LICOA Third Complaint Exhibits

EXHIBIT
A
EXHIBIT
B
LIFE INSURANCE COMPANY
OF ALABAMA
INTERNAL AUDIT REPORT

TABLE OF CONTENTS
PAGE
LIFE INSURANCE COMPANY OF ALABAMA NUMBER
Controls tested and definition of risk 3
Controls tested:
Fixed assets 4
Accounts payable 6
Cash receipts 8
Investments 10
Income taxes 12
Travel and entertainment policy 14
Internal policies and procedures 18
Summary of suggestions for improvement 19
Appendix A - Example investment procedures manual 21
Appendix B - Investment policy guidelines 25
Appendix C - Example internal audit charter 37
Appendix D - Example internal audit policy statement 42
Appendix E - Debt Securities Credit Rating Chart for Moody’s, S&P and Fitch 45
Appendix F - Talking Points for a Travel and Entertainment Policy 47
Appendix G - Example Travel and Entertainment Policy 49
Appendix H - General IRS Guidelines for Travel and Entertainment 60

Internal Audit Report
Life Insurance Company of Alabama
Listed below are the internal audit recommendations that were examined in the months of July
2012, August 2012 and September 2012. A summary of suggestions for improvement by control
is included for your information. Management may wish to develop a letter of response to this
report to detail how items are going to be implemented or that a change will not be placed into
operation for a specific suggestion.
Observations by Risk
Controls tested High Medium Low
1. Fixed assets X
2. Accounts payable X
3. Cash receipts X
4. Investments X
5. Income taxes X
6. Travel and entertainment policy X
7. Internal policies and procedures X
The report includes our findings, suggestions for improvement and assessed level of risk. Below
is the criteria used for the assessment of risk.
Assessment of Risk:
High (H) – Significant impact to the Company. Individually or aggregately material in terms of
financial impact, external compliance violation, adverse publicity, significant or pervasive
weakness in control environment, significant inefficiencies, etc.
Medium (M) – Moderate in terms of impact to the Company. Individual instance or an aggregate
of low risk items considered moderate terms of financial impact, compliance violation, adverse
publicity, weakness in control environment, efficiency, etc.
Low (L) – Low in terms of impact to the Company. Relatively immaterial in terms of financial
impact, no external compliance violation, little adverse publicity, minor inefficiencies, etc.
3
DRAFT: SUBJECT TO APPROVAL BY THE AUDIT COMMITTEE
Internal Audit Summary Report Observations by Risk

Fixed Assets H M L
X
Background:
This test was an assessment of the internal controls related to fixed asset. It was included in the
internal audit plan due to the importance of having proper capitalization or expensing
procedures.
Scope and Approach:

Our evaluation included the following procedures related to fixed assets of the Company:
 Developed an understanding of the processes and controls in place for fixed assets by
obtaining the Company’s capitalization policy.
 Evaluated the accuracy and completeness of expenses incurred during the first and second
quarters of 2012 as they related to fixed assets or repairs and maintenance and verified they
were in compliance with the Company’s policy. Evaluates the assets added to the fixed asset
detail as being properly capitalized and that asset lives were in compliance with the
Company’s capitalization policy.
 Verified that the subsidiary ledger of fixed assets agreed to the general ledger.
 Reviewed all lease agreements currently outstanding for proper treatment as an operating
lease or a capital lease.
Key Highlights:
 For the first and second quarter of 2012 expenditures described above, no observations were
noted.
 For the verification of the subsidiary ledger to the fixed asset schedule for the first and
second quarter, no observations were noted.
 For the review of current lease agreements outstanding for proper treatment, no observations
were noted.
Suggestions for Improvement or Observations Noted:

 Old or Replaced Equipment: During the review of the fixed asset subsidiary ledger, it was
noted that some of the assets appear to be very old or may have been replaced by newer
assets. A detailed review of the subsidiary ledger should be performed each year before
property tax filing to verify only assets the Company currently owns or that are in operation
are included in those returns.
4
Internal Audit Summary Report

Fixed Assets
Suggestions for Improvement or Observations Noted – Continued:

 Proper Description: The Company’s capitalization policy states that an accurate description
of fixed assets be maintained in the subsidiary ledger. While current assets examined
included an accurate description, there are several older assets that did not have a proper
description. Some assets are labeled “land” or “roof”, with no description as to where these
items are located or what asset they represent. Maintaining proper descriptions is crucial if
an asset is disposed of or replaced.
 Add Accounting Procedures to the Policy: The current capitalization policy does not
include the specific accounting procedures applied each quarter. Items that should be added
to the policy include the following:
o All expenses related to fixed assets are first expensed to a repair and maintenance
account and those accounts are reviewed quarterly by the controller for any asset that
needs to be capitalized.
o The specific repairs and maintenance accounts reviewed each quarter should be listed
in the policy.
o The policy for deprecating assets should be included. The controller expenses
depreciation as follows: (1) the first quarter 25% of the yearly depreciation is
expensed (2) the second quarter the next 25% or a total of 50% of the yearly
depreciation is expensed (3) the third quarter the next 25% or a total of 75% of the
yearly depreciation is expensed (4) the fourth quarter the next 25% or 100% of the
yearly depreciation is expensed.
o The policy for determining if a new lease agreement is operating verse capital should
be included in the policy
 Minutes: A threshold should be set on the value of a fixed asset or repair that should be
approved by the board and included in the minutes.
 Prepaid Expense Threshold: During the second quarter’s expense testing it was noted that
a prepaid software license expense that would calculate to a prepaid balance of
approximately twenty thousand dollars at the end of the year was not capitalized and
amortized over the life of the agreement. It has been the Company’s practice not to
capitalize such items due to the year end balances being immaterial and this type of asset is
considered a non admitted asset under accounting guidance. The accounting guidance states
that the recording of a prepaid expense item should follow the general capitalization policy of
the Company, which currently is to capitalize any item greater than $1,000. We suggest
adding to the capitalization policy something specific to non admitted prepaid assets to
coincide with what the Company is actually doing.
5

Accounts Payable H M L
X
Background:
Accounts payable is a critical portion of the Company’s financial records and can be subject to
fraud without careful reconciliation and oversight. This test was an assessment of the internal
controls related to accounts payable. It was included in the internal audit plan due to the
importance of having proper controls over expenses incurred by the Company and proper
payment and review procedures.
Scope and Approach:

Our evaluation included the following procedures related to the accounts payable of the
Company:
 Developed an understanding of the processes and controls in place for accounts payable by
obtaining the Company’s cash disbursement policy. Develop an understanding of each key
control the Company has over cash disbursements.
 Obtain a detail of all disbursements from account 112200 for the first six months of the 2012
year and sorted the detail by accounts payable checks. Randomly selected 30 checks from
general accounts payable expenses and LSP expenses to test for proper key control
compliance.
 From the samples selected each significant control area for accounts payable was tested for
proper compliance with the policy. Controls tested were as follows:
o Two staff members approved the invoice.
o Checks were filed in the electronic system with all required documentation to
support the expense.
o Checks were properly posted to the general ledger and general ledger account
selected appeared to be appropriate.
Key Highlights:
 For the sample of LSP expenditures selected for the first six months of the 2012 year, no
observations were noted.
 For the sample of general accounts payable expenditures selected for the first six months of
the 2012 year the following items were noted as suggestions for improvements.
o Expense that are usually prepared by Katrina, such as filing fees or businesses
licenses, are not reviewed by a second person and not scanned to the electronic filing
system. We suggest that these items be scanned into the electronic filing system, at
least one additional member of management review the expenses and forms
completed and someone other than Katrina should mail the checks.
6

Accounts Payable
Key Highlights –-Continued:

o Expenses that relate to a recurring monthly expense do not require a review signature
before payment is processed. This includes items such as water, electricity and phone
bills. These types of expense should be reviewed at least quarterly by someone other
than the accounts payable person processing the bill for excess usage or possible
problems, such as a water leak.

 Suggestions of Additions to the Check Disbursement policy:
o Include more detail of how invoices are received for payment internally by the
accounts payable clerks. How are invoices that are received electronically via email
handled?
o Include in the policy how general ledger expense account posting is determined. Is
the expense account posting determined by the person reviewing the invoice or by the
accounts payable clerk?
o What is the process of making sure an expense item is actually received? Add the
Company’s policy of obtaining receiving reports for items delivered to the Company
that should be matched to an invoice before payment is released.
o Add to the policy that invoices are checked by the accounts payable clerk for
mathematical accuracy.
o Add to the policy that invoices are stamped paid and the check number is written on
the invoice to avoid duplicate payment.
o Need to add to the policy how duplicate payments are avoided. Examples include
making sure each invoice number is entered into the accounting system, stamping all
invoices paid, paying amounts based on the invoice amount and not a vendor
statement total, and making sure deliver receipts are matched to invoices before
payment is remitted.
o What is the policy for approving and setting up vendors? There should also be a
policy for looking through the approved vendor list for those the Company no longer
does business with and deleting them from the system so a previously approved
vendor does not have a false payment made to them.
o What is the policy for proper cut off of expenses and making sure that expenses are
recorded in the proper periods?
 Suggestions of Improvements to the Cash Disbursement Policy:
o If a specific accounts payable clerk enters and processes a check for payment and
printing, that person should not mail the checks.
7

Cash Receipts H M L
X
Background:
This test was an assessment of the internal controls related to accounts receivable/cash
collections. It was included in the internal audit plan due to the importance of having proper
controls over receipts that are deposited or mailed to the Company.
Scope and Approach:

Our evaluation included the following procedures related to cash receipts of the Company:
 Developed an understanding of the processes and controls in place for cash receipts by
obtaining the Company’s cash receipt policy. Develop an understanding of each key control
the Company has over cash receipts.
 Obtain a detail of all receipts in account 112100 for the first six months of the 2012 year.
Randomly selected 30 receipts to test for proper key control compliance. The sample
included both ACH and check deposits.
 From the samples selected each significant control area for cash receipts was tested for
o Deposit amount was agreed to supporting documentation and checks deposited
were footed with a control tape.
o Summary control slips were scanned for electronic filing, deposited into the bank
account and recorded in the general ledger.
o ACH and check deposit amount were traced to clearing the bank statement.
o For deposits that were only checks, checks were footed to the deposit total.
 Reviewed two months bank reconciliations for proper reconciliations and review.
Key Highlights:
 The sample of cash receipts selected for the first six months of the 2012 year, no
observations were noted.
 During the review of the bank reconciliations there were no observations noted.
8

Cash Receipts

 Suggestions of Improvements to the Cash Receipt Policy:
o There should be a policy in place for recording and approving interbank transfers.
o Internal control items related to cash receipts:
 It was noted that the list of daily cash receipts that is compared to the posting
of customer accounts and deposits is not done by a person independent of the
cash receipts and accounts receivable functions.
 It was noted that the person that open the mail and makes a list of daily
receipts is not independent of the cashier and accounts receivable
bookkeeping.
 Generally the department that handles customer statement complaints is not
independent of the preparer of the daily cash receipts list or accounts
receivable.
 The three items noted above could be alleviated by assigning one staff
person that does not work in accounts receivable, to open the mail,
make a list of daily cash receipts to compare with postings to customer
accounts and handle customer complaints.
9

Investments H M L
X
Background:
This test was an assessment of the internal controls related to investments. It was included in the
internal audit plan due to the importance of having proper investment policies and procedures
due to the value of the Company’s balances.
Scope and Approach:

Our evaluation included the following procedures related to investments of the Company:
 Developed an understanding of the processes and controls in place for investments by
obtaining the Company’s investment policy.
 Agreed each month’s postings from the brokerage statement activity to the general ledger
until June 2012 and suggest any journal entries.
 Summarized what the Company’s policies and procedures are for common stock and bonds
and verified that the Company is adhering to their internal policy for those investment
currently outstanding as of June 2012.
 Agreed common stock and bond amounts per the brokerage statements to schedule D for the
quarter ended June 2012.
 Analyze the bond holdings for any write downs based on a low moody rating of B1 or below
and a NAIC rating of 3FE or below. The lower of the cost of the bond or the fair market
value was compared to the book value and evaluated for any additional impairment loss.
Key Highlights:
 During our review of the Company’s policy for investments it was noted that the policy did
not include procedures related to approving, recording or reviewing investment transaction.
See Appendix A for an investment procedures template that the Company can use as a guide
in writing an investment procedures manual.
 During our review of the Company’s policy for investments it was noted that it has not been
updated since 2006. There were several terminologies in the document that are not longer
valid in today’s market. See Appendix B for a summary of investment policy guidelines and
an example investment policy that may be helpful in updating the current policy and
Appendix E for classifications of debt securities from Moody’s, S&P and Fitch
 The monthly review of investment transactions resulted in several journal entries that will
need to be posted to the general ledger. The differences were the result of investment or
dividend postings that did not agree to the statements, foreign taxes not posted, bank fees not
posted, corrections of bond costs being posted to the wrong account, small differences in the
cost of an investment purchased and the US Bank in transit cash not being posted in the
correct period.
10

Investments

 Due to the investment policy not using updated terminologies for bond ratings it was difficult
to determine if the Company was adhering to their policy. There were several bonds with a
low moody rating that may be in violation of the Company’s policy. For common stocks
there were several stocks that did not meet the dividend paying requirement or the proper rate
of return requirement. There were no stocks held in brokerage accounts that violated the
over $100,000 requirement in the policy.
 There were no significance differences in the comparison of common stock and bond values
from the brokerage statements to schedule D. There were some common stocks and bonds
that are not held in a brokerage account. The example investment procedures manual and
investment policy include notes on how to incorporate these types of investments into the
Company’s policies.
 Per the review of bond holdings, there were several bonds that had a Moody rating of B1 or
lower and a NAIC rating of 3FE or below. Per our analysis there is a potential for an
additional write down of bond values. The Company needs to establish a clear write-down
policy and procedure and working papers to support the conclusion. This was also a point
that the external examiner made for the Company to incorporate.

 Update the Company’s investment policy.
 Establish an investment procedures manual. There should be clear steps on what the
investment committee is in charge of and what steps the outside broker is in charge of. What
needs to be prepared, approved, reconciled and reviewed internally.
 Have a time frame established to verify the Company is in compliance with their policy
related to investments.
 Need a policy to review bonds for lower of cost or market.
 Need a policy for investments not held by a broker
 Need a policy to receive an audited financial statements and Service Organization Control
Report (formerly 70, or SAS 70) from each broker the company does business with.
11

Income Taxes H M L
X
Background:
This procedure was an assessment of compliance with the Internal Revenue Service and various
state agencies regarding the annual income tax liability. It was included in the internal audit plan
due to the importance of complying with federal and state law for reporting taxable income and
payment of income taxes.
Scope and Approach:

Our evaluation included the following procedures related to income tax return preparation of the
Company:
 Review Form 1120-L for completeness and accuracy.
 Review various state income tax forms required to be filed.
 Prepare book-to-tax reconciliation for permanent and timing differences and review for
completeness.
 Recalculate income tax liability.
 Agree amounts reported on the income tax return with amounts reported on the annual
statement and trial balance.
Key Highlights:
 Observed a limitation on charitable contribution expenses; corrected classification of specific
expenses, reduced the limitation and lowered taxable income by $25,090.
 Reviewed the depreciation calculation for federal income tax purposes and noted bonus
depreciation as allowed for 2011 income tax purposes was not taken; recommended the
change in the calculation allowing an additional $24,043 of depreciation expense.
 As a result of our review and reconciliation of the investment accounts, it was discovered that
$91,315 of interest income was recorded in error and included in book net income; this was
eliminated from the taxable income calculation and resulted in a decrease to taxable income
of $91,315.
 Total changes and corrections reduced taxable income by approximately $140,000, for a
federal income tax savings of approximately $48,000.
 Observed that the deduction for book value of investments in other companies (stock) on the
Alabama Privilege Tax return did not include all qualifying stocks; Suggested correction of
this deduction and increased the deduction by approximately $540,000 for an Alabama
Privilege Tax savings of approximately $700.
12

Income Taxes

 Federal law requires the payment of the income tax liability on a quarterly basis; at the filing
of the 2011 federal income tax return, the amount of tax paid in exceeded the income tax
liability by over $510,000. This overpayment is being appropriately applied to the 2012 tax
liability.
 The tax returns are generally due March 15th; Because the independent audit of the financial
statements is normally not complete until sometime in May, it has become routine to request
extensions of time to file the tax returns (generally until September 15th). However, it is
observed that the returns are not being prepared and filed until later in the year
(August/September).

 Currently, the income tax returns are prepared internally and are not reviewed by a qualified
independent party. Consider the preparation of the income tax returns by an outside firm, or
the review of the internally prepared returns by an outside firm. In the case that the Company
hires an outside firm to prepare the returns, the returns should also be reviewed by an officer
of the company prior to the filing of those returns.
 Taxable income calculations should be prepared on a quarterly basis to insure that the
appropriate amount of tax has been paid in for the quarter; Although the overpayment of
income taxes can apply to the next year, in the case of the 2011 tax payments over $500,000
of the company’s cash has been held by the Internal Revenue Service for several months.
During this time, the company does not earn any interest and loses any potential earning
power from those funds.
 Tax returns should be filed as soon as possible; preliminary calculations can be prepared
prior to the completion of the audited financial statements so that as soon as the financial
numbers are finalized, the tax returns can be prepared and filed.
13

Travel and Entertaiment Policy H M L
X
Background:
This test was an assessment of the internal controls related to travel and entertainment. It was
included in the internal audit plan due to the importance of having proper controls over the
Company’s travel and entertainment expenses. This risk for this control is considered high
because of the external compliance violations that could occur with the IRS and adverse
publicity if the policy is not followed properly.
Scope and Approach:

Our evaluation included the following procedures related to the travel and entertainment policy
of the Company:
 Developed an understanding of the processes and controls in place for travel and
entertainment by obtaining the Company’s Travel & Business Expense Reimbursement
Policy.
 Obtained a detail of all disbursements from accounts 185-Travel, 818-Entertainment, 817-
Meals and 816-Lodging for the first six months of 2012. All expenses posted to these
accounts were tested for the following:
o The expense was submitted for reimbursement no later than 30 days following the
completion of a trip.
o Overall documentation of the expense included names and identity of the
individuals present, the business purpose, name and location of where the expense
took place, exact amount and date of the expense and receipts for all expenditures
o Mileage or gas reimbursement should include date and purpose of trip, location
traveled to and from, mileage and receipts
o Meal reimbursement should include name and identity of individuals present,
business purpose, name and location of where the meal took place, receipt and
date of the expense.
o Miscellaneous expense reimbursement should include a copy of the receipt,
names and identity of individuals present, business purpose and type of expense.
o An expense report should be submitted by each employee requesting
reimbursement and the report should be reviewed and approved.
o The expense was reviewed for the correct account charged and the expense
appeared appropriate.
14

Travel and Entertaiment Policy
Key Highlights:
Items noted during testing that appeared to not be in compliance with the Company’s travel and
entertainment policy are detailed below
 What appeared to be a preferred airline tickets and an upgraded hotel room was not
reimbursed by the employee for the amount above coach or a standard room.
 Rental car up grades with no clear reason for the upgrade or reimbursement by the employee.
 The following items were reimbursed with no clear business purpose or employee
reimbursement: tickets to concerts, spa appointments, spa merchandise, golf games, golf
apparel and supplies, city tour, limo services, in-room movies, personal hygiene items and
sporting events. The total for these items was approximately $16,600,
 On average, dinner and lunch meals were $50 to $100 per person with some lunches being as
high as $75 per person and dinners being as high as $220 per person. Receipts given to
support these expenses were not detailed to show how much was for food or drinks. The
amount expensed per day is significantly above the per diem rates set by the US government.
Even though the IRS does not state that the per diem rates must be used, those rates may be
guidelines that an IRS agent could use to determine if an expense is extravagant. The IRS
states the following: “You cannot deduct expenses for meals that are lavish or extravagant.
An expense is not considered lavish or extravagant if it is reasonable based on the facts and
circumstances. Expenses will not be disallowed merely because they are more than a fixed
dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts.” A detailed
receipt would show if the meal was for food only or if high dollar drinks were purchased and
would help in determining the reasonable facts and circumstances of the expense.
There were several receipts for “snacks” that appeared to be to lounges or bars before and
after dinner and lunch. Several hotel charges were in the hotel bars and lounges. It is unclear
if these types of charges are in accordance with the Companies policy that states “Life of
Alabama’s policy is to refrain from consuming alcoholic beverages during business
functions. However, in the event an employee chooses to consume alcoholic beverages in
connection with a business function, the Company expects that employees will act
responsible and avoid excess.”
 The business purpose was not legible on several receipts or expense reports.
 Several in town meals for employees only did not include a clear business purpose.
 Some expense items did not include attached receipts.
 All lodging receipts were classified as lodging in the general ledger even though there were
several charges for entertainment and meals included in the receipt. Meals and entertainment
expense classified as lodging would not be subject to the 50% deduction rule on the tax
return. Approximately $12,000 in meals and $8,500 in entertainment was totaled as being
included in lodging for the period tested.
15


 There was approximate $1,800 in cash tips reimbursed during the six month period with
no clear tip guidance in the policy. As these amounts are based on the honesty of the
employee and is a cash only transaction, a detailed tip policy should be included in the
travel and entertainment policy. The policy should give guidelines for tipping at
airports, hotels and restaurants. The employee can tip more than the guideline but will
not be reimbursed for the excess.
 A discussion needs to take place if a separate travel and entertainment policy for an
employee or an agent should be implemented.
 There needs to be a discussion of the Company reimbursing alcoholic beverages, what is
considered appropriate or excess. It could be detailed as to what is appropriate to
reimburse employee only meals verses customer entertainment meals.
 Consider receiving detailed receipts of expenses to determine how much of the meal was
for alcohol or food.
 Adding to the policy what is considered an unauthorized charge that is subject to
employee reimbursement? And who determines if it is unauthorized? Currently the
employee requesting reimbursement makes those determinations.
 Who checks that employees have adequate insurance on their cars used for business
travel?
 Need to define what a “reasonable” hotel room, airline ticket, rental car, meal or mini
bar charge should be.
 What is the policy for golf and spa expenses? These expenses should follow the IRS
guidelines for proper business expense; otherwise they need to be reimbursed by the
employee.
 What is the policy for entertainment ticket expenses? These expenses should follow the
IRS guidelines for proper business expense; otherwise they need to be reimbursed by the
employee.
 Need a detailed mileage/auto policy on how expenses will be reimbursed. Based on
actual expenses incurred or based on a mileage reimbursement. During testing of these
items some were being reimbursed based on actual gas receipts and some based on
mileage.
 Determined who completes the amounts for 1099 reporting or reimbursement to the
employee. Someone other than the employee should determine these classifications or
approve them.
 Making sure that all notes on expense reports that state what the business purpose of an
expense is for is legible, if a person’s handwriting cannot be read these individuals
should type all notes.
16

 Make a specific policy for in town employee meals that coincide with the IRS guidelines
and make sure there is a clear business purpose for the meal and has a legible
explanation on the receipt.
 Considering the amount of travel incurred by the Company an agreement with a travel
agent, rental car company, hotel chain or airline may be a good idea for better rates.
This would result in an agreement between the Company and the agency and would have
better guidelines that the company would set for these types of expense instead of
leaving the expense reservations, rates and upgrades up to the employee.
For this topic see the following Appendixes for additional guidance or discussion:
Appendix F - Talking Points for a Travel and Entertainment Policy
Appendix G - Example Travel and Entertainment Policy
Appendix H - General IRS Guidelines for Travel and Entertainment
17

Internal Policies and Procedures H M L
X
Background:
This procedure was an assessment of specific internal policies of the Company. It was included
in the internal audit plan due to the importance of having proper internal policies. This report
may not include all policies or procedures that we may suggest in the future.

