American National Insurance Company History

Company Perspectives:

With a wide array of life, health, annuity and property and casualty products, as well as multiple distribution systems for the sale of those products, American National has positioned itself to take advantage of emerging opportunities in virtually all sectors of the American economy.

Company History:

American National Insurance Company is one of the 100 largest life insurance companies in the United States in terms of insurance in force, providing personal life insurance and related financial services to more than seven million policy owners in 49 states, the District of Columbia, Guam, Puerto Rico, and American Samoa. Directly and through its subsidiaries, American National offers a broad line of coverage, including individual life, health, and disability insurance; group life and health insurance; personal lines of property and casualty insurance; and credit insurance. The company also offers a variety of mutual funds and annuities.

Founded in Texas in 1905

American National Insurance Company traces its origins to the entrepreneurial spirit of William Lewis Moody, Jr., a Texan with diverse business interests who prospered in the cotton and banking industries during the latter part of the 19th century before turning his attention to insurance in the early 1900s. In 1904--at a time when the insurance industry was dominated by large east coast companies writing most of the life insurance policies in Texas--the 39-year-old Moody became president of American National Insurance and Trust Company of Houston and relocated that company's headquarters to Galveston, where Moody's family owned a bank.

The following year Moody organized and became president of American National Insurance Company, which then took over $800,000 worth of insurance policies covered by American National Insurance and Trust. Chartered as a life insurance company with $100,000 of capital and $20,000 surplus, American National Insurance Company began operating with ten employees in the original Moody Bank building in Galveston. Initially, American National paid no dividends because Moody, who held controlling interest in American National, believed that during a company's early years all profits should go toward financing future growth.

Moody's plans for growth paid off, and within five years American National's assets had risen to more than $1 million. Between 1905 and 1910 American National's insurance in force also rose considerably--from $2.1 million to $22 million--and in 1911 the company paid its first dividend. The following year the company's home office work force had expanded to 70 employees, and the number of American National field representatives totaled more than 700. In 1913, to accommodate its growing work force, American National moved into a new 11-story office building, initially claiming two of its floors.

American National's premium revenues increased rapidly during the 1920s, with the deadly influenza epidemic of 1918-19 fresh in the memories of potential customers. American National's growth was also fueled by a stream of acquisitions, and by 1928 the company had absorbed 27 other insurance companies and was employing 500 persons in its home office.

During the decade of the 1920s American National's assets increased more than 400 percent--compared with the national average for insurance companies at the time of 160 percent--climbing from $7.3 million to $38 million. Insurance in force rose from about $100 million to more than $600 million.

Stability During the Depression Years

In large part as a result of its carefully selected investment portfolio, American National weathered the worst of the Great Depression without laying off employees or suffering annual losses. In 1933, with the nation's banks closed, American National continued to meet its financial obligations as policyholders paid small weekly premiums in cash.

Between 1930 and 1935--the worst years of the Depression for most businesses--American National's assets grew by 37 percent, while its capital and surplus funds nearly doubled, rising from $6 million to $11.5 million. During that same period American National's insurance in force declined only about three percent, or at half the rate of the insurance industry as a whole. The company's insurance sales picked up in 1936, and by 1939 American National had assets of $82 million, with insurance in force totaling $777 million.

At the onset of World War II, the company's assets and sales grew dramatically, and in 1942 American National became the first Texas insurance company to claim $100 million in assets. Two years later the company's insurance in force passed the billion dollar mark. During the war, American National was a significant financial contributor to the military efforts of the United States, purchasing about $33 million worth of government war bonds.

In 1950 American National made its first major diversification move, entering the accident insurance field through the purchase of Commonwealth Life and Accident Insurance Company of St. Louis, Missouri. That year the company also entered the health, hospitalization, and credit insurance fields through acquisitions of other companies operating out of St. Louis and Dallas. By the end of 1950, American National had $2 billion worth of insurance in force.

In 1954, after nearly 50 years of running the company he founded, W.L. Moody died. Moody left behind a business legacy that included control of American National, as well as ownership of newspapers, hotels, and businesses operating in the fields of banking, printing, and ranching. Before his death, Moody's assets were used to establish a family trust, as well as the Moody Foundation, with the latter holding a controlling interest in American National as well as responsibility for future distribution of nonprofit grants. Moody's daughter, Mary Moody Northen, succeeded her father as president of American National. The company continued to prosper under Northen, and by 1959 American National's insurance in force had grown to $5 billion.

Moody Family Influence Decreases in the 1960s

During the late 1950s the Moody Foundation's four-member board became deadlocked on numerous issues, with Shearn and Robert Moody, great-grandsons of W.L. Moody, opposing the two other board members. Texas state officials responded to the foundation feud by increasing the board's size and adding nonfamily members, beginning a long battle between Shearn Moody and nonfamily foundation trustees.

