EXAMINATION REPORT OF MEDICO CORP LIFE INSURANCE

EXAMINATION REPORT OF

MEDICO CORP LIFE INSURANCE COMPANY

DES MOINES, IOWA

AS OF DECEMBER 31, 2020

Des Moines, Iowa

June 7, 2022

HONORABLE DOUG OMMEN

Commissioner of Insurance

State of Iowa

Des Moines, Iowa

Commissioner:

In accordance with your authorization and pursuant to Iowa statutory provisions, an Examination has been

made of the records, business affairs and financial condition of

MEDICO CORP LIFE INSURANCE COMPANY

DES MOINES, IOWA

AS OF DECEMBER 31, 2020

with its home office located at 601 6

Ave, Des Moines, Iowa.

INTRODUCTION

Medico Corp Life Insurance Company, hereinafter referred to as the “Company”, was last examined as of

December 31, 2015 by examiners of the Nebraska Department of Insurance (“NE DOI”).

In conjunction with the examination of the Company as of December 31, 2020 by the Iowa Insurance

Division (“Division”), affiliates American Republic Insurance Company (“ARIC”), American Republic Corp

Insurance Company (“ARCIC”), Medico Insurance Company (“MIC”), Medico Life and Health Insurance Company

(“MLHIC”) and Great Western Insurance Company (“GWIC”) were also examined by the Division.

SCOPE OF EXAMINATION

This is the regular comprehensive financial examination of the Company covering the intervening period

from January 1, 2016 to the close of business on December 31, 2020, including any material transactions and/or

events occurring and noted subsequent to the examination period.

The examination was conducted in accordance with the National Association of Insurance Commissioners

(“NAIC”) Financial Condition Examiners Handbook. The Handbook requires that the Division plan and perform the

examination to evaluate the financial condition, identify current and prospective risks of the company and evaluate

system controls and procedures used to mitigate those risks. An examination also includes identifying and evaluating

significant risks that could cause an insurer’s surplus to be materially misstated both currently and prospectively.

All accounts and activities of the Company were considered in accordance with the risk-focused examination

process. This may include assessing significant estimates made by management and evaluating management’s

compliance with Statutory Accounting Principles.

The examination does not attest to the fair presentation of the financial statements included herein. If, during

the course of the examination, an adjustment is identified, the impact of such adjustment will be documented

separately following the Company’s financial statements.

The examination report includes significant findings of fact and general information about the insurer and its

financial condition.

HISTORY

The Company was incorporated on March 16, 1960 under the laws of the State of North Carolina as a stock

accident and health insurance company under the name Mid-South Insurance Company, with its home office in

Fayetteville, North Carolina. In 1972, the Articles of Incorporation were amended to include authority to write life

insurance in all forms, including annuities.

Effective February 20, 1996, the stockholders of the Company approved and adopted an Agreement and Plan

of Merger with Trigon Insurance Company (“TIC”) (d/b/a Trigon Blue Cross Blue Shield, formerly Blue Cross Blue

Shield of Virginia). Under the terms of the agreement, the Company became a wholly-owned subsidiary of TIC,

Virginia’s largest managed healthcare company. Each share of the Company’s common stock was canceled and

converted into $15.67 in cash.

Effective 1, 2000, World Insurance Company (“World”) entered into a Stock Purchase Agreement, dated as

of March 1, 2000, by and between World as a buyer, MSA as seller, and THI to acquire 100% of the stock of the

Company. Effective June 1, 2000 and pursuant to a Re-Domestication Order entered by the Nebraska Department of

Insurance, the Company was re-domiciled as a Nebraska corporation with its home office and principal executive

office in Omaha, Nebraska.

On January 13, 2004, ultimate control changed to American Republic Holding Co. (“AR Mutual”) via a

merger with the Company’s ultimate parent and AR Mutual, with AR Mutual as the surviving entity. Effective March

2, 2004, AR Mutual filed its Amended Articles of Incorporation with the Iowa Insurance Division and Iowa Secretary

of State to change its name to American Enterprise Mutual Holding Company.

