of estimating the ultimate cost to settle the liability for property and casualty insurance reported and incurred but not reported claims, the related audit effort in evaluating the assumptions for loss development patterns required a high degree of auditor judgment and an increased extent of effort, including involvement of our actuarial specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our principal audit procedures related to the assumptions for loss development patterns selected by management to estimate the property and casualty liability for unpaid claims and claim adjustment expenses included the following, among others:

• We tested the effectiveness of management’s controls over the property and casualty liability for unpaid claims and claim adjustment expenses, including those over the development, selection, and implementation of the assumptions for loss development patterns used in the actuarial estimates.

• With the assistance of our actuarial specialists, we tested the completeness and accuracy of the underlying data, including historical claims, used to determine the assumptions for loss development patterns, evaluated the appropriateness of the assumptions, evaluated the consistency of the selected assumptions used in the Company’s valuation model, and tested the mathematical accuracy of the valuation model.

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• We evaluated the reasonableness of the Company’s estimated property and casualty liability for unpaid losses and loss adjustment expenses by comparing to those independently derived by our actuarial specialists.

/s/ DELOITTE & TOUCHE LLP

Houston, Texas

February 25, 2022

We have served as the Company’s auditor since 2020.

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AMERICAN NATIONAL GROUP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands, except share data)

	December 31,
	2021		2020
ASSETS
Fixed maturity, bonds held-to-maturity, at amortized cost, net of allowance for credit losses of $13,129 in 2021 and $12,442 in 2020 (Fair value $7,458,789 in 2021 and $7,983,181 in 2020)	$	7,088,981	$	7,354,970
Fixed maturity, bonds available-for-sale, at fair value (Allowance for credit losses of $10,310 in 2021 and $7,482 in 2020) (Amortized cost $8,107,794 in 2021 and $7,073,142 in 2020)		8,380,248		7,597,180
Equity securities, at fair value (Cost $94,732 in 2021 and $754,625 in 2020)		135,433		2,070,766
Mortgage loans on real estate, net of allowance for credit losses of $97,079 in 2021 and $125,703 in 2020		5,199,334		5,242,531
Policy loans		365,208		373,014
Real estate and real estate partnerships, net of accumulated depreciation of $287,387 in 2021 and $269,626 in 2020		928,412		960,572
Investment funds		961,763		477,135
Short-term investments		1,840,732		1,028,379
Other invested assets		125,795		94,415
Total investments		25,025,906		25,198,962
Cash and cash equivalents		1,930,882		339,947
Accrued investment income		192,913		216,389
Reinsurance recoverables, net of allowance for credit losses of $14,553 in 2021 and $14,353 in 2020		459,621		414,359
Prepaid reinsurance premiums		47,789		42,804
Premiums due and other receivables		382,562		351,972
Deferred policy acquisition costs		1,498,124		1,360,211
Property and equipment, net of accumulated depreciation of $302,936 in 2021 and $281,738 in 2020		137,466		121,578
Prepaid pension		167,587		80,526
Other assets		156,768		155,600
Separate account assets		1,320,703		1,185,467
Total assets	$	31,320,321	$	29,467,815
LIABILITIES
Future policy benefits
Life	$	3,216,626	$	3,149,067
Annuity		1,598,365		1,617,774
Health		45,715		49,658
Policyholders’ account balances		13,879,198		12,812,155
Policy and contract claims		1,692,295		1,575,288
Unearned premium reserve		1,013,830		956,343
Other policyholder funds		379,545		358,601
Liability for retirement benefits		79,089		70,254
Notes payable		149,248		153,703
Deferred tax liabilities, net		200,510		478,347
Current tax payable		321,926		10,372
Federal Home Loan Bank advance		—		250,000
Other liabilities		421,212		335,219
Separate account liabilities		1,320,703		1,185,467
Total liabilities		24,318,262		23,002,248
EQUITY
American National Group, Inc. stockholders’ equity:
Common stock, $0.01 par value; 50,000,000 shares authorized; 26,887,200 shares issued and outstanding in 2021 and 2020		269		269
Additional paid-in capital		47,762		47,683
Accumulated other comprehensive income		147,054		222,170
Retained earnings		6,799,283		6,188,148
Total American National stockholders’ equity		6,994,368		6,458,270
Noncontrolling interest		7,691		7,297
Total stockholders’ equity		7,002,059		6,465,567
Total liabilities and stockholders’ equity	$	31,320,321	$	29,467,815

See accompanying notes to the consolidated financial statements.

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AMERICAN NATIONAL GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

	Years ended December 31,
	2021			2020
PREMIUMS AND OTHER REVENUES
Premiums
Life	$	412,769		$	396,099
Annuity		74,925			92,866
Health		143,484			168,805
Property and casualty		1,669,875			1,560,304
Other policy revenues		359,707			310,746
Net investment income		1,171,654			976,152
Net realized investment gains		64,628			35,660
Other-than-temporary impairments		—			—
(Increase) decrease in investment credit loss		28,778			(102,603	)
Net gains on equity securities		420,283			356,281
Other income		45,688			40,556
Total premiums and other revenues		4,391,791			3,834,866
BENEFITS, LOSSES AND EXPENSES
Policyholder benefits
Life		605,724			533,925
Annuity		149,931			214,158
Claims incurred
Health		98,029			116,122
Property and casualty		1,094,126			1,005,620
Interest credited to policyholders’ account balances		448,654			321,042
Commissions for acquiring and servicing policies		640,097			553,600
Other operating expenses		571,869			515,413
Change in deferred policy acquisition costs		(79,632	)		(5,678	)
Total benefits, losses and expenses		3,528,798			3,254,202
Income before federal income tax and other items		862,993			580,664
Less: Provision (benefit) for federal income taxes
Current		408,551			57,697
Deferred		(241,966	)		58,910
Total provision for federal income taxes		166,585			116,607
Income after federal income tax		696,408			464,057
Other components of net periodic pension benefit (costs), net of tax		3,574			4,456
Net income		699,982			468,513
Less: Net income attributable to noncontrolling interest, net of tax		657			1,008
Net income attributable to American National	$	699,325		$	467,505
Amounts available to American National common stockholders
Earnings per share
Basic	$	26.02		$	17.39
Diluted		26.01			17.38
Weighted average common shares outstanding		26,877,200			26,878,679
Weighted average common shares outstanding and dilutive potential common shares		26,884,679			26,887,125

See accompanying notes to the consolidated financial statements.

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AMERICAN NATIONAL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	Years ended December 31,
	2021			2020
Net income	$	699,982		$	468,513
Other comprehensive income (loss), net of tax
Change in net unrealized gains (losses) on securities		(142,854	)		134,315
Foreign currency transaction and translation adjustments		62			235
Defined benefit pension plan adjustment		67,676			(11,898	)
Total other comprehensive income (loss), net of tax		(75,116	)		122,652
Total comprehensive income		624,866			591,165
Less: Comprehensive income attributable to noncontrolling interest		657			1,008
Total comprehensive income attributable to American National	$	624,209		$	590,157

See accompanying notes to the consolidated financial statements.

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AMERICAN NATIONAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except per share data)

	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Treasury Stock			Noncontrolling Interest			Total Equity
Balance at January 1, 2020	$	30,832		$	21,011	$	99,518		$	5,946,857		$	(108,469	)	$	6,014		$	5,995,763
Reclassification of par value due to reorganization		(26,618	)		26,618		—			—			—			—			—
Retirement of treasury shares		(3,945	)		—		—			(104,524	)		108,469			—			—
Amortization of restricted stock		—			54		—			—			—			—			54
Cumulative effect of accounting change		—			—		—			(33,500	)		—			—			(33,500	)
Other comprehensive income		—			—		122,652			—			—			—			122,652
Net income attributable to American National		—			—		—			467,505			—			—			467,505
Cash dividends to common stockholders (declared per share of $3.28)		—			—		—			(88,190	)		—			—			(88,190	)
Contributions		—			—		—			—			—			856			856
Distributions		—			—		—			—			—			(581	)		(581	)
Net income attributable to noncontrolling interest		—			—		—			—			—			1,008			1,008
Balance at December 31, 2020	$	269		$	47,683	$	222,170		$	6,188,148		$	—		$	7,297		$	6,465,567
Amortization of restricted stock		—			79		—			—			—			—			79
Other comprehensive loss		—			—		(75,116	)		—			—			—			(75,116	)
Net income attributable to American National		—			—		—			699,325			—			—			699,325
Cash dividends to common stockholders (declared per share of $3.28)		—			—		—			(88,190	)		—			—			(88,190	)
Contributions		—			—		—			—			—			386			386
Distributions		—			—		—			—			—			(649	)		(649	)
Net income attributable to noncontrolling interest		—			—		—			—			—			657			657
Balance at December 31, 2021	$	269		$	47,762	$	147,054		$	6,799,283		$	—		$	7,691		$	7,002,059

See accompanying notes to the consolidated financial statements.

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AMERICAN NATIONAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Years ended December 31,
	2021			2020
OPERATING ACTIVITIES
Net income	$	699,982		$	468,513
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment gains		(64,628	)		(35,660	)
Other-than-temporary impairments		—			—
Increase (decrease) in investment credit loss		(28,778	)		102,603
Accretion of premiums, discounts and loan origination fees		18,932			9,479
Net capitalized interest on policy loans and mortgage loans		(31,620	)		(30,367	)
Depreciation		49,983			52,551
Interest credited to policyholders’ account balances		448,654			321,042
Charges to policyholders’ account balances		(359,707	)		(310,746	)
Deferred federal income tax expense (benefit)		(241,966	)		58,910
Income from equity method investments		(188,677	)		(42,467	)
Distributions from unconsolidated affiliates		150,024			82,045
Changes in:
Policyholder liabilities		271,202			210,397
Deferred policy acquisition costs		(79,632	)		(5,678	)
Reinsurance recoverables		(45,262	)		(2,529	)
Premiums due and other receivables		(30,590	)		(10,048	)
Prepaid reinsurance premiums		(4,985	)		1,865
Accrued investment income		23,476			(15,533	)
Current tax payable		311,554			339
Liability for retirement benefits		7,440			(13,765	)
Fair value of option securities		(127,681	)		(51,931	)
Fair value of equity securities		(420,283	)		(356,281	)
Other, net		(6,651	)		(100,276	)
Net cash provided by operating activities		350,787			332,463
INVESTING ACTIVITIES
Proceeds from sale/maturity/prepayment of:
Held-to-maturity securities		1,274,488			1,615,811
Available-for-sale securities		1,224,242			977,051
Equity securities		2,467,165			117,866
Real estate and real estate partnerships		21,139			61,548
Mortgage loans		951,602			522,900
Policy loans		51,105			52,767
Other invested assets		239,767			148,101
Disposals of property and equipment		65			268
Distributions from real estate and real estate partnerships		120,019			6,866
Distributions from investment funds		131,186			91,178
Payment for the purchase/origination of:
Held-to-maturity securities		(944,443	)		(498,149	)
Available-for-sale securities		(2,244,974	)		(1,473,808	)
Equity securities		(93,663	)		(131,238	)
Real estate and real estate partnerships		(12,252	)		(31,518	)
Mortgage loans		(854,496	)		(752,244	)
Policy loans		(20,527	)		(22,338	)
Other invested assets		(164,426	)		(98,371	)
Additions to property and equipment		(37,150	)		(39,863	)
Contributions to real estate and real estate partnerships		(123,061	)		(119,463	)
Contributions to investment funds		(591,324	)		(256,638	)
Change in short-term investments		(812,353	)		(603,058	)
Change in collateral held for derivatives		20,604			(15,648	)
Other, net		2,633			2,657
Net cash provided by (used in) investing activities		605,346			(445,323	)

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AMERICAN NATIONAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

	Years ended December 31,
	2021			2020
FINANCING ACTIVITIES
Policyholders’ account deposits		2,229,554			1,232,520
Policyholders’ account withdrawals		(1,251,458	)		(1,388,649	)
Proceeds from Federal Home Loan Bank borrowings		—			500,000
Repayment of Federal Home Loan Bank borrowings		(250,000	)		(250,000	)
Change in notes payable		(4,455	)		(4,294	)
Dividends to stockholders		(88,190	)		(88,190	)
Payments to noncontrolling interest		(649	)		(581	)
Net cash provided by financing activities		634,802			806
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		1,590,935			(112,054	)
Cash and cash equivalents at beginning of the period		339,947			452,001
Cash and cash equivalents at end of the period	$	1,930,882		$	339,947
Supplemental cash flow information:
Interest paid	$	387		$	805
Income taxes paid, net		89,600			50,800

See accompanying notes to the consolidated financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Nature of Operations

American National Group, Inc. (“ANAT” or the “Company”), through its consolidated subsidiaries (collectively “American National”) offers a broad portfolio of insurance products, including individual and group life insurance, annuities, health insurance, and property and casualty insurance. Business is conducted in all 50 states, the District of Columbia, and Puerto Rico.

On August 6, 2021, ANAT entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Brookfield Asset Management Reinsurance Partners Ltd. (“Brookfield Reinsurance”), an exempted company limited by shares existing under the laws of Bermuda, and Freestone Merger Sub Inc., a Delaware corporation and an indirect wholly-owned subsidiary of Brookfield Reinsurance (“Merger Sub”). On the terms and subject to the conditions of the Merger Agreement, at the closing, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving entity, which will become an indirect, wholly-owned subsidiary of Brookfield Reinsurance. The Merger was unanimously approved by the Company’s board of directors. The Merger has received the requisite stockholder approval required under Delaware law. The only remaining significant closing condition pursuant to the Merger is the required regulatory approval from the insurance authorities in Texas, Missouri, New York, Louisiana and California.

Note 2 – Summary of Significant Accounting Policies and Practices

The consolidated financial statements and notes thereto have been prepared in conformity with 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 the voting rights, 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, which include real estate partnerships and investment funds, are accounted for using the equity method of accounting. Certain amounts in prior years have been reclassified to conform to current year presentation.

During the first quarter of 2021, we reclassified the Company’s earnings from equity method investments in the condensed consolidated statements of operations from “Equity in earnings of unconsolidated affiliates” to “Net investment income.” For the year ended December 31, 2020, $42.5 million were reclassified, with no impact to net income. We also reclassified the related asset balances in the consolidated statements of financial position from “Investments in unconsolidated affiliates” to “Real estate and real estate partnerships” and “Investment funds,” with no impact to total assets.

Management believes these reclassifications result in increased transparency to the users of the financial statements as it relates to the Company’s invested assets and the performance of these investments that are tied to the primary operations of the Company.

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 are comprised of bonds classified as held-to-maturity that are carried at amortized cost net of credit loss allowance and bonds classified as available-for-sale that are carried at fair value. In addition, equity investments, other than those accounted for under the equity method or those that result in consolidation of the investee, are measured at fair value with changes in fair value recognized in earnings.

Mortgage loans on real estate are 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 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. In the consolidated statements of operations, gains and losses from the sale of loans are reported in “Net realized investment gains,” and changes in allowances are reported in “(Increase) decrease in investment credit loss.”

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Note 2 – Summary of Significant Accounting Policies and Practices — (Continued)

Mortgage loans are presented net of the Company’s recorded allowance for expected credit loss, which represents the portion of amortized cost basis on mortgage loans that the Company does not expect to collect. In determining the Company’s allowance for credit losses, management: (i) pools and evaluates mortgage loans with similar risk characteristics, (ii) considers expected lifetime credit losses adjusted for prepayments and extensions, and (iii) considers past events, current economic conditions and forecasts of future economic conditions. The allowance is calculated quarterly for each property type based on inputs unique to each loan property type.

On an ongoing basis, mortgage loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality), collateral dependent mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is reasonably possible or probable), and reasonably expected troubled debt restructurings (i.e., the Company grants concessions to a borrower that is experiencing financial difficulties) may be evaluated individually for credit loss. The allowance for credit losses for loans evaluated individually is established using the same methodologies for the overall commercial portfolio segment except for collateral dependent loans. The allowance for a collateral dependent loan is established as the excess of amortized cost over the estimated fair value of the loan’s underlying collateral, less selling cost when foreclosure is probable. Accordingly, the change in the estimated fair value of collateral dependent loans is recorded as a change in the allowance for credit losses which is recorded on a quarterly basis as a charge or credit to earnings.

Policy loans are carried at the outstanding balance plus any accrued interest 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 as an adjustment to “Net realized investment gains” 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 in which the Company 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, are accounted for using the equity method. These investments are reported as “Real estate and real estate partnerships” 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 when timely financial information is not available, and the contractual right does not exist to receive such financial information. In addition to the investees’ impairment analysis of their 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 as an adjustment to “Net investment income” 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.

