Insurer American National Group Exploring Options Including Possible Sale -Reuters
The news sent shares of American National spiking to their highest level in more than two years, closing 16.1% higher at $142.28 to give the insurer a market value in excess of $3.8 billion.
Started in 1905 by William Lewis Moody Jr., American National is still majority-owned by the founder’s family, which controls the company through a range of trusts and holdings.
An investment bank has been hired to run an auction for American National, with prospective buyers recently contacted to gauge their interest in a deal, the sources said.
The sources cautioned that no transaction is certain and asked not to be identified because the matter is confidential.
American National did not respond to a request for comment.
It is not clear what prompted the Galveston, Texas-based insurer to explore a sale.
Some financial advisers have been encouraging corporate owners to speed up asset sales ahead of a proposed hike in capital gains and inheritance taxes put forward by U.S. President Joe Biden’s administration.
American National offers a variety of products, including life, health and property and casualty (P&C) insurance, as well as annuities, according to its website.
Such diversification has gone out of favor in the insurance industry, where many executives argue it is more profitable to focus on a specific area. American International Group (AIG), for example, has said it will spin its life and retirement business into a new public company.
American National trades at a valuation of 0.51-times price-to-book, indicating the market is discounting its worth.
Meanwhile, P&C-focused peers Progressive Corp. and Hanover Insurance Group trade at 3.61-times and 1.57-times, respectively, according to Refinitiv data.
The profitability of insurers took a hit during the COVID-19 pandemic, as claims rose as a result of the economic disruption.
(Reporting by David French in New York Editing by Bill Berkrot and Matthew Lewis)