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A&H insurer eyes additional deals following sponsored demutualization

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A&H insurer eyes additional deals following sponsored demutualization

's total directpremiums written increased on a year-over-year basis by only about $300,000, or1.6%, during 2015, and they remain well below its peak level of annual production,but the Jackson, Miss.-based accident-and-health insurer signaled through a recentacquisition and certain disclosures in a regulatory filing that it may be in growthmode.

As previouslyreported, AmFirst on Dec. 31, 2015, acquiredTPM Life Insurance Co.,the successor to Teachers Protective Mutual Life Insurance Co., through a sponsoreddemutualization. It markedAmFirst's second acquisition of a U.S.-domiciled life insurer in five years, followingits Jan. 1, 2011, purchaseof Monitor Life Insurance Co. of NewYork. The company put the value of the acquisition at $3.75 millionin the filing.

AmFirsthas also made acquisitions of a financial technology company and several insurancecompanies in the Caribbean region in recent years, and it suggested in the management'sdiscussion and analysis section of its 2015 annual statement, which S&P Global Market Intelligencerecently obtained, that more deals may be coming.

The insurersaid that it is "looking forward to possibilities in 2016 of acquiring and/orforming new insurance subsidiaries" in addition to the expansion efforts alreadyunderway. To that end, the company disclosed that it had created the Mississippi-domiciledAmFirst Specialty Insurance Co. in March for the purpose of writing mobile homeinsurance coverage.

"Managementexpects positive numbers out of this subsidiary, but as of [mid-March] the companyhad not yet begun writing business," AmFirst said in the filing.

AmFirstis licensed in 18 states and the British Virgin Islands as of year-end 2015, thecompany said. It generated $11.1 million of its $18.9 million in direct premiumswritten in its home state of Mississippi, with Pennsylvania (TPM Life's state ofdomicile), South Carolina and Texas each accounting for more than $1 million inpremium volume.

"Managementhas been pleased with the underwriting results of its products and plans to continuewriting and assuming supplemental and dental business over the next five years inthe states in which it is licensed," AmFirst said in the filing. The companyconfirmed that it plans to market its products in three new states as a result ofthe TPM Life acquisition and to continue relatively nascent efforts to write professionaldisability and critical illness business in the British Virgin Islands.

"Thesenew marketing efforts will allow the company to expand its geographic presence andachieve its goal of increased capital and surplus through continued profitable underwritingresults and investment income," AmFirst said in the filing.

For TPMLife, which had been in runoff mode in its previous mutual form since 2014, thecompany said in the MD&A section of its 2015 annual statement that it plans to assume "profitable"accident-and-health business from affiliates in 2016 as well as to file and sella supplemental medical policy that its affiliates have produced in a profitablemanner, targeting states in which its affiliates are not licensed.

"Itis expected that this new product will also generate a source of positive cash flow,"TPM Life said in its filing. AmFirst confirmed that the states in which neitherit nor Monitor was licensed but TPM Life is licensed are Delaware, Kentucky andNew Jersey.

"Therefore,the addition of TPM Life to the AmFirst family will increase the geographic footprintof the group," AmFirst said in its filing.

ThoughAmFirst's direct premiums rose very modestly in 2015, a change in a relationshipwith one of its affiliates led to a marked increase in business volume on a netbasis. Net premiums written soared to $52.3 million in 2015 from $35.5 million in2014, an increase that AmFirst attributed to its newfound assumption of 50% of a"large block" of supplemental medical insurance business.

MonitorLife, for its part, reported in its 2015MD&A filing that it had "relinquished" to affiliates itdid not name a portion of a program under which it had assumed 100% of the supplementalmedical business of American NationalInsurance Co. unit StandardLife & Accident Insurance Co. The company said the change accountedfor 85% of the 55% decline in net premium income that it recorded during 2015.