EXAMINATION REPORT OF

AMERICAN REPUBLIC INSURANCE COMPANY

DES MOINES, IOWA

AS OF DECEMBER 31, 2015

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Des Moines, Iowa May 10, 2017

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

AMERICAN REPUBLIC INSURANCE COMPANY

DES MOINES, IOWA

AS OF DECEMBER 31, 2015

The examination was conducted at the Company’s Home Office located at 601 Sixth Avenue, Des Moines, Iowa. The report thereof, containing applicable comments, explanations and financial data is presented herein.

INTRODUCTION

American Republic Insurance Company, hereinafter referred to as the Company, was last examined by the Iowa Insurance Division as of December 31, 2010. The examination reported herein was conducted by examiners of the Insurance Division of Iowa. In conjunction with the examination of the Company, affiliates, American Republic Corp Insurance Company (NE), Medico Life and Health Insurance Company (IA - F/K/A Lincoln Republic Insurance Company), Medico Insurance Company(NE) and Medico Corp Life Insurance Company (NE) were examined by examiners of the Iowa Insurance Division and the Nebraska Department of Insurance.

SCOPE OF EXAMINATION

This is the regular comprehensive financial examination of the Company covering the intervening period from January 1, 2011 to the close of business on December 31, 2015, including any material transactions and/or events occurring and noted subsequent to the examination period.

The examination was conducted in accordance with the NAIC Financial Condition Examiners Handbook. The Handbook requires the examination to be planned and performed to evaluate the financial condition and identify prospective risks of the Company by obtaining information about the Company, including corporate governance, identifying and assessing inherent risks within the organization, and evaluating system controls and procedures used to mitigate those risks. An examination also includes assessing the principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation, management’s compliance with Statutory Accounting Principles and annual statement instructions, when applicable to domestic state regulations.

All accounts and activities of the organization were considered in accordance with

the risk-focused examination process. The Company’s assets were verified and evaluated and the liabilities determined to reflect herein a statement of its financial condition as of December 31, 2015.

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HISTORY The Company was incorporated in accordance with the laws of the State of Iowa for a twenty-year period on April 4, 1929 and commenced business May 10, 1929 as a mutual casualty insurance company under what is now known as Chapter 515, Code of Iowa. Business at that time was limited to writing individual accident and health risks. A subsequent amendment to the Articles of Incorporation provided for perpetual corporate existence. By amendment to the Articles of Incorporation at an annual meeting of the policyholders on February 13, 1951, the Company was authorized to write life insurance on the legal reserve or legal premium plan under provisions of Chapter 508, Code of Iowa.

On September 21, 1999, the Board of Directors adopted a plan to reorganize into a mutual insurance holding company structure. Effective December 28, 1999, the Company formed a mutual insurance holding company, American Republic Mutual Holding Company, (now known as American Enterprise Mutual Holding Company), and an intermediate holding company, American Republic Group, Inc., (now known as American Enterprise Group, Inc.), and converted to a stock life insurance company. On January 1, 2008, World Insurance Company, as affiliate, made a stock dividend of 100% of the stock of American Republic Corp Insurance Company to American Enterprise Group, Inc. Immediately subsequent to this dividend, American Enterprise Group, Inc. contributed 100% of the stock of American Republic Corp Insurance Company to American Republic Insurance Company. As a result of these transfers, American Republic Corp Insurance Company became a wholly owned subsidiary of American Republic Insurance Company.

On March 31, 2013, World Insurance Company merged into the Company with the Company as the surviving Company.

CAPITAL STOCK AND DIVIDENDS TO STOCKHOLDERS Issued and outstanding capital stock consists of 5,000,000 shares of common stock, par value $1.00 per share. Gross paid in and contributed surplus was increased $5,000,000 and unassigned surplus increased $110,599,268 in 2013 due to the merger. Total common capital stock and gross paid in and contributed surplus was $5,000,000 and $13,995,517 at December 31, 2015 respectively. The immediate parent of the Company owned all issued and outstanding shares at December 31, 2015. Ordinary dividends paid to stockholders during the period under review were as follows: Year Stockholders’ Dividends Paid 2011 $20,000,000 2012 24,500,000 2013 10,000,000

HOLDING COMPANY ACT For each year during the examination period, the Company filed the appropriate statements as required by statute for insurance holding company systems and was in compliance with statutory limitations.

