CERTIFICATE OF ADOPTION
Notice of the proposed report for the financial examination of
United World Life Insurance Company
Mutual of Omaha Plaza
Omaha, NEBRASKA 68175
dated as of December 31, 2020, verified under oath by the examiner-in-charge on
April 10, 2020 and received by the company on May 14, 2020, has been adopted
without modification as the final report pursuant to Neb. Rev. Stat. § 44-5906(3) (a).
Dated this 29
th
day of May 2020.
STATE OF NEBRASKA
DEPARTMENT OF INSURANCE
Justin C. Schrader, CFE
Chief Financial Examiner
STATE OF NEBRASKA
Department of Insurance
EXAMINATION REPORT
OF
UNITED WORLD LIFE INSURANCE COMPANY
as of
December 31, 2018
TABLE OF CONTENTS
Item Page
Salutation ........................................................................................................................................ 1
Introduction ......................................................................................................................................1
Scope of Examination ......................................................................................................................2
Description of Company: .................................................................................................................4
History .........................................................................................................................................4
Management and Control: ...........................................................................................................5
Holding Company ....................................................................................................................5
Shareholder ..............................................................................................................................5
Board of Directors ....................................................................................................................6
Officers ....................................................................................................................................7
Committees ..............................................................................................................................7
Transactions with Affiliates: ........................................................................................................7
Intercompany Services Agreement ..........................................................................................7
Revolving Lines of Credit ........................................................................................................8
Tax Allocation Agreement .......................................................................................................8
Territory and Plan of Operation ...................................................................................................8
Reinsurance ..................................................................................................................................9
Body of Report:................................................................................................................................9
Growth .........................................................................................................................................9
Financial Statements ....................................................................................................................9
Examination Changes In Financial Statements .........................................................................13
Compliance with Previous Recommendations ..........................................................................13
Commentary on Current Examination Findings ........................................................................13
Summary of Comments and Recommendations ............................................................................13
Acknowledgment ...........................................................................................................................14
Addendum ......................................................................................................................................15
Separate Account Business ............................................................................................................15
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Omaha, Nebraska
April 3, 2020
Honorable Bruce Ramge
Director of Insurance
Nebraska Department of Insurance
1135 M Street, Suite 300
Lincoln, Nebraska 68508
Dear Sir:
Pursuant to your instruction and authorizations, and in accordance with statutory
requirements, an examination has been conducted of the financial condition and business affairs of:
UNITED WORLD LIFE INSURANCE COMPANY
Mutual of Omaha Plaza
Omaha, Nebraska 68175
(hereinafter also referred to as the “Company”) and the report of such examination is respectfully
presented herein.
INTRODUCTION
The Company was last examined as of December 31, 2014, by the State of Nebraska. The
current financial condition examination covers the intervening period to, and including, the close of
business on December 31, 2018, and includes such subsequent events and transactions as were
considered pertinent to this report. The States of Nebraska and New York participated in this
examination and assisted in the preparation of this report.
The same examination staff conducted concurrent financial condition examinations of the
Company’s ultimate parent, Mutual of Omaha Insurance Company (Mutual of Omaha), and
subsidiaries, United of Omaha Life Insurance Company, Omaha Reinsurance Company,
Companion Life Insurance Company, Omaha Insurance Company, Mutual of Omaha Medicare
Advantage Company, Omaha Health Insurance Company, and Medicare Advantage Insurance
Company of Omaha.
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SCOPE OF EXAMINATION
This examination was conducted pursuant to and in accordance with both the NAIC
Financial Condition Examiners Handbook (Handbook) and Section §44-5904(1) of the Nebraska
Insurance Statutes. The Handbook requires that examiners plan and perform the examination to
evaluate the financial condition and identify prospective risks of the Company by obtaining
information about the Company including, but not limited to: corporate governance, identifying
and assessing inherent risks within the Company, and evaluating system controls and procedures
used to mitigate those risks. The examination also includes assessing the principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation and management’s compliance with Statutory Accounting Principles and Annual
Statement Instructions, when applicable to domestic state regulations.
The examination was completed under coordination of the holding company group
approach with the Nebraska Department of Insurance as the coordinating state and the New York
State Department of Financial Services. The companies examined under this approach benefit to
a large degree from common management, systems and processes, and internal control and risk
management functions that are administered at the consolidated or business unit level.