 See Appendix C for a suggested example of adding an Internal Audit Charter to the
 See Appendix D for a suggested example of adding an Internal Audit Policy Statement to the
 There needs to be a policy for borrowing on behalf of the company. Even though the
Company does not currently have long term debt with an outside borrower, there should be a
policy in place that address the following:
o Who has authority to borrow on behalf of the Company.
o What needs to be approved by the Board.
o Confirming with banks the company does business with that there are no loans
outstanding.
o Search of public records annually and credit reports for any unknown lending.
 A policy for recording or understanding contingent liabilities that may need to be accrued on
the balance sheet should be developed and documented. The policy should include an
analysis of legal expenses paid during the year for evidence of work on pending or threatened
litigations. Communications with the Company’s attorney regarding any potential lawsuits.
Verifying there are no other items that need to be disclosed to the auditors. Some examples
are guarantees of other debt, standby letters of credit or other purchase commitments.
18
Summary of Suggestions for Improvements
Fixed Assets
 A detailed review of the subsidiary ledger to verify only assets the Company currently owns
or that are in operation are included in those returns.
 Review subsidiary ledger for proper description of fixed assets.
 Add to the capitalization policy how fixed assets are recorded, the specific repairs and
maintenance accounts that are reviewed each quarter, how depreciation expense is recorded
each quarter, the policy for lease agreements, a threshold for board approval of fix asset
additions and a prepaid expense threshold.
Accounts Payable
 Add to the cash disbursement policy detail of how invoices are received for payment
internally by the accounts payable clerks, how general ledger expense account posting is
determined, the process of making sure an expense item is actually received, the policy that
invoices are checked by the accounts payable clerk for mathematical accuracy, the policy that
invoices are stamped paid and the check number is written on the invoice to avoid duplicate
payment, the policy how duplicate payments are avoided, the policy for approving and
setting up vendors and the policy for proper cut off of expenses.
 If a specific accounts payable clerk enters and processes a check for payment and printing,
that person should not mail the checks.
Cash Receipts
 Add to the cash receipt policy a policy for recording and approving interbank transfers.
 Assign one staff person that does not work in accounts receivable, to open the mail, make a
list of daily cash receipts to compare with postings to customer accounts and handle customer
complaints.
Investments
 Update the Company’s investment policy.
 Establish an investment procedures manual.
 Have a time frame established to verify the Company is in compliance with their policy
related to investments.
 Need a policy to review bonds for lower of cost or market.
 Need a policy for investments not held by a broker
 Need a policy to receive an audited financial statements and Service Organization Control
Report (formerly 70, or SAS 70) from each broker the company does business with.
19
Summary of Suggestions for Improvements - Continued
Income Taxes
 Consider the preparation of the income tax returns by an outside firm, or the review of the
internally prepared returns by an outside firm.
 Taxable income calculations should be prepared on a quarterly basis to insure that the
appropriate amount of tax has been paid in for the quarter.
 Tax returns should be filed as soon as possible; preliminary calculations can be prepared
prior to the completion of the audited financial statements so that as soon as the financial
numbers are finalized, the tax returns can be prepared and filed.
Travel and Entertainment

 Adding to the policy the following:
o Tip policy
o Employee verses agent reimbursement
o Alcohol reimbursement policy
o Receiving detailed receipts
o What is an unauthorized charge and who determines that
o Determine “reasonable” amounts for hotel room, airline ticket, rental car, meal or
mini bar charge
o Policy for golf, spa and entertainment tickets and what is appropriate
o Policy for in town employee only meals
o Detailed policy on when actual expenses will be reimbursed for gas or mileage
 Who checks that employees have adequate insurance on their cars used for business
travel?
 Determined who completes the amounts for 1099 reporting or reimbursement to the
employee. Someone other than the employee should determine these classifications or
approve them.
 Making sure that all notes on expense reports that state what the business purpose of an
expense is for are legible.
 Considering the amount of travel incurred by the Company an agreement with a travel
agent, rental car company, hotel chain or airline may be a good idea for better rates.
Internal Policies and Procedures

 See Appendix C for a suggested example of adding an Internal Audit Charter to the
 See Appendix D for a suggested example of adding an Internal Audit Policy Statement to the
 There needs to be a policy for borrowing on behalf of the company.
 A policy for recording or understanding contingent liabilities that may need to be accrued on
the balance sheet should be developed and documented.
20
Appendix A
EXAMPLE INVESTMENT PROCEDURES MANUAL
Key elements of a policy and procedures manual for investments should address the following
items:
 Managing Investments
 Managing Derivatives
 Assessing Assets for Impairment
The following are items that should be addressed in the policy and procedures manual:
Managing Investments
1. Management reviews the entity’s financial statements on a periodic basis and investigates
significant variances from budgets and expected results.
a. State the person in charge of reviewing the financial statements related to
investments.
b. State what the benchmark is for investing variances.
2. Interest and dividend income calculation and accruals are reviewed.
a. State the person in charge of preparing and reviewing.
3. Third party statements are reconciled to subledger and general ledger accounts and
reviewed for accuracy.
a. State the person in charge of reconciling the investments to the third party
statement and the person in charge of reviewing those reconciliations.
b. State the specific checklists that are completed or schedules that are prepared and
the software used.
c. State how statement or investment information is received by the person in charge
of reconciling.
d. Also cover any investments or assets that are not managed by a third party and
how those are valued and included in the financial statements.
e. Detail instructions on how Schedule D is completed should also be addressed.
21
Appendix A - Continued
4. Investment and derivative activity is reviewed at regular intervals by an appropriate level

of management.
a. State the person or committee in-charge of reviewing the activity. A reference to
the investment policy may also be necessary.
5. Reconciliations are prepared and reviewed in a timely fashion.
a. State the person in charge of reconciling the investments and the person in charge
of reviewing those reconciliations.
6. Investments are reviewed at acquisition and other appropriate intervals for appropriate
classification on the financial statements.
a. State the person or committee in charge of this step.
7. Accounting policies and procedures specify the correct treatment for valuing investments
and derivatives, including those requiring management estimates and judgments.
a. Copy and paste the specific reporting requirements for valuing equities, bonds and
other types of investments from the appropriate accounting guidance.
8. A supporting analysis is prepared for valuing investments and derivatives. This analysis
documents compliance with the entities accounting policies.
a. State the person in charge of this step.
9. Management reviews and approves adjustments to investment and derivative control
accounts.
a. State the person in charge of making such adjustments and the person responsible
for review.
Managing Derivatives (complete if applicable)

significant variance from budgets and expected results.
investments.
22
2. Third-party statements are reconciled to subledger and general ledger account(s).

a. State the person in charge of reconciling the investments to the third party
statements and the person in charge of reviewing those reconciliations.
3. Investment and derivative activity is reviewed at regular intervals by an appropriate level
of management.
a. State the person or committee in-charge of reviewing the activity. A reference to
the investment policy may also be necessary.
4. Management approves investment and derivative transactions to ensure that they are
valid and in compliance with the entity’s policies and procedures.
a. State the person in charge.
5. Accounting policies and procedures specify the correct treatment for valuing investments
and derivatives, including those requiring management’s estimates and judgments.
a. Copy and paste the specific reporting requirements for valuing equities, bonds and
other types of investments from the appropriate accounting guidance.
6. A supporting analysis is prepared for valuing investments and derivatives. This analysis
documents compliance with the entities accounting policies.
7. Management reviews and approves adjustments to investment and derivatives control
accounts.
8. Management monitors agreements to determine that all derivatives are identified and
properly accounts for.
Assessing Assets for Impairment

significant variances from budgets and expected results.
investments.
23
2. Accounting policies and procedures specify correct treatment for calculating asset
impairment, including those requiring management’s estimate and judgments.
a. A detail of how assets are valued for impairment should be listed.
b. State specific on-line or internal tools used during this analysis.
c. State the person in charge of analyzing impairment.
3. Recorded assets are reviewed for impairment.
a. State the person that is in charge of reviewing the impairment calculation.
4. A supporting analysis is prepared for calculating asset impairment. This analysis
document complies with the entities accounting policies.
5. An independent review of significant judgments and estimates included in the financial
records is preformed at the end of every accounting period by knowledgeable personnel.
a. This may be a member of management or the investment committee.
24
Appendix B
INVESTMENT POLICY GUIDELINES
The most prudent primary objectives for drafting a sound investment policy should be: safety,
liquidity, and yield. The investment policy should address certain key questions, including:
 Who are the authorized investment officers?

 What standard of care will be established?
 What instruments will be eligible for investment?
 How will diversification be ensured?
 How will safekeeping be handled?
 What is the maximum term for any given investment?
 What type of internal controls should be in place?
 Who will comprise the investment committee (internal/external members), if any? What
are their responsibilities?
 What type of investment reports/performance reports will be produced?
 What types of benchmarks will be used?
 Will an investment advisor be used (and to what capacity)? What are their
responsibilities?
 What are the criteria for beginning or ending an investment relationship?
 What happens if an investment fails to meet set criteria?
 How to value investments for reporting purposes?
25
Appendix B - Continued
SAMPLE INVESTMENT POLICY
I. Introduction
The intent of the Investment Policy of Life Insurance Company of Alabama is to define
the parameters within which funds are to be managed. In methods, procedures and
practices, the policy formalizes the framework for the Life Insurance Company of
Alabama’s investment activities that must be exercised to ensure effective investment
management of the Life Insurance Company of Alabama’s funds. The guidelines are
intended to be broad enough to allow the investment officer and committee to function
properly within the parameters of responsibility and authority, yet specific enough to
adequately safeguard the investment assets.
The assets of the Company should be invested to provide for the payment of all
contractual obligations to policyholders and to contribute to the growth of surplus over
the long-term. Therefore, the investment strategy will be based on prudent investment
principles within the context of applicable insurance regulations. The strategy will seek to
achieve the appropriate balance among: providing investment income to enhance
profitability; maintaining liquidity and generating cash flow to meet all obligations;
funding policyholder reserves within pricing strategies; and growing the value of surplus
over time, thereby contributing to the Company's future growth.
II. Governing Authority

The investment program shall be operated in conformance with federal, state, and other
legal requirements, including [insert any applicable NAIC guidelines].
III. Scope
This policy applies to activities of Life Insurance Company of Alabama with regard to
investing financial assets. The Life Insurance Company of Alabama diversifies its funds
to maximize investment earnings and to increase efficiencies with regard to investment
pricing, safekeeping and administration.
IV. General Objectives

The primary objectives, in priority order, of investment activities shall be:
1. Safety
Safety of principal is the foremost objective of the investment program.
Investments shall be undertaken in a manner that seeks to ensure the
preservation of capital in the overall portfolio. The goal will be to mitigate
credit risk and interest rate risk.
26
2. Liquidity
The investment portfolio shall remain sufficiently liquid to meet all
operating requirements that may be reasonably anticipated. (Can specific
a certain % should be liquid or due in one year) The portfolio will be
managed to meet the liquidity requirements so as to pay all benefits and
expenses in a timely manner.
3. Return
The investment portfolio shall be designed with the objective of attaining
a market rate of return, taking into account the investment risk constraints
of safety and liquidity needs.
V. Standards of Care
1. Prudence
The standard of prudence to be used by investment officials shall be the
“prudent person” standard and shall be applied in the context of managing
an overall portfolio. Investment officers acting in accordance with written
procedures and this investment policy and exercising due diligence shall
be relieved of personal liability for an individual security’s credit risk or
market price changes, provided deviations from expectations are reported
in a timely fashion and appropriate action is taken to control adverse
developments. The "prudent person" standard states that, “Investments
shall be made with judgment and care, under circumstances then
prevailing, which persons of prudence, discretion and intelligence exercise
in the management of their own affairs, not for speculation, but for
investment, considering the probable safety of their capital as well as the
probable income to be derived.”
2. Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain
from personal activity that could conflict with the proper execution and
management of the investment program, or that could impair their ability
to make impartial investment decisions. Employees and investment
officials shall disclose any material interests in financial institutions with
which they conduct business. Disclosure shall be made to the board of
directors. They shall further disclose any personal financial/investment
positions that could be related to the performance of the investment
portfolio.
27
3. Delegation of Authority and Responsibilities

Governing Body
The board of directors will retain ultimate fiduciary responsibility for the
portfolios. The board of directors will receive monthly reports, designate
investment officers and annually review the investment policy making any
changes necessary by adoption.
Investment Officers
Authority to manage the investment program is granted to the investment
committee hereinafter referred to as investment officer as designated by
the board of directors. Responsibility for the operation of the investment
program is hereby delegated to the [e.g. Treasurer, Investment Officer,
etc.] who shall act in accordance with established written procedures and
internal controls for the operation of the investment program consistent
with this Investment Policy. Officers will prepare monthly investment
reports and other special reports as may be deemed necessary. All
participants in the investment process shall seek to act responsibly as
custodians. No officer or designee may engage in an investment
transaction except as provided under the terms of this policy and
supporting procedures.
Investment Adviser
The Life Insurance Company of Alabama may engage the services of one
or more external investment managers to assist in the management of the
entity’s investment portfolio in a manner consistent with the entity’s
objectives. Such external managers may be granted discretion to purchase
and sell investment securities in accordance with this Investment Policy.
VI. Authorized Financial Institutions, Depositories, and Broker/Dealers

1. Authorized Financial Institutions, Depositories, and Broker/Dealers
A list will be maintained of financial institutions and depositories
authorized to provide investment services. In addition, a list will be
maintained of approved security broker/dealers selected by conducting a
process of due diligence. These may include ‘primary” dealers or regional
dealers that qualify under Securities and Exchange Commission (SEC)
Rule 15C3-1 (uniform net capital rule).
28
A. The investment officer shall determine which financial institutions are

authorized to provide investment services to Life Insurance Company of
Alabama. Institutions eligible to transact investment business with Life
Insurance Company of Alabama include:
 Primary government dealers as designated by the Federal
Reserve Bank;
 Nationally or state-chartered banks;
 The Federal Reserve Bank; and,
 Direct issuers of securities eligible for purchase.
B. Selection of financial institutions and broker/dealers authorized to

engage in transactions with the Life Insurance Company of Alabama shall
be at the sole discretion of Life Insurance Company of Alabama.
C. All broker/dealers who desire to become qualified for investment

transactions must supply the following (as appropriate):
 Audited financial statements and Service Organization Control
Reports (formerly 70, or SAS 70)
 Proof of FINRA certification
 Proof of state registration
 Certification of having read and understood and agreeing to
comply with the Life Insurance Company of Alabama's
investment policy.
 Evidence of adequate insurance coverage.
D. All financial institutions who desire to become depositories must

supply the following (as appropriate):
 Audited financial statements and Service Organization Control
Reports (formerly 70, or SAS 70)
 Proof of state registration
 Evidence of adequate insurance coverage.
E. A periodic review of the financial condition and registration of all

qualified financial institutions and broker/dealers will be conducted by the
investment officer.
29
2. Competitive Transactions
A. The investment officer shall obtain competitive bid information on all
purchases of investment instruments purchased on the secondary market.
A competitive bid can be executed through a bidding process involving at
least three separate brokers/financial institutions or through the use of a
nationally recognized trading platform.
B. If the Life Insurance Company of Alabama is offered a security for

which there is no readily available competitive offering on the same
specific issue, then the Investment Officer shall document quotations for
comparable or alternative securities. When purchasing original issue
instrumentality securities, no competitive offerings will be required as all
dealers in the selling group offer those securities as the same original issue
price.
C. If the Life Insurance Company of Alabama hires an investment adviser

to provide investment management services, the adviser must provide
documentation of competitive pricing execution on each transaction. The
investment adviser will retain documentation and provide upon request.
VI. Safekeeping and Custody

1. Delivery vs. Payment
All trades of marketable securities will be executed (cleared and settled)
on a delivery vs. payment (DVP) basis to ensure that securities are
deposited in the Life Insurance Company of Alabama ’s safekeeping
institution prior to the release of funds.
30
2. Third-Party Safekeeping
Securities will be held by an independent third-party safekeeping
institution selected by the Life Insurance Company of Alabama. All
securities will be evidenced by safekeeping receipts in the Life Insurance
Company of Alabama’s name. The safekeeping institution shall annually
provide a copy of its most recent report on internal controls - Service
Organization Control Reports (formerly 70, or SAS 70) prepared in
accordance with the Statement on Standards for Attestation Engagements
(SSAE) No. 16 (effective June 15, 2011.)
3. Internal Controls
Management is responsible for establishing and maintaining an internal
control structure designed to ensure that the assets of the Life Insurance
Company of Alabama are protected from loss, theft or misuse. Specifics
for the internal controls shall be documented in an investment procedures
manual that shall be reviewed and updated periodically by the Investment
Officers. The internal control structure shall be designed to provide
reasonable assurance that these objectives are met. The concept of
reasonable assurance recognizes that the cost of a control should not
exceed the benefits likely to be derived and the valuation of costs and
benefits requires estimates and judgments by management. The internal
controls shall address the following points at a minimum:
 Control of collusion
 Separation of transaction authority from accounting and
recordkeeping
 Custodial safekeeping
 Avoidance of physical delivery securities
 Clear delegation of authority to subordinate staff members
 Written confirmation of transactions for investments and wire
transfers
 Dual authorizations of wire transfers
 Staff training and
 Review, maintenance and monitoring of security procedures both
manual and automated. The external auditor shall provide an
annual independent review to assure compliance with state law,
policies and procedures.
4. Securities held by the Company and not by a Third-Party
(as list of securities held by the Company and the specific controls related
to those assets should be listed here)
31
VIII. Suitable and Authorized Investments

1. Investment Types and Credit Guidelines
The following investments will be permitted by this policy:
 U.S. Treasury and other government obligations that carry the
full faith and credit guarantee of the United States for the
payment of principal and interest.
 Federal Agency or U.S. government sponsored enterprises
(GSE) obligations, participations or other instruments
 Federally insured time deposits (Non-negotiable certificates of
deposit) in state or federally chartered banks, savings and
loans, or credit unions, provided that:
a. The amount per institution is limited to the maximum
covered under federal insurance;
 Time deposits (Non-negotiable certificates of deposit) in state
or federally chartered banks, savings and loans, or credit
unions.
 Negotiable certificates of deposit (NCDs)
 Commercial paper, rated in the highest tier (e.g., A-1, P-1, F-1,
or D-1 or higher) by a nationally recognized statistical rating
organization;
 Investment-grade obligations of state, provincial and local
governments and public authorities;
 SEC registered money market mutual funds; and
 Advice from a stock broker and bond investor should expand
this listing to include stocks and bonds
IMPORTANT NOTE: If the credit rating of a security is subsequently downgraded

below the minimum rating level for a new investment of that security, the Investment
Officer shall evaluate the downgrade on a case-by-case basis in order to determine if the
security should be held or sold. The Investment Officer will apply the general objectives
of safety, liquidity, yield and legality to make the decision.
2. Collateralization
Where allowed or required by state law and in accordance with full
collateralization will be required on all demand deposit accounts,
including checking accounts and negotiable (as authorized by respective
state statutes) and non-negotiable certificates of deposit.
32
IX. Investment Parameters

1. Mitigating credit risk in the portfolio
Credit risk is the risk that a security or a portfolio will lose some or all of
its value due to a real or perceived change in the ability of the issuer to
repay its debt. The Life Insurance Company of Alabama shall mitigate
credit risk by adopting the following:
A. Diversification
The investments shall be diversified by:
 limiting investments to avoid overconcentration in securities
from a specific issuer or business
 sector (excluding U.S. Treasury securities),
 limiting investment in securities that have higher credit risks,
 investing in securities with varying maturities, and
 list any other diversification items
B. Mitigating market risk in the portfolio

Market risk is the risk that the portfolio value will fluctuate due to
changes in the general level of interest rates. The Life Insurance
Company of Alabama recognizes that, over time, longer-term/core
portfolios have the potential to achieve higher returns. On the other
hand, longer-term portfolios have higher volatility of return. The
Life Insurance Company of Alabama shall mitigate market risk by
providing adequate liquidity for short-term cash needs, and by
making longer-term investments only with funds that are not
needed for current cash flow purposes. The Life Insurance
Company of Alabama further recognizes that certain types of
securities, including variable rate securities, securities with
principal pay downs prior to maturity, and securities with
embedded options, will affect the market risk profile of the
portfolio differently in different interest rate environments. The
Life Insurance Company of Alabama, therefore, adopts the
following strategies to control and mitigate its exposure to market
risk:
33
 The Life Insurance Company of Alabama shall maintain a

minimum of (insert time frame) months of budgeted operating
expenditures in short term investments to provide sufficient
liquidity for expected disbursements;
 The maximum percent of callable securities in the portfolio
shall be xx%;
 The maximum stated final maturity of individual securities in
the portfolio shall be xxx years, except as otherwise stated in
this policy; and,
 List any other factors as needed or suggested by the investment
broker
X Performance Standards/ Evaluation

The investment portfolio will be managed in accordance with the parameters specified
within this policy. The portfolio should obtain a market average rate of return during a
market/economic environment of stable interest rates. A series of appropriate benchmarks
shall be established against which portfolio performance shall be compared on a regular
basis. The benchmarks shall be reflective of the actual securities being purchased and
risks undertaken and the benchmarks shall have a similar weighted average maturity and
credit profile as the portfolio.
XI. Reporting/Disclosure
1. Methods
The investment officer shall prepare an investment report at least quarterly
[or monthly], including a management summary that provides an analysis
of the status of the current investment portfolio and the individual
transactions executed over the last quarter [or month]. This management
summary will be prepared in a manner which will allow the Life Insurance
Company of Alabama to ascertain whether investment activities during the
reporting period have conformed to the investment policy. The report
should be provided to the Life Insurance Company of Alabama's
investment committee. The report will include, at a minimum, the
following (the following reports can be submitted internally or through a
third party administrator):
a. An asset listing showing par value, cost and accurate and complete
market value of each security, type of investment, issuer, and interest rate;
b. Average maturity of the portfolio and modified duration of the
portfolio;
34
c. Maturity distribution of the portfolio;

d. Average portfolio credit quality; and,
e. Time-weighted total rate of return for the portfolio for the prior one
month, three months, twelve months, year to date, and since inception
compared to the Benchmark Index returns for the same periods;
f. Average weighted yield to maturity of portfolio on investments as
compared to applicable Benchmarks
g. Distribution by type of investment.
2. Annual reports
1 The investment policy shall be reviewed at least annually within 120
days of the end of the fiscal year to ensure its consistency with the overall
objectives of preservation of principal, liquidity and return, and its
relevance to current law and financial and economic trends.
2. A comprehensive annual report shall be presented in conjunction with
the investment policy review. This report shall include comparisons of
Company’s return to the Benchmark Index return, shall suggest policies
and improvements that might enhance the investment program, and shall
include an investment plan for the coming year.
3. Annual audit
Management shall establish an annual process of independent review by
the external or internal auditor(s) to assure compliance with internal
controls. Such audit will include tests deemed appropriate by the auditor.
4. Exemption
Any investment currently held that does not meet the guidelines of this
policy shall be temporarily exempted from the requirements of this policy.
Investments must come in conformance with the policy within six months
of the policy’s adoption or the governing body must be presented with a
plan through which investments will come into conformance. (or list any
specific exemptions for investments that do not meet this policy)
5. Amendments
This policy shall be reviewed on an annual basis. Any changes must be
approved by the investment officer and any other appropriate authority, as
well as the individuals charged with maintaining internal controls.
35
6. Valuation
The market value of the portfolio shall be calculated at least quarterly [or
monthly] and a statement of the market value of the portfolio shall be
issued at least quarterly or monthly]. This will ensure that the review of
the investment portfolio, in terms of value and price volatility has been
preformed. Securities should be reviewed for impairment on a quarterly
basis so that the securities which are found to be impaired are reported at
fair value at the time of impairment.
XIV Approval of Investment Policy