Investment funds are primarily comprised of senior secured and second lien private loans that are secured by assets, revenues and credit/balance sheet lending. We recognize our share of the fund’s earnings in net investment income on a one-quarter lag under the equity method of accounting. Cash distributions are received from the earnings and from liquidation of underlying investments. All investment funds are reevaluated quarterly by the fund manager and are audited annually by an independent audit firm.

Short-term investments comprised of commercial paper are carried at amortized cost, which approximates fair value. Short- term investments have a maturity of less than one year.

11

Note 2 – Summary of Significant Accounting Policies and Practices — (Continued)

Other invested assets comprised primarily of equity-indexed options are carried at fair value and may be collateralized by counterparties; such collateral is restricted to the Company’s use. Separately managed accounts and Federal Home Loan Bank stock are also included in other invested assets and are carried at cost or market value if available from the account manager. Other invested assets also include tax credit partnerships and mineral rights less allowance for depletion, where applicable.

Credit losses on fixed maturity securities, held-to-maturity, receive a lifetime expected credit loss allowance upon initial recognition of the security representing the net amount expected to be collected. Expected credit losses are measured on a collective (pool) basis by major security type with the credit loss allowance determined based on the difference between the net present value of the expected cash flows from those pooled securities with the amortized cost basis. The expected cash flows are discounted at the effective interest rate of the security and consider historical credit loss information that is adjusted for current market conditions and reasonable and supportable economic forecasts based upon a third-party valuation model. The valuation model calculates expected cash flows based on scenario conditioned probability of default and loss given default. Probability of default measures the likelihood of default over a specified time period, and the loss given default measures the amount that the Company could lose in the event of a counterparty default.

For fixed maturity securities, available-for-sale, 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 a third- party valuation model similar to that used for held-to-maturity securities. The net present value of the expected cash flows is calculated by discounting management’s best estimate of expected cash flows 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, a credit loss allowance is recorded. The credit loss is recorded as the excess of amortized cost over the net present value of the expected cash flows limited by the amount the fair value is less than the amortized cost (fair-value floor). If the fair value 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.

Additions to or releases of the allowance on all fixed maturity securities are reported in “(Increase) decrease in investment credit loss” in the consolidated statements of operations.

Prior to January 1, 2020, an other-than-temporary impairment (“OTTI”) loss was recorded when management believed the carrying value would not be realized. After the recognition of a credit loss, fixed maturity securities were 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 was not adjusted for subsequent increases in estimated fair value. Should there have been a significant increase in the estimate of cash flows expected to be collected from previously impaired securities, the increase would have been accounted for prospectively by accreting it as interest income over its remaining life.

Derivative instruments in the form of equity-indexed options are purchased to hedge against future interest rate increases in liabilities indexed to market rates and are recorded in the consolidated statements of financial position within other invested assets at fair value, net of collateral provided by counterparties. 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. The Company uses derivative instruments to hedge its business risk and holds collateral to offset exposure from its counterparties. Collateral that supports credit risk is reported in the consolidated statements of financial position as an offset to “Other invested assets” with an associated payable to “Other liabilities” for excess collateral.

Cash and cash equivalents have durations that do not exceed 90 days at the date of acquisition, 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 consist of buildings occupied by American National, data processing equipment, software, furniture and equipment, and automobiles which are carried at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful life of the asset (typically 3 to 50 years).

12

Note 2 – Summary of Significant Accounting Policies and Practices — (Continued)

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, including limited-pay contracts, 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.

DAC on universal life 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 premiums earned.

DAC on participating whole life products is amortized in proportion to estimated gross margins. Estimated gross margins are equal to premiums, plus investment income, less benefits, less expenses not included in DAC, less the change in reserves, less dividends.

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 anticipated in assessing the recoverability of DAC for short-duration contracts.

Liabilities for future policy benefits for 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 the policies were issued. Estimates 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 balances represent the contract value that has accrued to the benefit of the policyholders related to universal-life and investments-type contracts. For fixed products, these are generally equal to the accumulated deposits plus interest credited, reduced by withdrawals, payouts, and accumulated policyholder assessments. Indexed product account balances are equal to the sum of host and embedded derivative reserves computed per derivative accounting guidance.

Liabilities for unpaid 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 IBNR claim liabilities. Case reserves include the liability for reported but unpaid claims. IBNR liabilities include a provision for potential development on case reserves, losses on claims currently closed which may reopen in the future, as well as IBNR claims. These liabilities 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 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 collectability. Recoveries of gross ultimate losses under our non- catastrophe reinsurance are estimated by a review of individual large claims and the ceded portion of IBNR using assumed distribution of loss by percentage retained. Recoveries of gross ultimate losses under our catastrophe reinsurance are estimated by applying reinsurance treaty terms to estimates of gross ultimate losses. The most significant assumption is the average size of the individual losses for those claims that have occurred but have not yet been reported and our estimate of gross ultimate losses. The ultimate amount of the reinsurance ceded recoverable is unknown until all losses settle.

13

Note 2 – Summary of Significant Accounting Policies and Practices — (Continued)

Separate account assets and liabilities

Separate account assets and liabilities are funds that are held separate from the general assets and liabilities of American National. Separate account assets include funds representing the investments of variable insurance product contract holders, who bear the investment risk of such funds. Investment income and investment gains and losses from these separate funds accrue to the benefit of the contract holders. American National reports separately, as assets and liabilities, investments held in such 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. In addition, American National’s qualified pension plan assets are included in separate accounts. 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 statements of operations. Separate accounts are established in conformity with insurance laws and are not chargeable with liabilities that arise from any other business of American National.

Premiums, benefits, claims incurred, and expenses

Traditional ordinary life 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.

Annuity 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 contract holders.

Universal life and single premium whole life revenues represent amounts assessed to policyholders including 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.

Property and casualty premiums are recognized as revenue over the period of the contract in proportion to the amount of insurance protection, which is generally evenly over the contract period, net of reinsurance ceded. Claims incurred consist of claims and CAE paid and the change in reserves, net of reinsurance received and recoverable.

Participating insurance policies

Participating business comprised approximately 4.0% of the life insurance in-force at December 31, 2021 and 16.5% of life premiums in 2021.

For the majority of this participating business, profits earned 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). Dividends to participating policyholders were $8.1 million and $7.0 million for the years ended 2021 and 2020, respectively. Income of $18.3 million and $5.8 million was allocated to participating policyholders for the years ended 2021 and 2020, respectively.

For all other participating business, 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.

Federal income taxes

American National files 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.

14

Note 2 – Summary of Significant Accounting Policies and Practices — (Continued)

Deferred income tax assets and liabilities are 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. American National recognizes interest expense and penalties related to uncertain tax positions, if applicable, as income tax expense in the consolidated statements of operations. Accrued interest expense and penalties related to uncertain tax positions are reported as “Other liabilities” in the consolidated statements of financial position.

Pension and postretirement benefit plans

Pension and postretirement benefit obligations and costs for our frozen benefit plans are estimated using assumptions including demographic factors such as retirement age and mortality.

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. For this purpose, a hypothetical bond portfolio to match the expected monthly benefit payments under the pension plan was constructed with the resulting yield of the portfolio used as a discount rate.

In developing the investment return assumption, we relied on a model that utilizes the following factors:

• Current yield to maturity of fixed income securities

• Forecasts of inflation, GDP growth, and total return for each asset class

• Historical plan performance

• Target asset allocation

• Standard deviations and correlations related to historical and expected future returns of each asset class and inflation

The resulting assumption is the assumed rate of return for the plans’ target asset allocation, net of investment expenses, and reflects anticipated returns of the plans’ current and future assets.

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 (“SARs”) liability and compensation cost is based on the fair value of the grants and is remeasured each reporting period through the settlement date. The fair value of the SARs 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 reported as “Other liabilities” in the consolidated statements of financial position.

Restricted Stock (“RS”) equity and compensation cost is based on the fair value of the underlying stock at grant date. The compensation cost accrued is reported as “Additional paid-in capital” in the consolidated statements of financial position.

Restricted Stock Units (“RSUs”) are settled in cash, resulting in classifying RSUs as a liability award. The liability is remeasured each reporting period through the vesting date and is adjusted for changes in fair value. The compensation liability related to the RSUs is reported as “Other Liabilities” in the consolidated statements of financial position.

Litigation contingencies

Existing and potential litigation is reviewed quarterly to determine if any adjustments to liabilities for possible losses are necessary. Reserves for losses are established whenever they are probable and reasonably estimable. 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.

15

Note 3 – Recently Issued Accounting Pronouncements

Adoption of New Accounting Standards

Standard	Description	Effective Date and Method of Adoption	Impact on Financial Statements
ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes	The amendments simplify the accounting for income taxes by removing certain exceptions in the existing guidance including those related to intra-period tax allocation when there is a loss from continuing operations and income or a gain from other items. The amendments require that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax as well as other minor changes.	This standard became effective for the Company for all annual and interim periods beginning January 1, 2021. The new guidance specifies which amendments should be applied prospectively, retrospective to all periods presented or on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption.	The adoption of this standard did not have a material impact to the Company’s Consolidated Financial Statements or Notes to the Consolidated Financial Statements.

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

Standard	Description	Effective Date and Method of Adoption	Impact on Financial Statements
ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts	The guidance will improve the timeliness of recognizing changes in the liability for future policy benefits for traditional and limited payment long- duration contracts and will modify the rate used to discount future cash flows. The guidance will also simplify the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts (market risk benefits), simplify the amortization of deferred acquisition costs and add significant qualitative and quantitative disclosures.	This standard will become effective for the Company for all annual and interim periods beginning January 1, 2023, which was extended from the previous effective date of January 1, 2022 through the issuance of ASU 2020-11. The guidance allows for one of two adoption methods, a modified retrospective transition or a full retrospective transition except for the changes to accounting for market risk benefits which will require a retrospective transition.	Considerable progress in the implementation of the new standard has been made; however, we have not yet estimated the impact the new guidance will have on the consolidated financial statements. Accounting and actuarial policy elections have mostly been determined, data flows are being established, actuarial models are being developed, and implementation of a financial reporting disclosure system is in progress.
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	The amendments in this guidance provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The guidance only applies to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.	The amendments in this guidance are effective for all entities as of March 12, 2020 and will sunset through December 31, 2022, at which time the application of exceptions and optional expedients will no longer be permitted. The FASB is currently deliberating an ASU that would extend the sunset date through December 31, 2024.	The inventory of LIBOR exposures has been completed and is primarily limited to floating rate bonds, alternative investments, and borrowings within joint venture investments. Some of the contracts included in these categories will mature prior to December 31, 2021, the start of LIBOR rates cessations. The transition from LIBOR is expected to result in an immaterial impact to the Company’s Consolidated Financial Statements or Notes to the Consolidated Financial Statements.

16

Note 4 – Investment in Securities

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

	December 31, 2021
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
Fixed maturity, bonds held-to-maturity
U.S. treasury and government	$	12,284	$	—	$	(287	)	$	—		$	11,997
U.S. states and political subdivisions		104,039		1,676		(1,906	)		—			103,809
Foreign governments		14,369		137		(159	)		—			14,347
Corporate debt securities		6,810,518		388,726		(21,213	)		(11,467	)		7,166,564
Residential mortgage-backed securities		48,491		2,684		(481	)		(516	)		50,178
Collateralized debt securities		112,409		1,677		(1,046	)		(1,146	)		111,894
Total bonds held-to-maturity		7,102,110		394,900		(25,092	)		(13,129	)		7,458,789
Fixed maturity, bonds available-for-sale
U.S. treasury and government		26,887		121		(255	)		—			26,753
U.S. states and political subdivisions		1,028,331		51,124		(2,312	)		(14	)		1,077,129
Foreign governments		5,000		841		—			—			5,841
Corporate debt securities		6,809,610		268,964		(35,285	)		(7,141	)		7,036,148
Residential mortgage-backed securities		32,234		342		(341	)		(268	)		31,967
Collateralized debt securities		205,732		469		(904	)		(2,887	)		202,410
Total bonds available-for-sale		8,107,794		321,861		(39,097	)		(10,310	)		8,380,248
Total investments in fixed maturity	$	15,209,904	$	716,761	$	(64,189	)	$	(23,439	)	$	15,839,037

	December 31, 2020
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
Fixed maturity, bonds held-to-maturity
U.S. treasury and government	$	7,733	$	11	$	—		$	—		$	7,744
U.S. states and political subdivisions		109,445		4,101		(11	)		—			113,535
Foreign governments		3,851		374		—			—			4,225
Corporate debt securities		6,992,095		623,233		(9,117	)		(7,475	)		7,598,736
Residential mortgage-backed securities		114,579		5,065		(1,464	)		(452	)		117,728
Collateralized debt securities		139,709		6,864		(845	)		(4,515	)		141,213
Total bonds held-to-maturity		7,367,412		639,648		(11,437	)		(12,442	)		7,983,181
Fixed maturity, bonds available-for-sale
U.S. treasury and government		28,766		418		(1	)		—			29,183
U.S. states and political subdivisions		1,066,627		73,976		(145	)		—			1,140,458
Foreign governments		14,995		1,393		—			—			16,388
Corporate debt securities		5,887,756		471,205		(17,207	)		(7,275	)		6,334,479
Residential mortgage-backed securities		20,544		964		(29	)		(188	)		21,291
Collateralized debt securities		54,454		1,040		(94	)		(19	)		55,381
Total bonds available-for-sale		7,073,142		548,996		(17,476	)		(7,482	)		7,597,180
Total investments in fixed maturity	$	14,440,554	$	1,188,644	$	(28,913	)	$	(19,924	)	$	15,580,361

17

Note 4 – Investment in Securities — (Continued)

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

	December 31, 2021
	Bonds Held-to-Maturity				Bonds Available-for-Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	853,273	$	865,103	$	574,056	$	580,191
Due after one year through five years		2,232,939		2,355,707		3,015,864		3,156,717
Due after five years through ten years		2,969,115		3,145,270		2,474,224		2,576,325
Due after ten years		1,046,783		1,092,709		2,043,650		2,067,015
Total	$	7,102,110	$	7,458,789	$	8,107,794	$	8,380,248

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 presented based on the year of final contractual maturity.

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

	Years ended December 31,
	2021		2020
Proceeds from sales of fixed maturity, bonds available-for-sale	$	55,558	$	164,372
Gross realized gains		59		624
Gross realized losses		—		(4,145	)

Gains and losses are determined using specific identification of the securities sold. There was no transfer of bonds from held-to- maturity to available-for-sale during 2021. During 2020, bonds below investment grade with a carrying value of $142.7 million, were transferred from held-to-maturity to available-for-sale after a deterioration in the issuers’ creditworthiness.

In accordance with various regulations, American National has bonds on deposit with regulating authorities with a carrying value of $53.5 million and $47.7 million at December 31, 2021 and 2020, 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 $67.1 million and $111.0 million at December 31, 2021 and 2020, respectively.

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

	Years ended December 31,
	2021			2020
Bonds available-for-sale: change in unrealized gains (losses)	$	(248,756	)	$	242,105
Adjustments for
Deferred policy acquisition costs		58,281			(68,474	)
Participating policyholders’ interest		8,275			(3,010	)
Deferred federal income tax benefit (expense)		39,346			(36,306	)
Change in net unrealized gains (losses) on debt securities, net of tax	$	(142,854	)	$	134,315

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

	Years ended December 31,
	2021		2020
Unrealized gains on equity securities	$	38,771	$	349,999
Net gains on equity securities sold		381,512		6,282
Net gains on equity securities	$	420,283	$	356,281

18

Note 4 – Investment in Securities — (Continued)

The gross unrealized losses and fair value of bonds available-for-sale, aggregated by investment category and length of time individual securities have been in a continuous unrealized loss position due to market factors are shown below (in thousands, except number of issues):

	December 31, 2021
	Less than 12 months							12 months or more							Total
	Number of Issues		Gross Unrealized Losses			Fair Value		Number of Issues		Gross Unrealized Losses			Fair Value		Number of Issues		Gross Unrealized Losses			Fair Value
Fixed maturity, bonds available-for-sale
U.S. treasury and government		10	$	(230	)	$	18,378		1	$	(25	)	$	2,844		11	$	(255	)	$	21,222
U.S. states and political subdivisions		13		(618	)		50,025		4		(1,694	)		33,644		17		(2,312	)		83,669
Corporate debt securities		184		(27,335	)		1,596,811		32		(7,950	)		146,597		216		(35,285	)		1,743,408
Residential mortgage-backed securities		2		(339	)		13,193		2		(2	)		496		4		(341	)		13,689
Collateralized debt securities		26		(885	)		191,342		3		(19	)		4,447		29		(904	)		195,789
Total		235	$	(29,407	)	$	1,869,749		42	$	(9,690	)	$	188,028		277	$	(39,097	)	$	2,057,777
	December 31, 2020
	Less than 12 months							12 months or more							Total
	Number of Issues		Gross Unrealized Losses			Fair Value		Number of Issues		Gross Unrealized Losses			Fair Value		Number of Issues		Gross Unrealized Losses			Fair Value
Fixed maturity, bonds available-for-sale
U.S. treasury and government		1	$	(1	)	$	2,868		—	$	—		$	—		1	$	(1	)	$	2,868
U.S. states and political subdivisions		2		(145	)		10,205		—		—			—		2		(145	)		10,205
Corporate debt securities		43		(8,507	)		270,249		8		(8,700	)		13,270		51		(17,207	)		283,519
Residential mortgage-backed securities		1		(21	)		1,391		3		(8	)		593		4		(29	)		1,984
Collateralized debt securities		3		(93	)		12,752		1		(1	)		158		4		(94	)		12,910
Total		50	$	(8,767	)	$	297,465		12	$	(8,709	)	$	14,021		62	$	(17,476	)	$	311,486

A number of assumptions and estimates are inherent in evaluating whether an allowance for credit loss is necessary, which include 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. Based on this evaluation, unrealized losses on bonds available-for-sale where an allowance for credit loss was not recorded were concentrated in the Company’s fixed maturity securities within the finance and investment sector.