Effective March 17, 2006, the Company filed its Amended Articles of Incorporation with the Nebraska

Department of Insurance and the Secretary of State of Nebraska to change its name to World Corp Insurance

Company.

Effective March 13, 2013, the Company’s parent, World, completed a merger with an affiliate, ARIC, with

ARIC emerging as the surviving entity. As a result of the merger, the Company became a wholly-owned subsidiary

of ARIC.

Effective October 30, 2013, the Company filed its Amended Articles of Incorporation with the NE DOI and

Secretary of State of Nebraska to change its name to Medico Corp Life Insurance Company.

Following approval from the Division and the NE DOI, the Company re-domesticated from Nebraska to

Iowa, effective January 1, 2017.

CAPITAL STOCK AND DIVIDENDS

The Company has 6,000,000 shares authorized, 5,446,696 shares issued, and 5,446,696 shares outstanding

of $1.00 per share common stock. All shares of stock outstanding are held by ARIC.

The Company did not pay dividends to ARIC during the current examination period.

MUTUAL INSURANCE HOLDING COMPANY SYSTEM

The Company is a member of a Mutual Insurance Holding Company System as defined by Chapter 521A,

Code of Iowa. AEMHC, an Iowa mutual insurance holding company, is the ultimate controlling person for the group.

An Insurance Holding Company System Registration Statement was filed annually with the Iowa Insurance Division

for each year of the examination period.

An abbreviated organizational chart identifying the Companies within the Holding Company system follows:

American Enterprise Mutual Holding Company

("AEMHC")

American Enterprise Group, Inc.

("AEG")

Medico Insurance Company

("MIC")

American Republic

Insurance Company

("ARIC")

American Republis Corp

Insurance Company

("ARCIC")

Great Western Insurance

Company

("GWIC")

Medico Corp Life Insurance

Company

("MCLIC")

Medico Life and Health

Insurance Company

("MLHIC")

MANAGEMENT AND CONTROL

SHAREHOLDER

The annual meeting of the shareholder for the election of directors and for the transaction of such other

business as may properly come before the meeting, shall be held on the first Tuesday in March of each year at such

place as the Board of Directors shall each year fix, or at such other place, time and date as the Board of Directors

shall fix, which date shall be within the earlier of the first six (6) months after the end of the Company’s fiscal year

or fifteen (15) months after the shareholder’s last annual meeting.

Special meetings of the shareholder, for any purpose or purposes, unless otherwise prescribed by law, may

be called by the Chairman of the Board, Chief Executive Officer or the Board of Directors, and shall be called by the

Board of Directors upon the written demand, signed, dated and delivered to the Secretary, of the holders of at least

ten (10) percent of all the votes entitled to be cast on any issue proposed to be considered at the meeting. The time,

date and place of any special meeting shall be determined by the Board of Directors or, at its direction, by the Chief

Executive Officer.

Notice of the place, date and time of all meetings of the shareholder and, in the case of a special meeting, the

purpose or purposes for which the meeting is called, shall be communicated not fewer than ten (10) days nor more

than sixty (60) days before the date of the meeting to each shareholder entitled to vote at such meeting.

Every shareholder entitled to vote may vote in person or by proxy. Except as provided in subsection (c) or

unless otherwise provided by law, each outstanding share, shall be entitled to one vote on each matter submitted to a

vote at a meeting of shareholder. Directors shall be elected by a plurality of the votes cast by the shares entitled to

vote in the election at a meeting at which a quorum is present. If a quorum exists, action on a matter, other than the

election of directors, by a voting group is approved if the votes cast within the voting group favoring the action exceed

the votes cast opposing the action, unless a greater number is required by law.