The investment policy and any modifications to that policy shall be formally approved
and adopted by the board of directors of the Life Insurance Company of Alabama.
XV. Miscellaneous
1. List of Attachments
The following documents, as applicable, are attached to this policy:
 Listing of authorized personnel,
 Relevant investment statutes and ordinances,
 Listing of authorized broker/dealers and financial institutions,
 Internal Controls
2. Other Documentation
 Broker-dealer certification
 Safekeeping agreements,
 Wire transfer agreements,
 Sample investment reports,
 Bonding of employees handling investments
 Audited financial statements of broker/dealers and financial
institutions
 Service Organization Control Reports (formerly 70, or SAS 70) from
broker/dealers and financial institutions
36
Appendix C
EXAMPLE INTERNAL AUDIT CHARTER
INTRODUCTION:
Internal auditing is an independent and objective assurance and consulting activity that is
guided by a philosophy of adding value to improve the operations of Life Insurance
Company of Alabama. It assists Life Insurance Company of Alabama in accomplishing
its objectives by bringing a systematic and disciplined approach to evaluate and improve
the effectiveness of the organization’s risk management, control and governance
processes.
ROLE:
The internal audit activity is established by the board of directors or oversight body
(hereafter referred to as the board). The internal audit activity’s responsibilities are
defined by the board as part of their oversight role.
PROFESSIONALISM:
The internal audit activity will govern itself by adherence to The IIA’s mandatory
guidance, including the Definition of Internal Auditing, the Code of Ethics, and the
International Standards for the Professional Practice of Internal Auditing (Standards).
This mandatory guidance constitutes principles of the fundamental requirements for the
professional practice of internal auditing and for evaluating the effectiveness of the
internal audit activity’s performance.
The internal audit activity will adhere to Life Insurance Company of Alabama’s relevant
policies and procedures and the internal audit activity’s standard operating procedures
manual.
AUTHORITY:
The internal audit activity, with strict accountability for confidentiality and safeguarding
records and information, is authorized full, free and unrestricted access to any and all of
Life Insurance Company of Alabama’s records, physical properties, and personnel
pertinent to carrying out any engagement. All employees are required to assist the
internal audit activity in fulfilling its role and responsibilities. The internal audit activity
will also have free and unrestricted access to the board.
37
Appendix C - Continued
ORGANIZATION:
The chief audit executive (CAE) and/or external CPA firm will report functionally to the
board and administratively (i.e. day-to-day operations) to the CEO.
The board will approve all decisions regarding the performance evaluation, appointment,
or removal of the CAE and/or external CPA firm as well as the CAE’s annual
compensation and salary adjustment and/or external CPA firm’s fees. The CAE and/or
external CPA firm will communicate and interact directly with the board, including in
executive sessions and between board meetings as appropriate.
INDEPENDENCE AND OBJECTIVITY:
The internal audit activity will remain free from interference by any element in the
organization, including matters of audit selection, scope, procedures, frequency, timing,
or report content to permit maintenance of a necessary independent and objective mental
attitude.
Internal auditors will have no direct operations responsibility or authority over any of the
activities audited. Accordingly, they will not implement internal controls, develop
procedures, install systems, prepare records, or engage in any other activity that may
impair the internal auditor’s judgment.
Internal auditors must exhibit the highest level of professional objectivity in gathering,
evaluating, and communicating information about the activity or process being examined.
Internal auditors must make a balanced assessment of all the relevant circumstances and
not be unduly influenced by their own interests or by other in forming judgments.
38
RESPONSIBILITY:
The scope of internal auditing encompasses, but is not limited to, the examination and
evaluation of the adequacy and effectiveness of the organization’s governance, risk
management, and internal process as well as the quality of performance in carrying out
assigned responsibilities to achieve the organization’s stated goals and objectives. This
includes:
 Evaluating the reliability and integrity of information and the means used to
identify, measure, classify, and report such information.
 Evaluating the systems established to ensure compliance with those policies,
plans, procedures, laws, and regulations that could have a significant impact on
the organization.
 Evaluating the means of safeguarding assets and, as appropriate, verifying the
existence of such assets.
 Evaluating the effectiveness and efficiency with which resources are employed.
 Evaluating operating or programs to ascertain whether results are consistent with
established objectives and goals and whether the operations or programs are being
carried out as planned.
 Monitoring and evaluating governance processes.
 Monitoring and evaluating the effectiveness of the organization’s risk
management processes.
 Evaluating the quality of performance of external auditors and the degree of
coordination with internal audit.
 Performing consulting and advisory services related to governance, risk
management, and control as appropriate of the organization.
 Reporting periodically on the internal audit activity’s purpose, authority,
responsibility, and performance relative to its plan.
 Reporting significant risk exposures and control issues, including fraud risks,
governance issues, and other matters needed or requested by the board.
 Evaluating specific operations at the request of the board or management, as
appropriate.
39
INTERNAL AUDIT PLAN:
At least annually, the CAE or external CPA firm will submit to senior management and
the board an internal audit plan for review and approval. The internal audit plan will
consist of a work schedule as well as budget and resource requirements for the next
fiscal/calendar year. The CAE or external CPA firm will communicate the impact of
resource limitations and significant interim changes to senior management and the board.
The internal audit plan will be developed based on a prioritization of the audit universe
using a risk-based methodology, including input of senior management and the board.
Any significant deviation from the approved internal audit plan will be communicated to
senior management and the board through periodic activity reports.
REPORTING AND MONITORING:
A written report will be prepared and issued by the CAE or external CPA firm or
designee following the conclusion of each internal audit engagement and will be
distributed as appropriate. Internal audit results will also be communicated to the board.
The internal audit report may include management’s response and corrective action taken
or to be taken in regard to the specific findings and recommendation. Management’s
response, whether included within the original audit report or provided thereafter (i.e.,
within 30 days) by management of the audited area should include a timetable for
anticipated completion of action to be taken and an explanation for any corrective action
that will not be implemented.
The internal audit activity will be responsible for appropriate follow-up on engagement
findings and recommendations. All significant findings will remain in an open issues file
until cleared.
40
PERIODIC ASSESSMENT:
The CAE or external CPA firm will periodically report to senior management and the
board on the internal audit activity’s purpose, authority, and responsibility, as well as
performance relative to its plan. Reporting will also include significant risk exposures
and control issues, including fraud risks, governance issues, and other matters needed or
requested by senior management and the board.
INTERNAL AUDIT ACTIVITY CHARTER
Approved this __________ day of ___________, _________.
_____________________________________________
Chief Audit Executive or Representative of external CPA firm
_____________________________________________
Chief Executive Officer
_____________________________________________
Chairman of the Board of Directors
_____________________________________________
Chairman of the Audit Committee
41
Appendix D
EXAMPLE INTERNAL AUDIT POLICY STATEMENT
It is the policy of this organization to establish and support an internal audit activity as an
independent appraisal function to examine and evaluate organization activities as a
service to management and the board of directors. The internal audit activity reports
administratively to senior management and functionally to the audit committee of the
board of directors. In carrying out their duties and responsibilities, members of the
internal audit activity will have full, free an unrestricted access to all organization
activities, records, property and personnel.
The primary objective of the internal audit activity is to assist members of management
and the board in the effective discharge of their responsibilities. To this end, internal
audit will furnish them with analyses, recommendations, counsel, and information
concerning the activities reviewed.
The missions of the internal audit activity are:
1. Review business units within the entity at appropriate intervals to determine

whether they are efficiently and effectively carrying out their functions of
planning, organizing, directing and controlling in accordance with management
instructions, policies and procedures, and in a manner that is consistent with both
organization objectives and high standards or administrative practice.
2. Determine the adequacy and effectiveness of the organization’s systems of

internal accounting and operating controls.
3. Review the reliability and integrity of financial and operating information and the
means used to identify, measure, classify and report such information.
4. Review the established systems to ensure compliance with those policies, plans,
procedures, laws, and regulations that could have a significant impact on
operations and reports, and determine whether the organization is in compliance.
Suggest policy where required.
5. Review the means of safeguarding assets and, as appropriate, verify the existence
of such assets.
42
Appendix D - Continued
6. Appraise the economy and efficiency with which resources are employed, identify
opportunities to improve operating performance, and recommend solutions to
problems where appropriate.
7. Review operations and programs to ascertain whether results are consistent with
established objectives and goals and whether the operations or programs are being
carried out as planned.
8. Provide adequate follow-up to make sure that appropriate corrective action is

taken and that it is effective.
9. Coordinate audit efforts with those of the organization’s external auditors.
10. Participate in the planning, design, development, implementation, and operation

of major computer-based systems to determine whether:
 Adequate controls are incorporated in the systems.
 Through system testing is performed at appropriate stages.
 System documentation is complete and accurate.
 The needs of user organizations are met.
Conduct periodic audits of computer service centers and make post-installations

evaluations of major data processing systems to determine whether these systems
meet their intended purposes and objectives.
11. Participate in the planning and performance of audits of potential acquisitions

with the organization’s outside accountants and other members of the corporate
staff. Follow up to assure the proper accomplishment of the audit objectives.
12. Review compliance with the organization’s guidelines for ethical business
conduct and see that the highest standards of personal and corporate performance
are met.
13. Submit annual audit plans to the president and the board of directors, including
the audit committee, for their review and approval.
43
Appendix D - Continued
14. Report every quarter to the board of directors (the audit committee, if so directed)
as to whether:
 Appropriate action has been taken on significant audit observations.
 Audit activities have been directed toward the higher exposures to risk and
toward increasing efficiency, economy and effective operations.
 Internal and external audits are coordinated as to avoid duplications.
 Internal audit plans are adequate.
 There is any unwarranted restriction on the staffing and authority of the
internal audit activity or on access by internal auditors to all organization
activities, records, property and personnel.
15. Report to those members of management who should be informed or who should
take corrective action, the results of audit examinations, the audit opinions
formed, and the recommendations made.
16. Evaluate any plans or actions taken to correct reported conditions for satisfactory
disposition of audit observations. If the corrective action is considered
unsatisfactory, hold further discussions to active acceptable disposition. The
business unit manager is responsible for seeing that corrective action on reported
weaknesses is either planned or taken within 30 days from receipt of a report
disclosing those weaknesses. The business unit manager is also responsible for
seeing that a written report of action planned or completed is sent to the
applicable member of senior management. If a plan for action is reported, a
second report shall be made promptly upon completion of the plan.
17. Evaluate the activities of the external auditors as to their independence and
compliance with generally accepted audit standards.
Approval:
_____________________________________
Chair of the Audit Committee or President of the Board of Directors
_____________________________________
Date
44
Appendix E - Debt Securities Credit Rating Chart for Moody’s, S&P and Fitch
Moody's S&P Fitch

Long- Short- Long- Short- Long- Short-
term term term term term term
Aaa AAA AAA Prime
Aa1 AA+ AA+
A-1+ F1+
Aa2 AA AA High grade
P-1
Aa3 AA- AA-
A1 A+ A+
A-1 F1
A2 A A Upper medium grade
A3 A- A-
P-2 A-2 F2
Baa1 BBB+ BBB+
Baa2 BBB BBB Lower medium grade
P-3 A-3 F3
Baa3 BBB- BBB-
Ba1 BB+ BB+
Non-investment grade
Ba2 BB BB
speculative
Ba3 BB- BB-
B B
B1 B+ B+
B2 B B Highly speculative
B3 B- B-
Caa1 CCC+ Substantial risks
Not prime
Caa2 CCC Extremely speculative
Caa3 CCC- C CCC C Default imminent with
CC little
Ca prospect for recovery
C
C DDD
/ D / DD / In default
/ D
45
Standard &
Moody's Fitch Credit worthiness
Poor's
An obligor has EXTREMELY STRONG capacity to meet its financial
Aaa AAA AAA
commitments.
Aa1 AA+ AA+ An obligor has VERY STRONG capacity to meet its financial
Aa2 AA AA commitments. It differs from the highest rated obligors only in small
Aa3 AA- AA- degree.
A1 A+ A+ An obligor has STRONG capacity to meet its financial commitments but is

A2 A A somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligors in higher-rated
A3 A- A- categories.
Baa1 BBB+ BBB+ An obligor has ADEQUATE capacity to meet its financial commitments.
Baa2 BBB BBB However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its
Baa3 BBB- BBB- financial commitments.
Ba1 BB+ BB+ An obligor is LESS VULNERABLE in the near term than other lower-
Ba2 BB BB rated obligors. However, it faces major ongoing uncertainties and exposure
to adverse business, financial, or economic conditions which could lead to
Ba3 BB- BB- the obligor's inadequate capacity to meet its financial commitments.
B1 B+ B+ An obligor is MORE VULNERABLE than the obligors rated 'BB', but the
B2 B B obligor currently has the capacity to meet its financial commitments.
Adverse business, financial, or economic conditions will likely impair the
B3 B- B- obligor's capacity or willingness to meet its financial commitments.
An obligor is CURRENTLY VULNERABLE, and is dependent upon
Caa CCC CCC favorable business, financial, and economic conditions to meet its financial
commitments.
Ca CC CC An obligor is CURRENTLY HIGHLY-VULNERABLE.
The obligor is CURRENTLY HIGHLY-VULNERABLE to nonpayment.
C C
May be used where a bankruptcy petition has been filed.
An obligor has failed to pay one or more of its financial obligations (rated
C D D
or unrated) when it became due.
Preliminary ratings may be assigned to obligations pending receipt of final
e, p pr Expected documentation and legal opinions. The final rating may differ from the
preliminary rating.
Rating withdrawn for reasons including: debt maturity, calls, puts,
WR conversions, etc., or business reasons (e.g. change in the size of a debt
issue), or the issuer defaults.
This rating was initiated by the ratings agency and not requested by the
unsolicited unsolicited
issuer.
This rating is assigned when the agency believes that the obligor has
selectively defaulted on a specific issue or class of obligations but it will
SD RD
continue to meet its payment obligations on other issues or classes of
obligations in a timely manner.
No rating has been requested, or there is insufficient information on which
NR NR NR
to base a rating.
46
Appendix F - Talking Points for a Travel and Entertainment Policy
Before you begin you should ask yourself these questions:
 Who should be subject to the travel policy and should it apply equally to all levels of
employees?
 How forceful should the policy be?
 Should there be an international policy or should each country have its own policy?
 Should there be separate policies for employees and 1099 agents?
Expense Reporting considerations:

 What are the requirements for attaching receipts to expense reports?
 What receipts are acceptable?
 When must travelers file expense reports?
 On what form should employees report their expenses?
Payment Methods:
 How should employees pay for travel and entertainment expenditures?
 How are corporate charge card expenses to be billed?
 Which employees should receive corporate cards? And what expenses are acceptable
on those cards?
 Corporate cards should not be used to pay for personal expenses when it presents
potential liability.
 Determine at what level senior executives should receive Executive / VIP / Gold
corporate cards.
 Advise travelers on procedures for how to obtain a card and what to do in the event of
a lost or stolen card.
Air Travel considerations:

 What are the parameters for airfare expense?
 If the company or its agency has negotiated discounts with preferred airlines, to what
extent is use of such airlines superior or subordinate to other factors in this section?
 Does the company retain rights to the frequent flyer awards earned by employees
traveling on company business?
 Will exceptions to air travel policy be allowed in response to travelers’ concerns
about safety or service?
47
Appendix F - Continued
Car Rental considerations:

 Do you have a preferred supplier?
 What size or class of cars should be rented?
 How should reservations be made?
 Under what circumstances might policy suggest or require that rental cars be used or
not used?
 Should drivers purchase accidental insurance or liability coverage for personal
effects?
 Outline a procedure for the traveler should there be an accident.
Hotel policy considerations:

 How should hotel rooms be booked?
 How much should employees pay for hotel rooms?
 What other limitations should be placed on hotel usage?
 Under what circumstances can employees stay in better-quality properties or book
higher-rated rooms than ordinarily would be permitted?
Meal and Entertainment:

 How much are traveling employees allowed to spend on personal meals?
 Will alcohol for non-customer meals be reimbursed?
 Specify what personal meal expenses may not be reimbursable.
 Outline the difference between personal, business and entertainment meals.
Additional information:
 Include exceptions to the policy and what steps will be taken when employees violate
the policy.
Policy distribution:
 How should the policy be distributed?
 To whom should the policy be distributed
48
Appendix G - Example Travel and Entertainment policy
LIFE INSURANCE COMPANY OF ALABAMA TRAVEL AND

ENTERTAINMENT POLICY
Following is the new Life Insurance Company of Alabama Travel & Business
Expense Reimbursement Policy. This manual contains additional guidance and revised
limits for all travel & entertainment. Among the changes is the establishment of a travel
assistant and a new Expense Report. As such, please take some time to review the policy
as these changes (and others) are effective immediately.
While we all hope that our experiences conducting business on behalf of Life Insurance
Company of Alabama are pleasurable and gratifying, we also must be reasonable. This
policy will reflect our collective responsibility to conduct business in a fiscally
responsible manner
TABLE OF CONTENTS
General Guidelines
Reporting Guidelines
Travel Authorization
Logging Your Expenses
Authorization Process
Tips For the New Expense Reporting Template
General Guidelines
These policies and procedures are designed to act as a guideline for business travel and
entertainment expense and miscellaneous expense reimbursements. They are based on
practices employed by most organizations of our size and take into consideration what is
considered reasonable and customary. While this handbook does contain suggested
expense limits, we challenge all employees to use professional judgment when incurring
expenses on behalf of the Company. Life Insurance Company of Alabama recognizes
that, in some isolated cases, business related expenses might need to be reviewed on a
case-by-case basis; however, this primarily applies if the expense in question was not
discussed in this policy.
49
Appendix G - Continued
This policy is designed to accomplish the following key points:

 Ensure all employees have a clear and consistent understanding of policies and
procedures for business travel and expenses.
 Ensure employees are reimbursed for legitimate business travel and entertainment
expenses.
 Provide employees who must travel with a reasonable level of service and comfort at
the lowest possible cost.
 Maximize the company’s ability to negotiate discounted rates with preferred
suppliers and reduce travel expenses.
 Provide the appropriate level of accounting and business controls for the company to
ensure that expenses are reviewed and approved by the appropriate person.
Responsibility
The traveler is responsible for complying with Life Insurance Company of Alabama
Travel Policies. The manager who approves and signs expense reports is responsible for
accurately reviewing expense reports for compliance. Life Insurance Company of
Alabama will reimburse employees for all reasonable and necessary expenses while
traveling on authorized company business or entertaining business clients. Life Insurance
Company of Alabama assumes no obligation to reimburse employees for expenses that
are not in compliance with this policy. Life Insurance Company of Alabama’s Controller
must approve any deviation from this policy.
Enforcement
Employees who do not comply with this policy may be subject to delay or withholding of
reimbursement and/or, disciplinary action.
Alcoholic Beverages
Life Insurance Company of Alabama’s policy is to refrain from consuming alcoholic
beverages during business functions. However, in the event an employee chooses to
consume alcoholic beverages in connection with a business function, the Company
expects that employees will act responsibly and avoid excess. If an employee has any
concerns that he/she is not capable of safely driving after such events, the Company will
reimburse the cost of alternative transportation to ensure that the employee does not place
themselves or others in danger. An employee, who is arrested and convicted for Driving
Under the Influence while in the performance of company business, or when returning
from a business function, is subject to disciplinary action up to and including termination.
50
REPORTING GUIDELINES
Employees must file expense reports no later than 30 days following the completion of
the trip or of incurring the expense. Expenses must be submitted for reimbursement
within 3 months of being incurred, or they will not be reimbursed.
Documentation Requirements
Employees must provide the following information in order to be reimbursed for any
business related meals or entertainment expenditures:
 Names of individuals present, their titles and company name
 Name and location of where the meal or event took place
 Exact amount and date of the expense
 DETAILED receipts for all entertainment expenditures in excess of $25.00.
 DETAILED receipts for meals, in excess of $25.00.
Employees must submit the following documentation with their Expense Report:
 Air/Rail – original passenger receipt.
 Hotel – hotel folio plus credit card receipt or other proof of payment.
 Car Rental – credit card receipt or rental agency invoice.
 Entertainment – credit card receipt and detailed register receipt for all expenses over
$25.00.
 Meals – credit card receipt and detailed register receipts for meal expenses over
$25.00, if a detailed receipt is available.
Please note: credit card statements are not considered an acceptable form of receipt.
Receipts must be affixed to a piece of paper with like items (e.g. cabs) together. An
explanation of the business expense and a list of the individuals/company affiliations
entertained (in the case of meal/entertainment receipts) must be documented next to the
original receipt.
If like items have been summed to arrive at a single figure for entry to a single cell on the
expense report, please indicate which items are being totaled on the paper where the
receipts are affixed. Expense reports containing entries that cannot easily be supported by
receipts will be returned to the person submitting the expense report.
51
When a receipt is not available, a full explanation of the expense and the reason for the
missing receipt is required. Actual bills/receipts must be submitted whenever possible;
photocopies will be acceptable only with a detailed explanation as to why the original is
unavailable. Receipts must include the name of the vendor, location, date and dollar
amount. All expenses must be reported, regardless of how they were paid. The following
receipts are acceptable:
 Original receipt completed by the vendor
 Customer’s copy of credit card slip
 Credit card billing statement, only in the unusual case where it is not possible to
obtain the actual receipt
 Original phone bill
 IRS-approved electronic ticket receipt
Incorrect or Incomplete Expense Reports

Expense reports that are incorrect, incomplete or include disorganized receipts:
 Will be returned to the approver for completion.
 May result in delay or non-reimbursement of specific items.
Disregard for company policy or altering of receipts can result in disciplinary action up to
and including termination.
LOGGING YOUR EXPENSES

Effective immediately, employees must complete the new Life Insurance Company of
Alabama Expense Report for reimbursement of expenses.
Air/Rail Travel
Air travel reservations should be made in such a manner as to secure the best available
fare. Available resources include, but are not limited to: travel agents, online resources or
directly with the airline. (Please see the Tips For the New Expense Report section below
for additional information.) ALL AIR TRAVEL MUST BE IN COACH CLASS.
When traveling by air:

 Employees are expected to use the lowest logical airfare available.
 Employees should consider Saturday night stays and stays exceeding 3 days
 Employees are expected to reserve 7-day advance notice purchases.
 Employees are expected to use non-direct flights when the savings are substantial.
 Obtain CEO/CFO approval for all trips over $2,000.
 Obtain CEO/CFO approval for all International travel
52
Upgrades for Air Travel

Upgrades for air travel are not reimbursable. If an employee wishes to upgrade, it is done
at the employee’s expense.
Cancellations
When a trip is cancelled after the ticket has been issued, the traveler should inquire about
using the same ticket for future travel. Employees should reuse airline tickets if: a) they
are traveling on the same route, or b) airfare eligibility requirements (verified with travel
agent) are met.
Unused/Voided Airline Tickets

Unused airline tickets or flight coupons must never be discarded or destroyed as these
documents may have a cash value. To expedite refunds, unused or partially used airline
tickets must be returned immediately to the issuing authority. Employees must NOT
include unused tickets with their expense reports. Employees with an electronic ticket
simply need to call the travel agent/issuing authority to initiate a refund.
Lost or Stolen Airline Tickets

Immediately upon discovery of a lost/stolen ticket, the traveler must:
 Report the loss to the travel agent/issuing authority who will file the lost ticket
application
 Fill out a lost ticket application at the airline ticket counter.
Airport and Train Station Parking

When parking at an airport or train station is part of business travel, it is expected that
employees will utilize Long Term parking lots. Short Term parking fees will not be
reimbursed.
Auto Travel: Car Rental

Employees may rent a car to get to their destination when driving is more cost effective
than airline or rail travel. Employees may rent a car at their destination when it is less
expensive than other transportation modes such as taxis, airport limousines and airport
shuttles or when entertaining customers. Whenever multiple employees are traveling
together, every effort to rideshare or carpool must be made.
53
Employees must reserve a car in the compact rental car category. When picking up a
rental car, check with the rental car agent for any promotional rates, last-minutes specials
or free upgrades. At the time of rental, inspect the car and be sure that any damage found
is noted on the contract before the vehicle is accepted. When plans change, employees are
responsible for working with their Travel Assistant to cancel rental car reservations.
Employees may book a car rental class of service one level higher when:
 The traveler can be upgraded at no extra cost
 Two or more company employees are traveling together
 Entertaining customers
 Cars in the authorized category are not available
 Transporting excess baggage such as booth displays.
Domestic travelers should always accept the collision insurance offered by rental
agencies but should decline all other offered insurances. International travelers should
accept all insurances offered. Additionally, whenever possible, the prepaid gas option
should be declined.
Rental cars must be returned as follows:

 To the original rental city unless approved for a one-way rental
 Intact (i.e. no bumps, scratches, or mechanical failures)
 On time, to avoid additional hourly changes
 With a full tank of gas.
Should a rental car accident occur, employees should immediately contact the rental Car
Company, local authorities (as required), and the Human Resources Department.
Rental Car Gas

