ANICO to Pay $3 Million in Additional Benefits for Policyholders Affected by Race-Based Pricing

June 14, 2004

Texas Insurance Commissioner Jose Montemayor announced that Texas-based American National Insurance Company (ANICO) has agreed to provide an estimated $3.2 million to $3.5 million in additional benefits to African-American and Hispanic consumers whose policies were affected by race-based pricing.

Montemayor served as the lead regulatory negotiator for a five-state group that acted on behalf of all the members of the National Association of Insurance Commissioners (NAIC). The other members of the group who signed on to the settlement today are California, Louisiana, Oklahoma and Georgia, the states with the greatest number of affected policies after Texas.

“This settlement is another step in correcting past practices that were just plain wrong,” Montemayor said. “The restitution will help restore the value that otherwise would have been available without the consideration of race.”

The settlement affects small face amount life insurance policies, commonly known as industrial life or burial policies, which were sold at a higher cost to African-Americans and Hispanics. Although ANICO stopped this practice in 1964 in the sale of new policies, death and surrender benefits for many older policies were never adjusted. The settlement applies to policies with a face amount of $1,000 or less, issued by American National between 1936 and 1939 (African-American and Hispanic) and between 1948 and 1964 (African-American only), and where a surrender or death benefit was paid since Dec. 31, 1959.

Restitution will be provided nationwide to approximately 40,000 current and former policyholders or beneficiaries for whom ANICO has records and who previously collected death benefits, surrendered their policy or were still paying premiums after Dec. 31, 1959.

The average benefit increase per policy is approximately 22 percent. The actual dollar amount will vary by face amount, plan of insurance, issue age and issue year. Depending upon the current status of the affected policy, settlement benefits will be paid in the form of an increased face amount (inforce policies) or cash (surrendered, dead or endowed policies).

ANICO has also agreed to fund a national advertising campaign in an effort to notify additional policyholders who are eligible to participate in the settlement, but for whom ANICO no longer has records. Settlement notices will be published in display advertisements in Parade and Ebony magazines, in major metropolitan daily newspapers located in the Lead Regulatory States and in minority/community newspapers for each state that has at least 200 policyholders. Potential claimants will have 18 months to file their proof of claim in order to share in the settlement.

American National has set up a toll-free number, (866) 229-9685, to answer questions about the settlement, as well as a Web site: The company’s address is P.O. Box 1900, Galveston, Texas 77553-1900.

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