Except as otherwise set forth in this Section 3.12, any action required or permitted by law to be taken at a

meeting of the shareholder may be taken without a meeting or vote if one or more consents in writing setting forth

the action taken shall be signed and dated by the holders of outstanding shares having not less than ninety percent

(90%) of the votes entitled to be cast at a meeting at which all shares entitled to vote on the action were present and

voted, and are delivered to the Corporation for inclusion in the minutes or filing with the Corporation’s records.

Written consents may be delivered to the Corporation by electronic transmission.

BOARD OF DIRECTORS

The Bylaws state that the business and affairs of the Company shall be managed by a Board of Directors

consisting of not less than five (5) nor more than twenty-one (21) directors, who shall be individuals nominated and

elected as provided in the Articles and further subject to the provisions of the Bylaws.

Directors shall be elected for three-year (3-year) terms and, as nearly as may be, one-third (1/3) shall be

elected annually and shall serve until the annual meeting following the term for which each was elected and until his

successor is qualified.

The Board of Directors shall hold an annual meeting for the purpose of organization, the election of officers

and the transaction of other business. Regular meetings of the Board of Directors shall be held at such place and at

such times as the Board of Directors shall by resolution fix and determine from time to time. No notice shall be

required for any such regular meeting of the board.

Special meetings of the directors may be called by the Chairman of the Board, Chief Executive Officer or

one-third (1/3) of the directors at the time being in office at least one (1) day before the date on which the meeting is

to be held.

A majority of the Board of Directors shall constitute a quorum for the transaction of business at any meeting

of the Board of Directors. The Board has general charge of the business and affairs of the Company including the

power to adopt, amend or alter Bylaws unless otherwise specified by the shareholders.

The directors duly elected and serving as of December 31, 2020 were as follows:

Name and Address Principal Business Affiliation Term Expires

David John Keith American Enterprise Services Company 2021

Des Moines, Iowa President of Insurance Solutions

Sara Elaine Lehan American Enterprise Services Company 2021

Des Moines, Iowa Vice President, Chief Investment Officer

Thomas Anthony Swank American Enterprise Services Company 2022

Des Moines, Iowa Chief Executive Officer and President

Jeffrey Scott Harms American Enterprise Services Company 2023

Des Moines, Iowa Assistant Vice President, Financial Planning

and Reporting

Scott Michael Haugh American Enterprise Services Company 2023

Des Moines, Iowa Senior Vice President, Chief Financial Officer,

Chief Actuary, and Treasurer

David John Keith and Sara Elaine Lehan were re-elected at the annual meeting of the shareholders of the

Company on March 4th, 2021 for a three-year term, expiring in 2024.

Thomas Anthony Swank was re-elected at the annual meeting of the shareholders of the Company on March

2, 2022 for a three-year term, expiring in 2025.

COMMITTEES

The Board of Directors, by resolution adopted by the affirmative vote of a majority of the number of directors

then in office, may establish an Executive Committee and one or more other committees of the Board of Directors,

each to consist of one (3) or more directors appointed by the Board of Directors. Any such committee shall serve at

the will of the Board of Directors. As of December 31, 2020, the Board of Directors has not adopted a resolution

establishing an Executive Committee or any other committees.

The following committees of the Board of Directors of AEMHC serve for all entities within the holding

company group.

The membership of the committees as of December 31, 2020 was as follows:

Governance Committee

Name Principal Business Affiliation

James A. Walker* Heim-Walker

President and Chief Executive Officer

Kathy M. Collins Massage Envy

Chief Marketing Officer

Kathleen M. Redgate Global Atlantic Financial Group Limited

Former Executive Vice President

*Chair

Investment Committee

Name Principal Occupation

John L. Maginn* Maginn Associates

President

Craig W. Bainbridge, M.D. Retired Physician,Private Practice

Thomas A. Swank American Enterprise Mutual Holding Company

President and Chief Executive Officer

*Chair

Audit Committee

Name Principal Occupation

Donna J. Blank* National Financial Partners Corp.