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ORGANIZATIONAL CHART

MANAGEMENT AND CONTROL

SHAREHOLDERS The Company’s ultimate controlling person is American Enterprise Mutual Holding Company, a mutual insurance holding company. The regular annual meeting of the shareholders, as provided in the amended Bylaws, shall be held on the first Tuesday in March at such place as the Board of Directors shall fix, or at such other place, date and time as the Board shall 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 months after the end of the Corporation’s fiscal year or fifteen months after the shareholder’s last annual meeting. Each shareholder who is present or represented by proxy shall be entitled to one vote on any matter of election undertaken or considered. According to the amended Bylaws, an appointment of proxy is valid for eleven (11) months from the date of its execution, unless a longer period is expressly provided in the appointment form. Special meetings of the shareholders may be called by the Chairman of the Board, Chief Executive Officer or the Board of Directors. At any meeting of the shareholders, a majority of the votes entitled to be cast on the matter by a voting group constitutes a quorum of that voting group. BOARD OF DIRECTORS The Amended and Restated 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. At December 31, 2015, the Board consisted of five members. The Board of Directors shall not be authorized to change the range or to change to a fixed number of directors without the approval of the shareholders.

American Enterprise Mutual Holding Company

American Enterprise Group, Inc.

American Republic Insurance Company

American Enterprise Services Company

Medico Life and Health

Insurance Company

Medico Insurance Company

American Republic Equities

Corporation

Americare Marketing,

LLC

American Republic

Corp Insurance Company

The Entrecor

Group, LLC

American Republic Insurance Services,LLC

American Enterprise

Holdings, Inc.

Medico Corp Life Insurance Company

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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 Amended and Restated Bylaws provide that 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 members of the Board of Directors, duly elected and qualified, as of December 31, 2015 were as follows: Name and Address Principal Business Affiliation Term Expires Thomas Anthony Swank President and Chief Executive Officer 2016 West Des Moines, Iowa American Enterprise Services, Co. Timothy John Hall Executive Vice President 2016 Cumming, Iowa Business Development American Enterprise Services, Co. Susan Elizabeth Voss Vice President, General Counsel 2016 Des Moines, Iowa American Enterprise Services, Co. Mark Steven Movic Senior Vice President, Treasurer 2016 Des Moines, Iowa Chief Financial Officer American Enterprise Services, Co. Sara Elaine Lehan Assistant Vice President 2016 Urbandale, Iowa Financial Reporting American Enterprise Services, Co.

According to the Amended and Restated Bylaws of American Enterprise Mutual Holding Company, American Enterprise Group, Inc., and American Republic Insurance Company, the directors shall be entitled to be reimbursed for any expenses paid by them on account of attendance at any regular or special meeting of the Board of Directors and the board may fix the compensation of directors from time to time by resolution of the board.

COMMITTEES The Amended and Restated Bylaws state, 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 consisting of three (3) or more directors appointed by the Board of Directors. The members of the Executive Committee shall serve at the will of the Board of Directors. Unless otherwise restricted in the resolution establishing the Executive Committee, the Executive Committee shall have and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the Company except when the Board of Directors is in session, subject to the limitations set forth in

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the Bylaws. As of December 31, 2015, the Board of Directors has not adopted a resolution establishing an Executive Committee. The Amended and Restated Bylaws state, the Board of Directors, by resolution adopted by the affirmative vote of a majority of the number of directors then in office, may establish one or more other committees of the Board of Directors, each to consist of one (1) or more directors appointed by the Board of Directors. Any such committee shall serve at the will of the Board of Directors. The following committees serve for all entities within the group with the membership consisting of a majority of Directors who qualify as an Independent Director: Governance Committee; Finance Committee; and Audit/Risk Committee. Each Committee shall adopt a charter governing the Committee’s activities and appoint a Chair who qualifies as an Independent Director. As of December, 31, 2015 the members of the Governance, Finance, and Audit/Risk Committees, are comprised of the full American Enterprise Mutual Holding Company Board, chaired by the following: Governance Committee Chair – James A. Walker Finance Committee Chair – John L. Maginn Audit/Risk Committee Chair – Joseph E. Blair In August of 2016, the Board of Directors formally changed the name of the American Enterprise Mutual Holding Company Finance Committee to the American Enterprise Mutual Holding Company Investment Committee. In August of 2016, the Board of Directors elected the following committee members: Audit Committee Chair - Joseph E. Blair, Jr. Craig W. Bainbridge, M.D. Governance Committee Chair – James A. Walker Russell C. Davis Investment Committee Chair – John L. Maginn Tom D. Eilers OFFICERS The Amended and Restated Bylaws provide that the Chairman of the Board, the Chief Executive Officer, the President and the Secretary shall be elected annually by the Board of Directors at their annual meeting thereof. The executive officers of the Corporation 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 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.