Gasoline for use in rental cars is reimbursable with proper documentation. Make sure to
log this expense as AUTO RENTAL & GAS.
Cell Phone Use While Driving

Use of a cell phone while driving is not recommended in any situation and employees are
expected to refrain from using their phone while driving. Texting while driving is
prohibited. Employees are strongly encouraged to pull off to the side of the road and
safely stop the vehicle before placing or accepting a call. If acceptance of a call is
unavoidable and pulling over is not an option, employees are expected to keep the call
short. Life Insurance Company of Alabama strictly prohibits employees from using a cell
phone without a hands-free device while driving.
54
Taxi / Shuttle / Parking Fees

The use of airport shuttles and taxis upon arrival at the employee’s destination is the
preferred mode of transportation. Make sure to ask for a receipt if one is not offered. This
documentation aids in the expense-tracking process.
Business Use of Personal Vehicle

Employees may use their personal vehicle for business purposes if it is less expensive
than renting a car, taking a taxi, or using alternate transportation. Personal vehicles may
also be used when transporting company goods for delivery or entertaining clients. It is
the personal responsibility of the vehicle owner to carry adequate insurance coverage for
their protection and for the protection of any passengers. Life Insurance Company of
Alabama requires that employees who regularly use their personal vehicle for Company
business maintain minimum of $100,000/$300,000 bodily injury coverage and $50,000
property damage coverage on their vehicles. Mileage is reimbursed at the rate established
by the IRS ($.555/mile for 2012). This mileage allowance is in lieu of actual expenses for
gasoline, oil, repairs, tags, insurance, and depreciation. Therefore, actual expenses for
those items will not be reimbursed when your personal vehicle is used for business. To
be reimbursed for the use of your personal vehicle for business, employees must list on
the expense report:
 Date and purpose of the trip
 Locations traveled to and from
 Mileage
Lodging / Hotel
Hotel reservations should be made in such a manner as to secure the best available rate
and must be booked through the assistance of a Travel Assistant. Employees are required,
whenever possible, to use properties in the Moderate category.
In case of cancellation:
 Employees are responsible for working with their Travel Assistant or hotel to cancel
the reservation.
 Employees will be held responsible and will not be reimbursed for "no-show"
charges unless there is sufficient proof that the billing is in error or circumstances
were beyond the traveler’s control.
 Employees should request and record the cancellation number in case of billing
disputes.
 Employees should note that cancellation deadlines are based on the local time of the
property.
55
Meals
Personal meals are defined as meal expenses incurred by the traveler when dining alone
on an out-of-town business trip. Approximate meal expense guidelines are as follows:
 $20/day for breakfast and lunch combined
 $30 to $40/day for dinner.
 For guidelines for out of state meals please use the website
http://www.gsa.gov/portal/category/21287 for the Per Diem rates set by the U.S.
General Service Organization.
Business Meals Taken With Other Employees

Employees will be reimbursed for business-related meals taken with other employees
only in the following circumstances:
 When a client is present
 When at least one company employee is from out of town
 When, for confidentiality reasons, business must be conducted off company premises
The following documentation is required by the IRS, and must be recorded on the
expense report:
 Names of individuals present, their titles and company name,
 Name and location of where the meal or event took place,
 Exact amount and date of the expense.
Please note that employees will not be reimbursed for entertaining other employees
unless there is a direct reporting relationship between them.
Telephone Expenses:
Business Phone Calls

Employees will be reimbursed when using their personal cellular telephone, calling cards
or home phone for business related phone calls:
 Which are reasonable and necessary for conducting business
 With an original copy of the bill attached to the expense report form.
56
Personal Phone Calls While Traveling

Employees will be reimbursed for personal telephone calls while traveling on business:
 Not to exceed $20.00/day for domestic travel
 Not to exceed $50.00/day for international travel.
In all cases, employees are responsible for securing and utilizing the most reasonable
long-distance calling option available.
Hotel Telephone Usage

When staying at a hotel, employees should find out the property’s local and long distance
phone rates. Employees should avoid making phone calls that have an added surcharge.
Miscellaneous Expenses
The Miscellaneous column is designated for expenses that do not fit into the previous
categories, yet are directly business related and therefore reimbursable. ONLY the
following items can be considered as reimbursable business expenses:
 Office services (i.e. faxes, copies, overnight delivery / postage)
 Currency conversion fees
 Business gifts of reasonable value with prior management approval
 Laundry / Dry Cleaning / Suit Pressing for trips exceeding 3 days
 Seminar fees / training classes with prior approval
 Subscriptions with prior approval
Be sure to note that the following items are NOT reimbursable under this policy:
 Airline club / Country club membership dues

 Parking tickets or other fines
 Delinquency fees / Finance charges for personal credit cards
 Excess baggage charges or over weigh limit charges
 Spa charges for employees only
 Golf charges for employees only
 Expenses for travel incurred by companions/family members
 Expenses related to vacation or personal days while on a business trip
 Loss/Theft of personal funds or property/Lost baggage
 Avoidable "No-Show" charges for hotel or car service
 Non-Compulsory insurance coverage
 Rental car upgrades
 Airline seat upgrades
 Repairs due to accidents
57
 Excessive mini-bar charges or alcohol charges

 Laundry and valet services (trips under 6 working days)
 Any expenditures on behalf of a terminating or transferring employee
 Purchase of clothing and other personal items such as haircuts, shoe shines,
newspapers, magazines, tobacco, alcohol, etc.
 Purchase of in-room movies and entertainment
Never assume that an item will be covered under the "Miscellaneous" category. Be sure
to check with your manager if an item you need is not outlined specifically in this policy.
Entertainment Expenses: Entertaining Customers

Entertainment expenses include events such as nightclubs, theatre and sporting events,
whereby a business discussion takes place during, immediately before, or immediately
after the event.
Approval for reimbursement of entertainment expenses can only be granted by

department heads and will only be granted if:
 Person entertained has a potential or actual business relationship with Life Insurance
Company of Alabama
 Expenditure directly precedes, includes or follows a business discussion that would
benefit the company.
When entertainment expenses are expected to exceed $200 for one event, prior approval
from one of the following Life Insurance Company of Alabama employees is required to
receive reimbursement:
 CEO
 CFO
Circuitous Travel for Personal Reasons

Business trips, which also include circuitous travel for personal reasons, will be
reimbursed only for the direct or business portion of the trip, based on accommodations
actually used for business purposes. Ticket stubs or traveler's receipts covering the
routing of both the direct and circuitous portions of the trip must be enclosed with the
expense report and the calculation of both business and personal portions of the trip
should be provided
58
APPROVAL/AUTHORIZATION PROCESS
The employee’s manager must approve all expense reports. No employee is authorized to
approve his/her own, a peer’s, or a manager’s travel expense report. The manager is
responsible for verifying:
 Business purpose
 Correct totals
 Supporting documentation and receipts
 Policy compliance.
In addition, the person in attendance with the most senior title must put the expense on
his/her expense report to facilitate review by a more senior person not in attendance.
Remember:
 Traveler is responsible for complying with the Life Insurance Company of
Alabama’s Travel & Business Expense Policy
 Manager who approves and signs the expense report is responsible for reviewing the
report for compliance.
Once approval has been obtained, be sure to make a copy of the signed report along with
copies of your receipts to keep for your own records.
In Closing
Life Insurance Company of Alabama Travel & Business Expense Policy Guidelines are
designed to facilitate successful and cost effective travel. Please check with Accounting
or HR regarding questions and/or feedback.
59
Appendix H - General IRS Guidelines for Travel and Entertainment
See the website http://www.irs.gov/publications/p463/index.html

The below information was copied in relevant topics from that website.
When you travel away from home on business, you should keep records of all the
expenses you have and any advances you receive from your employer. You can use a log,
diary, notebook, or any other written record to keep track of your expenses.
Separating costs If you have one expense that includes the costs of meals, entertainment,
and other services (such as lodging or transportation), you must allocate that expense
between the cost of meals and entertainment and the cost of other services. You must
have a reasonable basis for making this allocation. For example, you must allocate your
expenses if a hotel includes one or more meals in its room charge.
Travel Expenses You Can Deduct

This chart summarizes expenses you can deduct when you travel away from home for
business purposes.
IF you have
expenses for... THEN you can deduct the cost of...
travel by airplane, train, bus, or car between your home and your business destination.
If you were provided with a ticket or you are riding free as a result of a frequent
transportation
traveler or similar program, your cost is zero. There are separate rules and limits if
you travel by ship.
fares for these and other types of transportation that take you between:
taxi, commuter bus,
The airport or station and your hotel, and
and airport
The hotel and the work location of your customers or clients, your business meeting
limousine
place, or your temporary work location.
baggage and sending baggage and sample or display material between your regular and temporary
shipping work locations.
operating and maintaining your car when traveling away from home on business. You
can deduct actual expenses or the standard mileage rate, as well as business-related
car
tolls and parking. If you rent a car while away from home on business, you can deduct
only the business-use portion of the expenses.
your lodging and meals if your business trip is overnight or long enough that you need
lodging and meals to stop for sleep or rest to properly perform your duties. Meals include amounts spent
for food, beverages, taxes, and related tips. See Meals for additional rules and limits.
cleaning dry cleaning and laundry.
business calls while on your business trip. This includes business communication by
telephone
fax machine or other communication devices.
tips tips you pay for any expenses in this chart.
other similar ordinary and necessary expenses related to your business travel. These
expenses might include transportation to or from a business meal, public
other
stenographer's fees, computer rental fees, and operating and maintaining a house
trailer.
60
Appendix H - Continued
How To Prove Certain Business Expenses
IF you have THEN you must keep records that show details of the following elements . . .
expenses for . .
Amount Time Place or Business Purpose
Description Business Relationship
Cost of each separate Dates you left Destination or Purpose: Business purpose for
expense for travel, lodging, and returned area of your the expense or the business
and meals. Incidental for each trip travel (name of benefit gained or expected to be
Travel
expenses may be totaled in and number city, town, or gained.
reasonable categories such of days spent other
as taxis, fees and tips, etc. on business. designation). Relationship: N/A
Purpose: Business purpose for
the expense or the business
benefit gained or expected to be
gained.
For entertainment, the nature of
the business discussion or
activity. If the entertainment
was directly before or after a
business discussion: the date,
Name and
place, nature, and duration of
address or
the business discussion, and the
location of
Cost of each separate identities of the persons who
place of
expense. Incidental took part in both the business
Date of entertainment.
Entertainment expenses such as taxis, discussion and the
entertainment Type of
telephones, etc., may be entertainment activity.
entertainment
totaled on a daily basis.
if not
Relationship: Occupations or
otherwise
other information (such as
apparent.
names, titles, or other
designations) about the
recipients that shows their
business relationship to you.
For entertainment, you must
also prove that you or your
employee was present if the
entertainment was a business
meal.
Date of the Description of
Gifts Cost of the gift.
gift. the gift.
Cost of each separate
expense. For car expenses,
Date of the
the cost of the car and any Purpose: Business purpose for
expense. For
improvements, the date Your business the expense.
Transportation car expenses,
you started using it for destination.
the date of the
business, the mileage for Relationship: N/A
use of the car.
each business use, and the
total miles for the year.
61
MEALS
You can deduct the cost of meals in either of the following situations.
 It is necessary for you to stop for substantial sleep or rest to properly perform your
duties while traveling away from home on business.
 The meal is business-related entertainment.
Business-related entertainment is discussed later. The following discussion deals only

with meals that are not business-related entertainment.
Lavish or extravagant. You cannot deduct expenses for meals that are lavish or
extravagant. An expense is not considered lavish or extravagant if it is reasonable based
on the facts and circumstances. Expenses will not be disallowed merely because they are
more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or
resorts.
50% limit on meals. You can figure your meals expense using either of the following
methods.
 Actual cost.
 The standard meal allowance.
Both of these methods are explained below. But, regardless of the method you use, you
generally can deduct only 50% of the unreimbursed cost of your meals.
Actual Cost
You can use the actual cost of your meals to figure the amount of your expense before
reimbursement and application of the 50% deduction limit. If you use this method, you
must keep records of your actual cost.
Standard Meal Allowance

Generally, you can use the “standard meal allowance” method as an alternative to the
actual cost method. It allows you to use a set amount for your daily meals and incidental
expenses (M&IE), instead of keeping records of your actual costs. The set amount varies
depending on where and when you travel. “Standard meal allowance” refers to the federal
rate for M&IE. If you use the standard meal allowance, you still must keep records to
prove the time, place, and business purpose of your travel.
62
Incidental expenses. The term “incidental expenses” means:

 Fees and tips given to porters, baggage carriers, bellhops, hotel maids, stewards or
stewardesses and others on ships, and hotel servants in foreign countries,
 Transportation between places of lodging or business and places where meals are
taken, if suitable meals can be obtained at the temporary duty site, and
 Mailing costs associated with filing travel vouchers and payment of employer-
sponsored charge card billings.
Incidental expenses do not include expenses for laundry, cleaning and pressing of
clothing, lodging taxes, or the costs of telegrams or telephone calls.
Incidental expenses only method. You can use an optional method (instead of actual
cost) for deducting incidental expenses only. The amount of the deduction is $5 a day.
You can use this method only if you did not pay or incur any meal expenses. You cannot
use this method on any day that you use the standard meal allowance. This method is
subject to the proration rules for partial days..
Note.
The incidental expenses only method is not subject to the 50% limit discussed below.
ENTERTAINMENT
You may be able to deduct business-related entertainment expenses you have for
entertaining a client, customer, or employee.
You can deduct entertainment expenses only if they are both ordinary and necessary and
meet one of the following tests.
 Directly-related test.
 Associated test.
An ordinary expense is one that is common and accepted in your trade or business. A
necessary expense is one that is helpful and appropriate for your business. An expense
does not have to be required to be considered necessary.
The amount you can deduct for entertainment expenses may be limited. Generally, you
can deduct only 50% of your unreimbursed entertainment expenses.
63
Directly-Related Test
To meet the directly-related test for entertainment expenses (including entertainment-
related meals), you must show that:
 The main purpose of the combined business and entertainment was the active
conduct of business,
 You did engage in business with the person during the entertainment period, and
 You had more than a general expectation of getting income or some other specific
business benefit at some future time.
Business is generally not considered to be the main purpose when business and
entertainment are combined on hunting or fishing trips, or on yachts or other pleasure
boats. Even if you show that business was the main purpose, you generally cannot deduct
the expenses for the use of an entertainment facility.
You must consider all the facts, including the nature of the business transacted and the
reasons for conducting business during the entertainment. It is not necessary to devote
more time to business than to entertainment. However, if the business discussion is only
incidental to the entertainment, the entertainment expenses do not meet the directly-
related test.
When Are Entertainment Expenses Deductible?

You can deduct ordinary and necessary expenses to entertain a client, customer, or employee
General rule
if the expenses meet the directly-related test or the associated test.
 Entertainment includes any activity generally considered to provide entertainment,
amusement, or recreation, and includes meals provided to a customer or client.
Definitions
 An ordinary expense is one that is common and accepted in your trade or business.
 A necessary expense is one that is helpful and appropriate.
Directly-related test
 Entertainment took place in a clear business setting, or
Tests to be  Main purpose of entertainment was the active conduct of business, and
met You did engage in business with the person during the entertainment period, and You
had more than a general expectation of getting income or some other specific business
benefit.
Associated test
 Entertainment is associated with your trade or business, and
 Entertainment is directly before or after a substantial business discussion.
 You cannot deduct the cost of your meal as an entertainment expense if you are claiming
the meal as a travel expense.
Other rules
 You cannot deduct expenses that are lavish or extravagant under the circumstances.
 You generally can deduct only 50% of your unreimbursed entertainment expenses
64
You do not have to show that business income or other business benefit actually resulted
from each entertainment expense.
Clear business setting. If the entertainment takes place in a clear business setting and is
for your business or work, the expenses are considered directly related to your business
or work. The following situations are examples of entertainment in a clear business
setting.
 Entertainment in a hospitality room at a convention where business goodwill is
created through the display or discussion of business products.
 Entertainment that is mainly a price rebate on the sale of your products (such as a
restaurant owner providing an occasional free meal to a loyal customer).
 Entertainment of a clear business nature occurring under circumstances where there
is no meaningful personal or social relationship between you and the persons
entertained. An example is entertainment of business and civic leaders at the opening
of a new hotel or play when the purpose is to get business publicity rather than to
create or maintain the goodwill of the persons entertained.
Expenses not considered directly related. Entertainment expenses generally are not
considered directly related if you are not there or in situations where there are substantial
distractions that generally prevent you from actively conducting business. The following
are examples of situations where there are substantial distractions.
 A meeting or discussion at a nightclub, theater, or sporting event.
 A meeting or discussion during what is essentially a social gathering, such as a
cocktail party.
 A meeting with a group that includes persons who are not business associates at
places such as cocktail lounges, country clubs, golf clubs, athletic clubs, or vacation
resorts.
Associated Test
Even if your expenses do not meet the directly-related test, they may meet the associated
test.
To meet the associated test for entertainment expenses (including entertainment-related

meals), you must show that the entertainment is:
 Associated with the active conduct of your trade or business, and
 Directly before or after a substantial business discussion (defined later).
65
Associated with trade or business. Generally, an expense is associated with the active
conduct of your trade or business if you can show that you had a clear business purpose
for having the expense. The purpose may be to get new business or to encourage the
continuation of an existing business relationship.
Substantial business discussion. Whether a business discussion is substantial depends

on the facts of each case. A business discussion will not be considered substantial unless
you can show that you actively engaged in the discussion, meeting, negotiation, or other
business transaction to get income or some other specific business benefit.
The meeting does not have to be for any specified length of time, but you must show that
the business discussion was substantial in relation to the meal or entertainment. It is not
necessary that you devote more time to business than to entertainment. You do not have
to discuss business during the meal or entertainment.
Meetings at conventions. You are considered to have a substantial business discussion if

you attend meetings at a convention or similar event, or at a trade or business meeting
sponsored and conducted by a business or professional organization. However, your
reason for attending the convention or meeting must be to further your trade or business.
The organization that sponsors the convention or meeting must schedule a program of
business activities that is the main activity of the convention or meeting.
Directly before or after business discussion. If the entertainment is held on the same
day as the business discussion, it is considered to be held directly before or after the
business discussion.
If the entertainment and the business discussion are not held on the same day, you must
consider the facts of each case to see if the associated test is met. Among the facts to
consider are the place, date, and duration of the business discussion. If you or your
business associates are from out of town, you must also consider the dates of arrival and
departure, and the reasons the entertainment and the discussion did not take place on the
same day.
66
50% Limit
In general, you can deduct only 50% of your business-related meal and entertainment
expenses.
The 50% limit applies to employees or their employers, and to self-employed persons
(including independent contractors) or their clients, depending on whether the expenses
are reimbursed.
The 50% limit applies to business meals or entertainment expenses you have while:
 Traveling away from home (whether eating alone or with others) on business,
 Entertaining customers at your place of business, a restaurant, or other location, or
 Attending a business convention or reception, business meeting, or business
luncheon at a club.
Included expenses. Expenses subject to the 50% limit include:

 Taxes and tips relating to a business meal or entertainment activity,
 Cover charges for admission to a nightclub,
 Rent paid for a room in which you hold a dinner or cocktail party, and
 Amounts paid for parking at a sports arena.
However, the cost of transportation to and from a business meal or a business-related

entertainment activity is not subject to the 50% limit.
Lavish or extravagant expenses. You cannot deduct expenses for entertainment that are
lavish or extravagant. An expense is not considered lavish or extravagant if it is
reasonable considering the facts and circumstances. Expenses will not be disallowed just
because they are more than a fixed dollar amount or take place at deluxe restaurants,
hotels, nightclubs, or resorts.
Allocating between business and nonbusiness. If you entertain business and

nonbusiness individuals at the same event, you must divide your entertainment expenses
between business and nonbusiness. You can deduct only the business part. If you cannot
establish the part of the expense for each person participating, allocate the expense to
each participant on a pro rata basis.
67
What Entertainment Expenses Are Not Deductible?

This section explains different types of entertainment expenses you generally may not be
able to deduct.
Club dues and membership fees. You cannot deduct dues (including initiation fees) for
membership in any club organized for:
 Business,
 Pleasure,
 Recreation, or
 Other social purpose.
This rule applies to any membership organization if one of its principal purposes is either:
 To conduct entertainment activities for members or their guests, or
 To provide members or their guests with access to entertainment facilities, discussed
later.
The purposes and activities of a club, not its name, will determine whether or not you can
deduct the dues. You cannot deduct dues paid to:
 Country clubs,
 Golf and athletic clubs,
 Airline clubs,
 Hotel clubs, and
 Clubs operated to provide meals under circumstances generally considered to be
conducive to business discussions.
Entertainment facilities. Generally, you cannot deduct any expense for the use of an
entertainment facility. This includes expenses for depreciation and operating costs such
as rent, utilities, maintenance, and protection.
An entertainment facility is any property you own, rent, or use for entertainment.
Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court,
bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort.
68
TRANSPORTATION
These expenses include the cost of transportation by air, rail, bus, taxi, etc., and the cost
of driving and maintaining your car.
Transportation expenses include the ordinary and necessary costs of all of the following.
 Getting from one workplace to another in the course of your business or profession
when you are traveling within the city or general area that is your tax home.
 Visiting clients or customers.
 Going to a business meeting away from your regular workplace.
 Getting from your home to a temporary workplace when you have one or more
regular places of work. These temporary workplaces can be either within the area of
your tax home or outside that area.
Transportation expenses do not include expenses you have while traveling away from
home overnight. However, if you use your car while traveling away from home
overnight, use the rules in this chapter to figure your car expense deduction. See Car
Expenses.
Daily transportation expenses you incur while traveling from home to one or more
regular places of business are generally nondeductible commuting expenses. However,
there may be exceptions to this general rule. You can deduct daily transportation
expenses incurred going between your residence and a temporary work station outside the
metropolitan area where you live. Also, daily transportation expenses can be deducted if:
(1) If you have one or more regular work locations away from your residence or (2) your
residence is your principal place of business and you incur expenses going between the
residence and another work location in the same trade or business, regardless of whether
the work is temporary or permanent and regardless of the distance.
Car Expenses
If you use your car for business purposes, you ordinarily can deduct car expenses. You
generally can use one of the two following methods to figure your deductible expenses.
 Standard mileage rate.
 Actual car expenses.
69
Standard Mileage Rate

You may be able to use the standard mileage rate to figure the deductible costs of
operating your car for business purposes. After June 30, 2011, the business mileage rate
increases to 55½ cents per mile.
If you use the standard mileage rate for a year, you cannot deduct your actual car
expenses for that year. You cannot deduct depreciation, lease payments, maintenance and
repairs, gasoline (including gasoline taxes), oil, insurance, or vehicle registration fees.
Actual Car Expenses

If you do not use the standard mileage rate, you may be able to deduct your actual car
expenses.
If you qualify to use both methods, you may want to figure your deduction both ways to
see which gives you a larger deduction.
Actual car expenses include:

Depreciation Lease Registration
Licenses payments fees
Gas Insurance Repairs
Oil Garage rent Tires
Tolls Parking fees
If you have fully depreciated a car that you still use in your business, you can continue to
claim your other actual car expenses.
Business and personal use. If you use your car for both business and personal purposes,
you must divide your expenses between business and personal use. You can divide your
expense based on the miles driven for each purpose.
70
EXHIBIT
C
OF ALABAMA

AS OF DECEMBER 31, 2014
TABLE OF CONTENTS
PAGE
Controls tested:
Fixed assets 4
Accounts payable 5
Cash receipts 7
Investments 8
Benford's Law testing 9
Company name and agent search 12
Company website search 13
New policies or changes to policy testing 15
Travel and entertainment policy 16
2
2014 through December 2014. A summary of suggestions for improvement by control is
included for your information. Management may wish to develop a letter of response to this
report to detail how items are going to be implemented or that a change will not be placed into
operation for a specific suggestion.
1. Fixed assets X
2. Accounts payable X
3. Cash receipts X
4. Investments X
5. Benford's Law testing X
6. Company name and agent search X
7. Company website search X
8. New policies or changes to policy testing X
9. Travel and entertainment X
Assessment of Risk:
3

Fixed Assets H M L
X
Background:
This test was an assessment of the internal controls related to fixed asset. It was included in the
internal audit plan due to the importance of having proper capitalization or expensing
procedures.
Scope and Approach:

• Developed an understanding of the processes and controls in place for fixed assets by
obtaining the Company’s capitalization policy.
• Evaluated the accuracy and completeness of expenses incurred during the third and fourth
quarters of 2014 as they related to fixed assets or repairs and maintenance and verified they
were in compliance with the Company’s policy. Evaluate the assets added to the fixed asset
detail as being properly capitalized and that asset lives were in compliance with the
Company’s capitalization policy.
• Verified that the subsidiary ledger of fixed assets agreed to the general ledger.
• Reviewed the 2014 property tax return for accuracy and completeness.
Key Highlights:
• For the third and fourth quarter of 2014 expenditures described above, no observations were
noted.
• For the verification of the subsidiary ledger to the fixed asset schedule for the third and
fourth quarter, no observations were noted.
• For the review of the 2014 property tax return, no observations were noted.

