8-K: American National Group Announces $300 Million Preferred Stock Offering to Redeem Existing Series A Shares

American National Group Inc. has entered into an underwriting agreement to issue 12 million depositary shares of a new 7.375% Series D preferred stock, using the proceeds to redeem its existing Series A preferred stock.

Summary

• American National Group Inc. has agreed to sell 12 million depositary shares, each representing a 1/1,000th interest in a share of 7.375% Series D Fixed-Rate Non-Cumulative Preferred Stock.
• The offering is expected to generate gross proceeds of $300 million.
• The company intends to use the net proceeds, along with cash on hand, to fully redeem its 5.95% Series A preferred stock and related depositary shares.
• The Series D preferred stock has a liquidation preference of $25,000 per share, equivalent to $25.00 per depositary share.
• The company may redeem the Series D preferred stock on or after January 15, 2030, at $25.00 per depositary share, plus any unpaid dividends.
• The company may also redeem the Series D preferred stock prior to January 15, 2030, at $25.50 per depositary share within 90 days of a rating agency event, or at $25.00 per depositary share within 90 days of a regulatory capital event.
• Dividends on the Series D preferred stock will be paid quarterly on the 15th of January, April, July, and October, starting April 15, 2025.

Sentiment

Score: 7

Explanation: The document outlines a routine financial transaction, a preferred stock offering to refinance existing debt. The terms are standard, and the company is taking steps to manage its capital structure. The sentiment is positive but not overly enthusiastic.

Positives

• The offering allows the company to refinance its existing Series A preferred stock with a new series at a higher fixed rate of 7.375%.
• The redemption of the Series A preferred stock simplifies the company's capital structure.
• The new Series D preferred stock is expected to be listed on the NYSE, potentially increasing its liquidity.

Negatives

• The company will incur underwriting discounts of $0.7875 per depositary share for retail investors and $0.500 per depositary share for institutional investors.
• The company is exposed to the risk of adverse market conditions that could impact the offering.
• The company is exposed to the risk of a rating agency event or regulatory capital event that could trigger an early redemption of the Series D preferred stock.

Risks

• The offering is subject to market conditions and may not be completed as planned.
• There is a risk that the company may not be able to list the depositary shares on the NYSE within the expected timeframe.
• The company's ability to redeem the Series D preferred stock is subject to its financial condition and regulatory requirements.
• The company is exposed to the risk of a material adverse change in its business, properties, assets, management, or prospects that could impact the offering.
• The company is exposed to the risk of a downgrade in its credit rating or the financial strength of its insurance subsidiaries.

Future Outlook

The company intends to use the net proceeds from the offering, along with cash on hand, to redeem in full its 5.95% Series A preferred stock and related depositary shares. The company expects the depositary shares to be listed on the NYSE within 30 days of initial delivery.

Management Comments

• The company intends to use the net proceeds from the Offering, together with cash on hand, to redeem in full the 5.95% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series A of the Company.

Industry Context

This offering is part of a broader trend of companies managing their capital structure and refinancing existing debt or preferred stock with new issuances. The fixed-rate nature of the preferred stock is attractive in the current interest rate environment.

Comparison to Industry Standards

• The 7.375% dividend rate is within the typical range for preferred stock offerings by financial institutions.
• The redemption provisions are standard for preferred stock, including call options after a certain date and early redemption options upon specific events.
• The use of proceeds to redeem existing preferred stock is a common practice for companies seeking to optimize their capital structure.
• Comparable companies that have recently issued preferred stock include insurance companies and other financial institutions such as Prudential Financial, Inc. and MetLife, Inc. These companies have issued preferred stock with similar terms and conditions, including fixed dividend rates and redemption options.

Related Party Transactions

• Brookfield Securities LLC, an underwriter in this offering, is an affiliate of Brookfield Corporation and has a conflict of interest in this offering within the meaning of FINRA Rule 5121.

Stakeholder Impact

• Shareholders will see a change in the company's capital structure with the redemption of the Series A preferred stock and the issuance of the Series D preferred stock.
• Preferred shareholders of the Series A stock will have their shares redeemed.
• New investors will have the opportunity to invest in the Series D preferred stock.
• The company's financial stability may be improved by the refinancing of the preferred stock.

Next Steps

• The company will file the final prospectus with the SEC.
• The company will work to list the depositary shares on the NYSE.
• The company will complete the redemption of the Series A preferred stock.

Key Dates

Keywords

preferred stock, depositary shares, underwriting agreement, public offering, redemption, fixed-rate, Series D, Series A, NYSE, capital raise