Equity securities by market sector distribution are shown below, based on fair value:

	December 31,
	2021			2020
Consumer goods		9.6	%		19.3	%
Energy and utilities		6.4			5.2
Finance		35.6			21.6
Healthcare		9.0			15.0
Industrials		3.5			7.4
Information technology		15.1			27.1
Other		20.8			4.4
Total		100.0	%		100.0	%

19

Note 4 – Investment in Securities — (Continued)

Allowance for Credit Losses

Held-to-Maturity Securities—Management measures expected credit losses on bonds held-to-maturity on a qualitative adjustment basis by major security type: corporate bonds, structured products, municipals, specialty products and treasuries. Accrued interest receivable on held-to maturity debt securities are excluded from the estimate of credit losses. The estimate of expected credit losses considers historical credit loss information that is adjusted for current market conditions and reasonable and supportable economic forecasts based upon a third-party valuation model.

Available-for-Sale Securities—For available-for-sale bonds in an unrealized loss position, the Company first assesses whether it intends to sell the security or will be required to sell the security before recovery of its amortized cost basis. If either of these criteria are met, the security’s amortized cost basis is written down to fair value through income. For bonds available-for-sale that do not meet either indicated criteria, the Company evaluates whether the decline in fair value has resulted from credit events or market factors. In making this assessment, management first calculates the extent to which fair value is less than amortized cost, and then may consider any changes to the rating of the security by a rating agency, and any specific conditions related to the security. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded through income, limited to the amount fair value is less than amortized cost. Any remaining unrealized loss is recognized in other comprehensive income.

When the discounted cash flow method is used to determine the allowance for credit losses, management’s estimates incorporate expected prepayments, if any. Model inputs are considered reasonable and supportable for three years. A mean reversion is applied in years four and five. Credit loss allowance is not measured on accrued interest receivable because the balance is written off to net investment income in a timely manner, within 90 days. Changes in the allowance for credit losses are recognized through the consolidated statement of operations as (increase) decrease in investment credit loss.

No accrued interest receivables were written off as of December 31, 2021.

The rollforward of the allowance for credit losses for bonds held-to-maturity is shown below (in thousands):

	Corporate Debt Securities			Collateralized Debt Securities			Residential Mortgage- Backed Securities			Total
Balance at January 1, 2021	$	(7,475	)	$	(4,515	)	$	(452	)	$	(12,442	)
Purchases		(1,412	)		(168	)		—			(1,580	)
Disposition		441			551			—			992
Provision		(3,021	)		2,986			(64	)		(99	)
Balance at December 31, 2021	$	(11,467	)	$	(1,146	)	$	(516	)	$	(13,129	)

	Foreign Governments			Corporate Debt Securities			Collateralized Debt Securities			Residential Mortgage-Backed Securities			Total
Balance at January 1, 2020	$	4		$	(18,563	)	$	(2,968	)	$	(137	)	$	(21,664	)
Purchases		—			(783	)		(329	)		134			(978	)
Disposition		—			9,501			800			—			10,301
Provision		(4	)		2,370			(2,018	)		(449	)		(101	)
Balance at December 31, 2020	$	—		$	(7,475	)	$	(4,515	)	$	(452	)	$	(12,442	)

20

Note 4 – Investment in Securities — (Continued)

The rollforward of the allowance for credit losses for available-for-sale debt securities is shown below (in thousands):

	U.S. Treasury and Government			U.S. State and Political Subdivisions			Corporate Debt Securities			Collateralized Debt Securities			Residential Mortgage- Backed Securities			Total
Beginning balance at January 1, 2021	$	—		$	—		$	(7,275	)	$	(19	)	$	(188	)	$	(7,482	)
Increase in allowance related to purchases		—			—			(3,158	)		(538	)		—			(3,696	)
Reduction in allowance related to disposition		—			—			4,117			182			—			4,299
Allowance on securities that had an allowance recorded in a previous period		3			12			3,680			(1,507	)		(29	)		2,159
Allowance on securities where credit losses were not previously recorded		(3	)		(26	)		(4,505	)		(1,005	)		(51	)		(5,590	)
Balance at December 31, 2021	$	—		$	(14	)	$	(7,141	)	$	(2,887	)	$	(268	)	$	(10,310	)

	Corporate Debt Securities			Collateralized Debt Securities			Residential Mortgage- Backed Securities			Total
Beginning balance at January 1, 2020	$	—		$	—		$	—		$	—
Increase in allowance related to purchases		(217	)		—			—			(217	)
Reduction in allowance related to disposition		63			6			3			72
Allowance on securities that had an allowance recorded in a previous period		(1,074	)		(25	)		(191	)		(1,290	)
Allowance on securities where credit losses were not previously recorded		(6,047	)		—			—			(6,047	)
Balance at December 31, 2020	$	(7,275	)	$	(19	)	$	(188	)	$	(7,482	)

Credit Quality Indicators

The Company monitors the credit quality of bonds held-to-maturity through the use of credit ratings, which are updated on a monthly basis. Information is also gathered regarding the asset performance of held-to-maturity bonds. The two traditional metrics for assessing interest rate risks are interest-coverage ratios and capitalization ratios, which can also be used in the assessment of credit risk. These risks are mitigated through the diversification of bond investments. Categories of diversification include credit ratings, geographic locations, maturities, and market sector.

The credit quality indicators for the amortized cost of bonds held-to-maturity are shown below (in thousands):

	December 31, 2021
	Amortized cost of bonds held-to-maturity by credit rating
Fixed maturity, bonds held-to-maturity	AAA		AA		A		BBB		BB and below		Total
U.S. treasury and government	$	—	$	12,284	$	—	$	—	$	—	$	12,284
U.S. state and political subdivisions		14,364		49,327		9,188		25,770		5,390		104,039
Foreign governments		—		13,355		1,014		—		—		14,369
Corporate debt securities		31,176		400,666		3,212,688		3,061,595		104,393		6,810,518
Collateralized debt securities		—		—		66,715		40,858		4,836		112,409
Residential mortgage-backed securities		—		47,304		—		—		1,187		48,491
Total	$	45,540	$	522,936	$	3,289,605	$	3,128,223	$	115,806	$	7,102,110

21

Note 4 – Investment in Securities — (Continued)

	December 31, 2020
	Amortized cost of bonds held-to-maturity by credit rating
Fixed maturity, bonds held-to-maturity	AAA		AA		A		BBB		BB and below		Total
U.S. treasury and government	$	—	$	7,733	$	—	$	—	$	—	$	7,733
U.S. state and political subdivisions		25,831		43,964		34,893		—		4,757		109,445
Foreign governments		—		2,820		1,031		—		—		3,851
Corporate debt securities		1,956		262,830		2,976,571		3,647,496		103,242		6,992,095
Collateralized debt securities		—		—		107,795		31,914		—		139,709
Residential mortgage-backed securities		—		112,995		—		—		1,584		114,579
Total	$	27,787	$	430,342	$	3,120,290	$	3,679,410	$	109,583	$	7,367,412

Note 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 both the location of the underlying collateral as well as the type of mortgage loan. The geographic categories come from the U.S. Census Bureau’s “Census Regions and Divisions of the United States.” The distribution based on carrying amount of mortgage loans by location is as follows (in thousands, except percentages):

	December 31,
	2021					2020
	Amount		Percentage			Amount		Percentage
East North Central	$	747,661		14.4	%	$	783,614		14.9	%
East South Central		117,574		2.3			146,052		2.8
Mountain		1,250,562		24.0			1,284,555		24.5
Pacific		878,820		16.9			806,426		15.4
South Atlantic		627,295		12.0			619,405		11.8
West South Central		1,261,659		24.3			1,313,848		25.1
Other		315,763		6.1			288,631		5.5
Total	$	5,199,334		100.0	%	$	5,242,531		100.0	%

As of December 31, 2021 and 2020, loans in foreclosure and loans foreclosed are as follows (in thousands, except number of loans):

	December 31,
	2021				2020
Foreclosure and foreclosed	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
In foreclosure		—	$	—		1	$	5,168
Filed for bankruptcy*		—		—		1		9,230
Total in foreclosure		—	$	—		2	$	14,398
Foreclosed		1	$	5,168		2	$	8,603

* Borrower filed for bankruptcy after foreclosure proceedings had begun.

22

Note 5 – Mortgage Loans — (Continued)

The age analysis of past due loans is shown below (in thousands, except percentages):

	30-59 Days Past Due		60-89 Days Past Due		More Than 90 Days Past Due		Total		Current		Total
December 31, 2021											Amount			Percentage
Apartment	$	—	$	—	$	—	$	—	$	522,595	$	522,595			9.9	%
Hotel		—		—		—		—		962,345		962,345			18.2
Industrial		—		—		—		—		912,645		912,645			17.2
Office		—		—		—		—		1,347,384		1,347,384			25.4
Parking		—		—		—		—		392,310		392,310			7.4
Retail		4,872		—		—		4,872		838,163		843,035			15.9
Storage		—		—		—		—		163,685		163,685			3.1
Other		—		—		—		—		152,414		152,414			2.9
Total	$	4,872	$	—	$	—	$	4,872	$	5,291,541	$	5,296,413			100.0	%
Allowance for credit losses												(97,079	)
Total, net of allowance											$	5,199,334
December 31, 2020
Apartment	$	—	$	—	$	—	$	—	$	557,159	$	557,159			10.5	%
Hotel		30,315		30,158		—		60,473		853,522		913,995			17.0
Industrial		14,930		—		5,168		20,098		836,105		856,203			15.9
Office		24,804		—		9,230		34,034		1,522,197		1,556,231			29.0
Parking		48,825		29,355		—		78,180		286,107		364,287			6.8
Retail		4,991		—		25,779		30,770		760,907		791,677			14.7
Storage		—		—		—		—		165,561		165,561			3.1
Other		—		—		—		—		163,121		163,121			3.0
Total	$	123,865		$59,513	$	40,177	$	223,555	$	5,144,679	$	5,368,234			100.0	%
Allowance for credit losses												(125,703	)
Total, net of allowance											$	5,242,531

As a result of the economic impact associated with COVID-19, American National modified 93 loans with a total balance of $1.6 billion during 2020. These modifications were in the form of forbearance of principal and interest payments for up to six months, extensions of maturity dates, and/or provision for interest only payments. The modifications were primarily related to our loans to hotels, retail and parking operations. Due to ongoing economic stress brought on by the pandemic, additional modifications for 33 of these loans with a total balance of $725.7 million were made during 2021. These additional modifications extended the forbearance of principal and interest payments and interest only provisions with a requirement for the payment of at least 20% of the total interest due during the extended modification period. The modified loans had an aggregate deferred interest of $5.6 million as of December 31, 2021.

There were no unamortized purchase discounts as of December 31, 2021 and 2020. Total mortgage loans were net of unamortized origination fees of $27.5 million and $26.1 million at December 31, 2021 and 2020, respectively. No unearned income is included in these amounts.

23

Note 5 – Mortgage Loans — (Continued)

Troubled Debt Restructurings

American National has granted concessions to certain mortgage loan borrowers. 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. Loans that have these concessions could be classified as troubled debt restructurings. The carrying value could change based on the expected recovery of the loan, which is evaluated quarterly. Loan modifications executed due to COVID-19 resulting in a total delay of more than six months were evaluated for troubled debt restructuring status under current GAAP guidance.

American National considers the amount, timing and extent of concessions in determining credit loss allowances for loan losses recorded in connection with a troubled debt restructuring.

Loans determined to be troubled debt restructuring during the periods presented are as follows (in thousands, except number of loans):

	Years ended December 31,
	2021						2020
	Number of Loans		Recorded Investment Pre-Modification		Recorded Investment Post-Modification		Number of Loans		Recorded Investment Pre-Modification		Recorded Investment Post-Modification
Office		2	$	37,985	$	37,985		7	$	76,220	$	76,220
Retail		3		32,325		32,325		6		79,943		79,943
Industrial		—		—		—		2		11,565		11,565
Hotel		—		—		—		34		811,131		811,131
Parking		1		9,257		9,257		16		248,465		248,465
Storage		1		8,890		8,890		—		—		—
Apartment		—		—		—		2		40,097		40,097
Total		7	$	88,457	$	88,457		67	$	1,267,421	$	1,267,421

For the year ended December 31, 2021, a total of 72 loans with a recorded investment of $1.3 billion were designated as a troubled debt restructuring. There are no commitments to lend additional funds to debtors whose loans have been modified in a troubled debt restructuring during the periods presented. The decrease in loans determined to be a troubled debt restructuring in 2021 is primarily attributable to improved economic conditions after lifting of COVID-19 related restrictions.

24

Note 5 – Mortgage Loans — (Continued)

Allowance for Credit Losses

Mortgage loans on real estate are stated at unpaid principal balance, adjusted for any unamortized discount, deferred expenses and allowances. The allowance for credit losses is based upon the current expected credit loss model. The model considers past loss experience, current economic conditions, and reasonable and supportable forecasts of future conditions. Reversion for the allowance calculation is implicit in the models used to determine the allowance. The methodology uses a discounted cash flow approach based on expected cash flows.

The rollforward of the allowance for credit losses for mortgage loans is shown below (in thousands):

	Commercial Mortgage Loans
Balance at January 1, 2021	$	(125,703	)
Provision		28,624
Balance at December 31, 2021	$	(97,079	)
	Commercial Mortgage Loans
Balance at January 1, 2020	$	(19,160	)
Cumulative adjustment at January 1, 2020		(11,216	)
Provision		(95,327	)
Balance at December 31, 2020	$	(125,703	)

The change in allowance in 2021 was primarily driven by the favorable response of the hospitality and retail industries to re- opening of the economy and resulting increases in travel and brick-and-mortar shopping.

25

Note 5 – Mortgage Loans — (Continued)

The asset and allowance balances for credit losses for mortgage loans by property-type are shown below (in thousands):

	December 31,
	2021					2020
	Asset Balance		Allowance			Asset Balance		Allowance
Apartment	$	522,595	$	(1,366	)	$	557,159	$	(8,845	)
Hotel		962,345		(39,272	)		913,995		(45,596	)
Industrial		912,645		(4,051	)		856,203		(2,516	)
Office		1,347,384		(26,988	)		1,556,231		(33,373	)
Parking		392,310		(16,037	)		364,287		(18,178	)
Retail		843,035		(6,685	)		791,677		(10,856	)
Storage		163,685		(459	)		165,561		(2,509	)
Other		152,414		(2,221	)		163,121		(3,830	)
Total	$	5,296,413	$	(97,079	)	$	5,368,234	$	(125,703	)

Credit Quality Indicators

Mortgage loans are segregated by property-type and quantitative and qualitative allowance factors are applied. Qualitative factors are developed quarterly based on the pooling of assets with similar risk characteristics and historical loss experience adjusted for the expected trend in the current market environment. Credit losses are pooled by property-type as it represents the most similar and reliable risk characteristics in our portfolio. The amortized cost of mortgage loans by year of origination by property-type are shown below (in thousands):

	Amortized Cost Basis by Origination Year
	2021		2020		2019		2018		2017		Prior		Total
Apartment	$	50,747	$	79,673	$	210,011	$	22,166	$	122,472	$	37,526	$	522,595
Hotel		32,312		35,041		94,618		203,151		218,129		379,094		962,345
Industrial		180,229		265,167		135,810		99,716		38,170		193,553		912,645
Office		4,812		24,919		62,260		162,412		314,931		778,050		1,347,384
Parking		31,618		28,651		13,783		26,676		8,446		283,136		392,310
Retail		115,290		69,329		38,761		74,464		74,198		470,993		843,035
Storage		23,184		28,936		48,401		37,156		17,095		8,913		163,685
Other		54,114		—		21,662		29,884		1,650		45,104		152,414
Total	$	492,306	$	531,716	$	625,306	$	655,625	$	795,091	$	2,196,369	$	5,296,413
Allowance for credit losses														(97,079	)
Total, net of allowance													$	5,199,334

Generally, mortgage loans are secured by first liens on income-producing real estate with a loan-to-value ratio of up to 75%. It is the Company’s policy to not accrue interest on loans that are 90 days delinquent and where amounts are determined to be uncollectible. At December 31, 2021, no commercial loans were past due over 90 days and in non-accrual status.

