A.M. Best Revises Outlook to Stable of American National Insurance Company; Upgrades Farm Family P/C Affiliates.

OLDWICK, N.J. -- A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit rating (ICR) of "aa-" of American National Insurance Company (ANICO) (Texas) (NASDAQ:ANAT), the lead life insurer and the ultimate parent company within the American National Group (ANG).

In addition, A.M. Best has affirmed the FSRs of A (Excellent) and ICRs of "a" of each of the following life insurance subsidiaries of ANICO: American National Life Insurance Company of Texas, Garden State Life Insurance Company (both of Texas), Farm Family Life Insurance Company (New York) and Standard Life and Accident Insurance Company (Oklahoma). The outlook for these ratings is stable.

These rating actions are based on ANICO's strong risk-adjusted capitalization; its diversified business profile, which is supported by its broad product offerings covering life, health, annuities and multi-line property/casualty insurance segments; its consistently positive consolidated operating results; and well-defined risk management programs, including generally conservative investment strategies. As the lead operating company and ultimate parent of both life and property/casualty subsidiaries, ANICO benefits from a diversified revenue and income stream covering both insurance and non-insurance businesses. A.M. Best views ANICO's significant capital flexibility and low financial leverage positively, which allows for a competitive advantage in building its multiple business segments.

Partially offsetting these rating factors are ANICO's mixed trends of consolidated operating results both on a statutory and GAAP basis, its sizeable exposure to interest sensitive liabilities, which are vulnerable to the impact of spread compression and investment risk, its high reliance on income and revenue growth from the property/casualty businesses, which continue to face a soft industry market, and the somewhat inconsistent performance of its life insurance subsidiaries. ANICO also may face challenges in an increasingly competitive environment.

The ratings of the four life insurance subsidiaries of ANICO reflect their more than adequate level of risk-adjusted capitalization, the implicit financial and management support of ANICO and each of the four life subsidiaries' marketing niches and product offerings. Offsetting these factors are the life subsidiaries' inconsistent earnings and premium trends, limited business profile and potential growth challenges.

A.M. Best also has revised the outlook to stable from negative and affirmed the FSR of A+ (Superior) and ICRs of "aa-" of American National Property and Casualty Group (ANPAC) and its following members: American National Property and Casualty Company, American National General Insurance Company and American National County Mutual Insurance Company (Galveston, TX) (due to its 100% reinsurance agreement with the American National Property and Casualty Company). All companies are domiciled in Springfield, MO, unless otherwise specified.

The ratings of ANPAC reflect its strong capitalization, well-established regional market presence and improved operational metrics, as well as the financial commitment of its Superior-rated life/health parent, ANICO.

Somewhat offsetting these positive rating factors are ANPAC's elevated but improving underwriting leverage, fluctuating operating performance and the inherent catastrophe risk associated with its property business that continues to expose its earnings to weather-related losses. The revised outlook is based on the group's return to better-than-industry performance.

Additionally, A.M. Best has upgraded the FSR to A+ (Superior) from A (Excellent) and ICRs to "aa-" from "a+" of the Farm Family Insurance Companies (Farm Family) and its two pooled property/casualty member companies, Farm Family Casualty Insurance Company (98%) and United Farm Family Insurance Company (2%). All companies are domiciled in Albany, NY. The outlook for these ratings is stable.

The upgrades represent A.M. Best's recognition of the completion of Farm Family's property/casualty operations integration into the ANG. The strategic purpose now fulfilled by Farm Family is to underwrite and service all of the commercial lines property/casualty business for ANG, whether the business resides on its own paper or ANPAC paper.

Further, these ratings reflect these companies' consistently favorable operating earnings, adequate capitalization and well-established market position in the Northeast. The ratings also consider Farm Family's ownership by its Superior-rated life/health parent, ANICO, and the synergies that are being enhanced with its sister group, ANPAC. Somewhat offsetting these positive factors are Farm Family's elevated but improving underwriting leverage and susceptibility to severe weather losses.

Concurrently, A.M. Best has affirmed the FSRs of A (Excellent) and ICRs of "a" of Pacific Property & Casualty Company (San Jose, CA) and American National Lloyds Insurance Company (Galveston, TX). The outlook for these ratings is stable.

Additionally, A.M. Best has revised the outlook to stable from negative and affirmed the FSR of A- (Excellent) and ICR of "a-" of ANPAC Louisiana Insurance Company (Mandeville, LA). All the above companies are affiliates of American National Property and Casualty Company.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.