• During the third and fourth quarters of 2014 testing, we noted no additional suggestions for
improvements or observations.
4

X
Background:
importance of having proper controls over expenses incurred by the Company and proper
payment and review procedures.
Scope and Approach:

Our evaluation included the following procedures related to the accounts payable of the
Company:
• Developed an understanding of the processes and controls in place for accounts payable by
obtaining the Company’s cash disbursement policy. Develop an understanding of each key
• Obtain a detail of all disbursements from account 112200 for the last six months of the 2014
year and sorted the detail by check type. Randomly selected 30 checks from each type of
disbursement: general accounts payable expenses, LSP and HCP expenses to test for proper
key control compliance.
• From the sample selected, each significant control area for general accounts payable was
tested for proper compliance with the policy. Controls tested were as follows:
o Check amount posted to the general ledger agreed to the electronic system
scanned file.
• From the sample selected, each significant control area for LSP disbursements was tested for
o Approval of payment was noted.
o Check amount posted to the general ledger agreed to the electronic system
scanned file.
5

Accounts Payable - Continued
• From the sample selected, each significant control area for HCP disbursements was tested for
o Check copy was located in the electronic system.
o Documentation was in the electronic policy folder stating why there was a
reimbursement and medical reports, if necessary, were included.
o Payment was approved and agreed to policy application.
Key Highlights:
• For the sample of general expenditures, LSP expenditures and HCP expenditures selected for
the last six months of the 2014 year, no observations were noted.

• During the last six months of the 2014 year testing, we noted no additional suggestions for
Suggestions for Improvement or Observations Noted in Previous reports:

• During the third and fourth quarters of 2014 testing, we noted no additional suggestions for
improvements or observations. Our previous suggestions have been addressed.
6

Cash Receipts H M L
X
Background:
This test was an assessment of the internal controls related to accounts receivable/cash collections. It was
included in the internal audit plan due to the importance of having proper controls over receipts that are
deposited or mailed to the Company.
Scope and Approach:

• Developed an understanding of the processes and controls in place for cash receipt by obtaining the
Company’s cash receipt policy. Develop an understanding of each key control the Company has over
cash receipts.
• Obtain a detail of all receipts in account 112100 for the 2014 year. Randomly selected 60 receipts to
test for proper key control compliance. The sample included both ACH and check deposits.
• From the sample selected, each significant control area for cash receipts was tested for proper
compliance with the policy. Controls tested were as follows:
o Deposit amount was agreed to supporting documentation and checks deposited were
footed with a control tape.
o Summary control slips were scanned for electronic filing, deposited into the bank account
and recorded in the general ledger.
o ACH and check deposit amounts were traced to clearing the bank statement.
• Reviewed four months bank reconciliations for proper reconciliation and review.
• One day's deposit detail was received each six months that listed each policy holders account
number and amount paid. This detail was footed and agreed back to the deposited amount. Each
policy holder's payment was traced to being properly applied to their account balance in the
general ledger system.
Key Highlights:
• For the sample of cash receipts selected for the2014 year, no observations were noted.
• During the review of the bank reconciliations there were no observations noted.
• During the testing of one day's deposit detail there were no observations noted.

• During the 2014 year testing, we noted no additional suggestions for improvements or observations.

• LICOA is currently working on cash receipt suggestions noted in our previous report related to
policies and procedures.
7

Investments H M L
X
Background:
internal audit plan due to the importance of having proper investment policies and procedures
due to the value of the Company’s balances.
Scope and Approach:

• Developed an understanding of the processes and controls in place for investments by
• Agreed each month’s postings from the brokerage statement activity to the general ledger
from July 2014 to December 2014 and suggested any journal entries as necessary.
• Agreed common stock and bond amounts per the brokerage statements to schedule D for the
year ended December 2014.
• Analyze the bond holdings for any write downs based on a NAIC rating of 5FE or below.
The lower of the cost of the bond or the fair market value was compared to the book value
and evaluated for any additional impairment loss.
Key Highlights:
• There were no significant differences between the investment statements and the posting in
the general ledger for the period from July 2014 until December 2014. Any monthly
differences were timing differences that cleared the next month.
• There were no significance differences in the comparison of common stock and bond values
from the brokerage statements to schedule D. There were some common stocks and bonds
that are not held in a brokerage account. The example investment procedures manual and
investment policy include notes on how to incorporate these types of investments into the
• Per review of the NAIC ratings of 5FE or below, we noted no additional suggestions for

• During the last six months of the 2014 year testing, we noted no additional suggestions for

• LICOA is currently working on investment suggestions noted in our previous report related
to policies and procedures.
8

Benford's Law Testing H M L
X
Benford's Law - Definition, History and Application
What is Benford’s Law?

Benford’s Law, named for physicist Frank Benford, is the mathematical theory of leading digits.
Specifically, in data sets, the leading digit(s) is (are) distributed in a specific, nonuniform way.
While one might think that the number 1 would appear as the first digit 11 percent of the time
(i.e., one of nine possible numbers), it actually appears about 30 percent of the time (see chart
below). Nine, on the other hand, is the first digit less than 5 percent of the time. The theory
covers the first digit, second digit, first two digits, last digit and other combinations of digits
because the theory is based on a logarithm of probability of occurrence of digits.
Accounting fraud detection

In 1972, Hal Varian suggested that the law could be used to detect possible fraud in lists of
socio-economic data submitted in support of public planning decisions. Based on the plausible
assumption that people who make up figures tend to distribute their digits fairly uniformly, a
simple comparison of first-digit frequency distribution from the data with the expected
distribution according to Benford's Law ought to show up any anomalous results. Following this
idea, Mark Nigrini showed that Benford's Law could be used in forensic accounting and auditing
as an indicator of accounting and expenses fraud.
9

Benford's Law Testing - Continued
Distributions that can be expected to obey Benford's Law

• Credit card transactions
• Purchase orders
• Loan data
• Customer balances
• Journal entries
• Stock prices
• Accounts payable transactions
• Inventory prices
• Customer refunds
Distributions that would not be expected to obey Benford's Law

• Where numbers are assigned: e.g., check numbers, invoice numbers
• Where numbers are influenced by human thought: e.g., prices set by psychological
thresholds ($1.99)
• Accounts with a large number of firm-specific numbers: e.g., accounts set up to record
$100 refunds
• Accounts with a built-in minimum or maximum
• Where no transaction is recorded
• Data sets with 500 or fewer transactions
Conclusion
Benford’s Law can recognize the probabilities of highly likely or highly unlikely frequencies of
numbers in a data set. The probabilities are based on mathematical logarithms of the occurrence
of digits in randomly generated numbers in large data sets. Those who are not aware of this
theory and intentionally manipulate numbers (e.g., in a fraud) are susceptible to getting caught
by the application of Benford’s Law.
Scope and Approach:

Taking into consideration the disbursements that would not be expected to obey Benford's Law
our evaluation included the following procedures related to general accounts payable:
• Received a listing of all general accounts payable checks written for the period of January
2014 until December 2014.
• Imported into a Benford's Law spreadsheets the check amount, see results below.
10

Benford's Law Testing - Continued
Key Highlights:
General Accounts Payable Checks Written from January to December 2014
Benford's Law
35%
Frequency of First Digit
30%
Predicted By Benford
25%
Frequency
20%
15%
10%
5%
0%
1 2 3 4 5 6 7 8 9
First Digit
Frequency Frequency
Occurrence of First Digit of First Digit Predicted
First Digit Of Digit at 12/31/14 at 6/30/14 By Benford
One 324 27.53% 28.67% 30.10%
Two 267 22.68% 21.49% 17.61%
Three 125 10.62% 11.10% 12.49%
Four 103 8.75% 7.19% 9.69%
Five 139 11.81% 10.94% 7.92%
Six 40 3.40% 6.15% 6.69%
Seven 78 6.63% 5.51% 5.80%
Eight 51 4.33% 4.15% 5.12%
Nine 38 3.23% 4.79% 4.58%

• There were no large unexpected deviations noted during this test.
11

Company Name and Agent Search H M L
X
Background:
This test was included as an internal audit step to research no individual or company has filed for
a name similar to Life Insurance Company of Alabama.
Key Highlights:
• Life Insurance Company of Alabama was registered in the following states:
o Alabama - Lynn Lowe listed as the registered agent
o Georgia - Samuel Pierce, Jr. listed as registered agent
o Tennessee - No agent listed, dissolved; inactive
o Arkansas - No agent listed
o Florida - Steven Keck and Lynn Lowe listed as officers, Clarence Daugette, III listed
as CEO
• Life Insurance Co. of Al was registered in the following state:
o Alabama - J S Holleman listed as the incorporator.
• Alabama Life Insurance Company was registered in the following state:
o Alabama - A L Welch listed as the registered agent, dissolved 2001
• LICOA Brokerage Services, Inc. was registered in the following state:
o Alabama - Raymond Renfrow, Jr. listed as the registered agent.
• LICOA Employee Benefits, Inc.
o Mississippi - Lewis W. West, III listed as the registered agent
• LICOA, Inc.
o Oklahoma - Kent Frates listed as the agent
• LICOA National, Inc.
o Kentucky - Robt H. Davis listed as the incorporator

• The audit committee or board should review the above list and determine if any additional
inquires need to be made.
12

Company Website Search H M L
X
Background:
This test was included as an internal audit step to research the domain name LICOA.com.
Key Highlights:
• The following was found during the search for the name LICOA.com:
o Registrar: Wild West Domains, LLC
o Registrant Name: Jeff Casey
o Server: whois.wildwestdomains.com
o Registrant Organization: Life Insurance Company of Alabama
o Registrant Email: jcasey@licoa.com
o Admin: Jeff Casey
o Admin Organization: Life Insurance Company of Alabama
o Tech Organization: Life Insurance Company of Alabama
o Tech email: jcasey@licoa.com
o Expiration date: July 22, 2015
o On the website www.scamadvisor.com Jeff Casey is listed as owner of the website
• Extensible Provisioning Protocol (EPP) domain status codes, indicate the status of a domain
name registration. A particular domain may have more than one status code, but must have at
least one. The status codes for the Company's domain, which were set by the domain's
registrar are as follows:
o clientTransferProhibited - This status code tells your domain's registry to reject
requests to transfer the domain from your current registrar to another. If you do want
to transfer your domain, you must first contact your registrar and request that they
remove this status.
o clientUpdateProhibited - This status code tells your domain's registry to reject
requests to update the domain
o client RenewProhibited - This status code tells your domain's registry to reject
requests to renew your domain. It is an uncommon status that is usually enacted
during legal disputes or when your domain is subject to deletion.
o clientDeleteProhibited - This status code tells your domain's registry to reject requests
to delete the domain, name registration, which can prevent unauthorized deletions
resulting from hijacking and/or fraud.
13

Company Website Search (Continued) H M L
X

• There is no segregation of duties regarding the domain name. The owner of the website is an
employee of the Company, not the Company or shareholder.
• The audit committee or board should review the above list and determine if changes need to
be made.
• Note the expiration period is July, 2015.
14

New Policies or Changes to Policies Testing H M L
X
Background:
This test was an assessment of the internal controls related to new or changed insurance policies.
It was included in the internal audit plan due to the importance of proper documentation and set
up of insurance policies.
Scope and Approach:

Our evaluation included the following procedures related to new or changes to insurance policies
of the Company:
• Developed an understanding of the processes and controls in place for insurance policies.
• Understand the different types of polices and changes
• Randomly select one month to test new or changes to policies.
Key Highlights:
• Randomly selected the month of October 2014 to test certain insurance policies. The
following types and number of policies were tested for the month of October 2014.
o Policies issued and paid - 30 policies tested
 Application was included in the file
 Any changes in the policy between completing the application and the policy
becoming effective was in the file, if necessary.
 The face amount of life insurance policies agreed between the application and
what was recorded.
 Commission was property set up for the agent(s).
 Medical records or other types of verification was included in the file, if
necessary.

• During the month of October 2014, we noted no additional suggestions for improvements or
observations. There were no exceptions noted during our testing.
15

Travel and Entertaiment Policy H M L
X
Background:
Company’s travel and entertainment expenses. This risk for this control is considered high
because of the external compliance violations that could occur with the IRS and adverse
publicity if the policy is not followed properly.
Scope and Approach:

Our evaluation included the following procedures related to the travel and entertainment policy
of the Company:
• Developed an understanding of the processes and controls in place for travel and
entertainment by obtaining the Company’s Travel & Business Expense Reimbursement
Policy.
• Obtained a detail of all disbursements from accounts 185-Travel, 818-Entertainment, 817-
Meals and 816-Lodging for the year ended 2014. All expenses posted to these accounts were
tested for the following:
traveled to and from, mileage and receipts.
business purpose, name and location of where the meal took place, receipt and
date of the expense.
o Miscellaneous expense reimbursement should include a copy of the receipt,
names and identity of individuals present, business purpose and type of expense.
16

Travel and Entertaiment Policy (Continued)
Key Highlights:
• There were meal expenses without detailed receipts. Per Company policy, detailed receipts
are required for all meal and entertainment expenses in excess of $25.00.
• The Company should consider giving a more clear description of excessive alcohol charges,
or consider changing company policy. The policy states to limit the consumption of alcoholic
beverages during business functions, but excessive consumption is not clear.
• There were a few instances in which Company entertainment expenses were only Company
Executives, which is contrary to Company policy which states that approval for
reimbursement of entertainment expenses can only be granted if the person entertained has a
potential or actual business relationship with Life Insurance Company of Alabama.

• Evaluate the threshold of required detailed receipts for meals and action when a detailed
receipt is not presented.
• There needs to be a discussion of what is considered appropriate or excess for
reimbursing alcoholic charges.
• Entertainment expenses should follow the IRS guidelines for proper business expense;
otherwise they need to be reimbursed by the employee.
• From the previous testing of this policy, there have been significant improvements.
17
EXHIBIT
D
OF ALABAMA

AS OF DECEMBER 31, 2017
TABLE OF CONTENTS
PAGE
Controls tested:
Fixed Assets 4
Accounts Payable 5
Cash Receipts 7
Investments 8
Company Name and Agent Search 9
Company Website Search 10
Travel and Entertainment Policy 11
New Policies or Changes to Policy Testing 13
Board of Directors’ Minutes 14
Payroll 15
Summary of Suggestions for Improvements 17
2
through December. A summary of suggestions for improvement by control is included for your
information. Management may wish to develop a letter of response to this report to detail how
items are going to be implemented or that a change will not be placed into operation for a specific
suggestion.
1. Fixed Assets X
2. Accounts Payable X
3. Cash Receipts X
4. Investments X
5. Company Name and Agent Search X
6. Company Website Search X
7. Travel and Entertainment X
8. New Policies X
9. Board of Directors’ Minutes X
10. Payroll X
Assessment of Risk:
3

Fixed Assets H M L
X
Background:
This test was an assessment of the internal controls related to fixed assets. It was included in the
internal audit plan due to the importance of having proper capitalization or expensing procedures.
Scope and Approach:

 Developed an understanding of the processes and controls in place for fixed assets by obtaining
the Company’s capitalization policy.
 Evaluated the accuracy and completeness of expenses incurred during 2017 as they related to
fixed assets or repairs and maintenance and verified they were in compliance with the
Company’s policy. Evaluated the assets added to the fixed asset detail as being properly
capitalized and that asset lives were in compliance with the Company’s capitalization policy.
 Verified that the subsidiary ledger of fixed assets agreed to the general ledger.
Key Highlights:
 For the 2017 expenditures described above, no observations were noted.
 For the verification of the subsidiary ledger to the fixed asset schedule for the third and fourth
quarter, no observations were noted.

 During 2017 testing, we noted no additional suggestions for improvements or observations.
4

X
Background:
importance of having proper controls over expenses incurred by the Company and proper payment
and review procedures.
Scope and Approach:

Our evaluation included the following procedures related to the accounts payable of the Company:
 Developed an understanding of the processes and controls in place for accounts payable by
obtaining the Company’s cash disbursement policy. Developed an understanding of each key
 Obtained a detail of all disbursements from account 112200 for the last six months of the 2017
year and sorted the detail by check type. Randomly selected 30 checks from each type of
disbursement: general accounts payable expenses, LSP and HCP expenses to test for proper
key control compliance.
 From the sample selected, each significant control area for general accounts payable was tested
for proper compliance with the policy. Controls tested were as follows:
o Check amount posted to the general ledger agreed to the electronic system scanned
file.
 From the sample selected, each significant control area for LSP disbursements was tested for
o Approval of payment was noted.
o Check amount posted to the general ledger agreed to the electronic system scanned
file.
5

Accounts Payable - Continued H M L
X
 From the sample selected, each significant control area for HCP disbursements was tested for
o Check copy was located in the electronic system.
o Documentation was in the electronic policy folder stating why there was a
reimbursement and medical reports, if necessary, were included.
o Payment was approved and agreed to policy application
Key Highlights:
 For the sample of general expenditures, LSP expenditures and HCP expenditures selected for
the last six months of the 2017 year, no observations were noted.

 During the last six months of the 2017 year testing, we noted no additional suggestions for

 During the third and fourth quarters of 2017 testing, we noted no additional suggestions for
6

Cash Receipts H M L
X
Background:
This test was an assessment of the internal controls related to accounts receivable/cash collections. It was
included in the internal audit plan due to the importance of having proper controls over receipts that are
deposited or mailed to the Company.
Scope and Approach:

 Developed an understanding of the processes and controls in place for cash receipt by obtaining the
Company’s cash receipt policy. Developed an understanding of each key control the Company has
over cash receipts.
 Obtained a detail of all receipts in account 112100 for the 2017 year. Randomly selected 60 receipts
to test for proper key control compliance. The sample included both ACH and check deposits.
 From the sample selected, each significant control area for cash receipts was tested for proper
compliance with the policy. Controls tested were as follows:
o Deposit amount was agreed to supporting documentation and checks deposited were footed
with a control tape.
o Summary control slips were scanned for electronic filing, deposited into the bank account
and recorded in the general ledger.
o ACH and check deposit amounts were traced to clearing the bank statement.
 Reviewed two months’ bank reconciliations for proper reconciliation and review.
 One day's deposit detail was received that listed each policy holders account number and amount
paid. This detail was footed and agreed back to the deposited amount. Each policy holder's
payment was traced to being properly applied to their account balance in the general ledger system.
Key Highlights:
 For the sample of cash receipts selected for the 2017 year, no observations were noted.
 During the review of the bank reconciliations there were no observations noted.
 During the testing of one day's deposit detail there were no observations noted.

7

Investments Observations by Risk
H M L
X
Background:
internal audit plan due to the importance of having proper investment policies and procedures due
to the value of the Company’s balances.
Scope and Approach:

 Developed an understanding of the processes and controls in place for investments by
 Agreed each month’s postings from the brokerage statement activity to the general ledger from
July 2017 to December 2017 and suggested any journal entries as necessary.
 Compared investment holdings at each quarter end to Company’s investment policy to test that
all were within policy limits.
Key Highlights:
 There were no significant differences between the investment statements and the posting in the
general ledger for the period from July 2017 until December 2017. Any monthly differences
were timing differences that cleared the next month.

 Multiple bond holdings had a book value in excess of the $2 million limit imposed by the
Company’s investment policy
8

Company Name and Agent Search H M L
X
Background:
This test was included as an internal audit step to research no individual or company has filed for
a name similar to Life Insurance Company of Alabama.
Key Highlights:
 Life Insurance Company of Alabama was registered in the following states:
o Alabama - Lynn Loer listed as the registered agent
o Georgia - Samuel Pierce, Jr. listed as registered agent, Clarence Daugette, III listed as
CEO
o Tennessee - No agent listed, dissolved; inactive
o Arkansas - No agent listed
o Florida - Steven Keck and Lynn Lowe listed as officers, Clarence Daugette, III listed
as CEO
 Life Insurance Co. of Alabama was registered in the following state:
o Alabama - J S Holleman listed as the incorporator located in Montgomery, AL.
 Alabama Life Insurance Company was registered in the following state:
o Alabama - A L Welch listed as the registered agent, dissolved 2001
 LICOA Brokerage Services, Inc. was registered in the following state:
o Alabama - Raymond Renfrow, Jr. listed as the registered agent.
 LICOA Employee Benefits, Inc.
o Mississippi – Billy West listed as the registered agent, dissolved.
 LICOA, Inc.
o Oklahoma - Kent Frates listed as the agent
 LICOA National, Inc.
o Kentucky - Robert H. Davis listed as the incorporator, Inactive.

 The audit committee or board should review the above list and determine if any additional
inquires need to be made.
9

Company Website Search H M L
X
Background:
This test was included as an internal audit step to research the domain name LICOA.com.
Key Highlights:
 The following was found during the search for the name LICOA.com:
o Registrar: Wild West Domains, LLC
o Registrant Name: Clarence Daugette
o Server: whois.wildwestdomains.com
o Registrant Organization: Life Insurance Company of Alabama
o Registrant Email: jcasey@licoa.com
o Admin: Clarence Daugette
o Admin Organization: Life Insurance Company of Alabama
o Tech Name: Clarence Daugette
o Tech Organization: Life Insurance Company of Alabama
o Tech email: jcasey@licoa.com
o Expiration date: July 23, 2017
o On the website www.whois.wildwestdomains.com Jeff Casey is listed as owner of the website
 Extensible Provisioning Protocol (EPP) domain status codes, indicate the status of a domain
name registration. A particular domain may have more than one status code, but must have at
least one. The status codes for the Company's domain, which were set by the domain's registrar
are as follows:
o clientTransferProhibited - This status code tells your domain's registry to reject
requests to transfer the domain from your current registrar to another. If you do want
to transfer your domain, you must first contact your registrar and request that they
remove this status.
o clientUpdateProhibited - This status code tells your domain's registry to reject requests
to update the domain
o clientRenewProhibited - This status code tells your domain's registry to reject requests
to renew your domain. It is an uncommon status that is usually enacted during legal
disputes or when your domain is subject to deletion.
o clientDeleteProhibited - This status code tells your domain's registry to reject requests
to delete the domain, name registration, which can prevent unauthorized deletions
resulting from hijacking and/or fraud.

We noted no additional suggestions for improvements or observations.
10

Travel and Entertainment Policy H M L
X
Background:
Company’s travel and entertainment expenses. This risk for this control is considered high because
of the external compliance violations that could occur with the IRS and adverse publicity if the
policy is not followed properly.
Scope and Approach:

Our evaluation included the following procedures related to the travel and entertainment policy of
the Company:
 Developed an understanding of the processes and controls in place for travel and entertainment
by obtaining the Company’s Travel & Business Expense Reimbursement Policy.
 Obtained a detail of all disbursements from accounts 185-Travel, 818-Entertainment, 817-
Meals and 816-Lodging for July 2017 to December 2017. All expenses posted to these
accounts were tested for the following:
traveled to and from, mileage and receipts.
business purpose, name and location of where the meal took place, receipt and date
of the expense.
o Miscellaneous expense reimbursement should include a copy of the receipt, names
and identity of individuals present, business purpose and type of expense.
11
Travel and Entertaiment Policy (Continued) H M L
X
Key Highlights:
 There were meal expenses without detailed receipts. Per Company policy, detailed receipts are
required for all meal and entertainment expenses in excess of $25.00. This policy is rarely
followed.
 IRS guidelines state that golf outings must be directly before or after a business discussion that
includes at least one potential or current business contact not associated with LICOA. One
exception is that of Conferences in which golf is an included activity of the conference. Golf
outings during LICOA sponsored trips are not considered business expenses and should be
reimbursed by the employee.
 Some expenses listed under meals or entertainment upon closer inspection were actually
personal items. These are personal expenses and should be reimbursed by the employee.