In 1961 Mary Moody Northen retired, and American National's presidency and chair passed out of the Moody family to W.L. Volger, executive vice-president since 1944. Two years later R.A. Forbush took over the presidency of the company, whose assets had grown to more than $1 billion.

Under the leadership of Forbush and Volger, American National made several moves to expand the company's business activities. In March 1967, American National acquired Securities Management & Research, Inc. (SM&R), the investment management company of Citadel, Inc.'s mutual fund. With the acquisition of SM&R, which became American National's first major wholly owned subsidiary, the company entered the investment oriented financial services field and began offering mutual funds under the name American National Growth Fund, Inc. One month after acquiring SM&R, American National also entered the savings and loan field by acquiring a majority interest in Southern California Financial Corporation, a holding company based in Los Angeles with control over Southern California Savings & Loan Association and $200 million in assets.

In December 1967, American National--in another strategic acquisition--purchased controlling interest in Trans World Life Insurance Company of New York, the only state in which American National was not already licensed to operate. Between 1967 and 1968 American National also extended its operations beyond the United States and was licensed to operate in Western Europe.

The acquisitions and expansion moves helped boost revenues, and by 1968 American National had $10 billion worth of insurance in force. In 1969 Phil B. Noah, an executive vice-president since 1962, became president and chairperson of American National. American National continued to expand its life insurance operations that year by acquiring Equitable Insurance Company of Texas, which became American National Life Insurance Company of Texas (ANTEX), American National's second major subsidiary. During its initial years under American National's control, the operations of ANTEX were focused primarily in the areas of credit, life, accident, and health insurance.

By 1969 American National's home office work force had grown to more than 1,000 employees and field representatives included more than 7,000 agents and office workers. In response to the growth of its work force, during the late 1960s American National began construction of its 20-story American National Tower in Galveston. The new headquarters was completed in 1971.

Continued Growth in the 1970s and 1980s

In 1970 Glendon E. Johnson was named president, assuming the additional duties of chairperson in 1973. That year American National created a third principal subsidiary, American National Property and Casualty Company (ANPAC), based in Springfield, Missouri. Designed to broaden the scope of coverage available to its customers, ANPAC was licensed in 40 states and chartered to handle multiple lines of insurance, including automobile and homeowner's policies. Between 1973 and 1974 American National also expanded its activities in New York and acquired complete control of Trans World Life.

During the early 1970s Shearn Moody filed a lawsuit aimed at ousting Moody Foundation trustees accused of allowing American National to make large, low collateral loans to Las Vegas gambling casinos. Shearn Moody won the suit, and in 1973 his family regained control of the Moody Foundation. But Shearn Moody's battles with the law and the foundation board continued into the next two decades. During the late 1980s he was convicted of mail fraud and improperly taking money from the Moody Foundation and was subsequently voted off the foundation board. In 1990 the conviction was overturned.

In 1976 American National took over control of Standard Life & Accident Insurance Company, a unit of Standard Life Corporation based in Oklahoma. Standard Life & Accident Insurance, which had filed for bankruptcy and had been charged with securities fraud prior to being acquired, became American National's fourth major wholly owned subsidiary. The following year Orson C. Clay assumed the presidency of American National.

Late in 1980 American National sold Trans World Life to a Mutual of Omaha Insurance Company subsidiary. During this time American National created its fifth major subsidiary, American National General Insurance Company. American National General was chartered to handle most lines of property and casualty insurance and, like ANPAC, was based in Springfield, Missouri.

In 1981 the subsidiary ANTEX discontinued its credit insurance operations and became active in the business of reinsuring ordinary life and individual annuity policies written by other companies. That year SM&R began offering its American National Money Market Fund. The following year the leadership of American National was returned to the Moody family when Robert Moody was named as chair of American National's board of directors. American National doubled the size of its credit insurance operations in 1986 when it acquired the operations of World Service Life Insurance Company of Colorado and two of its affiliates. American National's total assets climbed above the $3 billion mark in 1986, and by 1987 the company's insurance in force had grown to more than $25 billion.

In 1987 American National acquired the universal and life insurance operations of American Health & Life Insurance Company. The following year the company purchased three Primerica Corporation insurance companies--Pennsylvania Life Insurance Company, Executive Fund Life Insurance Company, and Trans Pacific Life Insurance Company--specializing in various kinds of individual life, accident, and health insurance.

Between 1985 and 1988 ANTEX wrote no new insurance policies, turning its attention to the acquisition of business through the assumption of reinsurance agreements, including two large blocks of individual life and annuity contracts that were acquired during this time. In 1989 ANTEX resumed writing individual life insurance polices and also began marketing individual accident and health insurance.

The 1990s: Focus on Marketing

In 1989 American National's annual revenues exceeded $1 billion for the first time, and one year later the company's insurance in force topped $30 billion. Pushing sales upward during the early 1990s were acquisitions of life insurance business and a marketing diversification program. In 1990 ANTEX significantly expanded its direct policy writing activities after entering into the association group health market, with health, accident, and hospitalization coverage offered under an agreement with an outside sales agency and group polices sold through the National Business Association.

