Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

Liquidity

The COVID-19 pandemic created significant economic uncertainty and volatility in the credit and capital markets beginning in March 2020, which has persisted. On April 13, 2020, the Company borrowed from the Federal Home Loan Bank of Dallas' COVID-19 Relief Advance Program. The net amount of the advance was approximately $240 million after a required capital stock purchase of approximately $10 million. The loan has an interest rate of 0.25% with a final maturity date of October 13, 2020. On April 28, 2020, the Company took an additional advance from the Federal Home Loan Bank of Dallas. The net amount of the advance was approximately $245 million after a required capital stock purchase of approximately $5 million. The loan has an interest rate of 0.38% with a final maturity date of April 28, 2021. We are closely monitoring the effect of the COVID-19 pandemic on our operations and our customers. While we believe current capital is sufficient to support operations, the Company took the advance from the FHLB in the event additional liquidity is needed for potential operational needs. Should the Company require additional liquidity to respond to the effects of COVID-19, we currently have approximately $622 million of additional credit available to us from the FHLB.

April and May Policy Credits for Personal Automobile Policyholders

On April 14, 2020, American National announced a 15% credit for its personal automobile policyholders based upon their premiums for April and May. The credit is expected to affect approximately 338,000 policyholders for an estimated $15 million. We estimate that the monetary impact of these policy credits will be offset by a reduction in auto claims as policyholders drive fewer miles due to shelter-in-place orders.

In response to the impacts of COVID-19, state insurance departments across the country have issued regulations that require us to not cancel policies for non payment for varying amounts of time but generally for at least 60 day periods which began in March and early April 2020. As a result, we expect to see a reduction in the cash flows typically received from policyholders during these periods.