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The following is a list of elected or appointed executive officers and their respective titles as of December 31, 2015 at the American Enterprise Mutual Holding Company and at American Republic Insurance Company: Name Title Thomas A. Swank Chairman of the Board and President Michael E. Abbott Chief Executive Officer Susan E. Voss Vice President, General Counsel and Corporate Secretary Mark Steven Movic Senior Vice President, Chief Financial Officer and Treasurer Mark A. Willse Vice President and Chief Actuary Randy D. Cairns Vice President and Chief Information Officer Margaret A. Brown Vice President, Chief Administrative Officer and Assistant Secretary Other Officers: Timothy J. Hall Executive Vice President, Business Development Sara E. Lehan Assistant Vice President, Finance David J. Keith Senior Vice President, Chief Operations Officer

In January of 2017 the Company appointed a new Vice President, Chief Actuary, Joan Hentschel, a new Chief Investment Officer, Adam Schwab in November of 2016 and the Audit Services and Risk Management Director, Jim Landis in April of 2016.

The total 2015 compensation of these officers is shown in Exhibit A to be found

immediately following the signature page of this report.

CONFLICT OF INTEREST The Company’s procedure for ensuring the disclosure of any possible conflicts of interest on the part of directors, officers and key personnel consists of a form regarding the absence of any conflicts of interest to be signed annually and submitted to the Board for review. It was determined by the examiners that no significant conflicts exist and the company appears to be actively obtaining statements.

CORPORATE RECORDS The minutes of the meetings of the policyholders, shareholders, Board of Directors and Committees were read and noted. They were complete and were properly attested. The Iowa Insurance Division’s examination report as of December 31, 2010 was acknowledged as received and read by the Board of Directors at the regular meeting of Board of Directors on August 9, 2012.

FIDELITY BONDS AND OTHER INSURANCE

This review noted that adequate coverage is maintained with licensed insurers to protect the Company’s assets and interests.

EMPLOYEES' AND AGENTS' WELFARE

On January 1, 2007, all employees of the Company and its affiliates became employees of American Enterprise Services Company (AES).

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Employees' Welfare The Company provides its employee agency managers with group medical and dental benefits under a self-insured plan on a contributory basis through a cafeteria plan. In addition, all employees in the Company’s career sales offices can participate in the Company’s career sales offices can participate in the Company’s qualified and Roth 401k plan. AES provides both qualified and Roth retirement programs, including a 401k plan, to qualified employees. Disability, dental, and health insurance benefits are provided on a contributory basis through a cafeteria plan.

REINSURANCE All the company’s reinsurance contracts contained the necessary insolvency clauses. Life Insurance Assumed

On August 1, 2006, the Company entered into three new 100% quota share Coinsurance treaties. All three treaties were part of a larger merger between three non-affiliates the Company had previous treaties in place with. The new treaties covered business agreed to by previous treaties. There was $15,000 in force at the end of 2015 on one of the original three companies with no impact on the Company’s reserve.

On April 1, 2010, the Company entered into an intercompany coinsurance agreement to

assume 100% of the life insurance business of an affiliate American Republic Corp Insurance Company. There was $175,931 in premium assumed during the year under the agreement.

