US Alliance Life & Security Co. will indemnify Midwest Holding Inc. unit American Life & Security Corp. for 100% of its obligations under a certain block of life insurance policies, pursuant to a coinsurance agreement.
The policies represent approximately 25% of Midwest's life insurance policies in force as of Sept. 30. American Life transferred approximately $8.8 million of insurance reserves on its books to US Alliance and received a ceding commission of about $1.9 million. US Alliance will reinsure American Life for 100% of death benefits, withdrawals, surrenders, annuities and other benefits related to the policies covered under the agreement. However, American Life will be responsible for any unpaid claims related to the policies if US Alliance defaults on the payout.
The companies have secured insurance regulatory clearance for the transaction.