The coordinated examination applies procedures sufficient to comprise a full scope
financial examination of each of the companies in accordance with the examination procedures
and standards promulgated by the NAIC and by the respective state insurance departments where
the companies are domiciled. The objective is to enable each domestic state to report on their
respective companies’ financial condition and to summarize key results of examination
procedures.
A general review was made of the Company’s operations and the manner in which its
business has been conducted in order to determine compliance with statutory and charter
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provisions. The Company’s history was traced and has been set out in this report under the
caption “Description of Company”. All items pertaining to management and control were
reviewed, including provisions for disclosure of conflicts of interest to the Board of Directors and
the departmental organization of the Company. The Articles of Incorporation and By-Laws were
reviewed, including appropriate filings of any changes or amendments thereto. The minutes of
the meetings of the Shareholder, Board of Directors and committees, held during the examination
period, were read and noted. Attendance at meetings, proxy information, election of Directors
and Officers, approval of investment transactions, and authorizations of salaries were also noted.
The fidelity bond and other insurance coverages protecting the Company’s property and
interests were reviewed, as were plans for employee welfare and pension. Certificates of
Authority to conduct the business of insurance in the various states were inspected and a survey
was made of the Company’s general plan of operation.
Data reflecting the Company's growth during the period under review, as developed from
the Company's filed annual statements, is reflected in the financial section of this report under the
caption "Body of Report".
The Company's reinsurance facilities were ascertained and noted, and have been
commented upon in this report under the caption "Reinsurance". Accounting records and
procedures were tested to the extent deemed necessary through the risk-focused examination
process. The Company’s method of claims handling and procedures pertaining to the adjustment
and payment of incurred losses were also noted.
All accounts and activities of the Company were considered in accordance with the risk-
focused examination process. This included a review of workpapers prepared by Deloitte &
Touche, LLP, the Company’s external auditors, during their audit of the Company’s accounts for
the years ended December 31, 2017 and December 31, 2018. Portions of the auditor’s
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workpapers have been incorporated into the workpapers of the examiners and have been utilized
in determining the scope and areas of emphasis in conducting the examination. This utilization
was performed pursuant to Title 210 (Rules of the Nebraska Department of Insurance), Chapter
56, Section 013.
Any failure of items to add to the totals shown in schedules and exhibits appearing
throughout this report is due to rounding.
DESCRIPTION OF COMPANY
HISTORY
The Company was originally incorporated in the State of Illinois and commenced business as
an insurer in 1970 under the name of Field Enterprises Educational Insurance Company. On June 1,
1970, the Company was merged with the World Book Educational Insurance Company (World
Book), a Texas corporation, with the surviving company being World Book and remaining an
Illinois insurance entity. Pursuant to Section 166(3) of the Illinois Insurance Code, the Company
assumed the age of World Book that was incorporated and licensed in 1954. In 1973, the Company
changed its name to World Book Life Insurance Company.
On April 27, 1983, United of Omaha Life Insurance Company (United), a wholly-owned
subsidiary of Mutual of Omaha, purchased 100% of the outstanding stock of the Company and
changed its name to United World Insurance Company. On October 1, 1984, the Company effected
another name change to United World Life Insurance Company, its present form.
The Company’s state of domicile was changed from Illinois to Nebraska on February 1,
1990.
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MANAGEMENT AND CONTROL
Holding Company
The Company is a member of an insurance holding company system as defined by
Nebraska Statute. An organizational listing flowing from the “Ultimate Controlling Person”, as
reported in the 2018 Annual Statement, is represented by the following (subsidiaries are denoted
through the use of indentations, and unless otherwise indicated, all subsidiaries are 100% owned):
Mutual of Omaha Insurance Company
East Campus Realty, LLC
Mutual of Omaha Holdings, Inc.
Mutual of Omaha Investor Services, Inc.
Mutual of Omaha Marketing Corporation
Omaha Insurance Company
Mutual of Omaha Medicare Advantage Company
Omaha Financial Holdings, Inc.
Mutual of Omaha Bank
OMAFIN, INC.
SB Capital Investment Fund, LLC (99.9%)
PHX SB Capital LLC (99.9%)
Synergy One Lending, Inc.
Mutual Community Development Company
Mutual of Omaha LoanPro, L.L.C.