Former Chief Financial Officer

Michael E. Abbott American Enterprise Mutual Holding Company

Retired Chief Executive Officer

Terrance J. Lillis Principal Financial Group

Retired Chief Financial Officer

*Chair

OFFICERS

The Bylaws providethat the executive officers of the Company shall be a Chairman of the Board, a President,

one of whom shall be designated by the Board of Directors as the Chief Executive Officer, and a Secretary. The Chief

Executive Officer, the President, and the Secretary are elected annually by the Board of Directors at their annual

meeting. The Company shall have other officers as may be appointed by the Chief Executive Officer. One person

may hold two or more offices at the same time.

The principal officers serving at December 31, 2020 were as follows:

Name Title

Thomas Swank President and Chief Executive Officer

Scott Haugh Senior Vice President, Chief Actuary, Chief Financial Officer and

Treasurer

Eric Nemmers Vice President, General Counsel and Secretary

David Keith President of Insurance Solutions

Dennis Case Senior Vice President and Chief Sales Officer

Debbie DeCamp Vice President, Corporate Marketing and Communications

Margaret Brown Vice President, Chief Human Resources Officer and Assistant Secretary

Sara Lehan Vice President, Chief Investment Officer

Kim Barney Vice President, Chief Administration Officer

Julie Larson Vice President, Chief Technology and Innovation Officer

Julie Pearce Assistant Vice President, AE Ventures

Chris Axiotis Director Audit Services and Risk Management

Effective January 1, 2022, AEMHC adopted a co-Chief Actuary model. Matt Johnson was named the co-

Chief Actuary and his focus is on the Health business. At that time, Dale Ward, who had served as Chief Actuary of

the Company since October 15, 2021, became co-Chief Actuary and his focus is on the Life business. Scott Haugh

retained his role as Chief Financial Officer and Treasurer.

The salaries for the above officers are shown in Exhibit A, found immediately following the signature page

of this report.

CONFLICT OF INTEREST

The Company has an established procedure for annual disclosure to its Board of Directors of any material

interest or affiliation on the part of its officers, directors or key employees which is in conflict with, or is likely to be

in conflict with the official duties of such person.

The Company requires its officers and directors to complete conflict-of-interest statements and disclose any

known or potential conflict of interest as part of the annual disclosure process. The examiners reviewed the conflict

of interest statements completed by the Company’s officers and directors for each year of the period covered by this

examination. No exceptions were noted.

CORPORATE RECORDS

Effective January 1, 2017, the Articles of Incorporation of the Company were restated and refiled to complete

the re-domestication of the Company from Nebraska to Iowa.

The Bylaws of the Company were amended on January 1, 2017 as a result of the amendments to the Articles

of Incorporation which were refiled in connection with the re-domestication.

The recorded minutes of the meetings of the Shareholder, Board of Directors, and Committees were read and

noted. They appeared to be complete and were found to be properly attested.

The Board of Directors of the Company acknowledged and accepted the 2015 Examination Report of the

Company through written consent without a meeting on August 16, 2017.

FIDELITY BOND AND OTHER INSURANCE

Under a financial institution bond, AEMHC and affiliated companies are protected against loss from any

fraudulent or dishonest act of any employee up to $5,000,000 each loss occurrence and $10,000,000 aggregate limit

of liability which meets the NAIC recommended minimum amount.

The other interests of the Company appear to be adequately protected through coverages afforded by policies

in force with admitted insurers.

RELATED PARTY AGREEMENTS

Shared Services Agreement

Effective July 1, 2015, AEMHC and all of its subsidiary companies became parties to a Shared Services

Agreement. The Agreement allows American Enterprise Services Company (“AES”), as the employer of all

employees in the AEMHC system and wholly owned subsidiary of AEG, to provide employee services and then

allocate related employee expenses to all other affiliate companies. The Agreement details the procedure for the

affiliate companies to determine expense allocations annually related to these services, as well as for their review and

reconciliation.