Off-Balance Sheet Credit Exposures

The Company has off-balance sheet credit exposures related to non-cancellable unfunded commitment amounts on commercial mortgage loans. We estimate the allowance for these exposures by applying the allowance rate we computed for each property type to the related outstanding commitment amounts. As of December 31, 2021, we have included a $7.7 million liability in other liabilities on the consolidated statements of financial position based on unfunded loan commitments of $1.0 billion.

26

Note 6 – Real Estate and Other Investments

The carrying amount of real estate and real estate partnerships, net of accumulated depreciation, by property-type and geographic distribution are as follows (in thousands, except percentages):

	December 31, 2021					December 31, 2020
	Amount		Percentage			Amount		Percentage
Hotel	$	56,198		6.1	%	$	67,857		7.1	%
Industrial		119,698		12.9			132,757		13.8
Land		39,760		4.3			51,220		5.3
Office		277,034		29.8			299,500		31.2
Retail		269,941		29.1			268,588		28.0
Apartments		153,871		16.6			120,847		12.6
Other		11,910		1.2			19,803		2.0
Total	$	928,412		100.0	%	$	960,572		100.0	%
	December 31, 2021					December 31, 2020
	Amount		Percentage			Amount		Percentage
East North Central	$	122,148		13.2	%	$	81,310		8.5	%
East South Central		59,122		6.4			65,302		6.8
Mountain		127,542		13.7			133,233		13.9
Pacific		112,714		12.1			127,421		13.3
South Atlantic		67,573		7.3			97,801		10.1
West South Central		428,272		46.1			434,722		45.3
Other		11,041		1.2			20,783		2.1
Total	$	928,412		100.0	%	$	960,572		100.0	%

As of December 31, 2021, no real estate partnerships met the criteria as held-for-sale.

American National regularly invests in real estate partnerships and frequently participates in the design with the sponsor, but in most cases, its involvement is limited to financing. Through analysis performed by American National, some of these partnerships 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. 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 2021 or 2020.

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

	December 31,
	2021		2020
Real estate and real estate partnerships	$	126,708	$	131,405
Investment funds		100,374		—
Short-term investments		500		500
Cash and cash equivalents		10,341		8,070
Premiums due and other receivables		3,201		3,484
Other assets		12,992		13,796
Total assets of consolidated VIEs	$	254,116	$	157,255
Notes payable	$	149,248	$	153,703
Other liabilities		8,250		8,490
Total liabilities of consolidated VIEs	$	157,498	$	162,193

The notes payable in the consolidated statements of financial position pertain to the borrowings of the consolidated VIEs. The liability of American National 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 $3.0 million at December 31, 2021 and 2020.

27

Note 6 – Real Estate and Other Investments — (Continued)

The total long-term notes payable of the consolidated VIE’s consists of the following (in thousands):

			December 31,
Interest rate	Maturity		2021		2020
LIBOR		2023	$	10,819	$	10,819
4% fixed		2022		75,293		78,565
4.18% fixed		2024		63,136		64,319
Total			$	149,248	$	153,703

For other real estate partnership VIEs, American National is not the primary beneficiary as major decisions impacting the economic activities of the VIE require consent from both partners. The carrying amount and maximum exposure to loss relating to these unconsolidated VIEs follows (in thousands):

	December 31,
	2021				2020
	Carrying Amount		Maximum Exposure to Loss		Carrying Amount		Maximum Exposure to Loss
Real estate and real estate partnerships	$	332,351	$	332,351	$	368,588	$	368,588
Mortgage loans on real estate		690,779		690,779		722,917		722,917
Accrued investment income		2,878		2,878		4,980		4,980

American National’s net investment income of real estate partnerships is the Company’s share of operating earnings and realized gains from investments in real estate joint ventures and other limited partnership interests (“joint ventures”) using the equity method of accounting. In 2021 and 2020 certain joint ventures took advantage of market opportunities to generate realized gains on the sale of real estate held or developed by the ventures.

The Company’s income from and investment in each joint venture did not exceed 20% and therefore no separate financial disclosure is required. The Company’s income from, assets held, and investment in each joint venture did not exceed 10% of operating income before tax. Additionally, American National’s investment in joint ventures is less than 3% of the Company’s total assets, and investments in individual joint ventures is not considered to be material to the Company in relation to its financial position or ongoing results of operations. Therefore, summarized financial information of equity method investees has not been included.

The Company’s total investment in investment funds, real estate partnerships, and other partnerships, of which substantially all are limited liability companies (“LLCs”) or limited partnerships, consists of the following (in thousands):

	December 31,
	2021		2020
Investment funds	$	947,856	$	458,776
Real estate partnerships		439,341		443,279
Other		13,907		18,359
Total investments in partnerships	$	1,401,104	$	920,414
	Years ended December 31,
	2021		2020
Income from operations	$	103,826	$	14,958
Net gain on sales		84,851		27,509
Net investment income from partnerships	$	188,677	$	42,467

28

Note 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. These options are not designated as hedging instruments for accounting purposes under GAAP. 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,
		2021						2020
Derivatives Not Designated as Hedging Instruments	Location in the Consolidated Statements of Financial Position	Number of Instruments		Notional Amounts		Estimated Fair Value		Number of Instruments		Notional Amounts		Estimated Fair Value
Equity-indexed options	Other invested assets		473	$	3,523,000	$	259,383		455	$	2,867,600	$	242,201
Equity-indexed embedded	Policyholders’ account balances		125,523		3,419,992		832,579		112,103		2,748,540		705,013

		Gains (Losses) Recognized in Income on Derivatives
Derivatives Not Designated as Hedging Instruments	Location in the Consolidated Statements of Operations	Years ended December 31,
		2021			2020
Equity-indexed options	Net investment income	$	127,681		$	51,931
Equity-indexed embedded derivative	Interest credited to policyholders’ account balances		(107,162	)		(22,977	)

The Company’s use of derivative instruments exposes it to credit risk in the event of non-performance by the counterparties. The Company has a policy of only dealing with counterparties it believes are creditworthy and obtaining sufficient collateral where appropriate, as a means of mitigating the financial loss from defaults. The Company holds collateral in cash and notes secured by U.S. government backed assets. The non-performance risk is the net counterparty exposure based on the fair value of the open contracts, less the fair value of collateral held. The Company maintains master netting agreements with its current active trading partners. As such, a right of offset has been applied to collateral that supports credit risk and has been recorded in the consolidated statements of financial position as an offset to “Other invested assets” with an associated payable to “Other liabilities” for excess collateral.

Information regarding the Company’s exposure to credit loss on the options it holds is presented below (in thousands):

			December 31, 2021
Counterparty	Moody/S&P Rating		Options Fair Value		Collateral Held in Cash		Collateral Held in Invested Assets		Total Collateral Held		Collateral Amounts used to Offset Exposure		Excess Collateral		Exposure Net of Collateral
Bank of America		A2/A-	$	6,289	$	5,950	$	—	$	5,950	$	5,950	$	—	$	339
Barclays		Baa2/BBB		45,410		28,173		18,100		46,273		45,410		863		—
Credit Suisse		Baa1/BBB+		34,411		35,300		—		35,300		34,411		889		—
ING		Baa1/A-		13,280		3,030		10,300		13,330		13,280		50		—
Morgan Stanley		A1/BBB+		61,817		57,716		5,700		63,416		61,817		1,599		—
NATIXIS*		A1/A		26,490		26,660		—		26,660		26,490		170		—
Truist		A3/A-		39,589		30,010		11,000		41,010		39,530		1,480		59
Wells Fargo		A1/BBB+		32,097		22,320		9,900		32,220		32,065		155		32
Total			$	259,383	$	209,159	$	55,000	$	264,159	$	258,953	$	5,206	$	430
			December 31, 2020
Counterparty	Moody/S&P Rating		Options Fair Value		Collateral Held in Cash		Collateral Held in Invested Assets		Total Collateral Held		Collateral Amounts used to Offset Exposure		Excess Collateral		Exposure Net of Collateral
Barclays		Baa2/BBB	$	51,489	$	31,513	$	18,100	$	49,613	$	49,613	$	—	$	1,876
Credit Suisse		Baa1/BBB+		9,447		8,680		—		8,680		8,680		—		767
Goldman-Sachs		A3/BBB+		1,227		1,170		—		1,170		1,170		—		57
ING		Baa1/A-		20,606		10,450		10,300		20,750		20,606		144		—
Morgan Stanley		A2/BBB+		37,406		30,616		5,700		36,316		36,316		—		1,090
NATIXIS*		A1/A+		30,567		30,720		—		30,720		30,567		153		—
Truist		A3/A-		52,127		43,960		11,000		54,960		52,127		2,833		—
Wells Fargo		A2/BBB+		39,332		29,370		9,900		39,270		39,270		—		62
Total			$	242,201	$	186,479	$	55,000	$	241,479	$	238,349	$	3,130	$	3,852

* Collateral is prohibited from being held in invested assets.

29

Note 8 – Net Investment Income and Net Realized Investment Gains (Losses)

Net investment income is shown below (in thousands):

	Years ended December 31,
	2021		2020
Bonds	$	523,422	$	560,811
Equity securities		28,102		31,325
Mortgage loans		260,721		251,414
Real estate and real estate partnerships		99,483		28,810
Investment funds		99,007		19,454
Equity-indexed options		127,681		51,931
Other invested assets		33,238		32,407
Total	$	1,171,654	$	976,152

Net investment income from equity method investments, comprised of real estate partnerships and investment funds, was $188.7 million and $42.5 million for the twelve months ended December 31, 2021 and 2020 respectively.

Net realized investment gains (losses) are shown below (in thousands):

	Years ended December 31,
	2021			2020
Bonds	$	54,941		$	23,318
Mortgage loans		(768	)		—
Real estate and real estate partnerships		10,240			12,401
Other invested assets		215			(59	)
Total	$	64,628		$	35,660

Net realized investment gains (losses) by transaction type are shown below (in thousands):

	Years ended December 31,
	2021			2020
Sales	$	16,045		$	10,249
Calls and maturities		55,526			26,948
Paydowns		385			(108	)
Impairments		(5,913	)		(1,276	)
Loss allowance		—			—
Other		(1,415	)		(153	)
Total	$	64,628		$	35,660

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

	Years ended December 31,
	2021		2020
Bonds*	$	—	$	—

* Effective January 1, 2020, the Company adopted ASU No. 2016-13. Adoption of this guidance resulted in an allowance for credit losses primarily on our commercial mortgage loans and related off-balance sheet unfunded loan commitments, held-to-maturity bonds and reinsurance recoverables.

30

Note 9 – Fair Value of Financial Instruments

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

	December 31,
	2021				2020
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Fixed maturity, bonds held-to-maturity	$	7,088,981	$	7,458,789	$	7,354,970	$	7,983,181
Fixed maturity, bonds available-for-sale		8,380,248		8,380,248		7,597,180		7,597,180
Equity securities		135,433		135,433		2,070,766		2,070,766
Equity-indexed options		259,383		259,383		242,201		242,201
Mortgage loans on real estate, net of allowance		5,199,334		5,271,950		5,242,531		5,451,152
Policy loans		365,208		365,208		373,014		373,014
Short-term investments		1,840,732		1,840,732		1,028,379		1,028,379
Separate account assets ($1,278,380 and $1,153,702 included in fair value hierarchy)		1,320,703		1,320,703		1,185,467		1,185,467
Separately managed accounts		99,884		99,884		64,424		64,424
Total financial assets	$	24,689,906	$	25,132,330	$	25,158,932	$	25,995,764
Financial liabilities
Investment contracts	$	10,947,958	$	10,947,958	$	10,101,764	$	10,101,764
Embedded derivative liability for equity-indexed contracts		832,579		832,579		705,013		705,013
Notes payable		149,248		149,248		153,703		153,703
Federal Home Loan Bank advance		—		—		250,000		250,227
Separate account liabilities ($1,278,380 and $1,153,702 included in fair value hierarchy)		1,320,703		1,320,703		1,185,467		1,185,467
Total financial liabilities	$	13,250,488	$	13,250,488	$	12,395,947	$	12,396,174

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.

31

Note 9 – Fair Value of Financial Instruments — (Continued)

Valuation Techniques for Financial Instruments Recorded at Fair Value

Fixed Maturity Securities and Equity Options—American National utilizes a pricing service to estimate fair value measurements. The fair value for fixed maturity securities that are disclosed as Level 1 measurements are based on unadjusted quoted market prices for identical assets that are readily available in an active market. 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. 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, pricing source 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 pricing source (typically a market maker) is obtained. Due to the disclaimers on the quotes that indicate the price is indicative only, American National includes these fair value estimates in Level 3.

For securities priced using a quote from an independent pricing source, such as the equity-indexed options and certain fixed maturity securities, American National uses a market-based fair value analysis to validate the reasonableness of prices received. 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 estimated fair value is received from the pricing service. The service utilizes similar methodologies to price preferred stocks as it does for fixed maturity securities. If applicable, these estimates would be disclosed as Level 2 measurements. American National tests the accuracy of the information provided by reference to other services annually.

Short-Term Investments—Short-term investments are primarily commercial paper rated A2 or P2 or better by Standard & Poor’s and Moody’s, respectively. Commercial paper is carried at amortized cost which approximates fair value. These investments are classified as Level 2 measurements.

32

Note 9 – Fair Value of Financial Instruments — (Continued)

Separate Account Assets and Liabilities—Separate account assets and liabilities are funds that are held separate from the general assets and liabilities of American National. Separate account assets include funds representing the investments of variable insurance product contract holders, who bear the investment risk of such funds. Investment income and investment gains and losses from these separate funds accrue to the benefit of the contract holders. American National reports separately, as assets and liabilities, investments held in such 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. In addition, American National’s qualified pension plan assets are included in separate accounts. 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 statements of operations. Separate accounts are established in conformity with insurance laws and are not chargeable with liabilities that arise from any other business of American National.

The separate account assets included on the quantitative disclosures fair value hierarchy table are comprised of short-term investments, equity securities, and fixed maturity bonds available-for-sale. Equity securities are classified as Level 1 measurements. Short-term investments and fixed maturity securities are classified as Level 2 measurements. These classifications for separate account assets reflect the same fair value level methodologies as listed above as they are derived from the same vendors and follow the same process.

The separate account assets also include cash and cash equivalents, investment funds, accrued investment income, and receivables for securities. These are not financial instruments and are not included in the quantitative disclosures of fair value hierarchy table.

No gains or losses were recognized on assets transferred to separate accounts for the years ended December 31, 2021 and 2020.

Embedded Derivative—The amounts reported within policyholder contract deposits include equity linked interest crediting rates based on the S&P 500 within indexed annuities and indexed life. The following unobservable inputs are used for measuring the fair value of the embedded derivatives associated with the policyholder contract liabilities:

• Lapse rate assumptions are determined by company experience. Lapse rates are generally assumed to be lower during a contract’s surrender charge period and then higher once the surrender charge period has ended. Decreases to the assumed lapse rates generally increase the fair value of the liability as more policyholders persist to collect the crediting interest pertaining to the indexed product. Increases to the lapse rate assumption decrease the fair value.

• Mortality rate assumptions vary by age and gender based on company and industry experience. Decreases to the assumed mortality rates increase the fair value of the liabilities as more policyholders earn crediting interest. Increases to the assumed mortality rates decrease the fair value as higher decrements reduce the potential for future interest credits.