 Some expenses lacked business purpose explanation. All expenses for meals and
entertainment require not only those present, but also the business purpose for the
expenses.
Additional Notes:
 Starting in 2018, the IRS no longer allows any deduction for entertainment expenses. The
IRS defines entertainment as “any activity generally considered to provide entertainment,
amusement, or recreation. Examples include entertaining guests at nightclubs; at social,
athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting,
fishing, vacation, and similar trips.” (IRS pub 463)
12

New Policies or Changes to Policies Testing H M L
X
Background:
This test was an assessment of the internal controls related to new or changed insurance policies.
It was included in the internal audit plan due to the importance of proper documentation and set
up of insurance policies.
Scope and Approach:

Our evaluation included the following procedures related to new or changes to insurance policies
of the Company:
 Developed an understanding of the processes and controls in place for insurance policies.
 Developed an understanding of the different types of polices and changes
 Randomly selected one month to test new or changes to policies.
Key Highlights:
 Randomly selected the month of November 2017 to test certain insurance policies. The
following types and number of policies were tested for the month of November 2017.
o Policies issued and paid - 30 policies tested
 Application was included in the file
 Any changes in the policy between completing the application and the policy
becoming effective was in the file, if necessary.
 The face amount of life insurance policies agreed between the application and
what was recorded.
 Commission was property set up for the agent(s).
 Medical records or other types of verification was included in the file, if
necessary.

 During the month of November 2017, we noted no additional suggestions for improvements
or observations. There were no exceptions noted during our testing.
13

Board of Directors’ Minutes Review H M L
X
Background:
This test was a review of the minutes from the quarterly Board of Directors meetings. It was
included in the internal audit plan due to the importance these meetings as well as the proper
documentation of them.
Scope and Approach:

Our evaluation included reviewing the minutes from the quarterly Board of Directors’ meetings.

 During the 2017 review, we noted no additional suggestions for improvements or observations.
14

Payroll H M L
X
Background:
This test was an assessment of the internal controls related to payroll. It was included in the
internal audit plan due to the importance of having proper payroll policies and procedures. This
is an area that can be subject to external audits from federal, state or local agencies.
Scope and Approach:

Our evaluation included the following procedures related to payroll of the Company:
 Developed an understanding of the processes and controls in place for payroll.
 Received a list of all employees employed as of October 2017 and selected 30 employees for
testing (not selecting employees from previous reports testing).
 The following items were tested in the employee files for the 30 employees selected:
o Salary was approved in the employee file or minutes
o Employee evaluations were in the file, if required
o An I-9 form was completed if the employee was hired after the date required
o A copy of the employee’s driver’s license was in the file, if required
o A copy of the employee's social security card was in the file, if required
o A signed confidentially agreement was in the file.
o An application was in the file
o E-verify was completed if the employee was hired after the requirement date
o A new hire form was completed if hired after the requirement date
o A form A-4 and W-4 was completed
 The following items were tested for the month of November 2017 payroll for the 30 employees
selected:
o The gross amount paid agreed to the approved payroll amount in the employee file
o A time sheet was completed, signed by the employee, approved and hours agreed to
the gross amount paid, if required
o Any stick time or vacation time included in the payroll was approved
o The total amount paid for the month of November 2017 agreed to the amount posted in
the general ledger for November 2017
 The total amount paid, net of withholdings, in November was traced to the December bank
statements as properly clearing the bank account.
 For the payroll dated November 30, 2017, the following items were recalculated for the 30
employees selected:
o FICA
o City of Gadsden withholding
o 401(k) withholding amount
15

H M L
Payroll – Continued X
 Obtained a detail of the accrued sick leave hours as well as the hourly rates of the
corresponding employees.
 Attempted to obtain a detail of the sick leave taken by company executives over the last three
years.
Key Highlights:
 There were no exceptions noted during the testing of the employee files.
 There were no exceptions noted while testing the month of November 2017 payroll.
 There were no exceptions noted while recalculating the tax returns examined.
 There were no exceptions noted while agreeing the net amount paid for February to the bank
statements.
 There were no exceptions noted during the recalculation of the FICA amounts withheld.
 There were no exceptions noted during the recalculation of the City of Gadsden withholding.
 There were no exceptions noted during the recalculation of the 401(k) withholding amounts.

16
Summary of Suggestions for Improvements
Fixed Assets
Accounts Payable
 During the third and fourth quarters of 2017 testing, we noted no additional suggestions for
Cash Receipts
Investments
 Multiple bond holdings had a book value in excess of the $2 million limit imposed by the
Company’s investment policy.
Company Name and Agent Search

 The audit committee or board should review the list and determine if any additional inquires need to be
made.
Company Website Search

Travel and Entertainment

 Some expenses lacked business purpose explanation. All expenses for meals and
entertainment require not only those present, but also the business purpose for the
expenses.
Additional Notes:
 Starting in 2018, the IRS no longer allows any deduction for entertainment
expenses. The IRS defines entertainment as “any activity generally
considered to provide entertainment, amusement, or recreation. Examples
include entertaining guests at nightclubs; at social, athletic, and sporting
clubs; at theaters; at sporting events; on yachts; or on hunting, fishing,
vacation, and similar trips.” (IRS pub 463)
New Policies
 During the month of November 2017, we noted no additional suggestions for improvements or
observations. There were no exceptions noted during our testing.
Board of Directors’ Minutes

Payroll
17
EXHIBIT
E
EXHIBIT
F
From: Scully & Scully <customerservice@scullyandscully.com>
Sent: Tuesday, January 08, 2019 2:29 PM
To: Michael Causey
Subject: [EXTERNAL] Order Confirmation #S0224602

Order Confirmation
Ship Method WHITE GLOVE /

Order Number S0224602
MANNA
Billing Address
Shipping Address
MICHAEL CAUSEY
MICHAEL CAUSEY
302 BROAD STREET
302 BROAD STREET
GADSDEN, AL 35901
GADSDEN, AL 35901
ITEM QTY TOTAL
Presidential Wrenn s-t 1 $4,350.00

Chair document navy
HMR9855ST-DOCN
SUBTOTAL $4,350.00
SALES TAX $0.00
SHIPPING $437.00
TOTAL $4,787.00
You will receive an email containing your tracking number as soon as your order ships.
Questions? Please email us at customerservice@scullyandscully.com or call us toll-
free at 800-223-3717 Mon - Sat between 9:00am and 6:00pm EST.
YOU MIGHT ALSO LIKE

Scully & Scully
504 Park Avenue | New York, NY 10022-1101

ASSET LISTING
Life Insurance Company of Alabama - December 31, 2019
Date Acq Description
G.L. A/C#: 10410 - REAL ESTATE OCCUPIDE BY C

7/28/2017 Remodel Accounting - 314
12/29/2017 Betterment to bldg. 308
3/20/2018 Elevator modernization - new motor, electrical components, board
3/29/2018 New roof 302
3/29/2018 New roof 308
3/29/2018 New roof 310
5/8/2018 REMODEL EXECUTIVE UPSTAIRS
7/16/2018 Elevator - new hydraulic lines
July 2018 - June 2019 Renovations bldg 302
G.L. A/C#: 10430 - INVESTMENT REAL ESTATE

2/23/2017 New Roof - 322 Broad St
G.L. A/C#: 118 - FURNITURE & FIXTURES

8/9/2017 Desk - Accounting - Amy Hudgins
8/9/2017 Desk - Accounting - Cassie Chapman
8/9/2017 Desk - Accounting - Chakeeta Boateng
8/9/2017 Desk - Accounting - Cindy Abbott
8/9/2017 Desk - Accounting - Jina Capes
8/9/2017 Desk - Accounting - Karmen Grant
1/9/2018 Desk - upstairs - executive L unit
1/9/2018 Storage Credenza - upstairs - agency
2/7/2018 Sofa - Carlisle 76" Max Cream - upstairs agency break room
3/16/2018 Desk - Becky
3/16/2018 Desk - Beverly
5/4/2018 BLUE CREAM CHEST
7/31/2018 Storage cabinet for Cassie
1/4/2019 Refrigerator for board room
1/8/2019 Desk Chair - Clarence - Presidential Wrenn Swivel
1/11/2019 Large Hicks Pendant in Brass & Bronze #1
1/11/2019 Large Hicks Pendant in Brass & Bronze #2
1/11/2019 Nota Lamp in Denim #1
1/11/2019 Nota Lamp in Denim #2
1/11/2019 Two Tiered Chandelier in Brass
1/15/2019 Presidio Settee, Saddle Leather
1/23/2019 Carmen Grasscloth Credenze - Navy
1/24/2019 Board Room Table
2/1/2019 Firesafe - 4 drawer - legal - Jason #1
2/1/2019 Firesafe - 4 drawer - letter - Jason #1
2/1/2019 Firesafe - 4 drawer - letter - Jason #2
2/4/2019 Acanthus 50x60 Mirror, Mahogany - Clarence
2/7/2019 Desk & Drawers - Gail Black
2/7/2019 Desk - Zach Lindsey
2/7/2019 Desk, credenza, drawer - Hoyt Casey
2/7/2019 Desk, credenza, drawer - Jane Stewart
2/7/2019 Desk, credenza, drawer - Lori Urban
2/7/2019 Fire Alarm System
2/12/2019 Desk - claims office #4
2/20/2019 Desk - Alie
2/20/2019 Desk - Brooke
2/20/2019 Desk furniture - Jason
2/20/2019 Dining Table & Chairs - Claims
2/27/2019 Desk - Amanda
2/27/2019 Desk - IS #1
2/27/2019 Desk - IS #2
2/27/2019 Desk - Imaging #1
2/28/2019 Desk & Drawers - Scott
2/28/2019 Desk - Jimmy Jones
2/28/2019 Gold glass console
2/28/2019 Secretary table
3/4/2019 Exeter Side Chair Leopard #1
3/4/2019 Maia Chair, Wingate Linen #1
3/4/2019 Maia Chair, Wingate Linen #2
3/4/2019 Sofa - candidocean
3/5/2019 Desk & Lateral Files - Tim
3/5/2019 Desk - Underwriting #1
3/19/2019 Dining Table & Chairs - Imaging
3/21/2019 Custom Botanical by Lindsey artwork - Alie's office #1
3/22/2019 Desk - Joseph
3/22/2019 Desk - Larry
3/29/2019 Lateral File - 4 drawer - Meredith
4/9/2019 4 DWR LGL Fire File
5/14/2019 Refrigerator - upstairs auditorium
5/14/2019 Refrigerator - upstairs loung kitchen
5/15/2019 Settee - Executive Hall
6/6/2019 Desk - Call Center - #1
6/6/2019 Desk wtih credenza and lateral files - Steve
6/13/2019 Table for Alie's office
G.L. A/C#: 130 - EDP EQUIPMENT

1/11/2017 Computer - Printshop/Olivia
1/30/2017 APC Smart-UPS X 3000 Rack/Tower LCD
2/27/2017 Envelope printer with Fiery RIP
3/10/2017 New Imaging Sys - HPE ProLiant DL380 Gen9-Xeon E5-2620V4
3/22/2017 Intel I7 Computer sytem w/ 27" LCD - Clarence
4/18/2017 HP Color Laser Printer to replace color copier
4/27/2017 48 Port Managed Fiber Switch
8/31/2017 Computer system - Agency - Janice Garrett-Intel 15, 3 monitors
9/19/2017 iPad Pro 12.9" - Agency
10/12/2017 Lenovo Yoga 710 I7 - Steve Keck
11/21/2017 Computer for Call Center - Intel 15 processor
11/21/2017 Lenovo Yoga I5 - Ray - Agency
11/21/2017 Lenovo Yoga I7 - Accounting
12/5/2017 iPad Pro 10.5 inch - Pro Wi-Fi + Cellular 512GB Space Gray - Lynn
12/5/2017 iPad Pro 10.5 inch Wi-Fi + Cellular 512 GB Space Gray - Hoyt
3/2/2018 Microsoft Surface Book 2 Intel 15 - IT Dept
3/8/2018 Computer for IT Dept
3/8/2018 Lenovo Yoga 720 15" Laptop - Ken Lewis
3/14/2018 APC Batteries (2 - to replace bad batteries)
3/14/2018 Sonic Wall NSA 4600
3/30/2018 Lenovo Yoga 720-151KB w/ adapters for Agency
4/25/2018 New Off-Site Back-up Servers HP Gen 10 2X Xeon processor
4/25/2018 New Off-Site Back-up Servers HP Gen 10 2X Xeon processor
5/23/2018 Backup Tape Drive - Quantum Rackmount Tap Drive LTO-8
6/8/2018 H/W Acquisition
6/14/2018 Apple ipad pro - 256gig - wifi & cell
6/15/2018 Computer - Intel 13 processor - Acct
6/15/2018 Computer - Intel 13 processor - Printshop
7/11/2018 Lenove Yoga 730 - IT Dept
8/8/2018 Memory for Umware Server
9/21/2018 SAN host VMware data - MSA2052 SAN Dual Controller,hardrive,tranceiver
9/28/2018 New Production Printers for InsPro HP Laserjet Enterprise M806x
9/28/2018 New Production Printers for InsPro HP Laserjet Enterprise M806x
10/10/2018 Aruba 48G POE+ 48 Port Gigabit Layer 2 Edge Switch
10/31/2018 Offsite Backup/Firewall Atlanta - TZ400 Sonic Wall & Rackmount for Wall
11/15/2018 Lenovo Yoga 730 Laptop - Debbie
12/20/2018 Samsung Laptop - IT
12/21/2018 Operator Work Station - Intel 15 Processor
12/28/2018 HP Gen 10 Server
12/28/2018 HP Gen 10 Server
1/14/2019 APC Smart UPS Battery Back (2) & Rack/Tower
1/25/2019 Cabinet, Batter Backup, Switch, Network Patch Panesl, POE Adapter
1/25/2019 Ipad Pro 11" w/ pencil - Clarence
1/25/2019 Samsung Notebook 9 Pro - IT Dept
1/29/2019 900 GB Hard drive #1
1/29/2019 900 GB Hard drive #2
3/15/2019 Computer
3/29/2019 Computer #1
3/29/2019 Computer #2
3/29/2019 Computer #3
3/29/2019 Computer #4
3/29/2019 Lenovo Thinkpad I7
4/5/2019 Lenovo Yoga laptop - ACCT - Katrina
4/26/2019 Backup Server Storage
5/24/2019 Apple Ipad silver w/ pencil - Hoyt
5/29/2019 Scanner for Liz - Epson DS-570
6/6/2019 Aruba 48G POE+ 48 Port Gig Layer 2 Edge Switch
6/13/2019 Apple Ipad pro 11 - Clarence
6/13/2019 Avaya IPO500v2 30port Digital Station Module w/ Battery Backup
G.L. A/C#: 133100 - 133100

12/3/2018 Minivan
Vendor Cost
Greer Building Contractors LLC pd ck 3178256 100,537.00

Greer Building Contractors LLC pd ck 3181779 58,982.00
Bagby Elevator pd cks 3178254 3182181 3183099 47,992.00
GKL Companies Inv 003200 pd ck 3183188 69,000.00
GREER BLDG INV 1229 - PD CK 3183810 29,864.00
Bagby Elevator pd cks 3184474 3184832 13,578.00
Greer Building Contractors LLC 448,912.81
2,439,249.43
32,700.00
32,700.00
Observer inv 5394922 pd ck 3178929 1,434.44

Observer inv pd ck 3178929 1,269.85
Observer Supply inv 5401349-0 pd ck 3181274 2,395.80
Observer Supply Inc Inv 5401349-0 pd ck 3181274 1,265.00
Stock & Trade Design Co - pd via American Expr 1,328.80
BIRMINGHAM WHOLESALE FURNITURE CO PD AMEX 2,337.50
Observer Supply inv 5408810 - pd ck 3185103 1,129.70
pd via AMEX - Lowe's 1,626.90
pd via AMEX - Scully and Scully 4,787.00
pd via AMEX Hiltz-Lauber Furnishings, Inc. 1,020.87
pd via AMEX Hiltz-Lauber Furnishings, Inc. 1,020.87
pd via AMEX - Hiltz Lauber Furnishings 1,294.59
pd via AMEX - One Kings Lane 2,206.50
pd via AMEX - Society Social 2,375.00
pd via AMEX - The Nest 4,500.00
Observer - Inv 5415049 pd ck 3187910 2,860.00
Pd via AMEX - One Kings Lane 3,224.00
Observer Inv 5415211 pd ck 3187910 3,036.00
Observer Inv 5415204 - pd ck 3187910 2,068.00
Observer inv 5415213 - pd ck 3187910 6,120.40
Alabama Fire Control Systems inv 539 pd ck 3187787 15,788.75
Observer 5415539 pd ck 3187910 3,135.00
Pd via AMEX Serena & Lily 3,437.28
pd via AMEX Birmingham Wholesale 1,114.57
pd via AMEX - Birmingham Wholesale 3,593.91
Pd via AMEX - Mrs. Howard 1,698.84
Pd via AMEX - Mrs. Howard 1,698.84
Pd via AMEX Birmingham Wholesale 3,297.80
Pd via AMEEX SB - Sarah Bartholmew 1,093.51
Lowe's pd via AMEEX 2,748.90
Lowe's pd via AMEEX 2,748.90
Birmingham Wholesale Furniture Co pd via AMEEX 2,275.90
Observer - pd ck 3188444 1,108.79
Observer - pd ck 3188444 1,108.79
Observer - pd ck 3188444 1,108.79
Observer - pd ck 3188444 1,108.79
Observer - pd ck 3188444 1,108.79
Observer - pd ck 3188444 1,108.79
Observer - pd ck 3188444 1,108.79
Observer - pd ck 3188444 1,108.79
Observer - pd ck 3188444 1,108.79
The Nest pd via AMEX 1,320.00
202,344.58
Micro Excell inv 20269 - pd ck 3174459 1,378.31

Micro inv 20280 - pd ck 3175842 2,561.45
IntoPrint inv 181564 - pd ck 3175747 27,376.55
Mico inv 20347 - pd ck 3175981 23,604.77
Micro inv 20356 - pd ck 3175981 2,027.35
Micro Excel inv 20385-pd ck 3176561 3,651.45
Micro Excell Inv 20590 - pd ck 3179358 1,253.45
Micro Excell Inv 20625-pd check 3179978 1,852.95
Micro Excell Inv 20835 pd ck 3183132 1,649.95
PAS-Hosting - paid ck 3184343 48,000.00
Micro Excel inv 20985 - pd ck 3184612 1,066.56
Micro Excel inv 20985 - pd ck 3184612 1,066.56
Micor Excell Inv 21086 - pd ck 3185645 4,135.45
Connection invo 10772007.01 - pd ck 3186063 46,709.47
Chief IT Services - pd ck 3186310 1,798.50
Micro Excell - inv 21344, pd ck 3187377 1,132.56
Chief IT Services inv 190214-1 pd ck 3187954 11,179.04
Micro Exell Inv 21410 pd ck 3187845 1,539.94
Micro Excell inv 21515 pd ck 3188106 1,462.45
Chief IT inv 190423-1 pd ck 3188192 1,798.50
Eric McBryar inv 1025 pd ck 3188559 1,490.00
389,134.92
19,923.00
19,923.00
3,083,351.93
EXHIBIT
G
EXHIBIT
H
EXHIBIT
I
SPECIAL MEETING OF THE
BOARD OF DIRECTORS

Wednesday June 17, 2020

A special meeting of the Board of Directors was called to review an opportunity to purchase a
large block of $5 and $1 par stock.

Due to the current COVID‐19 pandemic the opportunity was emailed to all members for their
vote.

ROLL CALL:

All members were sent an email regarding the offer and all members responded.

Rosalie Renfrow Causey M. Lynn Lowe
Gerald Ray Smith, Jr. Anne Daugette Renfrow
Clarence W. Daugette, III Raymond R. Renfrow, Jr.
Alburta D. Lowe Herman Warren Cobb

The Chairman declared a quorum present and the meeting duly qualified for the transaction of
business.

MINUTES:

As this a meeting conducted by email to vote on the stock purchase, there was no reading of the
prior meeting minutes.

The family of Mayo Clark contacted the company as they are interested in liquidating their stock
position. They have offered their stock holdings for the sum of $400,000.

Purchase of the stock, being 5,346 shares of one‐dollar par and 1,440 shares of five‐dollar par for the
sum of $400,000 by the Company was unanimously approved.

There being no further business and upon motion duly made and seconded, the meeting
adjourned.
_______________________
J. Steven Keck, Secretary

EXHIBIT
J
January 16, 2020
W. Roscoe Johnson, III

Attorney at Law, LLC
P. 0. Box 1667
Gadsden,AL 35902
RE: Stockholder #02425 - George W. Barnett & Anita R. Barnett JTTEN
Dear Mr. Johnson:
Enclosed please find Clarence Daugette's check number 3104 in the amount of
$510.00 made payable to the Anita R. Barnett Estate. This represents the purchase
of the Barnett's 51 shares of Class A Common $1 par Life Insurance Company of
Alabama stock at the rate of $10.00 per share.
We appreciate the opportunity to be of service to you. Please do not hesitate to

contact me should you have any questions.
Sincerely,
Lori A. Urban
Stockholder Accounts
/lu
Enclosure(s)
February 3, 2020
Kathryn B. Hendricks
230 The Prado NE
Atlanta, GA 30309-3336
RE: Stockholder #21825
Dear Mrs. Hendricks:
As per your conversation with Clarence Daugette enclosed please find his check number
1553 in the amount of $2,715.00 made payable to you. This represents the purchase of
your 56 shares of Class A Common $1 par Life Insurance Company of Alabama stock at
the rate of $15.00 per share and 15 shares of Common $5 par at the rate of $125.00 per
share that you both agreed upon.
We appreciate the opportunity to be of service to you. Please do not hesitate to contact

me should you have any questions.
Sincerely,
Lori A. Urban
/lu
Enclosure
January 8, 2020
Kathryn B. Hendricks
230 The Prado NE
Atlanta, GA 30309-3336
Dear Mrs. Hendricks:
Please find enclosed, Stock Certificate #89330 which represents 56 shares of Class A
Common $1 par Life Insurance Company of Alabama stock and Stock Certificate #13586
for 15 shares of Common $5 par stock that you inherited from your father, S. Grantland
Barnes. Please sign the enclosed Stock Certificate receipts and return them to me in the
enclosed self-addressed stamped envelope. In addition, please find enclosed check
#466909 in the amount of $52.40 which represents the 2019 dividend that was returned.
You also stated that you would like to sell the stock. Enclosed please find a list of people
that would be interested in purchasing the stock. You can contact one or all of them to
negotiate a price. Our stock is listed over the counter if you would like to go through a
broker. The symbol for the $1 par is LINSA and the $5 par is LINS. If you accept one of
their offers, you don't have to send me the Stock Certificate receipts, but please sign the
back of the certificates and have your signature notarized.
If you should have any questions, do not hesitate to call me on my direct line 256-439-
3202 or toll free 1-800-226-2371.
Sincerely,
Lori A. Urban
/lu
Enclosures
February 3, 2020
Barbara Sokol
1891 Dobbs Road
Alexander City, AL 35010
Dear Mrs. Sokol:
Enclosed please find Clarence Daugette's check number 1552 in the amount of $390.00
made payable to you. This represents the purchase of your 6 shares of Class A Common
$1 par Life Insurance Company of Alabama stock at the rate of $15.00 per share and 3
shares of Common $5 par at the rate of $100 per share.