Consolidated Tax Allocation Agreement

AEMHC, AEG, the Company and its affiliates are parties to a Tax Allocation Agreement that provides for

the allocation of certain tax benefits in the filing of a consolidated tax return.

EMPLOYEE WELFARE

AES is the sponsor of the American Enterprise 401(k) savings plan, under which the employees of the

Company participate in a qualified defined contribution plan. Disability, dental and health insurance benefits are

provided on a contributory basis through a cafeteria plan.

REINSURANCE

The reinsurance contracts of the Company were reviewed and no contract provisions were found to be outside

the custom of the industry. All contracts had acceptable insolvency clauses and transfer of risk.

Effective April 1, 2010, the Company entered into an intercompany coinsurance agreement to cede a 100%

quota share of major medical and Medicare supplement products to ARIC.

Effective October 1, 1998, the Company and United Teachers Associates Insurance Company entered into a

quota share reinsurance agreement that cedes 100% of certain annuity, supplementary, and life contracts.

STATUTORY DEPOSIT

The Company had securities on deposit with the Iowa Insurance Division in excess of the minimum statutory

requirement.

TERRITORY AND PLAN OF OPERATION

The Company is licensed to write business in 44 states and the District of Columbia. The Company offers

primarily Medicare supplement insurance. Except for a small block of annuities, the Company cedes all of its business

to ARIC.

GROWTH OF COMPANY

The growth of the Company is reflected by the following data taken from the annual statements for the years

indicated.

(000’s omitted)

Admitted Capital and Premium Income*

Year

Assets Surplus Life Annuity A&H

2016

$53,706 $21,773

$ - $ - $ -

2017

65,574 22,324

- - -

2018

73,543 24,957

- - -

2019

48,375 25,807

- - -

2020

47,014 27,107

- - -

*See April 1, 2010 ceded reinsurance agreement with ARIC described in the Reinsurance section above.

ACCOUNTS AND RECORDS

The Company uses electronic data processing equipment and related software for processing and maintaining

its accounts, records and files. In most areas, an imaging system is used to maintain documents on the computer

system rather than maintaining the original documents (paper) or other media (microfilm, microfiche, etc.). The

Information Systems controls were reviewed by this examination. No material exceptions were noted to accepted

control practices and procedures.

The trial balance of the Company’s general ledger was taken for 2020 and was found to be in agreement with

the office copy of the filed annual statement.

The records in the Company’s policy master file were sampled and tested by comparing data contained in

supporting documents to data contained in the computer records. No material discrepancies were noted.

During the course of examination, no statutory violations or material differences with the amounts reflected

in the financial statements, as presented in the annual statement at December 31, 2020, were identified.

SUBSEQUENT EVENTS

COVID-19 Pandemic

In March 2020, the World Health Organization declared Coronavirus disease (“COVID-19”) a pandemic. As

of the date of this report, there is significant uncertainty as to the impact the pandemic will have on the economy,

insurance industry and the Company. In addition, this uncertainty has contributed to extreme volatility in the financial

markets. As such, the Iowa Insurance Division will continue to monitor COVID-19 developments.

F I N A N C I A L S T A T E M E N T S

A N D C O M M E N T S T H E R E O N

Note: The following financial statements are based on the

statutory financial statements filed by the Company

with the Iowa Insurance Division and present the

financial condition of the Company for the period

ending December 31, 2020.