• Equity volatility assumptions begin with current market volatilities and grow to long-term values. Increases to the assumed volatility will increase the fair value of liabilities, as future projections will produce higher increases in the linked index. At December 31, 2021 and 2020, the one-year implied volatility used to estimate embedded derivative value was 19.6% and 17.6%, respectively.

Fair values of indexed life and annuity liabilities are calculated using the discounted cash flow technique. Shown below are the significant unobservable inputs used to calculate the Level 3 fair value of the embedded derivatives within policyholder contract deposits (in millions, except range percentages):

	Fair Value					Range
	December 31,					December 31,
	2021		2020		Unobservable Input	2021			2020
Security type
Embedded derivative
Indexed Annuities	$	799.3	$	670.8	Lapse Rate		1-50	%		1-50	%
					Mortality Multiplier		100	%		100	%
					Equity Volatility		12-64	%		16-69	%
Indexed Life		33.3		34.2	Equity Volatility		12-64	%		16-69	%

33

Note 9 – Fair Value of Financial Instruments — (Continued)

Quantitative Disclosures

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

	Assets and Liabilities Carried at Fair Value by Hierarchy Level at December 31, 2021
	Total Fair Value		Level 1		Level 2		Level 3
Financial assets
Fixed maturity, bonds available-for-sale
U.S. treasury and government	$	26,753	$	26,753	$	—	$	—
U.S. states and political subdivisions		1,077,129		—		1,077,129		—
Foreign governments		5,841		—		5,841		—
Corporate debt securities		7,036,148		—		6,789,991		246,157
Residential mortgage-backed securities		31,967		—		31,967		—
Collateralized debt securities		202,410		—		202,410		—
Total bonds available-for-sale		8,380,248		26,753		8,107,338		246,157
Equity securities
Common stock		94,895		93,315		—		1,580
Preferred stock		40,538		7,570		—		32,968
Total equity securities		135,433		100,885		—		34,548
Options		259,383		—		—		259,383
Short-term investments		1,840,732		—		1,840,732		—
Separate account assets		1,278,380		381,414		896,966		—
Separately managed accounts		99,884		—		—		99,884
Total financial assets	$	11,994,060	$	509,052	$	10,845,036	$	639,972
Financial liabilities
Embedded derivative for equity-indexed contracts	$	832,579	$	—	$	—	$	832,579
Notes payable		149,248		—		—		149,248
Separate account liabilities		1,278,380		381,414		896,966		—
Total financial liabilities	$	2,260,207	$	381,414	$	896,966	$	981,827
	Assets and Liabilities Carried at Fair Value by Hierarchy Level at December 31, 2020
	Total Fair Value		Level 1		Level 2		Level 3
Financial assets
Fixed maturity, bonds available-for-sale
U.S. treasury and government	$	29,183	$	—	$	29,183	$	—
U.S. states and political subdivisions		1,140,458		—		1,140,458		—
Foreign governments		16,388		—		16,388		—
Corporate debt securities		6,334,479		—		6,224,042		110,437
Residential mortgage-backed securities		21,291		—		21,291		—
Collateralized debt securities		55,381		—		55,381		—
Total bonds available-for-sale		7,597,180		—		7,486,743		110,437
Equity securities
Common stock		2,055,229		2,054,789		—		440
Preferred stock		15,537		14,909		—		628
Total equity securities		2,070,766		2,069,698		—		1,068
Options		242,201		—		—		242,201
Short-term investments		1,028,379		—		1,028,379		—
Separate account assets		1,153,702		309,425		844,277		—
Separately managed accounts		64,424		—		—		64,424
Total financial assets	$	12,156,652	$	2,379,123	$	9,359,399	$	418,130
Financial liabilities
Embedded derivative for equity-indexed contracts	$	705,013	$	—	$	—	$	705,013
Notes payable		153,703		—		—		153,703
Separate account liabilities		1,153,702		309,425		844,277		—
Total financial liabilities	$	2,012,418	$	309,425	$	844,277	$	858,716

34

Note 9 – Fair Value of Financial Instruments — (Continued)

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):

	Level 3
	Assets						Liability
	Investment Securities			Equity-Indexed Options			Separately Managed Accounts			Embedded Derivative
Balance at January 1, 2020		45,307			256,005			50,503			731,552
Net gain for derivatives included in net investment income		—			51,931			—			—
Net change included in interest credited		—			—			—			22,977
Net fair value change included in other comprehensive income		80			—			(312	)		—
Purchases, sales and settlements or maturities
Purchases		191,960			80,705			25,343			—
Sales		(70,842	)		(8,063	)		(11,110	)		—
Settlements or maturities		—			(138,377	)		—			—
Premiums less benefits		—			—			—			(49,516	)
Gross transfers out of Level 3		(55,000	)		—			—			—
Balance at December 31, 2020		111,505			242,201			64,424			705,013
Net gain for derivatives included in net investment income		—			127,681			—			—
Net change included in interest credited		—			—			—			107,162
Net fair value change included in other comprehensive income		3,269			—			1,444			—
Purchases, sales and settlements or maturities
Purchases		225,063			97,712			56,712			—
Sales		(58,593	)		—			(22,696	)		—
Settlements or maturities		—			(208,211	)		—			—
Premiums less benefits		—			—			—			20,404
Gross transfers into Level 3		1,479			—			—			—
Gross transfers out of Level 3		(2,018	)		—			—			—
Balance at December 31, 2021	$	280,705		$	259,383		$	99,884		$	832,579

Within the net gain for derivatives included in net investment income were unrealized gains of $4.4 million and unrealized losses of $11.2 million relating to assets still held at December 31, 2021 and 2020, respectively.

The associated embedded derivative decrease during 2020 is largely driven by classification changes to declared funds within indexed products and by changes to the embedded derivative discount rate.

There was $26.8 million transferred between Level 1 and Level 2 fair value hierarchies during the periods presented for U.S. treasury and government bonds available-for-sale. It was determined these securities will be disclosed as Level 1 since valuations are based on quoted prices readily available in an active market. American National’s valuation of financial instruments categorized as Level 3 in the fair value hierarchy are based on valuation techniques that use significant inputs that are unobservable or had a decline in market activity that obscured observability. The indicators considered in determining whether a significant decrease in the volume and level of activity for a specific asset has occurred include the level of new issuances in the primary market, trading volume in the secondary market, the level of credit spreads over historical levels, applicable bid-ask spreads, and price consensus among market participants and other pricing sources. The transfers into Level 3 during 2021 were the result of securities not being priced by the third-party service at the end of the period.

35

Note 9 – Fair Value of Financial Instruments — (Continued)

Equity-Index Options—Certain over the counter equity options are valued using models that are widely accepted in the financial services industry. These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility and forward price/dividend assumptions. Other primary inputs include interest rate assumptions (risk-free rate assumptions), and underlying equity quoted index prices for identical or similar assets in markets that exhibit less liquidity relative to those markets.

The following summarizes the fair value (in thousands), valuation techniques and unobservable inputs of the Level 3 fair value measurements:

	Fair Value at December 31, 2021		Valuation Technique	Unobservable Input	Range/Weighted Average
Security type
Investment securities
Common stock	$	1,580	Guideline public company method (1)	Recurring Revenue Multiple (2)		8x
			Option pricing method	LTM EBITDA Multiple (3)		7.6x
			CVM	NCY EBITDA Multiple (5)		4.8x
Preferred stock		32,968	Guideline public company method (1)	LTM Revenue Multiple (4)		6.3x
			Priced at cost	LTM EBITDA Multiple (3)		4.2x
				NCY EBITDA Multiple (5)		4.8x
				Term (Years)		1.80
				Volatility		60.00	%
Bonds		246,157	Priced at cost	Coupon rate		2.63-8.00	%
Separately managed accounts		99,884	Discounted cash flows (yield analysis)	Discount rate		4.80-16.40	%
			CVM	NCY EBITDA Multiple (5)		4.8x
			Market transaction	N/A		N/A
	Fair Value at December 31, 2020		Valuation Technique	Unobservable Input	Range/Weighted Average
Security type
Investment securities
Common stock	$	440	Option pricing method	Term (years)		2.83
				Volatility		45.00	%
			Market transaction	N/A		N/A
Preferred stock		628	Option pricing method	Term (years)		2.83
				Volatility		45.00	%
			Market transaction	N/A		N/A
Bonds		110,437	Priced at cost	Coupon rate		2.72-8.00	%
Separately managed accounts		64,424	Discounted cash flows (yield analysis)	Discount rate		7.25-14.71	%
			Market transaction	N/A		N/A

⁽¹⁾  Guideline public company method uses price multiples from data on comparable public companies. Multiples are then adjusted to account for differences between what is being valued and comparable firms.

⁽²⁾  Recurring Revenue Multiple for the most relevant period of time, measures the value of the equity or a business relative to the revenues it generates.

⁽³⁾  Last Twelve Months (“LTM”) EBITDA Multiple valuation metric shows earnings before interest, taxes, depreciation and amortization adjustments for the past 12 month period.

⁽⁴⁾  LTM Revenue Multiple valuation metric shows revenue for the past 12 month period.

⁽⁵⁾  Next Calendar Year (“NCY”) EBITDA Multiple is the forecasted EBITDA expected to be achieved over the next calendar year.

Investment Securities—These bonds use cost as the best estimate of fair value. They are valued at cost because the value would not change unless there is a fundamental deterioration in the portfolio. There is no observable market valuation price or third-party sources that provide market values for these securities since they are not publicly traded. The common and preferred stock are valued at market transaction, option pricing method, or guideline public company method based on the best available information.

Separately Managed Accounts—The separately managed account manager uses the mid-point of a range from a third-party to price these securities. Discounted cash flows (yield analysis) and market transactions approach are used in the valuation. They use discount rate which is considered an unobservable input.

36

Note 9 – Fair Value of Financial Instruments — (Continued)

Fair Value Information About Financial Instruments Not Recorded at Fair Value

Information about fair value estimates for financial instruments not measured at fair values is discussed below:

Fixed Maturity Securities—The fair value of bonds held-to-maturity is determined to be consistent with the disclosure under Valuation Techniques for the Financial Instrument Recorded at Fair Value section.

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.

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

Separately Managed Accounts—The amounts reported in separately managed accounts consist primarily of notes and private equity. These investments are private placements and do not have a readily determinable fair value. The carrying value of the separately managed accounts is cost or market value, if available from the separately managed account manager. Market value is provided by the separately managed account manager in subsequent quarters. American National believes that cost approximates fair value at initial recognition during the quarter of investment.

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, net of 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 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.

Federal Home Loan Bank Advance—The Federal Home Loan Bank advance was carried at outstanding principal balance. The fair value of the advance was obtained from the Federal Home Loan Bank of Dallas. The Company does not have outstanding loans from FHLB as of December 31, 2021.

37

Note 9 – Fair Value of Financial Instruments — (Continued)

The carrying value and estimated fair value of financial instruments not recorded at fair value on a recurring basis are shown below (in thousands):

	December 31, 2021
	FV Hierarchy Level		Carrying Amount		Fair Value
Financial assets
Fixed maturity, bonds held-to-maturity
U.S. treasury and government		Level 1	$	12,284	$	11,997
U.S. states and political subdivisions		Level 2		104,039		103,809
Foreign governments		Level 2		14,369		14,347
Corporate debt securities		Level 2		6,799,051		7,166,564
Residential mortgage-backed securities		Level 2		47,975		50,178
Collateralized debt securities		Level 2		111,263		111,894
Total fixed maturity, bonds held-to-maturity				7,088,981		7,458,789
Mortgage loans on real estate, net of allowance		Level 3		5,199,334		5,271,950
Policy loans		Level 3		365,208		365,208
Total financial assets			$	12,653,523	$	13,095,947
Financial liabilities
Investment contracts		Level 3	$	10,947,958	$	10,947,958
Notes payable		Level 3		149,248		149,248
Total financial liabilities			$	11,097,206	$	11,097,206
	December 31, 2020
	FV Hierarchy Level		Carrying Amount		Fair Value
Financial assets
Fixed maturity, bonds held-to-maturity
U.S. treasury and government		Level 2	$	7,732	$	7,744
U.S. states and political subdivisions		Level 2		109,445		113,535
Foreign governments		Level 2		3,851		4,225
Corporate debt securities		Level 2		6,981,597		7,595,712
Corporate debt securities		Level 3		3,024		3,024
Residential mortgage-backed securities		Level 2		114,127		117,728
Collateralized debt securities		Level 2		135,194		141,213
Total fixed maturity, bonds held-to-maturity				7,354,970		7,983,181
Mortgage loans on real estate, net of allowance		Level 3		5,242,531		5,451,152
Policy loans		Level 3		373,014		373,014
Total financial assets			$	12,970,515	$	13,807,347
Financial liabilities
Investment contracts		Level 3	$	10,101,764	$	10,101,764
Notes payable		Level 3		153,703		153,703
Federal Home Loan Bank advance		Level 2		250,000		250,227
Total financial liabilities			$	10,505,467	$	10,505,694

38

Note 10 – Deferred Policy Acquisition Costs

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

	Life			Annuity			Health			Property & Casualty			Total
Balance at January 1, 2020		852,900			415,380			32,578			122,149			1,423,007
Additions		148,142			55,411			15,926			335,744			555,223
Amortization		(94,386	)		(103,709	)		(15,619	)		(335,831	)		(549,545	)
Effect of change in unrealized gains on available-for-sale debt securities		(10,448	)		(58,026	)		—			—			(68,474	)
Net change		43,308			(106,324	)		307			(87	)		(62,796	)
Balance at December 31, 2020		896,208			309,056			32,885			122,062			1,360,211
Additions		161,898			99,971			14,369			366,167			642,405
Amortization		(111,764	)		(77,133	)		(17,906	)		(355,970	)		(562,773	)
Effect of change in unrealized gains on available-for-sale debt securities		9,703			48,578			—			—			58,281
Net change		59,837			71,416			(3,537	)		10,197			137,913
Balance at December 31, 2021	$	956,045		$	380,472		$	29,348		$	132,259		$	1,498,124

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

39

Note 11 – Liability for Future Policy Benefits and Policyholder Account Balances

American National estimates 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 6.0% 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. The interest rate used in establishing such liabilities range from 3.5% to 8.0%.

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. The interest rates used in establishing such liabilities range from 3.0% to 6.0%.

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 consolidated statements 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 adjustment.

40

Note 12 – Liability for Unpaid Claims and Claim Adjustment Expenses

The liability for unpaid claims and claim adjustment expenses (“claims”) for health and property and casualty insurance is included in “Policy and contract claims” in the consolidated statements of financial position and is the amount estimated for incurred but not reported (“IBNR”) claims and claims that have been reported but not settled. The liability for unpaid claims is estimated based upon American National’s historical experience and actuarial assumptions that consider the effects of current developments, anticipated trends and risk management programs, less 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. The time value of money is not taken into account for the purposes of calculating the liability for unpaid claims. There have been no significant changes in methodologies or assumptions used to calculate the liability for unpaid claims and claim adjustment expenses.

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

	Years ended Decem ber 31,
	2021			2020
Unpaid claims balance, beginning	$	1,354,213		$	1,322,837
Less: Reinsurance recoverables		243,084			246,447
Net beginning balance		1,111,129			1,076,390
Incurred related to
Current		1,277,798			1,177,634
Prior years		(93,357	)		(61,659	)
Total incurred claims		1,184,441			1,115,975
Paid claims related to
Current		735,968			681,960
Prior years		392,881			399,276
Total paid claims		1,128,849			1,081,236
Net balance		1,166,721			1,111,129
Plus: Reinsurance recoverables		288,358			243,084
Unpaid claims balance, ending	$	1,455,079		$	1,354,213

The net and gross reserve calculations have shown favorable development 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 $93.4 million and $61.7 million in 2021, and 2020, respectively. The favorable development in 2021 was a reflection of lower-than-anticipated settlement costs of losses arising from commercial automobile, agribusiness, private passenger automobile, guaranteed asset protection waiver, and collateral protection insurance lines of business. The favorable development in 2020 was a reflection of lower rates of claim severity emergence than previously expected in the worker’s compensation line of business, and lower liability claim settlement costs emerging from agribusiness and private passenger automobile lines of business.

For short-duration health insurance claims, the total of IBNR plus expected development on reported claims included in the liability for unpaid claims and claim adjustment expenses at December 31, 2021 and December 31, 2020 was $18.9 million and $20.5 million respectively.