In 1990 American National also acquired American Security Life Insurance Company, a Texas life insurer licensed in 31 states. American Security Life was sold the following year after American National assumed the former company's insurance portfolio.

In 1991 Robert Moody assumed the additional duties of chief executive officer. That year the company expanded its investment fund sales channels when SM&R began a new marketing program and expanded its distribution outlets to include banks, savings and loan associations, and credit unions. In an effort to broaden its insurance sales force, in 1992 American National began recruiting noncareer insurance agents, association groups, bank affiliates, auto dealers, and other groups to sell its insurance products.

In June 1992, American National expanded its distribution channels further, paying $41.1 million to acquire Garden State Life Insurance Company, a direct-response insurance company based in New Jersey. Licensed to do business in 49 states, Garden State's activities included television and direct mail marketing of term life insurance policies with a face amount of $100,000 or more.

In large part as a result of its increasingly diversified sales and marketing efforts, in 1992 American National saw significant financial gains. In July 1992, American National sold the insurance portfolio of Commonwealth Life and Accident Insurance Company for $14.2 million. Net income for the year rose $40 million to $168 million, and revenues increased better than ten percent, climbing from $1.1 billion to $1.3 billion. Assets exceeded the $5 billion mark for the first time in 1992, and life insurance in force swelled by almost 20 percent, climbing to more than $37 billion.

American National entered 1993 having paid annual dividends for 82 consecutive years and having raised its dividend 19 straight years. In terms of industry measuring sticks, in 1993 the company received A.M. Best Company's top rating (A-double-plus) and held $156 in assets for every $100 in liabilities, which was one of the better assets-to-liability ratios in the insurance field.

The company had begun expanding its sales of annuities in the early 1990s, marketed in large part through third parties, and this area became a strong source of revenue over the next several years. In 1994 Garden State began to explore offering life insurance policies to customers of credit card companies and banks, with the first sales taking place in the fall of 1995. Initial sales were modest, however, and Garden State's overall revenues were stagnant during the mid- to late-1990s. Garden State introduced a new form of Critical Illness health insurance in late 1997, which the company expected to bring revenues back up.

Sales of health insurance for American National and its subsidiaries declined during the mid-1990s with the company's restructured home service division in fact discontinuing sales of major medical insurance policies altogether. American National's field agent force had been halved during an eight-year period beginning in the late 1980s, with only 2,200 licensed agents left by 1998. Sales of life insurance policies now were increasingly being made by the company's multiple line, rather than single line, agents.

The Standard Life and Accident subsidiary, which primarily offered medicare supplement insurance policies, also had seen a decline in sales since the early 1990s, though a number of new products were added in 1995-96. Four-fifths of Standard's net premiums still consisted of this "medigap" coverage, however, and this market was highly vulnerable to changes in state and national health insurance laws. Standard made moves to diversify, seeking increasing life and annuity sales.

American National's bread and butter remained life insurance, and this area continued to contribute more than 70 percent of the company's earnings. Life insurance in force totaled $43.8 billion in 1997, with the company's overall consolidated assets standing at $8.5 billion. Net income for the fiscal year 1997 was up 15 percent from 1996, to $248 million, with stockholder dividends increased yet again. A.M. Best Company's ratings were still A-double-plus, or "Superior."

As the year 2000 approached, the company's outlook appeared to be quite solid. Conservative by nature, with the life insurance business remaining primarily stable and predictable, there appeared to be few major obstacles to continued prosperity. As a result of its diversified sales force and marketing techniques, which had been expanded substantially in the 1990s, American National expected to reap continued growth in revenues and assets. It remained guardedly optimistic about the ramifications of potential national health care programs on health insurance premiums and the company's overall operations. The heirs of founder William Moody, through the Moody Foundation and The Libbie S. Moody Trust, continued to control more than 61 percent of the company as it neared the end of its first century in business.

Principal Subsidiaries: American National Life Insurance Company of Texas; Garden State Life Insurance Company; Standard Life and Accident Insurance Company; American National Property and Casualty Insurance Company; American National General Insurance Company; American National Lloyds Insurance Company; ANREM Corporation; Securities Management & Research, Inc.

Principal Divisions: Home Service; Multiple-Line; Independent Markets; Group Insurance; Individual Health; Credit Insurance.

Further Reading:

• Hackett, George, with Daniel Shapiro, "In Galveston, Moody's Blues: a Saga of Sex, Violence and Money, Texas Style," Newsweek, February 2, 1987.
  History of American National, Galveston, Texas: American National Insurance Company, 1975.
• Norman, James R., "Texas Gothic," Forbes, October 22, 1990, pp. 345-49.

Source: International Directory of Company Histories, Vol. 27. St. James Press, 1999.

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