ASSETS

Assets

Non-Admitted

Admitted

Bonds $26,530,786 $ $26,530,786

Preferred stocks 200,000 200,000

Cash, cash equivalents and shor

-term investments 4,363,900 4,363,900

Investment income due and accrued 191,857 191,857

Amounts recoverable from reinsurers 9,995,817 9,995,817

Other amounts receivable under reinsurance contracts 4,428,785 4,428,785

et deferred tax asset 1,382,381 800,926 581,455

Guaranty funds receivable or on deposi

475,054 475,054

Health care and other amounts receivable 605,340 605,340

Miscellaneous receivable 253,313 6,665 246,648

Prepaid expenses 44,202 44,202

Total Assets $48,471,434 $1,457,133 $47,014,301

LIABILITIES, SURPLUS AND OTHER FUNDS

Other amounts payable on reinsurance $14,910,030

Interest maintenance reserve 294,091

Commissions to agents due or accrued 24,727

General expenses due or accrued 470,410

Taxes, licenses and fees due or accrued, excluding federal income taxes 542,503

Current federal and foreign income taxes 444,571

Amounts held for agents' accoun

591,245

Remittances and items not allocated 72,675

Asset valuation reserve 287,582

Payable to parent, subsidiaries and affiliates 2,204,867

Unclaimed property 64,545

Total Liabilities $19,907,246

Common capital stock $ 5,446,696

Gross paid in and contributed surplus 25,436,438

Unassigned funds (surplus) (3,776,079)

Total Surplus and Other Funds $27,107,055

Total Liabilities, Surplus and Other Funds $47,014,301

SUMMARY OF OPERATIONS

et investment income $ 942,277

Amortization of Interes

Maintenance Reserve 32,249

Commissions and expense allowances on reinsurance ceded 48,148,313

Miscellaneous income 53,418

Total $49,176,257

Commissions on premiums, annuity considerations and deposi

-type contract funds $27,108,591

General insurance expenses 20,234,163

Insurance taxes, licenses and fees, excluding federal income taxes 865,458

Fines/penalties 306

Total $48,208,518

et gain from operations before federal income taxes $ 967,739

Federal and foreign income taxes incurred 398,974

Net Income $ 568,765

CAPITAL & SURPLUS

Capital and surplus, December 31, 2019 $25,806,520

et Income $ 568,765

Change in net deferred income tax (3,216)

Change in non-admitted assets 811,543

Change asset valuation reserve (76,556)

et change in capital and surplus for the yea

$ 1,300,535

Capital and Surplus, December 31, 2020 $27,107,055

CASH FLOW

Cash from Operations

Premiums collected net of reinsurance $ (285,096)

et investment income 956,075

Miscellaneous income 48,212,749

Total $ 48,883,728

Benefit and loss related payments $ (1,415,120)

Commissions, expenses paid and aggregate write-ins

for deductions 47,924,768

Total 46,509,648

Net cash from operations $ 2,374,080

Cash from Investments

Proceeds from investments sold, matured or repaid:

Bonds $ 8,480,131

Total investment proceeds $ 8,480,131

Cost of investments acquired:

Bonds $ 5,579,117

Total investments acquired 5,579,117

Net cash from investments $ 2,901,014

Cash from Financing and Miscellaneous Sources

Other cash provided (applied) (2,381,516)

Net cash from financing and miscellaneous sources $ (2,381,516)

Reconciliation of Cash, Cash Equivalents, and Shor

-Term Investments

et change in cash, cash equivalents and shor

-term investments $ 2,893,578

Cash, cash equivalents and shor

-term investments:

Beginning of year 1,470,322

End of year $ 4,363,900

CONCLUSION

The cooperation and assistance extended by the officers and employees of the Company during the course of

this examination is hereby acknowledged.

In addition to the undersigned, examiners from the Iowa Insurance Division, INS Services, Inc., information

systems specialists, and Insurance Strategies Consulting, LLC, actuarial specialists, participated in the examination

and the preparation of this report.

Respectfully submitted,

/s/ Thomas Allen

Thomas Allen, CFE

Examiner-in-Charge

Examination Resources, LLC on behalf of the Iowa Insurance

Division

State of Iowa

/s/ Amanda Theisen

Amanda Theisen, CFE

Supervisor, Assistant Chief Examiner

Iowa Insurance Division

State of Iowa