41

Note 12 – Liability for Unpaid Claims and Claim Adjustment Expenses — (Continued)

The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated statement of financial position is as follows (in thousands):

	December 31, 2021
Net outstanding liabilities
Auto Liability	$	458,517
Non-Auto Liability		303,662
Commercial Multi-Peril		150,783
Homeowners		84,625
Short Tail Property		38,998
Credit Property and Casualty		16,004
Credit Life		1,435
Health		23,329
Credit Health		4,557
Other		897
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance		1,082,807
Reinsurance recoverable on unpaid claims
Auto Liability		11,554
Non-Auto Liability		40,650
Commercial Multi-Peril		8,419
Homeowners		13,746
Short Tail Property		12,818
Credit Property and Casualty		11,782
Credit Life		673
Health		193,065
Credit Health		1,657
Other		7,020
Total reinsurance recoverable on unpaid claims		301,384
Insurance lines other than short-duration		244,418
Unallocated claim adjustment expenses		63,686
		308,104
Total gross liability for unpaid claims and claim adjustment expense	$	1,692,295

42

Note 12 – Liability for Unpaid Claims and Claim Adjustment Expenses — (Continued)

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.

• Pegged Frequency and Severity—This method uses actual claims count data and emergence patterns of older accident periods to project the ultimate number of reported claims for a given accident year. A similar process projects the ultimate average severity per claim so that the product of the two projections results in a projection of ultimate loss for a given accident year.

• Bornhuetter-Ferguson—This method uses, as a starting point, either an assumed Initial Expected Loss Ratio Method or Pegged Frequency and Severity method and blends in the loss ratio or frequency and severity implied by the claims experience to date by using loss development patterns based on our historical experience. This method is generally appropriate where there are few reported claims and an unstable 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 prior calendar years’ paid expense to paid loss ratio 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.

For most credit property and casualty products, IBNR liability is calculated as a percentage of pro rata unearned premium, with the specific percentage for a given product line informed by a traditional completion factor claim reserve analysis.

The expected development on reported claims is the sum of a pay-to-current reserve and a future reserve. The pay-to-current reserve is calculated for each open claim having a monthly indemnity and contains the amount required to pay the open claim from the last payment date to the current valuation date. The future reserve is calculated by assigning to each open claim a fixed reserve amount based on the historical average severity. For debt cancellation products and involuntary unemployment insurance, this reserve is calculated using published valuation tables.

Cumulative claim frequency information is calculated on a per claim basis. Claims that do not result in a liability are not considered in the determination of unpaid liabilities.

For any given line of business, none of these methods are relied on exclusively. With minor exceptions, multiple methods may be used for a line of business as a check for reasonableness of our reselected reserve value.

The following contains information about incurred and paid claims development as of December 31, 2021, net of reinsurance, as well as cumulative claim frequency and the total of IBNR liabilities plus expected development on reported claims included within the net incurred claims amounts. The information about incurred and paid claims development for the years ended December 31, 2012 to 2020 is presented as supplementary information.

43

Note 12 – Liability for Unpaid Claims and Claim Adjustment Expenses — (Continued)

Auto Liability—Consists of personal and commercial auto. Claims and claim adjustment expenses are shown below (in thousands):

	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																				As of December 31, 2021
	Years ended December 31,																				IBNR Plus		Cumulative Number of
Accident Year	2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021		Expected Development		Reported Claims
2012	$	251,593	$	242,255	$	231,312	$	228,013	$	229,426	$	228,559	$	228,864	$	228,486	$	228,236	$	228,181	$	58		44,691
2013				242,364		236,432		233,068		231,301		228,285		226,608		227,234		227,102		226,943		134		38,817
2014						232,146		223,386		217,819		215,419		214,870		214,557		214,326		214,253		203		36,011
2015								237,578		240,697		239,421		245,775		244,798		244,621		243,304		374		36,097
2016										259,177		256,080		261,400		259,128		257,633		256,294		1,434		37,114
2017												269,803		280,012		275,850		273,551		270,464		4,607		38,591
2018														314,467		299,512		288,806		282,805		12,541		37,826
2019																330,988		313,636		305,312		26,749		36,267
2020																		277,597		254,808		46,637		26,166
2021																				299,746		89,756		26,556
																		Total	$	2,582,110

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years ended December 31,
Accident Year	2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021
2012	$	82,531	$	150,323	$	183,448	$	204,980	$	214,467	$	219,170	$	222,117	$	222,865	$	224,585	$	224,799
2013				79,358		143,709		181,535		204,480		215,280		219,303		223,739		224,675		226,211
2014						72,838		134,376		166,947		187,375		204,057		209,401		210,994		212,522
2015								78,861		149,366		186,281		211,908		231,530		237,792		239,986
2016										86,492		153,911		198,326		225,869		237,592		247,640
2017												88,357		175,175		218,435		241,823		255,530
2018														95,777		185,317		227,312		248,183
2019																98,545		193,389		231,892
2020																		78,699		151,722
2021																				85,916
																		Total	$	2,124,401
		All outstanding liabilities before 2012, net of reinsurance*																		808
		Liabilities for claims and claim adjustment expenses, net of reinsurance																	$	458,517

* Unaudited supplementary information.

44

Note 12 – Liability for Unpaid Claims and Claim Adjustment Expenses — (Continued)

Non-Auto Liability—Consists of workers’ compensation and other liability occurrence. Claims and claim adjustment expenses are shown below (in thousands):

	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																				As of December 31, 2021
																							Cumulative
	Years ended December 31,																				IBNR Plus		Number of
Accident Year	2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021		Expected Development		Reported Claims
2012	$	83,146	$	80,470	$	78,644	$	75,226	$	68,017	$	63,630	$	64,118	$	63,336	$	63,552	$	63,304	$	1,623		4,877
2013				74,183		75,815		70,772		67,841		65,096		64,564		63,284		62,926		62,159		1,738		4,556
2014						83,084		75,550		72,624		67,339		67,865		67,267		67,268		66,250		3,168		6,111
2015								83,897		78,968		76,724		67,548		64,189		63,326		63,523		3,593		5,563
2016										86,935		83,179		73,764		73,195		68,178		67,347		4,153		4,501
2017												102,616		88,902		81,240		77,322		76,540		6,397		8,176
2018														88,986		85,910		79,493		75,207		16,115		13,684
2019																96,064		95,340		92,544		26,473		11,875
2020																		90,197		83,339		37,431		10,028
2021																				102,869		65,428		8,512
																		Total	$	753,082

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years ended December 31,
Accident Year	2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021
2012	$	13,862	$	27,574	$	38,826	$	49,585	$	55,194	$	57,863	$	59,528	$	60,900	$	61,450	$	61,858
2013				12,794		22,743		32,474		42,504		47,987		51,672		54,323		55,426		56,916
2014						11,201		26,587		36,220		45,206		51,853		55,307		57,497		58,559
2015								11,979		23,488		37,059		46,285		51,303		53,478		55,434
2016										12,733		24,633		35,502		45,820		50,596		55,205
2017												14,865		37,139		48,654		53,996		59,582
2018														13,156		26,115		37,574		45,316
2019																12,204		30,199		40,729
2020																		9,596		23,838
2021																				12,389
																		Total	$	469,826
		All outstanding liabilities before 2012, net of reinsurance*																		20,406
		Liabilities for claims and claim adjustment expenses, net of reinsurance																	$	303,662

* Unaudited supplementary information.

45

Note 12 – Liability for Unpaid Claims and Claim Adjustment Expenses — (Continued)

Commercial Multi-Peril—Consists of business owners insurance and mortgage fire business. Claims and claim adjustment expenses are shown below (in thousands):

	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																				As of December 31, 2021
	Years ended December 31,																				IBNR Plus		Cumulative Number of
Accident Year	2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021		Expected Development		Reported Claims
2012	$	35,169	$	28,548	$	26,805	$	23,258	$	23,385	$	23,090	$	22,481	$	22,045	$	22,033	$	22,381	$	151		2,717
2013				33,979		27,592		27,867		26,970		25,948		26,028		24,790		24,681		24,733		231		2,228
2014						36,852		31,220		34,911		33,962		36,132		34,279		34,004		33,836		292		2,311
2015								33,997		31,488		29,023		32,282		31,285		33,059		34,282		821		2,240
2016										38,115		33,475		33,080		31,615		33,628		32,705		875		4,798
2017												42,411		37,079		40,611		43,367		47,660		3,631		6,815
2018														50,784		50,182		51,519		51,035		4,595		5,678
2019																56,062		59,789		58,262		11,129		3,587
2020																		68,226		63,281		16,924		4,012
2021																				95,708		39,566		4,999
																		Total	$	463,883

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years ended December 31,
Accident Year	2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021
2012	$	11,525	$	14,454	$	16,263	$	18,670	$	20,716	$	21,026	$	21,352	$	21,415	$	21,453	$	21,499
2013				9,374		12,723		15,426		18,406		20,816		21,718		23,210		23,348		23,513
2014						12,001		16,484		20,199		24,602		27,339		31,448		32,702		32,934
2015								9,820		12,956		16,402		21,680		25,188		27,201		28,566
2016										11,327		17,193		19,085		22,339		25,686		26,690
2017												12,458		20,828		23,294		26,202		28,420
2018														18,027		30,078		32,490		35,781
2019																22,098		32,295		37,408
2020																		25,492		38,415
2021																				41,452
																		Total	$	314,678
		All outstanding liabilities before 2012, net of reinsurance*																		1,578
		Liabilities for claims and claim adjustment expenses, net of reinsurance																	$	150,783

* Unaudited supplementary information.

46

Note 12 – Liability for Unpaid Claims and Claim Adjustment Expenses — (Continued)

Homeowners—Consists of homeowners and renters business. Claims and claim adjustment expenses are shown below (in thousands):

	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																				As of December 31, 2021
	Years ended December 31,																				IBNR Plus		Cumulative Number of
Accident Year	2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021		Expected Development		Reported Claims
2012	$	181,284	$	177,664	$	175,523	$	175,509	$	175,178	$	175,032	$	174,611	$	174,276	$	174,239	$	174,238	$	—		30,999
2013				152,208		149,080		149,272		148,231		147,927		147,444		147,359		147,234		147,246		—		20,041
2014						132,651		131,634		130,287		131,546		130,895		130,747		130,799		130,713		—		18,183
2015								125,430		124,199		123,619		123,824		123,731		123,357		123,312		2		17,758
2016										147,264		145,373		144,376		145,019		144,828		144,766		17		21,559
2017												164,284		172,274		172,491		169,524		169,430		45		23,589
2018														174,495		179,561		176,317		176,681		61		22,576
2019																177,854		176,005		173,763		1,181		20,260
2020																		227,298		228,441		2,876		24,788
2021																				240,732		31,342		19,762
																		Total	$	1,709,322

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years ended December 31,
Accident Year	2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021
2012	$	143,797	$	169,415	$	171,842	$	173,170	$	173,676	$	174,139	$	174,247	$	174,256	$	174,239	$	174,238
2013				115,605		140,309		145,152		146,650		146,920		147,145		147,233		147,232		147,245
2014						96,300		122,601		126,245		129,467		130,059		130,305		130,542		130,577
2015								86,617		114,696		119,331		122,585		122,955		123,065		123,161
2016										105,415		136,796		140,972		144,000		144,596		144,635
2017												116,075		159,107		166,009		167,638		168,241
2018														121,631		165,203		170,850		174,077
2019																122,530		163,400		170,229
2020																		166,352		217,224
2021																				175,265
																		Total	$	1,624,892
		All outstanding liabilities before 2012, net of reinsurance*																		195
		Liabilities for claims and claim adjustment expenses, net of reinsurance																	$	84,625

* Unaudited supplementary information.

47

Note 12 – Liability for Unpaid Claims and Claim Adjustment Expenses — (Continued)

Short Tail Property—Consists of auto physical damage, fire, rental owners, standard fire policy, country estates, inland marine and

watercraft. This line of business has substantially all claims settled and paid in less than two years. Claims and claim adjustment expenses are shown below (in thousands):

	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance				As of December 31, 2021
	Years ended December 31,				IBNR Plus Expected Development			Cumulative Number of Reported Claims
Accident Year	2020*		2021
2020	$	237,332	$	229,857	$	282			53,008
2021				269,065		(3,599	)		53,068
		Total	$	498,922

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years ended December 31,
Accident Year	2020*		2021
2020	$	203,827	$	227,495
2021				235,425
		Total	$	462,920
All outstanding liabilities before 2020, net of  reinsurance*				2,996
Liabilities for claims and claim adjustment expenses, net of reinsurance			$	38,998

* Unaudited supplementary information

Credit Property and Casualty—Consists of credit property insurance, vendor’s or lender’s single interest insurance, GAP insurance, GAP waiver, debt cancellation products, involuntary unemployment insurance and collateral protection insurance. This line of business has substantially all claims settled and paid in less than two years. Claims and claim adjustment expenses are shown below (in thousands):

	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years ended December 31,				As of December 31, 2021
Accident Year	2020*		2021		IBNR Plus Expected Development		Cumulative Number of Reported Claims
2020	$	65,260	$	65,269	$	—		22,385
2021				51,002		12,188		14,443
		Total	$	116,271

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years ended December 31,
Accident Year	2020*		2021
2020	$	46,417	$	65,269
2021				34,998
		Total	$	100,267
All outstanding liabilities before 2020, net of reinsurance*				—
Liabilities for claims and claim adjustment expenses, net of reinsurance			$	16,004

* Unaudited supplementary information.

48

Note 12 – Liability for Unpaid Claims and Claim Adjustment Expenses — (Continued)

Credit Life—For credit life products, IBNR is calculated as a percentage of life insurance in-force. This line of business has substantially all claims settled and paid in less than two years. Claims and claim adjustment expenses are shown below (in thousands):

	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance				As of December 31, 2021
	Years ended December 31,				IBNR Plus Expected Development		Cumulative Number of Reported Claims
Accident Year	2020*		2021
2020	$	7,265	$	8,397	$	35		48
2021				10,291		1,300		50
		Total	$	18,688

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years ended December 31,
Accident Year	2020*		2021
2020	$	6,201	$	8,359
2021				8,894
		Total	$	17,253
All outstanding liabilities before 2020, net of reinsurance*				—
Liabilities for claims and claim adjustment expenses, net of reinsurance			$	1,435

* Unaudited supplementary information.

Health Reserving Methodology—The following methods are utilized:

• 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 long-term care and 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.

• 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, future net investment income, 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.

There is no expected development on reported claims in the health blocks. Claim frequency is determined by totaling the number of unique claim numbers during the period as each unique claim number represents a claim event for an individual claimant.

49

Note 12 – Liability for Unpaid Claims and Claim Adjustment Expenses — (Continued)

Health—Consists of stop-loss and other supplemental health products. This line of business has substantially all claims settled and paid in less than five years. Claims and claim adjustment expenses are shown below (in thousands):

	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance										As of December 31, 2021
	Years ended December 31,										IBNR Plus Expected Development		Cumulative Number of Reported Claims
Accident Year	2017*		2018*		2019*		2020*		2021
2017	$	41,544	$	39,930	$	35,466	$	35,447	$	35,451	$	—		29,216
2018				64,686		63,729		57,676		57,682		—		30,004
2019						48,175		52,508		47,294		1		30,614
2020								38,461		37,871		3,816		24,946
2021										43,153		14,174		20,877
								Total	$	221,451

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years ended December 31,
Accident Year	2017*		2018*		2019*		2020*		2021
2017	$	25,358	$	35,392	$	35,420	$	35,420	$	35,420
2018				34,894		57,759		57,616		57,617
2019						33,353		47,270		47,245
2020								23,398		34,118
2021										27,889
								Total	$	202,289
All outstanding liabilities before 2017, net of reinsurance*										4,167
Liabilities for claims and claim adjustment expenses, net of reinsurance									$	23,329

* Unaudited supplementary information.

Credit Health Reserving Methodology—The following methods are utilized:

Tabular Claims Reserves—These reserves rely on published valuation continuance tables. The insured’s age at disablement, the duration of the claim and the remaining term of the policy are used to provide a factor which is applied to the remaining exposure to calculate the present value of future benefits for insureds on claim.

The claim liability consists of IBNR and Due/Unpaid. The IBNR utilizes an inventory type method based on historical patterns of claim payments incurred but not reported within the last six months of the valuation date.

The Due/Unpaid reserves are the amount needed to pay an open claim from the last date of payment to the reserve valuation date.

Credit Health—The claim liability consists of credit disability. This line of business has substantially all claims settled and paid in less than five years. Claims and claim adjustment expenses are shown below (in thousands):

	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance										As of December 31, 2021
	Years ended December 31,										IBNR Plus Expected Development		Cumulative Number of Reported Claims
Accident Year	2017*		2018*		2019*		2020*		2021
2017	$	4,555	$	4,852	$	4,773	$	4,820	$	4,873	$	46		3,803
2018				4,631		4,163		4,155		4,303		76		3,572
2019						3,902		3,705		3,631		97		2,999
2020								3,736		3,741		222		2,605
2021										3,415		457		1,533
								Total	$	19,963

* Unaudited supplementary information.