On July 1, 2012, the Company entered into an intercompany coinsurance agreement to

assume 100% of the life insurance business written on a direct basis of an affiliate Medico Insurance Company (Medico) not ceded to a third party reinsurer. There was $1,820,127 in premium assumed during the year under the agreement. Life Insurance Ceded The Company’s retention is $100,000 under automatic and facultative life cessions unless specified differently. Excess writings of current ordinary life business are ceded to an authorized reinsurer under an agreement that provides for both automatic and facultative cessions on a yearly renewable term plan. The Company’s retention includes any combination of life, double indemnity and waiver of premium risks. Cessions are automatic up to $750,000 with a minimum of $6,000 per cession. Excess writings of current term business are ceded to an authorized reinsurer under an agreement that provides automatic and facultative cessions on a coinsurance basis. The Company retains 25 percent for non-employees and zero percent for employees from the first dollar up to their retention. Cessions are automatic up to $1,500,000 with a minimum cession of $10,000. Excess writings of current Universal Life plans are ceded to an authorized reinsurer under an agreement that provides for both automatic and facultative cessions of life and cost of protection insurance on a yearly renewable term basis. Cessions are automatic up to $1,000,000.

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Excess writings of Single Premium Endowment at 95 and Modified Premium Endowment at 95 plans are ceded to an authorized reinsurer under both a yearly renewable term agreement and a coinsurance agreement. The Company retains 35 percent under the coinsurance agreement. The cessions are automatic on risks up to $750,000 with a minimum cession requirement of $10,000. Effective March 18, 1988, the Company entered into an agreement with an authorized reinsurer ceding 100 percent of the liability for certain group term life and disability income policies. The reinsurer issues the policies for the Company using the Company’s policy forms. The Company receives an expense allowance from the reinsurer on this block of business. The Company has an arrangement with an authorized reinsurer to reinsure all its final expense life insurance contracts. The reinsurer performs all administrative functions on these policies.

Through a merger with World Insurance Company in 2013, the Company acquired a block of whole life products and associated riders that are reinsured on a YRT basis. Limits of automatic acceptance are graded by age and table rating and range from four to six times the Company's retention depending on the reinsurer. Waiver of premium disability benefits are automatically accepted in amounts equal to the life reinsurance automatically ceded. Risks not automatically accepted under the above treaty may be submitted on a facultative basis.

Two automatic YRT agreements effective in January and February of 1993 respectively,

provide 50/50 coverage for Excess Interest Whole Life and the Ten Year Term Rider. Effective October 1, 1993, Annual Renewable Term, 5 Year Level Term and 10 Year Level Term plans were added with either reinsurer picking up 100% of the coverage. Effective March 1, 1994, universal life products and riders were added to the products reinsured under these agreements.

These new products were reinsured on a 50/50 basis between the two companies. The

Company retains the first $100,000 of benefits under the policies and automatically cedes 100% of the excess not to exceed $400,000 for Ages 0 through 70, Standard through Table 6. Waiver of premium and accidental death benefits are not reinsured under these agreements.

Accidental death benefits (ADB) are ceded under an automatic 100% quota share treaty

effective January 1, 1996. Issue limits are $200,000. Facultative options are available. This agreement replaced a bulk ADB treaty that had been in place.

Universal life products developed by Consumers Life Insurance Company (Consumers

Life) were sold through the Company's marketing organization from January 1, 1987 through January 31, 1993 and ceded 100% to Consumers Life. Cessions included life, waiver of premium, ADB, payer, and non-forfeiture benefits. Consumers Life performed underwriting, new business, and policy maintenance services through January 31, 1993.

The Company recaptured this business effective January 1, 1997 and in the process

assumed the reinsurance arrangements under which Consumers Life had ceded its excess of $50,000 retention to reinsurers participating from 25% to 100% on cessions of various policy forms. Run-off continues at the date of this report.

The “Ultima” flexible premium annuity product is ceded 100% to one reinsurer under a

coinsurance agreement effective January 29, 1996. The Company receives an allowance of 7% on first year premiums and 3.5% on renewals. The contract is unlimited in duration but may be terminated as to new business by the reinsurer upon 90 days’ written notice. The Company may terminate those policies that have attained the twentieth or subsequent anniversary upon 90 days written notice to the reinsurer. The reinsurer will pay the Company a surrender

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benefit equal to the surrender value upon termination. This contract was negotiated with an intermediary affiliated with the reinsurer.

The Company acquired through a merger in 1998 a block of Life and Annuity business.

