

	Years ended December 31,
	2019		2018		2017
Common stock
Shares issued	30,832,449		30,832,449		30,832,449
Treasury shares	(3,945,249	)	(3,947,000	)	(3,900,565	)
Outstanding shares	26,887,200		26,885,449		26,931,884
Restricted shares	(10,000	)	(10,000	)	(74,000	)
Unrestricted outstanding shares	26,877,200		26,875,449		26,857,884

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



	SAR				RS Shares				RS Units
	Shares		Weighted-Average Grant Date Fair Value		Shares		Weighted-Average Grant Date Fair Value		Units		Weighted-Average Grant Date Fair Value
Outstanding at December 31, 2016	6,153		$	113.36	76,000		$	110.73	100,445		$	105.97
Granted	—		—		—		—		16,500		117.69
Exercised	(333	)	116.48		(2,000	)	130.52		(62,111	)	108.90
Forfeited	—		—		—		—		(2,069	)	104.17
Expired	(3,234	)	118.37		—		—		—		—
Outstanding at December 31, 2017	2,586		106.70		74,000		110.19		52,765		106.26
Granted	—		—		—		—		8,250		121.93
Exercised	(650	)	99.79		(64,000	)	114.90		(41,949	)	106.94
Forfeited	—		—		—		—		(750	)	121.93
Expired	(1,601	)	114.17		—		—		—		—
Outstanding at December 31, 2018	335		84.41		10,000		80.05		18,316		111.12
Granted	—		—		—		—		8,250		113.19
Exercised	—		—		—		—		(18,316	)	111.12
Forfeited	—		—		—		—		—		—
Expired	(269	)	77.90		—		—		—		—
Outstanding at December 31, 2019	66		$	110.83	10,000		$	80.05	8,250		$	113.19



	SAR			RS Shares		RS Units
Weighted-average contractual remaining life (in years)	0.34			3.17		0.33
Exercisable shares	66			N/A		N/A
Weighted-average exercise price	$	110.83		$	80.05	$	111.12
Weighted-average exercise price exercisable shares	110.83			N/A		N/A
Compensation expense (credit)
Year ended December 31, 2019	$	15,000		$	80,000	$	1,168,000
Year ended December 31, 2018	(28,000		)	328,000		1,098,000
Year ended December 31, 2017	(15,000		)	823,000		3,227,000
Fair value of liability award
December 31, 2019	$	1,000		N/A		$	971,000
December 31, 2018	33,000			N/A		2,426,000

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

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 most of these awards feature a graded vesting schedule in the case of the retirement, death or disability of an award holder. 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 vest after one-year or upon earlier death, disability or retirement from service after age 65. Upon vesting, RSU awards are settled in cash based upon the market price of our common stock on the date of vesting.



	Years ended December 31,
	2019		2018		2017
Weighted average shares outstanding	26,882,691		26,886,357		26,896,926
Incremental shares from RS awards and RSUs	8,552		30,286		63,769
Total shares for diluted calculations	26,891,243		26,916,643		26,960,695
Net income attributable to American National (in thousands)*	$	620,363	$	158,995	$	493,651
Basic earnings per share*	$	23.08	$	5.91	$	18.35
Diluted earnings per share*	$	23.07	$	5.91	$	18.31



*	This includes the impact of the U. S. Tax Cut and Jobs Act ("Tax Reform") of a $206.4 million tax benefit, primarily due to the remeasurement of our existing deferred tax balances to the 21% corporate income tax rate. Excluding the impact of Tax Reform, the Company’s net income for the year ended December 31, 2017 would have been $287.3 million and net earnings per basic and diluted share would have been $10.68 and $10.65, respectively.

Risk Based Capital (“RBC”) is a measure insurance regulators use to evaluate the capital adequacy of American National Insurance Company and its insurance subsidiaries. RBC is calculated using formulas applied to certain financial balances and activities that consider, among other things, 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 200% of the authorized control level RBC are required to take certain actions. At December 31, 2019 and 2018, American National Insurance Company’s statutory capital and surplus was $3,477,727,000 and $3,162,808,000, respectively. American National Insurance Company and each of its insurance subsidiaries had statutory capital and surplus at December 31, 2019 and 2018, substantially above 200% of the authorized control level.

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

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

One of American National’s insurance subsidiaries has been granted a permitted practice from the Missouri Department of Insurance to record as the valuation of its investment in a wholly-owned subsidiary that is the attorney-in-fact for a Texas domiciled insurer, the statutory capital and surplus of the Texas domiciled insurer. This permitted practice increases the statutory capital and surplus of both American National Insurance Company and the Missouri domiciled insurance subsidiary by $70,339,000 and $69,787,000 at December 31, 2019 and 2018, respectively. The statutory capital and surplus of both American National Insurance Company and the Missouri domiciled insurance subsidiary would have remained substantially above the Company action level RBC had it not used the permitted practice.

We paid a dividend of $0.82 per share each quarter of the years ended December 31, 2019 and 2018. We expect to continue to pay regular cash dividends, although there is no assurance as to future dividends because they depend on future earnings, capital requirements and financial conditions.

American National Insurance Company's payment of dividends to stockholders is restricted by insurance law. The restrictions require life insurance companies to maintain minimum amounts of capital and surplus, and in the absence of special approval, limit the payment of dividends to the greater of the prior year's statutory net income from operations, or 10% of prior year statutory surplus. American National Insurance Company is permitted without prior approval of the Texas Department of Insurance to pay total dividends of $347,773,000 during 2020. Similar restrictions on amounts that can transfer in the form of dividends, loans, or advances to American National Insurance Company apply to its insurance subsidiaries.

American National County Mutual Insurance Company (“County Mutual”) is a mutual insurance company owned by its policyholders. American National has a management agreement that effectively gives it control of County Mutual. As a result, County Mutual is included in the consolidated financial statements of American National. Policyholder interests in the financial position of County Mutual are reflected as noncontrolling interest of $6,750,000 at December 31, 2019 and 2018.

American National Insurance Company 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 a noncontrolling deficit of $736,000 and noncontrolling equity of $7,517,000 at December 31, 2019 and 2018, respectively.