50

Note 12 – Liability for Unpaid Claims and Claim Adjustment Expenses — (Continued)

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years ended December 31,
Accident Year	2017*		2018*		2019*		2020*		2021
2017	$	1,389	$	3,328	$	4,058	$	4,438	$	4,639
2018				1,473		2,930		3,598		3,918
2019						1,208		2,618		3,138
2020								1,179		2,613
2021										1,098
								Total	$	15,406
All outstanding liabilities before 2017, net of  reinsurance*										—
Liabilities for claims and claim adjustment expenses, net of reinsurance									$	4,557

* Unaudited supplementary information.

The following table is supplementary information. A 10-year average annual percentage payout of incurred claims is shown below:

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Year 1			Year 2			Year 3			Year 4			Year 5			Year 6			Year 7			Year 8			Year 9			Year 10
Auto Liability		33.0	%		29.5	%		15.3	%		9.5	%		5.7	%		2.6	%		1.2	%		0.5	%		0.7	%		2.0	%
Non-Auto Liability		17.1	%		19.9	%		15.9	%		13.4	%		8.3	%		5.1	%		3.3	%		1.9	%		1.6	%		13.5	%
Commercial Multi-Peril		37.1	%		16.2	%		8.1	%		10.5	%		8.7	%		5.2	%		3.8	%		0.5	%		0.5	%		9.4	%
Homeowners		73.1	%		21.3	%		3.3	%		1.7	%		0.3	%		0.1	%		0.1	%		—	%		—	%		0.1	%
Short Tail Property		88.1	%		11.9	%		—	%		—	%		—	%		—	%		—	%		—	%		—	%		—	%
Credit Property and Casualty		69.9	%		30.1	%		—	%		—	%		—	%		—	%		—	%		—	%		—	%		—	%
Credit Life		80.1	%		19.9	%		—	%		—	%		—	%		—	%		—	%		—	%		—	%		—	%

51

Note 13 – Reinsurance

American National reinsures portions of certain life insurance policies to provide a greater diversification of risk and manage exposure on larger risks. The maximum amounts that would be retained by one life insurance company (ANICO) by issue ages are shown below (in thousands):

	0-75 Years		76-80 Years		81 and Over
Individual life	$	5,000	$	2,000	$	1,000
Individual accidental death		250		250		250
Credit life		100		100		100
Group life		100		100		100
Total	$	5,450	$	2,450	$	1,450

For the Property and Casualty segment, American National retains the first $2.0 million of loss per risk. Reinsurance covers up to $6.0 million of property and liability losses per risk. Additional excess property per risk coverage is purchased to cover risks up to $20.0 million, and excess casualty clash coverage is purchased to cover losses up to $60.0 million. 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 is purchased for individual risks attaching at $20.0 million as needed. Corporate catastrophe coverage is in place for losses up to $470.0 million ($500.0 million if the top layer of the Property Catastrophe Top and Drop contract is included). American National retains the first $35.0 million of each catastrophe. Catastrophe aggregate reinsurance coverage is also purchased and is provided by two contracts.

The first contract is the Property Catastrophe Top and Drop cover that consists of $30.0 million of annual limit available either wholly or in part across two layers of coverage. The first layer is 100% of $30.0 million excess of $470.0 million on an occurrence basis. The second layer provides aggregate protection where subject loss is $15.0 million excess of $20.0 million of each catastrophe, and recoveries follow satisfaction of a $15.0 million annual aggregate deductible. The second layer acts to reduce the retention on large second and third catastrophe events to $20.0 million following a first large catastrophe. This cover was placed at 100% for 2021 and does not include a reinstatement. The second aggregate contract provides for $30.0 million of coverage after $160.0 million of annual aggregated catastrophe losses has been reached. Qualifying losses include amounts of retained losses net of other reinsurance below $35.0 million on Property Claims Services (“PCS”) declared catastrophe events and internally declared catastrophe events exceeding $5.0 million. This cover was placed at 55% for 2021 and does not include a reinstatement.

American National remains primarily liable with respect to any reinsurance ceded and would bear the entire loss if the reinsurer does not meet their obligations under any reinsurance treaties. American National had the following recoverables from reinsurance, net of allowance for credit losses (in thousands):

	December 31,
	2021		2020
Reinsurance recoverables	$	459,621	$	414,359

None of the amount outstanding at December 31, 2021 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.

52

Note 13 – Reinsurance — (Continued)

The amounts in the consolidated financial statements include the impact of reinsurance. Premiums written and earned are shown below (in thousands):

	Years ended December 31,
	2021			2020
WRITTEN
Direct	$	2,650,696		$	2,533,278
Reinsurance assumed		644,858			591,457
Reinsurance ceded		(944,194	)		(883,187	)
Net	$	2,351,360		$	2,241,548
EARNED
Direct	$	2,716,632		$	2,629,403
Reinsurance assumed		317,081			291,945
Reinsurance ceded		(732,660	)		(703,274	)
Net	$	2,301,053		$	2,218,074

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

	December 31,
	2021			2020
Direct life insurance in-force	$	136,710,529		$	128,075,765
Reinsurance risks assumed from other companies		221,023			171,433
Reinsurance risks ceded to other companies		(22,835,954	)		(24,006,683	)
Net life insurance in-force	$	114,095,598		$	104,240,515

Note 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,
	2021						2020
	Amount			Rate			Amount			Rate
Total expected income tax expense at the statutory rate	$	181,229			21.0	%	$	121,939			21.0	%
Tax-exempt investment income		(3,929	)		(0.5	)		(4,262	)		(0.7	)
Deferred tax change		(8,375	)		(1.0	)		2,816			0.5
Dividend exclusion		(3,459	)		(0.4	)		(3,097	)		(0.5	)
Tax credits, net		(4,988	)		(0.6	)		(7,484	)		(1.3	)
Low income housing tax credit expense		4,744			0.5			4,923			0.8
Change in valuation allowance		(138	)		—			(625	)		(0.1	)
Other items, net		1,501			0.3			2,397			0.4
Total	$	166,585			19.3	%	$	116,607			20.1	%

As of December 31, 2021, American National had no material net operating loss or tax credit carryforwards.

American National’s federal income tax returns for tax years 2018 to 2020 are subject to examination by the Internal Revenue Service. In the opinion of management, all prior year taxes have been paid or adequate provisions have been made for any tax deficiencies that may be assessed.

As of December 31, 2021, American National had no provision for uncertain tax positions and no provision for penalties or interest. In addition, management does not believe there are any uncertain tax benefits that could be recognized within the next twelve months that would impact American National’s effective tax rate.

53

Note 14 – Federal Income Taxes — (Continued)

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

	December 31,
	2021			2020
DEFERRED TAX ASSETS
Mortgage loans on real estate	$	27,784		$	34,341
Future policy benefits, policyholders’ account balances and claims		43,538			57,572
Unearned premium reserve		25,142			23,225
Participating policyholders’ liability		67,367			41,593
Deferred compensation		11,427			9,057
Tax carryforwards		1,748			1,643
Gross deferred tax assets before valuation allowance		177,006			167,431
Valuation allowance		(2,552	)		(2,458	)
Gross deferred tax assets after valuation allowance		174,454			164,973
DEFERRED TAX LIABILITIES
Bonds		69,089			122,326
Equity securities		8,386			262,017
Real estate, real estate partnerships and investment funds		16,319			12,499
Other invested assets		30,452			29,664
Deferred acquisition costs		218,252			199,152
Property and equipment		6,272			7,689
Pension and liability for retirement benefits		20,640			1,549
Other liabilities		5,554			8,424
Gross deferred tax liabilities		374,964			643,320
Total net deferred tax liability	$	200,510		$	478,347

In 2021, our deferred tax liabilities decreased from $478.3 million at December 31, 2020 to $200.5 million at December 31, 2021. The decrease was primarily due to the sale of equity securities. Upon sale, deferred tax liabilities on unrealized gains became realized for tax purposes resulting in a decrease in deferred tax liabilities and an increase in current tax liability.

GAAP requires us to evaluate the recoverability of our deferred tax assets and establish a valuation allowance, if necessary, to reduce our deferred tax assets 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. There were no material changes to our valuation allowance recorded during the years ended December 31, 2021 and 2020. Although realization is not assured, management believes it is more-likely-than-not that our remaining deferred tax assets will be realized and that as of December 31, 2021, no additional valuation allowance is required.

54

Note 15 – Accumulated Other Comprehensive Income (Loss)

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

	Net Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plan Adjustments			Foreign Currency Adjustments			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2020		157,851			(55,232	)		(3,101	)		99,518
Amounts reclassified from AOCI (net of tax benefit $2,092 and expense $1,018)		(7,870	)		3,831			—			(4,039	)
Unrealized holding gains arising during the period (net of tax expense $52,808)		198,657			—			—			198,657
Unrealized adjustment to DAC (net of tax benefit $14,380)		(54,094	)		—			—			(54,094	)
Unrealized gains on investments attributable to participating policyholders’ interest (net of tax benefit $632)		(2,378	)		—			—			(2,378	)
Actuarial loss arising during the period (net of tax benefit $4,181)		—			(15,729	)		—			(15,729	)
Foreign currency adjustment (net of tax expense $62)		—			—			235			235
Balance at December 31, 2020		292,166			(67,130	)		(2,866	)		222,170
Amounts reclassified from AOCI (net of tax benefit $8,608 and expense $2,016)		(32,382	)		7,584			—			(24,798	)
Unrealized holding losses arising during the period (net of tax benefit $43,343)		(163,051	)		—			—			(163,051	)
Unrealized adjustment to DAC (net of tax expense $12,239)		46,042			—			—			46,042
Unrealized losses on investments attributable to participating policyholders’ interest (net of tax expense $1,738)		6,537			—			—			6,537
Actuarial gain arising during the period (net of tax expense $15,974)		—			60,092			—			60,092
Foreign currency adjustment (net of tax expense $65)		—			—			62			62
Balance at December 31, 2021	$	149,312		$	546		$	(2,804	)	$	147,054

55

Note 16 – Stockholders’ Equity and Noncontrolling Interests

ANAT has one class of common stock with a par value of $0.01 per share and 50,000,000 authorized shares. Each issued and outstanding share of the Company’s common stock will be converted into the right to receive $190.00 in cash without interest pursuant to the Merger Agreement with Brookfield Reinsurance. Refer to Note 1, Nature of Operations, for more information. The number of shares outstanding at the dates indicated are shown below:

	Years ended December 31,
	2021			2020
Common stock
Shares issued		26,887,200			26,887,200
Treasury shares		—			—
Outstanding shares		26,887,200			26,887,200
Restricted shares		(10,000	)		(10,000	)
Unrestricted outstanding shares		26,877,200			26,877,200

Stock-based Compensation

American National has made grants of Stock Appreciation Rights (“SAR”), Restricted Stock (“RS”) Awards, and Restricted Stock Units (“RSU”), pursuant to a stock-based compensation plan. The term for granting additional awards under such plan expired in 2019. Pursuant to the plan, grants were made to certain officers meeting established performance objectives, and grants were made to directors as compensation and to align their interests with those of other shareholders. In addition, American National has made grants to directors and advisory directors of RSUs that are cash-settled only, with no provision for conversion to stock. During 2021, 10,197 of such cash-settled RSUs were granted and remain outstanding at December 31, 2021 as shown in the table below.

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

	SAR				RS Shares				RSUs
	Shares		Weighted- Average Grant Date Fair		Shares		Weighted- Average Grant Date Fair		Units			Weighted- Average Grant Date Fair
Outstanding at December 31, 2020		—		—		10,000		80.05		8,250			113.19
Granted		—		—		—		—		10,197			113.35
Exercised		—		—		—		—		(8,250	)		75.35
Forfeited		—		—		—		—		—			—
Expired		—		—		—		—					—
Outstanding at December 31, 2021		—	$	—		10,000	$	80.05		10,197		$	113.35

56

Note 16 – Stockholders’ Equity and Noncontrolling Interests — (Continued)

	SAR			RS Shares		RSUs
Weighted-average contractual remaining life (in years)		0.0			1.16		0.33
Exercisable shares		—			N/A		N/A
Weighted-average exercise price	$	—		$	80.05	$	113.35
Weighted-average exercise price exercisable shares		—			N/A		N/A
Compensation expense (credit)
Year ended December 31, 2021	$	—		$	80,000	$	1,989,000
Year ended December 31, 2020		(1,000	)		80,000		449,000
Fair value of liability award
December 31, 2021	$	—			N/A	$	1,926,000
December 31, 2020		—			N/A		793,000

The SARs gave 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 expired five years after vesting. All remaining SARs expired on May 1, 2020.

RS awards entitle the participant to full dividend and voting rights. Each RS share awarded 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 feature a graded vesting schedule in the case of the retirement, death or disability of an award holder or change in control. Restricted stock awards for 350,334 shares have been granted at an exercise price of zero, of which 10,000 shares are unvested.

RSU awards to our directors and advisory directors are settled in cash based upon the market price of our common stock after one-year or earlier upon death, disability or retirement from service after age 65 or change in control. During the twelve months ended December 31, 2021, 8,250 RSUs were granted and vested on May 1, 2021 and were settled in cash. A new grant of 10,197 RSUs was awarded to directors and advisory directors on May 1, 2021 with one-year cliff vesting which will be settled in cash.

Pursuant to the Merger Agreement with Brookfield Reinsurance, each outstanding and unvested restricted share award and restricted stock unit award will vest and be converted into the right to receive cash payment equal to $190.00 multiplied by the total number of shares of common stock subject to such award prior to the effective date of the merger with Brookfield Reinsurance. Refer to Note 1, Nature of Operations, for more information.

Earnings per Share

Basic earnings per share were calculated using a weighted average number of shares outstanding. Diluted earnings per share include RS awards and RSU award shares issued in 2019. RSUs issued in 2021 and 2020 may only be settled in cash.

	Years ended December 31,
	2021		2020
Weighted average shares outstanding		26,877,200		26,878,679
Incremental shares from RS awards and RSUs		7,479		8,446
Total shares for diluted calculations		26,884,679		26,887,125
Net income attributable to American National (in thousands)	$	699,325	$	467,505
Basic earnings per share	$	26.02	$	17.39
Diluted earnings per share	$	26.01	$	17.38

57

Note 16 – Stockholders’ Equity and Noncontrolling Interests — (Continued)

Statutory Capital and Surplus

Risk Based Capital (“RBC”) is a measure insurance regulators use to evaluate the capital adequacy of American National’s insurance subsidiaries. RBC is calculated using formulas applied to certain financial balances and activities that consider, among other things, investment risks related to the type and quality of investments, insurance risks associated with products and liabilities, interest rate risks and general business risks. Insurance companies that do not maintain capital and surplus at a level at least 100% of the company action level RBC are required to take certain actions. At December 31, 2021 and 2020, ANICO’s statutory capital and surplus was $4.0 billion and $3.6 billion, respectively, which resulted in an RBC level above 200% of the company action level. All of our other insurance subsidiaries had statutory capital and surplus at December 31, 2021 and 2020 above 200% of the company action level except ANPAC Louisiana Insurance Company (“ANPLA”), which had an RBC level of 194% at December 31, 2020, which increased to 242% at December 31, 2021.

American National’s insurance subsidiaries prepare financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of each subsidiary’s 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 our 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 ANICO and American National Lloyds Insurance Company by $68.1 million and $75.3 million at December 31, 2021 and 2020, respectively. The statutory capital and surplus of both ANICO and American National Lloyds Insurance Company would have remained above the authorized control 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,
	2021		2020
Statutory capital and surplus
Life insurance entities	$	2,425,759	$	2,188,808
Property and casualty insurance entities		1,570,501		1,463,179

	Years ended December 31,
	2021		2020
Statutory net income (loss)
Life insurance entities	$	956,053	$	(25,178	)
Property and casualty insurance entities		383,962		127,207

Statutory net income for our life insurance entities increased as a result of a $1.0 billion dividend payment to ANICO from ANH Investments, LLC, as a result of proceeds received from the sale of the majority of the equity securities portfolio. Statutory net income for our property and casualty entities increased driven by an increase in net realized gains as a result of the sale of the majority of the companies’ equity securities portfolios.