The business was originally reinsured through a 100% quota share reinsurance agreement with Memorial Life Insurance who went out of business in 2009. The business was then transferred to North American Life Insurance Company and then transferred on January 1, 2015 to Security National Life Insurance Company (Security National), who also administers the business. A trust agreement between the Company, Security National and Zions Bank has been established to hold deposits on not less than 100% of the reserves on the reinsured policies. Accident & Health Insurance Assumed Effective August 1, 2006, the Company 100% reinsured, on an indemnity reinsurance basis, and provided all administrative services for a block of major medical insurance business issued by three subsidiary companies of Ceres Group, Inc.(now a wholly owned subsidiary of Great American Financial Resources, Inc.): Continental General Insurance Company, Central Reserve Life Insurance Company and Provident American Life and Health Insurance Company. There was $158,574 in premium assumed at the end of 2015 with no impact on the Company’s reserve.

On November 10, 2008, an affiliate entered into four contracts with a non-

affiliate. In 2009, the Company assumed the administration of non-affiliate’s existing major medical and Medicare supplement business and converted it to its systems. Also in 2009, on a state by state basis, agents of the non-affiliate discontinued sales of the non-affiliate’s health products and began selling major medical and Medicare supplement products of the Company and the affiliate. The overall relationship included a 50-50 coinsurance for both the non-affiliate existing business and the Company and affiliate branded business sold by the non-affiliate’s agents, so that the companies shared equally in the risk and results of each business. There was $15,237,409 in premium assumed during 2015.

On November 10, 2008, the Company entered into a reinsurance agreement to assume 50%

of the business from an affiliate, American Republic Corp, for their branded Medicare supplement policies sold by American Family Insurance Company agents. There was a total of $4,327,403 in premium assumed during 2015.

On April 1, 2010, the Company entered into two intercompany coinsurance agreement

to assume 100% of major medical and Medicare supplement business not subject to existing reinsurance agreements with two affiliates American Republic Corp Insurance Company and Medico Corp Life Insurance Company. There was a total of $75,704,148 in premium assumed during 2015 under both agreements.

On July 1, 2012, the Company entered into an intercompany coinsurance agreement to

assume 100% of the health insurance business written on a direct basis by its affiliate, Medico Insurance Company, not ceded to a third party reinsurer. There was $84,230,266 in premium assumed during 2015 under the agreement. Accident and Health Insurance Ceded On February 9, 1987 entered into an agreement with an authorized reinsurer ceding 100 percent of the liability for certain disability income polices. This agreement has been terminated as to new business.

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On September 1, 1993 the Company entered into a quota share agreement to ceded ninety percent of the Company’s liability for certain long-term care contracts. The coinsurer performs all administrative functions on these policies. A trust agreement has been established for the benefit of the Company to hold deposits not less than 105% of reserves.

On April 1, 1999, the Company entered into a coinsurance agreement ceding current

long-term care business to an authorized reinsurer. A trust agreement has been established for the benefit of the Company to hold deposits not less than 102% of reserves. Executed concurrently with this agreement is a modified coinsurance agreement whereby 25 percent of this long-term care business is retroceded back to the Company. On January 1, 1997, the Company entered into a 100% coinsurance agreement on a block of disability income and various other sickness and accident policy forms with United Teachers Associates Insurance Company.

On June 1, 2001, the Company entered into a coinsurance agreement ceding critical illness and cancer only business to an authorized reinsurer. The Company will retain a 25 percent quota share of the risk on each life up to maximum dollar retention of $12,500. The reinsurer will automatically coinsure 75 percent of each risk, on a first dollar quota share basis, up to an automatic acceptance limit of $37,500. This contract was terminated for new business on January 1, 2005.

Business classified as Dental is ceded under two separate quota share agreement to Security Life Insurance Company of America dated January 1, 2001 and September 1, 2011. Reinsurance limits are 50% on all insurance policies issued or renewed providing comprehensive dental benefit under both group and individual policies.

