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. The total expense associated with these plans was $9,493,000, $10,157,000, and $13,466,000 for 2019, 2018, and 2017, respectively.

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. In 2017, the Company commenced a one-time window offering to terminated, vested participants of our qualified defined benefit pension plans. The offer allowed participants to take a lump sum or annuity payout funded from pension plan assets. A $7.2 million pension expense was recognized in the second quarter of 2017 for this de-risking. There was an additional pension settlement expense of $5.3 million recognized in the fourth quarter of 2017. This was part of the normal year-end actuarial valuation process of the defined pension plans. Due to plan amendments to make this option available in 2017, higher lump sum payouts were recorded.

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.



	Qualified						Non-qualified
	December 31,
	2019			2018			2019			2018
Reconciliation of benefit obligation
Obligation at January 1,	$	344,974		$	415,824		$	68,035		$	75,014
Service cost	524			498			—			—
Interest cost on projected benefit obligation	14,867			13,428			2,554			2,418
Actuarial (gain) loss	48,210			(57,807		)	3,847			(496		)
Benefits paid	(21,302		)	(26,969		)	(8,703		)	(8,901		)
Obligation at December 31,	387,273			344,974			65,733			68,035
Reconciliation of fair value of plan assets
Fair value of plan assets at January 1,	402,579			382,724			—			—
Actual return on plan assets	88,827			(13,184		)	—			—
Employer contributions	—			60,000			8,703			8,901
Benefits paid	(21,305		)	(26,961		)	(8,703		)	(8,901		)
Fair value of plan assets at December 31,	470,101			402,579			—			—
Funded status at December 31,	$	82,828		$	57,605		$	(65,733	)	$	(68,035	)



	Years ended December 31,
	2019			2018			2017
Service cost	$	523		$	499		$	63
Interest cost	17,421			15,846			18,772
Expected return on plan assets	(24,248		)	(24,164		)	(23,579		)
Amortization of net actuarial loss	7,070			8,560			23,832
Net periodic benefit cost	$	766		$	741		$	19,088



	Years ended December 31,
	2019			2018			2017
Actuarial gain	$	19,615		$	28,260		$	20,040
Deferred tax expense	(4,120		)	(5,934		)	(4,209		)
Cumulative effect of change in accounting	(16,491		)	—			—
Other comprehensive income, net of tax	$	(996	)	$	22,326		$	15,831

The estimated actuarial loss for the plan that will be amortized from AOCI into the net periodic benefit cost over the next fiscal year is $4,789,000. Amounts recognized as a component of AOCI that have not been recognized as a component of the combined net periodic benefit cost of the defined benefit pension plans, are shown below (in thousands):

American National’s funding policy for the qualified pension plans is to make annual contributions to meet the minimum funding standards of ERISA. American National and its affiliates did not contribute to its qualified plans in 2019 and do not expect to contribute in 2020 due to the substantial contribution over minimum funding standards made in 2018. American National contributed $60,000,000 and $25,023,000 to the qualified pension plans in 2018 and 2017, respectively. The benefits paid from the non-qualified plans were $8,703,000, $8,901,000 and $12,212,000 in 2019, 2018 and 2017, respectively. Future payments from the non-qualified pension benefit plans will be funded out of general corporate assets.

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 value (hierarchy measurements) of the pension plan assets by asset category are shown below (in thousands):



	December 31, 2019
	Total		Level 1		Level 2		Level 3
Asset Category
Corporate debt securities	$	149,409	$	—	$	149,409	$	—
Residential mortgage-backed securities	4,041		—		4,041		—
Mutual funds	25,594		25,594		—		—
Equity securities by sector
Consumer goods	46,260		46,260		—		—
Energy and utilities	27,410		27,410		—		—
Finance	57,900		57,900		—		—
Healthcare	37,017		37,017		—		—
Industrials	17,996		17,996		—		—
Information technology	60,225		60,225		—		—
Other	35,597		35,597		—		—
Commercial paper	2,948		—		2,948		—
Unallocated group annuity contract	598		—		598		—
Other	5,106		5,106		—		—
Total	$	470,101	$	313,105	$	156,996	$	—



	December 31, 2018
	Total		Level 1		Level 2		Level 3
Asset Category
Corporate debt securities	$	140,836	$	—	$	140,836	$	—
Residential mortgage-backed securities	4,644		—		4,644		—
Mutual funds	9,161		9,161		—		—
Equity securities by sector
Consumer goods	44,746		44,746		—		—
Energy and utilities	23,844		23,844		—		—
Finance	45,131		45,131		—		—
Healthcare	31,259		31,259		—		—
Industrials	16,033		16,033		—		—
Information technology	47,226		47,226		—		—
Other	28,963		28,963		—		—
Commercial paper	6,836		—		6,836		—
Unallocated group annuity contract	1,131		—		1,131		—
Other	2,769		2,714		55		—
Total	$	402,579	$	249,077	$	153,502	$	—

The investment policy for the retirement plan assets is designed to provide the highest return possible commensurate with sound and prudent underwriting practices. The investment diversification goals are to have investments in cash and cash equivalents as necessary for liquidity, debt securities up to 100% and equity securities up to 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 rating of NAIC 1 or 2.

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

Commercial paper investments generally have a credit rating of A2 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.

American National sponsors a contributory health and dental benefit plan to a closed block of retirees and their dependents who met certain age and length of service requirements as of December 31, 1993. The primary retiree health benefit plan provides Medicare Supplemental and prescription drug benefits. American National’s contribution is limited to $40 per month for retirees and spouses. Since American National’s contributions to the cost of the retiree benefits plans are fixed, the health care cost trend rate will have no effect on the future expense or the accumulated postretirement benefit obligation. 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 $4,687,000 and $6,085,000 at December 31, 2019 and 2018, respectively. These amounts were approximately equal to the unfunded accumulated postretirement benefit obligation.