58

Note 16 – Stockholders’ Equity and Noncontrolling Interests — (Continued)

Dividends

Dividends are paid on a quarterly basis. We paid a quarterly dividend of $0.82 per share for each quarter for the years ended December 31, 2021 and 2020, and we expect to continue to pay regular quarterly cash dividends, not to exceed $0.82 per share, prior to the completion of the merger with Brookfield Reinsurance, although there is no assurance as to future dividends because they depend on future earnings, capital requirements and financial conditions. Refer to Note 1, Nature of Operations, for more information regarding the Merger Agreement with Brookfield Reinsurance.

The amount of dividends paid by our insurance company subsidiaries is restricted by insurance law. These restrictions are based, in part, on the prior year’s statutory income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without prior regulatory approval. Dividends in larger amounts, or extraordinary dividends, are subject to approval by the insurance commissioner of the relevant state of domicile. For example, restrictions applicable to Texas-domiciled life insurance companies like ANICO limit the payment of dividends to the greater of the prior year’s statutory net gain from operations before realized capital gains, or 10% of prior year statutory surplus, in each case determined in accordance with statutory accounting principles. ANICO is permitted, without prior approval of the Texas Department of Insurance, to pay total dividends of $792.4 million during 2022, subject to the terms and conditions of the Merger Agreement with Brookfield Reinsurance.

Noncontrolling Interests

American National County Mutual Insurance Company (“County Mutual”) is a mutual insurance company owned by its policyholders. ANICO 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 $6.8 million at December 31, 2021 and 2020, respectively.

American National Group, Inc. and its subsidiaries exercise 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 anoncontrolling interest of $0.9 million and a noncontrolling deficit of $0.9 million at December 31, 2021 and 2020, respectively.

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Note 17 – Segment Information

Management organizes the business into five operating segments:

• Life—consists of whole, term, universal, indexed and variable life insurance. Products are primarily sold through career, multiple-line, and independent agents as well as direct marketing channels.

• Annuity—consists of fixed, indexed, and variable annuity products. Products are primarily sold through independent agents, brokers, and financial institutions, along with multiple-line and career agents.

• Health—consists of Medicare Supplement, stop-loss, other supplemental health products and credit disability insurance. Products are typically distributed through independent agents and managing general underwriters.

• Property and Casualty—consists of personal, agricultural and targeted commercial coverages and credit-related property insurance. Products are primarily sold through multiple-line and independent agents or managing general agents.

• Corporate and Other—consists of net investment income from investments and certain expenses not allocated to the insurance segments and revenues and related expenses from non-insurance operations.

The accounting policies of the segments are the same as those described in Note 2, Summary of Significant Accounting Policies and Practices, of the Notes to the Consolidated Financial Statements. All revenues and expenses 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 segment 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 segment.

• Expenses are charged to segments through direct identification and allocations based upon various factors.

The following summarizes total assets by operating segments (in thousands):

	Years ended December 31,
	2021		2020
Total assets
Life	$	7,491,012	$	7,111,991
Annuity		14,803,297		13,642,357
Health		532,809		515,841
Property and Casualty		2,888,696		2,716,896
Corporate and Other		5,604,507		5,480,730
Total	$	31,320,321	$	29,467,815

60

Note 17 – Segment Information — (Continued)

The results of operations measured as the income before federal income taxes and other items by operating segments are summarized below (in thousands):

	Year ended December 31, 2021
	Life			Annuity			Health		Property & Casualty			Corporate & Other		Total
PREMIUMS AND OTHER REVENUES
Premiums	$	412,769		$	74,925		$	143,484	$	1,669,875		$	—	$	2,301,053
Other policy revenues		336,136			23,571			—		—			—		359,707
Net investment income		277,962			629,417			8,153		62,140			193,982		1,171,654
Net realized investment gains		—			—			—		—			64,628		64,628
Decrease in investment credit loss		—			—			—		—			28,778		28,778
Net gains on equity securities		—			—			—		—			420,283		420,283
Other income		1,577			3,282			21,743		15,807			3,279		45,688
Total premiums and other revenues		1,028,444			731,195			173,380		1,747,822			710,950		4,391,791
BENEFITS, LOSSES AND EXPENSES
Policyholder benefits		605,724			149,931			—		—			—		755,655
Claims incurred		—			—			98,029		1,094,126			—		1,192,155
Interest credited to policyholders’ account balances		84,005			364,649			—		—			—		448,654
Commissions for acquiring and servicing policies		186,470			98,842			24,231		330,554			—		640,097
Other operating expenses		195,127			53,379			42,284		213,486			67,593		571,869
Change in deferred policy acquisition costs		(50,134	)		(22,838	)		3,537		(10,197	)		—		(79,632	)
Total benefits, losses and expenses		1,021,192			643,963			168,081		1,627,969			67,593		3,528,798
Income before federal income tax and other items	$	7,252		$	87,232		$	5,299	$	119,853		$	643,357	$	862,993

	Year ended December 31, 2020
	Life			Annuity		Health			Property & Casualty		Corporate & Other			Total
PREMIUMS AND OTHER REVENUES
Premiums	$	396,099		$	92,866	$	168,805		$	1,560,304	$	—		$	2,218,074
Other policy revenues		295,263			15,483		—			—		—			310,746
Net investment income		261,389			570,003		8,637			63,949		72,174			976,152
Net realized investment gains		—			—		—			—		35,660			35,660
Increase in investment credit loss		—			—		—			—		(102,603	)		(102,603	)
Net gains on equity securities		—			—		—			—		356,281			356,281
Other income		2,084			2,716		19,598			12,779		3,379			40,556
Total premiums and other revenues		954,835			681,068		197,040			1,637,032		364,891			3,834,866
BENEFITS, LOSSES AND EXPENSES
Policyholder benefits		533,925			214,158		—			—		—			748,083
Claims incurred		—			—		116,122			1,005,620		—			1,121,742
Interest credited to policyholders’ account balances		75,943			245,099		—			—		—			321,042
Commissions for acquiring and servicing policies		167,548			55,910		30,182			299,960		—			553,600
Other operating expenses		182,395			48,359		39,265			202,503		42,891			515,413
Change in deferred policy acquisition costs		(53,756	)		48,298		(307	)		87		—			(5,678	)
Total benefits, losses and expenses		906,055			611,824		185,262			1,508,170		42,891			3,254,202
Income before federal income tax and other items	$	48,780		$	69,244	$	11,778		$	128,862	$	322,000		$	580,664

Note 18 – Pension and Postretirement Benefits

Savings Plans

American National sponsors a qualified defined contribution (401(k) plan) for all employees, and non-qualified defined contribution plans for certain employees whose otherwise eligible earnings exceed the statutory limits under the qualified plans.

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Note 18 – Pension and Postretirement Benefits — (Continued)

The total expense associated with matching contributions to these plans was $10.8 million and $9.9 million for 2021 and 2020, respectively.

Pension Benefits

American National sponsors qualified and non-qualified defined benefit pension plans, all of which have been frozen. As such, no additional benefits are accrued through these plans for additional years of service credit or future salary increase credit, and no new participants are added to the plans. Benefits earned by eligible employees prior to the plans being frozen have not been affected.

The qualified pension plans are noncontributory. The plans provide benefits for salaried and management employees and corporate clerical employees subject to a collective bargaining agreement based on years of service and employee compensation. The non-qualified pension plans cover key employees and restore benefits that would otherwise be curtailed by statutory limits on qualified plan benefits.

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Note 18 – Pension and Postretirement Benefits — (Continued)

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

	Qualified						Non-qualified
	2021			2020			2021			2020
Reconciliation of benefit obligation
Obligation at beginning of year	$	427,745		$	387,273		$	65,791		$	65,733
Service cost		589			543			—			—
Interest cost on projected benefit obligation		10,290			13,079			917			1,789
Actuarial (gain) loss		(11,640	)		50,620			2,496			6,775
Benefits paid		(27,604	)		(23,770	)		(8,510	)		(8,506	)
Obligation at end of year		399,380			427,745			60,694			65,791
Reconciliation of fair value of plan assets
Fair value of plan assets at beginning of year		511,989			470,101			—			—
Actual return on plan assets		90,822			65,700			—			—
Employer contributions		—			—			8,510			8,506
Benefits paid		(27,597	)		(23,812	)		(8,510	)		(8,506	)
Fair value of plan assets at end of year		575,214			511,989			—			—
Funded status at end of year	$	175,834		$	84,244		$	(60,694	)	$	(65,791	)

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

	Years ended December 31,
	2021			2020
Service cost	$	589		$	543
Interest cost		11,207			14,868
Expected return on plan assets		(25,921	)		(26,109	)
Amortization of net actuarial loss		7,628			4,848
Settlement recognition		1,973			—
Net periodic cost (benefit)	$	(4,524	)	$	(5,850	)

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

	Years ended December 31,
	2021			2020
Actuarial gain (loss)	$	85,666		$	(15,061	)
Deferred tax benefit (expense)		(17,990	)		3,163
Cumulative effect of change in accounting		—			—
Other comprehensive income (loss), net of tax	$	67,676		$	(11,898	)

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,
	2021			2020
Net actuarial gain (loss)	$	690		$	(84,976	)
Deferred tax benefit (expense)		(144	)		17,846
Amounts included in AOCI	$	546		$	(67,130	)

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Note 18 – Pension and Postretirement Benefits — (Continued)

The weighted average assumptions used are shown below:

	Used for Net Benefit Cost for year ended December 31, 2021			Used for Benefit Obligations as of December 31, 2021
Discount rate		2.52	%		2.86	%
Long-term rate of return		5.25			—

American National’s funding policy for the qualified pension plans is to make annual contributions to meet the minimum funding standards of the Pension Protection Act of 2006. American National and its affiliates did not contribute to its qualified plans in 2021 and 2020 due to the substantial contribution over minimum funding standards of $60 million made in 2018. The benefits paid from the non-qualified plans were $8.5 million and $8.5 million in 2021 and 2020, respectively. Future payments from the non-qualified pension benefit plans will be funded out of general corporate assets.

The following table shows pension benefit payments expected to be paid (in thousands):

2022	$	49,048
2023		33,243
2024		32,891
2025		30,522
2026		29,648
2027 - 2031		135,164

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

	December 31, 2021
	Total		Level 1		Level 2		Level 3
Asset Category
Corporate debt securities	$	144,770	$	—	$	144,770	$	—
Residential mortgage-backed securities		61		—		61		—
Equity securities by sector
Consumer goods		63,296		63,296		—		—
Energy and utilities		27,078		27,078		—		—
Finance		48,401		48,401		—		—
Healthcare		60,972		60,972		—		—
Industrials		29,375		29,375		—		—
Information technology		103,379		103,379		—		—
Other		86,256		86,256		—		—
Commercial paper		3,104		—		3,104		—
Unallocated group annuity contract		498		—		498		—
Other		8,024		8,024		—		—
Total	$	575,214	$	426,781	$	148,433	$	—

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Note 18 – Pension and Postretirement Benefits — (Continued)

	December 31, 2020
	Total		Level 1		Level 2		Level 3
Asset Category
Corporate debt securities	$	157,933	$	—	$	157,243	$	690
Residential mortgage-backed securities		3,521		—		3,521		—
Equity securities by sector
Consumer goods		57,684		57,684		—		—
Energy and utilities		22,007		22,007		—		—
Finance		40,161		40,161		—		—
Healthcare		51,641		51,641		—		—
Industrials		25,827		25,827		—		—
Information technology		78,720		78,720		—		—
Other		70,230		70,230		—		—
Commercial paper		872		—		872		—
Unallocated group annuity contract		1,940		—		1,940		—
Other		1,453		1,453		—		—
Total	$	511,989	$	347,723	$	163,576	$	690

The investment policy for the retirement plan assets is designed to provide the highest return 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 75% 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 Level 1 or 2 rating.

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 A2 by Moody’s or P2 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

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.

The accrued postretirement benefit obligation, included in the liability for retirement benefits, was $12.2 million and $5.3 million at December 31, 2021 and 2020, respectively. These amounts were approximately equal to the unfunded accumulated postretirement benefit obligation.

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Note 19 – Commitments and Contingencies

Commitments

American National and its subsidiaries lease insurance sales office space, technological equipment, and automobiles. The remaining long-term lease commitments at December 31, 2021 were approximately $12.7 million.

American National had aggregate commitments at December 31, 2021 to purchase, expand or improve real estate, to fund fixed interest rate mortgage loans, and to purchase other invested assets of $1.5 billion of which $786.2 million is expected to be funded in 2022 with the remainder funded in 2023 and beyond.

American National had outstanding letters of credit in the amount of $3.5 million as of December 31, 2021 and 2020.

The Merger Agreement contains certain termination rights for both the Company and Brookfield Reinsurance. If the Merger has not closed by May 6, 2022 (“Outside Date”), either the Company or Brookfield Reinsurance may terminate the Merger Agreement. However, if the closing has not occurred because the required insurance regulatory approvals have not been obtained, and all other conditions to closing have been satisfied (other than those conditions that by their terms are to be satisfied at the closing, each of which is capable of being satisfied at the closing) or waived, the Outside Date will be August 6, 2022. The Merger Agreement requires the Company to pay Brookfield Reinsurance a $178.5 million termination fee under certain circumstances. Those circumstances are relatively limited, since the Company has already received the required stockholder approval for the Merger. Specifically, a termination fee would be payable by the Company if (i) Brookfield Reinsurance terminates the merger agreement due to the occurrence of a terminable breach by the Company, (ii) a competing acquisition proposal from a third party was announced prior to the termination that was not withdrawn and (iii) within 12 months after the termination, the Company enters into a definitive agreement with respect to, or otherwise consummates, the competing acquisition proposal (or does not oppose it, in the case of a tender or exchange offer).

Federal Home Loan Bank (FHLB) Agreements

In May 2018, the Company became a member of the Federal Home Loan Bank of Dallas to augment its liquidity resources. The Company initially purchased $7.0 million of stock to meet the FHLB’s membership requirement. The FHLB member stock is recorded in other invested assets on the Company’s consolidated statements of financial position. Through its membership, the Company has access to the FHLB’s financial services including advances that provide an attractive funding source for short-term borrowing and for access to other funding agreements. As of December 31, 2021, certain collateralized mortgage obligations with a fair value of approximately $28.0 million and commercial mortgage loans of approximately $1.5 billion were on deposit with the FHLB as collateral for borrowing. As of December 31, 2021, the collateral provided borrowing capacity of approximately $902.7 million. The deposited securities and commercial mortgage loans are included in the Company’s consolidated statements of financial position within fixed maturity securities and mortgage loans on real estate, net of allowance, respectively.

Guarantees

ANICO 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 ANICO. The loans are secured by the cash values of the life insurance policies. If the customer were to default on a bank loan, ANICO would be obligated to pay off the loan. 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, 2021, was approximately $121.4 million, while the total cash value of the related life insurance policies was approximately $143.1 million.

Restrictions of the Merger Agreement limit the Company’s ability, without Brookfield Reinsurance’s consent, to incur guarantee or assume any indebtedness, subject to certain limited exceptions, including investment portfolio transactions in the ordinary course of business consistent with past practice and other incurrences of indebtedness not to exceed $10,000,000 in the aggregate.

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Note 19 – Commitments and Contingencies — (Continued)

Litigation

American National and certain subsidiaries 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 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. Accruals for losses are established whenever they are probable and reasonably estimable. If no one estimate within the range of possible losses is more probable than any other, an accrual is recorded based on the lowest amount of the range.

Note 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, health insurance contracts, and legal services. The impact on the consolidated financial statements of significant related party transactions is shown below (in thousands):

		Dollar Amount of Transactions				Amount due from American National
		Years ended December 31,				December 31,
Related Party	Financial Statement Line Impacted	2021		2020		2021			2020
Gal-Tex Hotel Corporation	Mortgage loan on real estate	$	—	$	—	$	—		$	—
Gal-Tex Hotel Corporation	Net investment income		—		—		—			—
Greer, Herz & Adams, LLP	Other operating expenses		13,203		13,451		(310	)		(441	)

Mortgage Loans to Gal-Tex Hotel Corporation (“Gal-Tex”): American National held a first mortgage loan which originated in 1999, with an interest rate of 7.25% and final maturity date of April 1, 2019 issued to a subsidiary of Gal-Tex, which was collateralized by a hotel property in San Antonio, Texas. This loan has been paid in full. The Moody Foundation owns 34.0% of Gal-Tex and 22.75% of American National, and the Libbie Shearn Moody Trust owns 50.2% of Gal-Tex and 37.0% of American National.

Transactions with Greer, Herz & Adams, LLP: Irwin M. Herz, Jr. is a member of the Board of Directors of American National Group, Inc. and certain of its subsidiaries, and a Partner with Greer, Herz & Adams, LLP, which serves as American National’s General Counsel.

67