In August 2010, the Company acquired a block of major medical business from Central

Reserve Life Insurance Company, Continental General Insurance Company and Provident American Life and Health. In addition, selective coverages under this agreement were reinsured Hannover Life Reassurance Company of America under a 50% Quota Share reinsurance agreement. Reinsurance premium of $17,381 was paid for this coverage in 2015. Credit Life and Disability On January 1, 1998, the Company acquired two blocks of credit life and credit disability insurance on an assumption reinsurance basis from Investors Fidelity Life Assurance Company and assumed two additional blocks of credit life and disability from another reinsurer under an indemnity reinsurance agreement. These risks were subsequently retroceded to an unauthorized reinsurer. The retrocession agreement provides for a letter of credit as well as the establishment of a trust agreement to qualify the Company’s reserve credits. On October 31, 2005, the Company replaced this agreement and was effected by a novation agreement that specified that the new authorized reinsurer would assume all rights, liabilities and obligations of the former reinsurer. A trust deposit agreement was executed concurrently with this new agreement. On January 1, 2000, the Company entered into an indemnity reinsurance agreement ceding credit life and disability insurance, written by a particular agency, to an unauthorized reinsurer. Policies written in Arkansas are 100 percent ceded while policies written in Oklahoma are 75 percent ceded. The agreement provides for a letter of credit to qualify the Company’s reserve credits. On September 1, 2000, the Company entered into indemnity reinsurance agreements ceding credit life and disability insurance, written by particular producer owned companies, to two unauthorized reinsurers. One of the agreements provide for a letter of credit as well as the establishment of a trust agreement to qualify the Company’s reserve

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credits. The other agreement provides for the establishment of a trust agreement to qualify the Company’s reserve credits.

On October 1, 2001, the Company entered into an assumption reinsurance and novation agreement acquiring three blocks of credit life and credit disability business on an assumption reinsurance basis from Consumers Life Insurance Company and subsequently retroceded these risks to certain unauthorized reinsurers. These retrocession agreements provide for a letter of credit and/or the establishment of a trust agreement to qualify the Company’s reserve credits. On October 1, 2001, the Company entered into an assignment and novation agreement with Consumers Life Insurance Company and Protective Life Insurance Company (formerly Lyndon Life) ceding credit life and credit disability business acquired on an assumption basis from Consumers Life Insurance Company to Protective Life Insurance Company. On January 1, 2005, the Company entered into indemnity reinsurance agreements ceding credit life and disability insurance to two unauthorized reinsurers. Trust deposit agreements were executed concurrently with these two agreements. As of December 31, 2015 the Company is no longer assuming any credit business. All new business is written directly on the Company’s paper and ceded to one authorized reinsurer, London Life Reinsurance Company, and one unauthorized reinsurer, Life of the South Insurance Company, which is secured by a trust fund. Variable Annuity Assumed As of September 1, 1993 the Company assumed a portion of the variable annuity business written by an authorized reinsurer under a contract of indemnity reinsurance on a risk premium basis. As part of the arrangement, the Company has on deposit with the ceding insurer an amount equal to the reinsured portion of the difference between the account value and the reserve.

Simultaneously, a treaty was entered into by the Company providing coverage, on a yearly renewable term basis, for its portion of the risk assumed in conjunction with the guaranteed minimum death benefit of the variable annuity business.

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 At December 31, 2015, the Company was licensed to transact business in the District of Columbia and all states with the exception of New York. The products marketed include Medicare supplement and ancillary products such as dental, vision and hearing, as well as short-term convalescent care and final expense whole life. An approximate analysis by line of business based on the Company's Schedule T gross written premium shows that accident and health sales comprise approximately 91 percent of total premium. Of total accident and health sales, Medicare Supplement policies make up approximately 58 percent of the premium.

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The five states with the highest premiums by direct business are: State Direct Premium Collected Percentage of Total Iowa $ 27,892,759 17.4% Wisconsin 21,211,735 13.2% Missouri 15,071,285 9.4% Illinois 13,454,818 8.4% North Carolina 11,978,327 7.4% Total all states $160,556,582 100.00%

GROWTH OF COMPANY The growth of the Company is reflected by the following data taken from the annual statements for the years indicated. The figures are shown to the nearest one thousand dollars as follows: Total Separate Separate Capital Life Admitted Accounts Accounts and Insurance Year Assets* Assets Liabilities* Liabilities Surplus In Force 2011 $538,649 $3,638 $279,349 $3,638 $259,300 $2,073,924 2012 522,675 3,398 236,313 3,398 286,362 1,923,852 2013 801,428 3,690 363,965 3,690 437,464 2,020,347 2014 802,461 3,523 334,400 3,523 468,061 1,790,585 2015 820,045 2,776 342,153 2,776 477,892 1,578,051 Aggregate Life Life/Annuity Aggregate A & H A & H Life Claim Premium A & H Claim Premium Year Reserves Reserves Income Reserves Reserves Income 2011 $61,354 $1,478 $6,349 $59,829 $26,733 $288,130 2012 58,310 1,718 5,914 50,211 20,627 218,111 2013 118,459 3,048 10,879 74,054 30,214 314,223 2014 114,305 2,410 10,093 64,918 25,395 287,787 2015 110,109 2,215 9,921 64,820 29,975 318,177 *Includes Separate Accounts.