Sincerely,
Lori A. Urban
/lu
Enclosure(s)
January 28, 2020
Ms Lori A. Urban
LOCAOA
P. 0. Box 349
Gadsden, Alabama 35902
Dear Ms. Urban
1 have found the stock certificate that I had thought was misplaced. I will
include it in the packet.
I accept Mr. Clarence Daugette's offer of $15.00 per share of the Class A
Common $1.00 par stock of Life Insurance Company of Alabama and $100.00
per share of the Common $5.00 par stock, a total of $390.00.
January 23, 2020
Barbara Ann Bresler Sokol

1891 Dobbs Road
RE: Stock #05180
Dear Mrs. Sokol:
In response to our phone conversation yesterday, Clarence Daugette offered you $15.00
per share for your Class A Common $1 par Life Insurance Company of Alabama stock
and $100.00 per share for your Common $5 par stock, making a total of $390.00. We
also discovered that you are missing one of the certificates.
If you accept Mr. Daugette's offer, please sign the enclosed Lost Certificate Affidavit and
the six (6) certificates that you have and have them notarized. Return all to me along
with a written request that you accept Mr. Daugette's offer. I have enclosed a self-
addressed, stamped envelope for your convenience.
Please call me at 1-800-226-2371 or my direct line at 256-439-3202 if you should have

any questions.
Sincerely,
Lori A. Urban
/lu
Enclosure(s)
June 30, 2020
Robert F. Lisenba
2120 Eastwood Dr.
Merritt Island, FL 32952
Dear Mr. Lisenba:
As per your letter of June 18, 2020, please find enclosed Clarence Daugette's check
number 1565 in the amount of $1,824.00 made payable to you. This represents the sale
of your 32 shares of Class A Common $1 par Life Insurance Company of Alabama stock
at the rate of $12.00 per share and 8 shares of Common $5 par at the rate of $180.00
per share that you both agreed upon.

Sincerely,
Lori A. Urban
/lu
Enclosure
June 18, 2020

P.O. Box 349
Gadsden, AL 35902
Attn: Lori Urban
To Whom It May Concern,
I, Robert Ford Lisenba, wish to sell my shares of stock to
Clarence Daugette:
- 8 shares of $5 par stock at $180 per share
- 32 shares of $1 par stock at $12 per share
For a total of $1824.00
Sincerely,
/fo?JE-ho! ~
Robert Ford Lisenba
7281 Flagridge Dr.
Ooltewah, TN 37363
-i Lor; J
Pe.r our J, sc..uss1on 1

please, ma·, I cfiec1:
-1-o ;
!<ober+ L, si11bt.L..
J I ;;2.o ~a..s .f uooci Dr ·
M.er r, .J+ I5 fan c.J1 J:'l, :3 2 '1 51-
Jh a.n /C s 1 , /) . f /)
(?('t.,,n di)..., ~aw ho,,,
May 28, 2020
Robert F. Lisenba
7281 Flag Ridge Drive
Ooltewah, TN 37363
Dear Mr. Lisenba:
In response to the conversation that I had with your daughter, Linda, today, She stated that you
want to sell your stock which is 32 shares of Class A Common $1 par Life Insurance Company of
Alabama stock and 8 shares of Common $5 par stock. Enclosed please find a list of people that
would be interested in purchasing the stock. You can contact one or all of them to negotiate a
price. Our stock is listed over the counter if you would like to go through a broker. The symbol
for the $1 par is LINSA and the $5 par is LINS.
If you should have any questions, do not hesitate to call me on my direct line 256-439-3202 or
toll free 1-800-226-2371.
Sincerely,
Lori A. Urban
/lu
Enclosure
Lori Urban
From: Lori Urban

Sent: Tuesday, May 26, 2020 3:16 PM
To: 'Cheryl Alford'
Subject: RE: [EXTERNAL] Re-registration of stock certificates
Cheryl,
I will be looking for your mail this week. Below please find a list of people willing to purchase the stock.
Clarence Daugette 256-393-0316 cwd1951@aol.com

Steve Elrod 229-254-1550 steveelrod@yahoo.com
Brent Hill 256-504-4702
Steve Keck 256-613-5594 jskeck96@gmail.com
Ray Renfrow 256-390-0503
Billy Joe Watson 205-533-1033
Lori A. Urban
Executive Administrative Assistant
And Stockholder Accounts

P. 0. Box 349
Gadsden,AL 35902
(256) 439-3202
-----Original Message-----
From: Cheryl Alford <cralfordg@gmail.com>
Sent: Tuesday, May 26, 2020 12:53 PM
To: Lori Urban <lori@licoa.com>
Subject: [EXTERNAL] Re-registration of stock certificates
Lori,
In regard to our phone call last week concerning re-registering stock certificates from C.E. Reid or Eleanor Reid to the
estate Estate of Eleanor P. Reid, I have located all the stock certificates and am noting that Eleanor was misspelled on
most of the certificates.
I will be sending stock certificates, death certificates for both parents, and letters testamentary for Eleanor Reid and tax
ID for Eleanor P.Reid Estate by certified mail this week.
Also at your convenience please email me list of people that might be interested in buying this stock.
Thank you for your time in this matter.
Regards,
Cheryl R. Alford
1
May 8, 2020
Cheryl Alford
1517 Fair Way View
Birmingham, AL 35244
RE: Stock #39980 - C. E. Reid or Eleanor Reid
Dear Mrs. Alford:
In response to our phone conversation yesterday concerning your parents stock, our
records do indicate that they held one certificate for twenty-five (25) shares of Common
$5 par Life Insurance Company of Alabama stock and fourteen certificates for seventy-
eight (78) shares of Class A Common $1 par stock. You also stated that the certificates
cannot be located except for one; 66305.
To transfer the stock into your name, I will need the following:
1. Sign the enclosed Lost Certificate Affidavit and have it notarized.

2. Sign the back of the one certificate that you have, and have it notarized.
3. A certified copy of their Death Certificates and your mother's Letters
Testamentary.
4. A written request that we transfer the stock into your name.
Return these to me in the enclosed stamped self-addressed envelope and I will transfer
the stock. I have also enclosed a list of people that would be interested in buy the stock,
if you want to get in touch with one of them. If you want to go through a broker, the
symbol for the $5 par is LINS and the $1 par is LINSA.
Please do not hesitate to contact me if you should have any questions.
Sincerely,
Lori A. Urban
/lu
Enclosu re(s)
August 10, 2020
Cheryl Alford
1517 Fairway View Dr.
RE: Stockholder #40098 - Eleanor P. Reid Estate
Dear Mrs. Alford:
$3,592.00 made payable to the Estate of Eleanor Jeanette Reid a/k/a Eleanor P. Reid,
deceased. This represents the sale of 78 shares of Class A Common $1 par Life Insurance
Company of Alabama stock at the rate of $14.00 per share and 25 shares of Common $5
par at the rate of $100.00 per share.

Sincerely,
Lori A. Urban
/lu
Enclosure
Lori Urban
From: Lori Urban

Sent: Wednesday, July 8, 2020 11 :52 AM
To: 'Cheryl Alford '
Subject: LICOA Stock Shares
Mr. Daugette forwarded me your email and asked me to reply for him. He said that the current market price is $14.00
per share for the Class A Common $1 par and $100.00 per share for the Common $5 par and he will offer you those
prices. The total will be $1,092 for the $1 par and $2,500 for the $5 par, totaling $3,592.00. If you accept this offer,
please sign the back of the certificates and have them notarized. Return them to me with a written request to sale them
to him at the above prices and we will send you a check.
If you should have any questions, please do not hesitate to ask.
Sincerely,
Lori A. Urban

P.O. Box 349
Gadsden, AL 35902
(256) 439-3202
From: cwd1951@aol.com <cwd1951@aol.com>

Sent: Wednesday, July 8, 2020 11:34 AM
Subject: [EXTERNAL] Fwd: LICOA Stock Shares
Sent from AOL Mobile Mail

Get the new AOL app: mail.mobile .aol.com
On Monday, June 29, 2020, Cheryl Alford <cralfordg@gmail.com> wrote:
Mr. Daugette,
As a word of introduction I am Cheryl R. Alford, executor of the Eleanor P. Reid estate.
I was given your name as a shareholder of Life Insurance Company of Alabama stock by Lori Urban, Executive
Administrative Assistant for the company. She indicated you may be interested in acquiring additional shares.
The estate is the owner of 78 shares of Class A Common $1 par Life Insurance Company of Alabama stock (Certificate
#89349), and 25 shares of Common $5 par (Certificate #13600). I am interested in selling all these shares.
Please advise if you would be interested in buying these shares and if so what price you would offer.
If you are not interested in acquiring these shares please advise on anyone you think may be interested.
1
Regards,
Cheryl R. Alford
2
1517 Fairway View Drive
July 30, 2020
Ms. Lori Urban

P. 0. Box349
Gadsden,AL 35902
Subject: Stock sale of shares from the Eleanor P. Reid Estate to Mr. Clarence Daugette
Dear Ms. Urban,
Enclosed please find two Assignments Separate From Certificate for the Estate's shares
in Life Insurance Company of Alabama, Inc. The two Assignments reflect the sale of
stock certificates 13600 and 89349 from the Estate to Clarence Daugette. The estate is
selling the shares for the prices listed on the Assignments, for a total of $3,592.00.
If you have any questions, please give me a call (205-243-4013).
Thank you for your attention to this matter.
Regards,
(]/u,it-"1 l.-~ •tllJ-1JJL/--✓

,/ I
Cheryl R. Alfortl
June 3, 2020
Joseph M. Pollitt
104 Kenilworth Park Dr.
Apt. 3C
Towson, MD 21204
Dear Mr. Pollitt:
$1,056.00 made payable to you. This represents your sale of your 13 shares of Class A
Common $1 par Life Insurance Company of Alabama stock at the rate of $12.00 per
share and 5 shares of Common $5 par at the rate of $180 per share.

Sincerely,
Lori A. Urban
/lu
Enclosure(s}
sjz7/ z.. 6 zo
0- E,,,e; A. /J~/f-N
3.-rtr>Cl<./:k>Ll)e,,f?._ A~C/~7.S
~6. /3c,I[ ~49
Gt1--z:>~~JJ,I /tt-A-6J1/-IIYJ/1. ~~9tP2-
S,-~ CE::.R:ctF1C:-Ar£~ Le-ST /.sELL s't'bc.X.-S
I Lol SJ+ {D $/E;,LL Vl1Y S,l)ciLS Tb vViR...

CL,4-ftE./JC.£ DAtJ9ETc£ ~f2_
$ \ 8D/sJ,/AA.£. F~ my ;Q S-·p,4,:_ 5--(d:~S .df

1 tz. / sbJA-R-'c:-/ Ft?~ ni y f l r-:,:\--fZ. s-r~
FoR. A c::::e~D JbT~l.. oF 1 tJ oS-{p~ QO
(s-1a..E= k-r,A--c#~D MEMD -0A-r-1c::z:f -s / q 2-0 "
\\-tMJ,bl 1,0~ Fol<. f+L.L 'f t>t.JR J-l-,E.t.P W11H
flAY tee.-riFt cA;--re:s 'f"'H-,+-r W'£//C-E Li!:>>-r.
TTh4tulLS !
May 5, 2020
Joseph M. Pollitt
104 Kenilworth Park Dr.
Apt. 3C
Towson, MD 21204
RE: Stock #38876
Dear Mr. Pollitt:
In response to our phone conversation yesterday, our records do indicate that you own
five (5) shares of Common $5 par Life Insurance Company of Alabama stock and
thirteen (13) shares of Class A Common $1 par stock. You stated that you could not
locate the certificates.
To reissue the stock, I have enclosed a Lost Certificate Affidavit that will need to signed
and notarized. Return it to me along with a note stating that you wish for me to reissue
the certificates. I have also enclosed a list of people willing to buy your stock, or you
may go through a broker. We are traded over the counter. The symbol for the $5 par is
LINS and LINSA for the $1 par. The last I heard the stock was going for $175.00 for the
$5 par and $11.45 for the $1 par.
Please call me at 1-800-226-2371 or my direct line at 256-439-3202 if you should have

any other questions.
Sincerely,
Lori A. Urban
/lu
Enclosure(s)
LORI URBAN
Executive Administrative Assistant &Stockholder Accounts
··---------=
Life Insurance Company of Alabama Phone:256-439-3202
email: lorl@llcoa.com
March 16, 2020
Regina Graham
TrusseH, Funderburg, Rea, Bell & Furgerson, P.C.
1905 First Avenue, South
Pell City, AL 35125
RE: Randolph W. Carleton and Marie W. Carleton stock
Dear Gina:
Enclosed please find letters to both Robert A. Carleton and William R. Carleton, Jr. with
checks for the purchase of their parent's stock and uncashed dividend checks.

Sincerely,
Lori A. Urban
/lu
Enclosure(s)
HOME OFFICE • P.O. Box 349 • Gadsden, Alabama 35902 • Phone: 256-543-2022 • 800-226-2371 • www.licoa.com
~
LORI URBAN
Executive Administrative Assistant & Stockholder Accounts
Life Insurance Company of Alabama Phone: 256-439-3202

email: lori@licoa.com
March 16, 2020
William R. Carleton, Jr.

340 Watson Road
Cropwell, AL 35054
RE: Stockholder #07600, #07610 & #07615 - Randolph W. Carleton or Marie W.

Carleton
Dear Mr. Carleton:
$2,286.68 made payable to you. This represents your half of the purchase of your
parent's 185 shares of Class A Common $1 par Life Insurance Company of Alabama stock
at the rate of $13.91 per share and 20 shares of Common $5 par at the rate of $100 per
share. In addition, please find check number 466915 in the amount of $411.82 which
represents your half of the dividend checks that were never cashed.

Sincerely,
Lori A. Urban
/lu
Enclosure(s)
LORI URBAN
Executive Administrative Assistant & Stockholder Accounts
Life Insurance Company of Alabama Phone: 256-439-3202
email: lori@llcoa.com
March 16, 2020
Robert A. Carleton
4538 Wolf Creek Road, South
Pell City, AL 35128
RE: Stockholder #07600, #07610 & #07615 - Randolph W. Carleton or Marie W.

Carleton
Dear Mr. Carleton:
$2,286.67 made payable to you. This represents your half of the purchase of your
parent's 185 shares of Class A Common $1 par Life Insurance Company of Alabama stock
at the rate of $13.91 per share and 20 shares of Common $5 par at the rate of $100 per
share. In addition, please find check number 466916 in the amount of $411.83 which
represents your half of the dividend checks that were never cashed.

Sincerely,
Lori A. Urban
/lu
Enclosure(s)
Lori Urban
From: Gina Graham <gina@tfrblaw.com>

Sent: Friday, March 13, 2020 3:05 PM
To: Lori Urban
Subject [EXTERNAL] RE: Marie Carleton Death Certificate
Both Bill Carleton and Bob Carleton are in agreement to sell pursuant to your email below.
From: Lori Urban <lori@licoa.com>

Sent: Tuesday, March 10, 2020 4:52 PM
To: Gina Graham <gina@tfrblaw.com>
Subject: RE: Marie Carleton Death Certificate
I have someone that will offer the market price as of today. $13.91 per share for the Class A Common $1 par-185
= =
shares x $13.91 $2,573.35. $100 per share for the Common $5 par- 20 shares x $100 $2,000.00 for a total of
$4,573.35. The dividends that weren't cashed total $703.95, not $521.79. I will let you know when I have the checks in
t he mail.
Lori A. Urban

P. O. Box349
Gadsden, AL 35902
(256) 439-3202

Subject: [EXTERNAL] RE: Marie Carleton Death Certificate
William R. Carleton, Jr. d/o/b: 09/30/1960

340 Watson Road ss#: 419-02-5383
Cropwell, AL 35054
===================================-----------------
Robert A. Carleton d/o/b:02/08/1962
4538 Wolf Creek Road, South ss#: 419-02-5646
Pell City, AL 35128

That will be fine. I will need both of their addresses to put on the dividend checks.
Lori A. Urban
1
EJ<ecutive Administrative Assistant

P.O. Box 349
Gadsden, AL 35902
(256) 439-3202

On the dividend checks can you reissue and divide between Bill and Bob? Also, can the checks be sent to our office so
we have a record of what has transpired? Ill be glad to contact them as soon as I receive. If not, whatever you wish to
do as long as I can be kept in the loop. Thanks so much,
Gina

Perfect. When I find a buyer do you want me to get separate checks and mail them to each one? I also have $521.79 in
uncashed dividend checks.
Lori A. Urban

P. o. Box349
Gadsden, AL 35902
(256) 439-3202

Okay, I scanned and attached the death certificate. Let me know.

Can you resend it? It is not letting me open it.
Lori A. Urban
2

P. 0 . Box 349
Gadsden, AL 35902
(256) 439-3202

Subject: [EXTERNAL] Marie Carleton Death Certificate
Attached death certificate of Marie Carleton.
3
January 27, 2020
Mr. John Z. Hinds, III

6300 Moseley-Dixon Road
Macon, GA 31220
Dear Mr. Hinds:
$775.00 made payable to you. This represents the purchase of your 10 shares of
Class A Common $1 par Life Insurance Company of Alabama stock at the rate of
$15.00 per share and 5 share_s of Common $5 par at the rate of $125 per share.
We appreciate the opportunity to be of service to you. Please do not hesitate to

contact me should you have any questions.
Sincerely,
Lori A. Urban
/lu
Enclosure(s)
- - - - -- - - - - - - -
l.,,{e,,-:J:ns~rt)nc..e &Yn_f~"',t_ _ _ _ _ __
-~~
A-TTN : htJ~J "1?8~
Po. 'Box
---'--
:3'-1-9
- --
GtUlo~
-
4L as-902 - 998:r
-;/- - - - - ---
- -=-I w1sl, ~ _se// tL!l ti/'~e ·f-4a..7 -

S~c:ir'
_ I _!Wn fp c/are,.,e_e__~,7lil'le ZIT e., _
_ .t-ItJ-_(l-er .da.r_? /);,_,,- -the _~/- ~ s._6,eJ( a/) ✓ _
_ i /_ ZS 12-er
sfiMe. for -61.e -~ f"U"- s6'ot._t-i,._"f"_
_ I ~~n _-(Jo,r 11, -fo~I 4 .,;775.. __
- _Qjf\c.e,ref_r_, -
--~,-J~7i/ ,
-
'
--
'
- -
/
- - -----
EXHIBIT
K
Officer/Year Salary Bonus Total
Clarence William Daugette, III.
Through 6/30/2019 150006 37930 187,936
2018 284,774 66,256 351,030
2017 273,822 87,555 361,377
2016 266,709 88,084 354,793
2015 258,941 111,232 370,173
2014 251,399 110,869 362,268
Marvin Lynn Lowe

Through 6/30/2019 149,994 37,062 187,056
2018 284,753 65,441 350,194
2017 273,801 86,875 360,676
2016 266,690 87,403 354,093
2015 258,922 110,552 369,474
2014 251,381 110,185 361,566
Raymond Rudolph Renfrow, Jr.

Through 6/30/2019 149,994 37,062 187,056
2018 284,753 65,441 350,194
2017 273,801 86,875 360,676
2016 266,690 87,403 354,093
2015 258,922 110,552 369,474
2014 251,381 110,185 361,566
Jack Steven Keck

Through 6/30/2019 147,312 36,860 184,172
2018 279,121 61,735 340,856
2017 268,905 82,775 351,680
2016 261,920 83,294 345,214
2015 254,191 105,725 359,916
2014 246,885 105,801 352,686
Rosalie Renfrow Causey

Through 6/30/2019 149,994 37,062 187,056
2018 222,304 104,333 326,637
2017 88,855 31,101 119,956
2016 87,953 28,286 116,239
2015 72026 33944 105,970
2014 67015 29635 96650
Clarence Weyman Bracewell Jr.

2014 146562 43149 189711
Hoyt Russel Casey

Through 6/30/2019 59503 19895 79398
2018 114430 34224 148654
2017 110029 39893 149922
2016 123132 23984 147116
2015 102715 48818 151533
2014 99724 42924 142648
Jeffrey Lynn Casey
Through 10/31/2017 161622 29084 190706
2016 112858 19423 132281
2015 93039 43628 136667
2014 90329 38607 128936
Katrina Davis Hulsey

Through 6/30/2019 59503 19657 79160
2018 106992 29954 136946
2017 102877 35630 138507
2016 116044 19842 135886
2015 96039 43982 140021
2014 90329 38607 128936
Michael P. Causey
Through 6/30/2019 56802 19294 76096
2018 95604 28033 123637
2017 91927 32952 124879
2016 105190 17345 122535
2015 82667 18595 101262
2014 47000 5549 52549
Kenneth W. Lewis
Through 6/30/2019 98487 22287 120774
2018 189397 32020 221417
2017 182113 45154 227267
2016 194579 27691 222270
2015 155837 25866 181703
Libby Alaine Belyeu

2018 0 4271 4271
2017 115593 31735 147328
2016 82727 20231 102958
2015 68229 36946 105175
2014 66241 32434 98675
Debbie A Edmondson
Through 6/30/2019 49569 18832 68401
2018 81138 29009 110147
2017 72481 32838 105319
2016 82658 20222 102880
2015 68164 36930 105094
2014 66179 32421 98600
Tim Cole
May/June 2019 15003 15003
Zach Lindsey
May/June 2019 12003 12003
Scott Jones
May/June 2019 15003 15003
EXHIBIT
L
Compensation
Officers
7/30/2019‐Present
Clarence William Daugette, III. $ 344,259.74
Marvin Lynn Lowe $ 156,742.16
Raymond Rudolph Renfrow, Jr. $ 344,235.56
Jack Steven Keck $ 334,572.52
Rosalie Renfrow Causey $ 341,669.56
Hoyt Russel Casey $ 140,473.38
Katrina Davis Hulsey $ 136,622.38
Michael P. Causey $ 130,769.00
Kenneth W. Lewis $ 218,520.50
Debbie A Edmondson $ 120,229.50
Tim Cole $ 105,216.20
Zach Lindsey $ 85,716.20
Scott Jones $ 109,067.20
Directors
Gerald Ray Smith $ 9,500.00
Warren Cobb Jr. $ 9,500.00
Anne D. Renfrow $ 6,000.00
Alburta D. Lowe $ 6,000.00
Marvin Lynn Lowe $ 3,000.00
EXHIBIT
M
Projected 2019 - 2023 Budget
Prepared By: J. Steven Keck, FSA, MAAA
Date Prepared: November 19, 2018

Table of Contents 1
Tables of Contents
Chapter Page
1 Background and Intended Use

1.1 Background 3
1.2 Intended Use 3
2 Reliances and Limitations

2.1 Reliances 4
2.2 Limitations 4
3 2019 - 2023 Budget Summary

3.1 Description 6
3.2 Summary of 2019 - 2023 Budget 7
4 General Methodology
4.1 Outline of Procedure 15
4.2 Description of Inforce Models 15
5 Assumptions
5.1 Interest Rates 19
5.2 Mortality Rates 19
5.3 A&H Claim Costs & Trend Assumptions 22
5.4 Lapse Rates 23
5.5 Commissions 27
5.6 Expenses 29
5.7 Other Assumptions 29
5.8 Future New Business Production Assumptions 30
6 Model Validation
6.1 Initial Values 31
6.2 Actual versus Projected Analysis 32
Table of Contents 2
Tables of Contents
Chapter Page
7 Model Projection Runs 33

7.1 Whole Life
a. Inforce
b. New Business
7.2 Term Life
a. Inforce
b. New Business
7.3 FPU RPU ETI
7.4 Exhibit 7
7.5 Ordinary Annuities
7.6 Group Dental
a. Inforce
b. New Business
7.7 Other Group
7.8 Unlimited Cancer
7.9 Capped Cancer
a. Inforce
b. New Business
7.10 Intensive Care
7.11 Accident
a. Inforce
b. New Business
7.12 Disability
a. Inforce
b. New Business
7.13 HIP
a. Inforce
b. New Business
7.14 ADB
7.15 ROP
7.16 CI
a. Inforce
b. New Business
7.17 Older Lump Sum
Chapter 1: Background and Intended Use 3
Chapter 1
Background and Intended Use
1.1 Background
This is a report which outlines projected line item income and expenses for
calendar years 2019 through 2023.
This report summarizes the results of this analysis, and also documents the
considerations, methods and assumptions underlying the projections. Modeling
techniques which involved a large number of plan/age cells and sub-model
projections of cash flows and statutory earnings were used to make the
projections. For practical reasons, this report is presented in an overview format,
with sufficient information such that a qualified actuary could reproduce the results
of this report. Internal files which contain complete information pertaining to the
underlying detailed information in support of this summary have been prepared
and are available for review by persons authorized by the management of the
Company.
All projections performed during this analysis was done under the supervision of J.
Steven Keck, FSA, MAAA, the appointed actuary for the Company.
Actuarial methods, considerations and analyses used in the preparation of this

report conform to the appropriate Standards of Practice as promulgated by the
Actuarial Standards Board, which standards form the basis for this report.
1.2 Intended Use
The purpose of this report is to assist the owners and management of Life
Insurance Company of Alabama in determining a budget of income and expenses
for the next five calendar years. In addition, the budget projections for 2019
through 2023 are intended to provide further information requested by various
rating agencies. These results are not intended to be used for any other purpose.
Chapter 2: Reliances and Limitations 4
Chapter 2
Reliances and Limitations
2.1 Reliances
In developing this report, I have relied extensively on information produced by the