Omaha Health Insurance Company
Turner Park North, LLC
United of Omaha Life Insurance Company
Companion Life Insurance Company
Fulcrum Growth Partners III, L.L.C. (80%)
Medicare Advantage Insurance Company of Omaha
Mutual of Omaha Structured Settlement Company
Omaha Reinsurance Company
UM Holdings, LLC
United World Life Insurance Company
Shareholder
Article VI of the Company’s Articles of Incorporation states that, “the Corporation’s
authorized capital shall be Three Million Two Hundred Twenty Thousand Dollars ($3,220,000).
The number of the Corporation’s authorized common shares shall be 280,000, with a par value of
6
$11.50 per share.” At December 31, 2018, Company records indicated that 220,000 shares were
issued and outstanding, which were all owned by United.
Article I, Section 1 of the Company’s By-Laws states that, “the Stockholders shall meet
annually in the month of March of each year at the Home Office of the Corporation or at such
other time, date or place as may be designated by the Board of Directors.”
Board of Directors
Article II, Section 1 of the Company's By-Laws states that, "the Board of Directors shall
consist of not less than five nor more than fifteen Directors. Not less than one of the Directors shall
be a resident of Nebraska, but the remainder of the Directors need not be residents of Nebraska. The
Board of Directors shall be elected at the annual meeting of the Stockholders by a majority vote of
the stock represented in person or by proxy at the meeting for a term of one year each.”
The following persons were serving as Directors at December 31, 2018:
Name and Residence Principal Occupation
James T. Blackledge Chief Executive Officer
Elkhorn, NE Mutual of Omaha Insurance Company
Stephen J. Abels Executive Vice President
Omaha, NE Mutual of Omaha Insurance Company
Bradley N. Buechler Executive Vice President
Omaha, NE Mutual of Omaha Insurance Company
Kurt S. Christiansen Senior Vice President
Omaha, NE Mutual of Omaha Insurance Company
Laura A. Fender Senior Vice President and Assistant Treasurer
Omaha, NE Mutual of Omaha Insurance Company
Stacy A. Scholtz Executive Vice President
Omaha, NE Mutual of Omaha Insurance Company
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Officers
Article IV, Section 1 of the Company’s By-Laws states that, “the Officers of this Corporation
shall consist of a Chairman of the Board of Directors, President, one or more Vice Presidents,
Secretary, Treasurer, and such additional Officers with such functions and titles as may be authorized
by the Board of Directors.”
The following is a partial listing of Senior Officers elected and serving the Company at
December 31, 2018:
Name Office
James T. Blackledge President
Scott M. Priebe Treasurer
Jay A. Vankat Corporate Secretary
Alan D. Brinkman Appointed Actuary
Committees
Article II, Section 2 of the Company’s By-Laws states that, “the Board of Directors… may
appoint such committees and specify their power and duties and responsibilities as may, in the
judgement of the Board of Directors, be necessary or advisable…”
TRANSACTIONS WITH AFFILIATES
Intercompany Services Agreement
The Company’s ultimate parent, Mutual of Omaha, and certain of its direct and indirect
subsidiaries, including the Company, share certain resources such as personnel, operational and
administrative services, facilities, information and communication services, employee benefit
administration, investment management, advertising and general management services. Most of the
expenses related to these resources were paid by Mutual of Omaha and subject to allocation among
Mutual of Omaha and its subsidiaries.
Regular operating expenses of the companies are paid through the Accounts Payable and
Expense Accounting Department of Mutual of Omaha. In general, these expenses are processed
8
through an electronic allocation system maintained by the Budget and Expense Management
Department. This system, through the use of cost centers, allocates operating expenses based on
department ID’s such as number of employees, square footage utilized, number of transactions
processed, etc., to redistribute operating expenses to product lines within each of the companies
receiving the services.
Statistical bases or theories used in allocation formulas are developed by the Finance
Operation's staff and reviewed by the companies' external auditors during their annual audit of the
expense allocations.
Revolving Lines of Credit
The Company entered into revolving credit lending agreement with Mutual of Omaha that
allows the Company to borrow up to $20,000,000. There is also a revolving credit borrowing
agreement that allows the Company to lend up to $20,000,000 to Mutual of Omaha. The interest
rate for borrowing under these agreements in 2018 was from 1.5% to 2.43%. Each of these
lending agreements renew annually for a one-year term.
Tax Allocation Agreement
A consolidated federal income tax return is filed for Mutual of Omaha and its eligible
subsidiaries pursuant to a written agreement approved by the Board of Directors. Each company’s
provision for federal income tax expense is based on separate return calculations with credit for
net operating losses and capital losses allowed only as each company would utilize such losses on
a separate return basis with limited exceptions.