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. Trial balances of the Company’s general ledgers were taken for each year under examination and were found to be in agreement with the office copies of the filed annual statements for those years. Cash receipts and disbursements were tested to the extent deemed necessary.

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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. Differences noted were immaterial.

SUBSEQUENT EVENTS American Enterprise Group re-domesticated American Republic Corp Insurance Company, Medico Corp Life Insurance Company and Medico Insurance Company to the State of Iowa in 2016.

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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: Except as otherwise stated, the financial statements immediately following reflect only the transactions for the period ending December 31, 2015, and the assets and liabilities as of that date. Schedules may not add or tie precisely due to rounding.

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ASSETS Not Ledger Admitted Admitted Bonds $600,279,751 $ $600,279,751 Common stock 40,854,881 40,854,881 Mortgage Loans on Real Estate 23,255,075 23,255,075 Real Estate: Properties occupied by the company 34,394,799 34,394,799 Properties held for the production of income 0 0 Cash and short-term investments 12,590,719 12,590,719 Contract loans 8,467,506 8,467,506 Other invested assets 2,298,716 537,211 1,761,505 Receivables for securities 22,650 22,650 Investment income due and accrued 5,759,101 5,759,101 Premiums and considerations: Uncollected premiums 666,806 666,806 Deferred premiums 924,309 924,309 Reinsurance ceded: Amounts recoverable from reinsurers 664,163 664,163 Other amounts receivable under contracts 52,563,797 52,563,797 Current federal income tax recoverable 1,745,702 1,745,702 Net deferred tax asset 22,155,038 10,212,354 11,942,684 Guaranty funds receivable or on deposit 2,242,245 2,242,245 Electronic data processing equipment 1,752,215 90,333 1,661,882 Furniture and equipment 6,439,756 6,439,756 0 Health care and other amounts receivable 1,139,149 1,139,149 0 Leasehold improvements, Autos Aggregate Write-ins Other than Inv Assets 18,229,422 757,835 17,471,587 Total assets excluding Separate Accounts $836,445,800 $19,176,638 $817,269,162 From Separate Accounts 2,775,633 2,775,633 Total assets $839,221,433 $19,176,638 $820,044,795

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LIABILITIES, SURPLUS AND OTHER FUNDS Aggregate reserve for life contracts $110,108,709 Aggregate reserve for accident and health contracts 64,820,036 Liability for deposit-type contracts 7,893,952 Life contract claims 2,215,358 Accident and health contract claims 29,974,952 Provision for policyholder dividends payable in following year 1,761,722 Premiums received in advance 24,273,102 Other amounts payable on reinsurance 34,889,571 Interest Maintenance Reserve 4,784,982 Commissions to agents due or accrued 16,382 Commissions and expense allowances payable on reinsurance assumed 18,158,191 General expenses due or accrued 13,458,677 Taxes, licenses and fees due or accrued 2,324,190 Unearned investment income 157,201 Amounts withheld or retained by Company 4,707,146 Amounts held for agents’ accounts 12,689 Remittances and items not allocated 362,635 Asset valuation reserve 9,140,789 Payable to parent, subsidiaries and affiliates 5,399,772 Liability for Pension 2,524,742 Abandoned property reserve 2,392,322 Total liabilities excluding Separate Accounts $339,377,120 From Separate Accounts statement 2,775,633 Total liabilities $342,152,753 Common capital stock $ 5,000,000 Gross paid in and contributed surplus 13,995,517 Claim fluctuation reserve 0 Permanent guaranty fund 0 Aggregate write-ins for special surplus funds 16,146 Unassigned funds (surplus) 458,880,379 Total capital and surplus $477,892,042 Total liabilities, surplus and other funds $820,044,795

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SUMMARY OF OPERATIONS Premium and annuity considerations $328,098,693 Net investment income 28,530,204 Amortization of interest maintenance reserve 982,757 Commissions and expense allowances on reinsurance ceded 4,960,757 Income from fees associated with investment management, administration and contract guarantees from Separate Accounts 43,668 Miscellaneous income 3,303,476 Total $365,919,555 Death benefits $ 10,684,823 Matured endowments 371,714 Annuity benefits 98,544 Disability benefits and benefits under accident and health contracts 220,465,605 Surrender benefits and withdrawals for life contracts 3,812,524 Interest and adjustments on contract or deposit-type contract funds 202,168 Payments on supplementary contracts without life contingencies 196,677 Increase in aggregate reserves for life and a&h contracts (4,294,309) Total $231,537,746 Commissions on premiums and annuity considerations 9,019,503 Commissions and expense allowances on reinsurance assumed 60,665,752 General insurance expenses 34,869,390 Insurance taxes, licenses and fees 3,967,360 Increase in loading on deferred and uncollected premiums (86,124) Net transfers to Separate Accounts (794,440) Aggregate write-ins for deductions (362,686) Miscellaneous losses 0 Total $338,816,501 Net gain from operations before dividends to policyholders and federal income taxes $ 27,103,054 Dividends to policyholders 1,680,317 Net gain from operations after dividends to policyholders and before federal income taxes $ 25,422,737 Federal income taxes incurred 3,233,896 Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) $ 22,188,841 Net realized capital gains or (losses) (579,856) Net income $ 21,608,985

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CAPITAL AND SURPLUS Capital and surplus, December 31, 2014 $468,061,292 Net income $ 21,608,985 Change in net unrealized capital gains (losses) (3,336,769) Change in net deferred income tax (3,857,972) Change in non-admitted assets (2,438,930) Change in asset valuation reserve (1,786,876) Aggregate write-ins for gains/losses in surplus (357,688) Net change in capital and surplus for the year $ 9,830,750 Capital and surplus, December 31, 2015 $477,892,042

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CASH FLOW Cash from Operations Premiums collected net of reinsurance $314,606,837 Net investment income 27,514,447 Miscellaneous income 8,208,303 Total $350,329,587 Benefits and loss related payments $224,287,830 Net transfers to Separate Accounts (794,440) Commissions, expenses paid and aggregate write-ins for deductions 105,068,458 Dividends paid to policyholders 1,736,246 Federal income taxes paid 1,603,418 Total 331,901,512 Net cash from operations $ 18,428,075 Cash From Investments Proceeds from investments sold, matured or repaid: Bonds $107,425,582 Stocks 1,134,863 Mortgage Loans 144,926 Other Invested Assets 76,259 Miscellaneous proceeds 0 Total investment proceeds $108,781,630 Cost of investments acquired (long-term only): Bonds $ 77,886,657 Stocks 306,278 Mortgage loans 23,400,000 Real estate 25,182,314 Other invested assets 875,717 Miscellaneous applications 10,047 Total investments acquired 127,661,012 Net increase (decrease) in contract loans and premium notes (875,223) Net cash from investments $(18,004,159) Cash from Financing and Miscellaneous Sources, Cash provided: Net deposits on deposit-type contracts (73,701) Other cash applied (4,676,387) Net cash from financing and miscellaneous sources $ (4,750,088) Reconciliation of Cash and Short-Term Investments Net change in cash, cash equivalents and short-term investments $ (4,326,172) Cash, cash equivalents and short-term investments: Beginning of year 16,916,892 End of period $ 12,590,720

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CONCLUSION The assistance extended by the officers and employees of the Company during the course of this examination is hereby acknowledged. In addition to the undersigned, the following examiners representing the Iowa Insurance Division participated in this examination:

Alex Matovu Josh Pietan Hannah Jones Randy Guzman Bob Wong IT Specialist, AES, CFE

In addition to the undersigned, Derek Petersen, CFE participated in this examination representing the Nebraska Department of Insurance. The actuarial portion of this examination was completed by Insurance Strategies Consulting, L.L.C.

Respectfully submitted,

/s/ Jeffrey S. Payne ___ Jeffrey S. Payne, CFE Insurance Company Examiner Specialist Iowa Insurance Division State of Iowa