TERRITORY AND PLAN OF OPERATION
As evidenced by current or continuous Certificates of Authority, the Company is licensed to
transact business in all states, with the exception of Connecticut and New York, and the District of
Columbia.
9
Initially, the Company’s operations were limited to underwriting of ordinary life insurance
policies for juveniles, sold via direct response methods. The Company’s sales activities next turned
to individual senior-age life policies marketed on a direct basis. The Company continues to collect
premiums and service these renewal blocks of direct policies.
Beginning in 2004, the Company began selling Medicare Supplement insurance. The
Medicare Supplement business is sold through three distributions: Agency, Brokerage, and Direct to
Consumer.
REINSURANCE
Under the terms of a reinsurance agreement, effective January 1, 1984, as amended
September 6, 1990, the Company cedes to Mutual of Omaha, 100% of all individual and group
health and accident business. This agreement contains appropriate insolvency and intermediary
clauses, as well as a proper termination provision.
BODY OF REPORT
GROWTH
The following comparative data reflects the growth of the Company during the period
covered by this examination:
2015 2016 2017 2018
Bonds $110,313,807 $114,291,396 $111,032,745 $101,753,001
Total admitted assets 123,737,737 119,805,752 122,764,222 128,505,594
Aggregate life reserves 53,132,471 51,078,482 51,298,840 51,403,173
Total liabilities 74,809,103 68,393,490 74,042,112 83,950,996
Unassigned funds (surplus) 15,871,641 18,355,268 15,665,116 11,497,604
Premium income 1,421,169 1,346,193 1,264,226 1,184,468
Net investment income 4,975,021 4,716,543 4,645,588 4,184,724
Net income (549,089) 4,848,824 1,908,616 2,841,326
FINANCIAL STATEMENTS
The following financial statement are based on the statutory financial statements filed by
the Company with the State of Nebraska Department of Insurance and present the financial
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condition of the Company for the period ending December 31, 2018. The accompanying
comments on financial statements reflect any examination adjustments to the amounts reported in
the annual statements and should be considered an integral part of the financial statements. A
reconciliation of the capital and surplus account for the period under review is also included.
FINANCIAL STATEMENT
December 31, 2018
Assets
Net
Assets Not Admitted
Assets Admitted Assets
Bonds $101,753,001 $101,753,001
Cash and cash equivalents 12,946,957 12,946,957
Contract loans 619,426 619,426
Securities lending reinvested collateral assets 3,247,283 3,247,283
Subtotals, cash and invested assets $118,566,667 $118,566,667
Investment income due and accrued 731,139 731,139
Uncollected premiums (42,639,924) (42,639,924)
Deferred premiums 285,448 285,448
Amounts recoverable from reinsurers 27,812,489 27,812,489
Other amounts receivable under
reinsurance contracts 14,973,482 14,973,482
Net deferred tax asset 4,763,464 $ 590,317 4,173,147
Guaranty funds receivable or on deposit 4,270,222 4,270,222
Receivable from parent 50,128 50,128
Health care and other amounts receivable 26,661 26,661
Disallowed interest maintenance reserve 58,400 58,400
Other miscellaneous assets 17,455,221 17,273,015 182,206
Total assets, excluding Separate Accounts $146,353,397 $17,948,394 $128,405,004
From Separate Accounts Statement * 100,591 100,591
Totals $146,453,988 $17,948,394 $128,505,594
* Separate Accounts Statement included in the Addendum to this report.
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Liabilities, Surplus and Other Funds
Aggregate reserve for life policies and contracts $ 51,403,173
Liability for deposit-type contracts 274,725
Contract claims – life 145,967
Premiums received in advance 17,990
Commissions to agents due or accrued - accident and health 937,550
General expenses dues or accrued 496,379
Taxes, licenses and fees due or accrued 3,743,325
Current federal and foreign income taxes 143,611
Unearned investment income 8,692
Amounts withheld or retained by company 604
Amounts held for agents’ account 1,408,177
Remittances and items not allocated 73,535
Asset valuation reserve 510,225
Payable to parent, subsidiaries, and affiliates 11,802,146
Drafts outstanding 8,812,967
Payable for securities lending 3,247,283
Miscellaneous liabilities 824,055
Total liabilities, excluding Separate Accounts business $ 83,850,405
From Separate Accounts Statement * 100,591
Total liabilities $ 83,950,996
Common capital stock $ 2,530,000
Gross paid in and contributed surplus 30,526,994
Unassigned funds (surplus) 11,497,604
Total capital and surplus $ 44,554,598
Totals $128,505,594
* Separate Accounts Statement included in the Addendum to this report.
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SUMMARY OF OPERATIONS – 2018
Premiums and annuity considerations $ 1,184,468
Net investment income 4,184,724
Amortization of interest maintenance reserve (5,089)
Commissions and expense allowances on reinsurance ceded 109,698,754
Investment, administration, and contract guarantees income
from separate accounts 605
Other miscellaneous income 9,296
Totals $115,072,758
Death benefits $ 787,330
Annuity benefits 42,317
Surrender benefits and fund withdrawals 918,403
Interest and adjustments on contract or deposit-type contract funds 30,894
Increase in aggregate reserves for life and accident and health contracts 104,333
Totals $ 1,883,278
Commissions on premiums and annuity considerations 42,679,946
General insurance expenses 56,849,445
Insurance taxes, licenses and fees 10,598,830
Increase in loading on deferred and uncollected premiums (5,472)
Net transfers to or (from) separate accounts net of reinsurance 1,949
Other deductions 26,477
Totals $112,034,453
Net gain from operations before federal income taxes $ 3,038,304
Federal income taxes incurred 196,980
Net realized capital gain 2
Net income $ 2,841,326
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CAPITAL & SURPLUS ACCOUNT
2015 2016 2017 2018
Capital and surplus, beginning $49,370,535 $48,928,635 $51,412,262 $48,722,110
Net income (loss) $ (549,089) $ 4,848,824 $ 1,908,616 $ 2,841,326
Change in net deferred income
tax 1,011,692 213,779 (436,649) 1,496,724
Change in non-admitted assets (887,156) (2,548,244) (4,211,630) (8,512,464)
Change in asset valuation reserve (17,347) (30,732) 49,510 6,902
Net change for the year $ (441,900) $ 2,483,627 $(2,690,153) $ (4,167,512)
Capital and surplus, ending $48,928,635 $51,412,262 $48,722,110 $44,554,598
EXAMINATION CHANGES IN FINANCIAL STATEMENTS
Unassigned funds (surplus) in the amount of $11,497,604, as reported in the Company's
2018 Annual Statement, has been accepted for examination purposes. Examination findings, in the
aggregate, were considered to have no material effect on the Company’s financial condition.
COMPLIANCE WITH PREVIOUS RECOMMENDATIONS
No recommendations were made as a result of the previous examination.
COMMENTARY ON CURRENT EXAMINATION FINDINGS
There are no comments or recommendations that have been made as a result of this
examination.
SUMMARY OF COMMENTS AND RECOMMENDATIONS
There are no comments or recommendations that have been made as a result of this
examination.
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ADDENDUM
SEPARATE ACCOUNT BUSINESS
In conformity with statutory provisions required by Sections 44-402.01 to 44-402.04 of the
Nebraska Insurance Code, the Company has established and manages a Separate Account.
The Separate Account assets and liabilities, reflected in the financial statements of the
Company, represent a product referred to as a Group Flexible Premium Deferred Annuity with
Deposit Privileges. Each annuitant, through a group contract, has their deposit placed into a
certificate of deposit by the Company for the benefit of the individual annuitant.
The Company had ceased writing annuity contracts prior to the period covered by this
examination. This action was invoked pursuant to an Internal Revenue Service ruling on September
24, 1980, which denied investment income deferral treatment to annuitants. The Company has
received a letter from the Internal Revenue Service indicating that retroactive application of the
September, 1980 ruling would not be applied; therefore, all annuity contracts written prior to
September 24, 1980 were accorded tax deferred treatment to the annuitants.
The following statement shows the financial condition of the Separate Account business
during the examination period:
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COMPARATIVE FINANCIAL STATEMENT
SEPARATE ACCOUNT BUSINESS
2015 2016 2017 2018
Assets
Cash and cash equivalents $307,305 $315,663 $97,490 $100,186
Investment income due and accrued 192 592 342 404
Total assets $307,497 $316,256 $97,832 $100,591
Liabilities and Surplus
Aggregate reserve for life and
annuity contracts $307,497 $316,256 $97,832 $100,591
Total liabilities $307,497 $316,256 $97,832 $100,591
Surplus $ 0 $ 0 $ 0 $ 0
Totals $307,497 $316,256 $97,832 $100,591