Company. Although independent verification of this information was not
undertaken, I did review certain portions of the information for reasonableness and
consistency. Reliance is placed on, but not limited to, the general accuracy of the
following information:
* The basic records, the statutory reserve valuation listings, other listings
produced from these basic records, and the basis upon which information
entered these valuations and listings.
* The information contained in the Statutory Annual Statements of Life

Insurance Company of Alabama for the years ending 2013 through 2017 and
the September 30, 2018 Statutory Quarterly Statement as filed with the
Alabama Department of Insurance.
* Information as to commissions, gross premiums, cash values, statutory

reserves, and policy benefits and provisions.
* GGY Axis software used in performing model projections.
The Company also employs the services of WA Consulting, LLC, an actuarial

consulting firm. This firm performs quarterly reserve processing from inforce
records provided to them by the Company as well as assisting in annual budget
and cash flow projections for use by the appointed actuary. I relied upon Mr. Jim
Karnow, ASA, MAAA, from WA Consulting, to construct the model and provide the
necessary output. I evaluated the results of the model for reasonableness and
consistency, however, direct inspection of the model input was not performed.
2.2 Limitations
This report and the data and model projections developed are subject to the
following limitations:
* This report and the opinions and conclusions expressed herein are for the
exclusive use of the management of Life Insurance Company of Alabama, its
advisors and consultants. Distribution or disclosure of this report, in whole or
in part, shall not be made to any other party (except pursuant to valid legal
process) without our prior written consent.
Chapter 2: Reliances and Limitations 5
* This report has been prepared in conformity with its intended use by persons
technically competent to evaluate the estimate of the five-year Budget of Life
Insurance Company of Alabama. Judgments as to the data contained in the
report should be made only after reviewing the report in its entirety, as the
conclusions reached by review of a section or sections on an isolated basis
may be incorrect. It is assumed that any user of this report will seek
clarification as to any matter in question.
* Although the model projections were developed to reflect the current and
proposed operating environments and the most probable future experience
within such environments, it should be recognized that actual future results will
vary from those projected in this report. Deviations in the parameters used to
reflect the environment could alter the projected results substantially. These
parameters include management direction, insurance regulations, accounting
practices, the Company's ability to file and obtain rate increases, federal and
local taxation, and external economic factors such as inflation rates and
available investment yields. Also, deviations from most probable assumptions
are normal and to be expected. Even without any change in perceived
environments, actual results from year to year will vary from those projected
due to normal random fluctuations. Due to the scope of the project, no
sensitivity testing was performed to demonstrate the impact of fluctuations in
the model assumptions.
Chapter 3: 2019 - 2023 Budget Summary 6
Chapter 3
2019 - 2023 Budget Summary
3.1 Description
This report develops an estimate of the statutory income and expense items of Life
Insurance Company of Alabama for calendar years 2019 through 2023. In making
this budget, we have followed the general methodology described in Chapter 4
and used the actuarial assumptions set forth in Chapter 5. The model is validated
in Chapter 6 and copies of the computer model projection runs are provided in
Chapter 7.
The following is a brief discussion of the assumptions used to project future

Statutory income and expense items for calendar years 2019 through 2023:
a) Investment Rate - The 4.00% projected interest rate on the market value of
current and future invested assets represents the level of interest earnings
(net of investment expenses) we expect the Company to average over the
five-year projection period used in our calculations.
b) Mortality - Industry mortality tables were used as the basis for the assumed
mortality used in our calculations. These tables were adjusted to reflect the
results of a recent mortality study looking at the Company experience
covering 2010 through 2017 calendar years.
c) Morbidity - Life of Alabama performs loss ratio studies on its individual and
group A&H business on a periodic basis. From this data, along with a review
of the benefit structure contained in each A&H model policy form, we derived
the incurred claim costs used in our calculations. Incurred claim costs for the
five-year projection period were trended forward for overall trend as stated in
Chapter 5. We have assumed that the Company will monitor loss ratios and
file for and obtain approval of any necessary future rate increases to account
for these trends, where appropriate.
d) Rate Increases - Due to medical trend, or worse than anticipated experience,

the following premium rate increases were projected:
Inactive
Effective Uncapped Capped Group Other
Year Cancer Cancer Dental Group
2019 15.0% 15.0% 5.0% 10.0%
2020 15.0% 15.0% 5.0% 10.0%
2021 10.0% 10.0% 5.0% 10.0%
2022 10.0% 10.0% 5.0% 0.0%
2023 10.0% 10.0% 5.0% 0.0%
The rate increases projected are the average rate increase for each model
plan. The rate increases may not apply uniformly to all plans in the model line
of business. Rate increases are effective on the policy anniversary.
e) Persistency - Life of Alabama recently conducted a study of its

lapse/termination experience for calendar years 2014 through 2017. The
results from this study along with pricing assumptions formed the basis of the
lapse rates used in the calculations.
f) Expenses - Life of Alabama recently conducted a study of its expenses for

calendar years 2010 through 2018. The results of this study, along with input
regarding future expenditures, formed the basis for the expense assumptions.
g) Commissions - Top level commissions for the primary representative product

within a line of business were used. These commissions were then adjusted
to more accurately reflect actual experience. This includes adjustments to
take into account rate increases on certain policies within the line of business.
This is to recognize that with the exception of the group dental business,
commissions only apply to original premiums.
h) Reserve Increases - All reserve increases used in our calculations are based
upon statutory reserve requirements.
i) New Business Projections - New business projections were provided by the

Company and are reflected in the budget projections.
3.2 Summary of 2019 - 2023 Budget
The 2019 - 2023 Budget Summary is shown on the following pages.

Remainder of 2018 Budget Summary

(in 1,000's)
Line Of Business
Total Ordinary Exh. 7 Ordinary Group Group Other Unlimited Capped Other Ind.
Life Liabilities Annuities Life Dental Group Cancer Cancer A&H
Premium Income................................... 9,329 1,677 0 5 0 642 131 615 4,087 2,172
Investment Income...........................…… 1,154 695 11 15 0 2 22 15 286 108
Reinsurance Allowances...................... 96 96 0 0 0 0 0 0 0 0
Total Income……………………………… 10,579 2,467 11 20 0 644 154 631 4,374 2,279
Death Benefits...................................... 780 780 0 0 0 0 0 0 0 0
A&H Benefits........................................ 4,246 0 0 0 0 417 93 484 2,380 872
Accumulated Fund Payments………… 43 0 11 32 0 0 0 0 0 0
Surrender Benefits.........................…… 250 250 0 0 0 0 0 0 0 0
Increase In Rsv. & Fund Accum….... 415 298 0 (9) 0 (0) 22 (4) 137 (30)
Policyholder Dividends………………… 3 3 0 0 0 0 0 0 0 0
Total Policyholder Benefits……………… 5,737 1,332 11 23 0 417 115 481 2,516 842
Commissions................................……… 1,990 412 0 0 0 124 13 6 819 615
Taxes Licenses & Fees........................ 287 58 0 0 0 19 4 18 123 65
General Expenses……………………… 2,616 644 0 0 0 179 29 131 1,024 610
Increase in Loading............................… 38 38 0 0 0 0 0 0 0 0
Total Expenses…………………………… 4,931 1,152 0 0 0 322 46 155 1,965 1,290
Total Benefits & Expenses……………… 10,669 2,485 11 23 0 739 162 636 4,482 2,132
Net Gain from Operations Before FIT… (89) (17) 0 (3) 0 (95) (8) (5) (108) 148
Federal Income Tax………………… 34 15 0 (1) 0 (18) (1) 1 (2) 39
Net Income………..………………… (124) (33) 0 (2) 0 (77) (7) (7) (106) 109
Revised 2018 Budget Summary (Actual thru 9/30 plus projected 4Q 2018)
(in 1,000's)
Line Of Business
Premium Income.................................. 37,341 7,120 0 23 1 2,497 501 2,520 16,175 8,504
Investment Income...........................… 4,754 2,837 47 60 0 4 90 76 1,194 446
Other Income....................................... 37 37 0 0 0 0 0 0 0 0
Total Income……………………………… 42,133 9,993 47 83 1 2,501 592 2,597 17,370 8,949
Death Benefits..................................... 3,187 3,187 0 0 0 0 0 0 0 0
A&H Benefits....................................... 16,556 0 0 0 0 1,662 383 1,998 9,133 3,380
Surrender Benefits.........................…… 1,068 978 0 90 0 0 0 0 0 0
Increase In Rsv. & Fund Accum….... 2,092 1,670 0 (44) 0 (0) 83 (41) 407 16
Total Policyholder Benefits……………… 22,986 5,872 15 78 0 1,662 466 1,958 9,539 3,396
Commissions................................…… 7,886 1,553 0 0 0 484 56 21 3,313 2,458
Taxes Licenses & Fees........................ 1,079 209 0 0 0 70 14 72 479 235
General Expenses……………………… 11,046 3,295 0 0 3 666 80 191 4,080 2,732
Increase in Loading............................… 176 176 0 0 0 0 0 0 0 0
Total Expenses………………………… 20,187 5,233 0 0 3 1,220 150 284 7,871 5,425
Total Benefits & Expenses……………… 43,174 11,106 15 78 3 2,882 617 2,242 17,411 8,821
Net Gain from Operations Before FIT… (1,041) (1,112) 32 5 (2) (381) (25) 355 (41) 129
2019 Budget Summary

(in 1,000's)
Line Of Business
Premium Income............................... 38,634 6,894 0 25 1 2,619 515 2,420 17,452 8,706
Investment Income...........................… 4,684 2,810 45 57 0 (1) 92 61 1,173 447
Reinsurance Allowance..................... 411 411 0 0 0 0 0 0 0 0
Other Income..................................... 0 0 0 0 0 0 0 0 0 0
Total Income…………………………… 43,729 10,116 45 82 1 2,619 607 2,481 18,625 9,153
Death Benefits................................... 2,966 2,966 0 0 0 0 0 0 0 0
A&H Benefits..................................... 17,011 0 0 0 0 1,701 365 1,917 9,586 3,441
Surrender Benefits.........................… 1,038 1,038 0 0 0 0 0 0 0 0
Increase In Rsv. & Fund Accum….... 1,732 1,370 (3) (35) 0 (0) 69 (32) 553 (190)
Total Policyholder Benefits…………… 22,936 5,388 45 92 0 1,701 434 1,885 10,139 3,251
Commissions................................…… 8,072 1,653 0 0 0 505 49 23 3,420 2,423
Taxes Licenses & Fees..................... 1,191 240 0 0 0 79 15 73 524 261
General Expenses…………………… 10,492 2,590 0 1 4 715 112 489 4,176 2,404
Increase in Loading........................... 152 152 0 0 0 0 0 0 0 0
Total Expenses………………………… 19,907 4,635 0 1 4 1,298 177 584 8,119 5,088
Total Benefits & Expenses…………… 42,842 10,023 45 94 4 2,999 611 2,469 18,259 8,339
Net Gain from Operations Before FIT 887 93 (0) (11) (3) (380) (4) 12 366 814
Federal Income Tax………………… 399 99 (0) (2) 0 (72) 0 10 168 196
Net Income………..………………… 488 (6) (0) (9) (3) (308) (4) 2 198 618
2020 Budget Summary

(in 1,000's)
Line Of Business
Premium Income............................... 40,664 7,264 0 24 1 2,742 533 2,502 18,753 8,845
Other Income..................................... 0 0 0 0 0 0 0 0 0 0
Total Income…………………………… 45,972 10,641 44 79 1 2,729 628 2,563 19,977 9,310
Death Benefits................................... 2,927 2,927 0 0 0 0 0 0 0 0
A&H Benefits..................................... 17,237 0 0 0 0 1,745 370 1,912 9,832 3,377
Commissions................................…… 8,471 1,773 0 0 0 528 46 21 3,579 2,524
Total Expenses………………………… 20,866 4,869 0 1 4 1,360 178 599 8,597 5,259
Net Gain from Operations Before FIT 1,799 289 (0) (11) (3) (375) 22 79 1,053 745
Net Income………..………………… 1,198 142 (0) (9) (3) (304) 15 56 735 566
2021 Budget Summary

(in 1,000's)
Line Of Business
Premium Income............................... 42,435 7,663 0 22 1 2,873 538 2,524 19,749 9,065
Other Income..................................... 0 0 0 0 0 0 0 0 0 0
Total Income…………………………… 47,938 11,164 44 76 1 2,848 636 2,587 21,032 9,549
Death Benefits................................... 3,111 3,111 0 0 0 0 0 0 0 0
A&H Benefits..................................... 17,719 0 0 0 0 1,789 363 1,906 10,164 3,496
Commissions................................…… 8,867 1,866 0 0 0 553 44 18 3,737 2,648
Total Expenses………………………… 21,702 5,084 0 1 4 1,418 175 597 8,973 5,450
Federal Income Tax………………… 647 161 0 (2) 0 (68) 13 29 359 156
Net Income………..………………… 1,405 182 (0) (8) (3) (292) 47 84 901 493
2022 Budget Summary

(in 1,000's)
Line Of Business
Premium Income............................... 44,173 8,080 0 21 1 3,012 508 2,491 20,736 9,325
Other Income..................................... 0 0 0 0 0 0 0 0 0 0
Total Income…………………………… 49,871 11,696 44 73 1 2,975 609 2,556 22,090 9,827
Death Benefits................................... 3,266 3,266 0 0 0 0 0 0 0 0
A&H Benefits..................................... 18,252 0 0 0 0 1,843 359 1,899 10,552 3,599
Increase In Rsv. & Fund Accum….... 2,421 1,534 (3) (31) 0 (0) 34 (27) 879 35
Commissions................................…… 9,291 1,968 0 0 0 580 41 17 3,909 2,776
Total Expenses………………………… 22,575 5,323 0 1 4 1,480 165 583 9,363 5,656
Net Income………..………………… 1,409 242 (0) (7) (3) (282) 40 78 934 407
2023 Budget Summary

(in 1,000's)
Line Of Business
Premium Income............................... 45,965 8,473 0 20 1 3,158 480 2,456 21,746 9,631
Other Income..................................... 0 0 0 0 0 0 0 0 0 0
Total Income…………………………… 51,869 12,205 44 71 1 3,110 584 2,523 23,180 10,152
Death Benefits................................... 3,406 3,406 0 0 0 0 0 0 0 0
A&H Benefits..................................... 18,864 0 0 0 0 1,905 356 1,889 10,965 3,748
Increase In Rsv. & Fund Accum….... 2,664 1,531 (3) (30) 0 (0) 23 (25) 1,110 58
Commissions................................…… 9,740 2,073 0 0 0 608 39 15 4,094 2,912
Total Expenses………………………… 23,551 5,559 0 1 4 1,552 156 573 9,806 5,900
Net Income………..………………… 1,406 318 (0) (7) (3) (281) 38 67 940 335
Chapter 4: General Methodology 15
Chapter 4
General Methodology
4.1 Outline of Procedure
In determining an estimate of statutory income and expense items on Life of

Alabama's in-force and projected new business for the Ordinary Life, Ordinary
Annuity, Individual A&H, and Group A&H lines of business as of September 30,
2018, the following general procedures were used:
1. The total business in-force at September 30, 2018 and projected new
business for the last quarter of 2018 and all of 2019 through 2023 was
grouped into model plans.
2. For each model plan, a computer model was constructed which grouped the
modeled life business by issue year, issue age, and sex and the modeled
A&H business by issue year and issue age.
3. For each model plan, income and expenses were projected over five years
using the assumptions described in Chapter 5.
4. Projected income and expense numbers generated for 2019 through 2023
were used in calculating the five-year budget.
In determining an estimate of statutory income and expense items on Life of

Alabama's other lines of business, the following general procedures were used:
1. For the group life line of business, prior Annual Statements were analyzed.
Income and expense items were trended forward for 2019 through 2023.
2. Investment income on Capital and Surplus was estimated and allocated

across lines of business in proportion to other investment income.
4.2 Description of Inforce Model
A summary of the September 30, 2018 in-force business model is shown on the
following pages.
Traditional Life
Actual Inforce as of 9/30/2018 Modeled Inforce as of 9/30/2018
Model Plan Actual Record Inforce Statutory Annlzd Record Inforce Statutory Annlzd
Plan Description Plans Count (000's) Reserve* Premium Count (000's) Reserve* Premium
WL163 Select Risk Whole Life WL163, WL164, WL171, WLBIC, 314 3,658 2,180,349 45,762 314 3,658 2,180,342 45,762
WLDSP, WLFSP, WLSAS
WL104 Protector Whole Life R0060, R0071, R1010, R1300, R150A, 580 4,230 2,447,828 77,117 580 4,230 2,447,830 77,117
(1958 CSO 3% Version) RV513, RV514, RV510, RV511, RV517,
WL100, WL101, WL102, WL104,
WL105, WL115, WL150, WL158
WL108 Protector Whole Life WL108 1,008 10,280 3,557,803 89,500 1,008 10,280 3,557,796 89,500
(1958 CSO 4.5% Version)
WL142 Simplified Issue WL WL142, WL143 9,061 269,431 14,288,133 3,932,822 9,061 269,431 14,288,117 3,932,819
WL140 Protector Whole Life WL113, WL114, WL130, 3,433 68,516 12,542,669 824,479 3,433 68,516 12,542,656 824,479
(1980 CSO 4.5% Version) WL131, WL132, WL134,
WL135, WL140, WL141
WL165 Life Paid-Up at Age 65 R1140, WL111, 5 25 14,002 275 5 25 14,002 275
WL112, WL165
WL120 20 Pay Whole Life R0570 17 26 10,649 312 17 26 10,649 312
LOA Term Opt Re Term LT310, LT315, LT320, LT330, LT410, 3,431 338,964 1,813,962 1,308,768 3,431 338,964 1,813,943 1,302,678
10, 15, 20 & 30 year LT415, LT420, LT430
DTA84 Term to Age 70 DTA25, DTA65, DTA82, DTA83, 78 47 2,496 1,925 78 47 2,492 1,284
DTA84, LT265, DT701-DT744
LT220 20 Year Term LT220 806 68,508 1,208,212 290,739 806 68,508 1,208,200 290,739
LT212 10 Year Term LT211, LT212, LT213, 1,110 103,187 1,585,924 863,527 1,110 103,187 1,585,928 863,527
LT207, WL115
LT266 Level Term to Age 65 LT266 7 115 11,365 569 7 115 11,367 569
R0020 Endowment at Age 65 EN355, EN366, R0002, 5 111 98,152 1,729 5 111 98,151 1,729
R0006, R0020, RI465
WL170 Whole Life (41CSO) WL170, R1012 10 63 52,028 1,200 10 63 52,028 1,200
Child Riders Child Riders CDB01, CDB02 1,300 38,623 38,706 121,285 1,300 38,623 38,623 121,285
WLPAR Participating Whole Life WL900 - WL975, WLPFS 154 994 644,579 22,932 154 980 644,581 22,932
Paid-Up Paid-Up Life All fully paid up 1,347 6,130 4,381,440 1,347 6,130 4,381,428
and reduced paid up records
ETI Extended Term Insurance All ETI policies 1,268 32,356 1,074,107 1,268 32,356 1,074,120
Deficiency Reserve 239,567 240,922
Total - Direct Modeled Plans 23,934 945,263 46,191,971 7,582,941 23,934 945,249 46,193,174 7,576,207
Total - Reinsurance Modeled Plans 1,738,388 1,814,786
Total Modeled Net of Reinsurance 23,934 945,263 44,453,583 7,582,941 23,934 945,249 44,378,388 7,576,207
Total - Unmodeled Plans Net of Reinsurance 2,484 44,082 82,072 90,536
TOTAL LIFE NET OF REINSURANCE 26,418 989,346 44,535,655 7,673,477
* Model Plan amounts are before reinsurance reserve credits.

Deferred Annuities
Model Plan Actual Record Statutory Record Statutory
Plan Description Plans Count Reserve Count Reserve
AN615 Rear-end Load Flex AN615-619 41 324,166 41 324,166
AN665 Front-Load CWD AN655-669 7 219,502 7 219,503
AN675 Front-Load APDA AN675-679 75 579,406 75 579,403
SAB Annuity Rider SAB01-03 10 93,721 10 93,723
- Immediate Annuities - 8 283,108 8 283,108
TOTAL - Modeled Plans 141 1,499,903 141 1,499,903
TOTAL - Unmodeled Plans - -
TOTAL EXHIBIT 5B 141 1,499,903
Exhibit 7 Liabilities
Model Plan Actual Record Statutory Record Statutory
Plan Description Plans Count Reserve Count Reserve
- Dividend Accumulations - n/a 1,002,627 n/a 1,002,620
PDTA Premium Deposit Fund PDTA1 5 9,486 5 9,486
- Supp Contracts Not Involving Life - n/a 124,446 n/a 124,450

Contingencies
TOTAL - Modeled Plans n/a 1,136,559 n/a 1,136,556
TOTAL - Unmodeled Plans n/a -
TOTAL EXHIBIT 7 n/a 1,136,559

Individual Accident & Health

Model Plan Actual Record Policy Statutory Annlzd Record Policy Statutory Annlzd
Plan Description Plans Count Count Reserve * Premium Count Count Reserve * Premium
1 Cancer - C13, C14, C22, C23, C27 1,093 231 ** 401,593 2,453,534 1,093 231 ** 401,591 2,453,533
(Uncapped) C32, C33, C39, C59, C69
2 Cancer - All Other Cancer Codes 196,230 26,547 14,367,060 16,332,354 196,230 26,547 14,367,337 16,332,348
(Capped) except C53, C55, C62-C65
3 Accident A19, A24, A34, 53,692 7,348 151,624 3,175,359 53,692 7,348 152,020 3,175,358
A44, A52, A56
4 Intensive Care IC14-IC23, I28-I55 15,684 508 ** 514,501 1,204,983 15,684 508 ** 514,514 1,204,983
5 Lump Sum C53, C70, C72, 2,819 2,819 3,558,883 1,059,580 2,819 2,819 3,558,898 1,059,580
(Cancer and Heart) H54, H71
7 Return of Premium RP43 127 0 ** 993,462 23,389 127 0 ** 993,467 23,382
8 Other Indiv. A&H D31, DI, H plans 21,097 6,034 1,239,892 3,092,258 21,095 6,032 1,240,001 3,091,265
except H54, H71
9 Critical Illness C88, H89 818 818 52,013 160,608 818 818 52,011 160,608
10 Tabular Error/Margin Adj. n/a n/a 3,396 n/a n/a n/a 0 n/a
TOTAL - Modeled Plans 291,560 44,305 21,282,424 27,502,065 291,558 44,303 21,279,838 27,501,056
TOTAL - Unmodeled Plans - - - -
TOTAL EXHIBIT 6A (IND A&H) 291,560 44,305 21,282,424 27,502,065
TOTAL EXHIBIT 6B & EXHIBIT 8 (IND A&H) 4,456,676 4,456,677
Group Accident & Health

Model Plan Actual Record Policy Statutory Annlzd Record Policy Statutory Annlzd
Plan Description Plans Count Count Reserve * Premium Count Count Reserve * Premium
1 Group Dental/Vision D57, D60, V90 4,419 4,419 63 2,569,598 4,419 4,419 57 2,569,597
2 Other Group A&H A58, R62, 2,727 1,096 1,254,294 490,788 2,727 1,096 1,254,326 490,924
C55, C62, C63, C64,
C65, I62, I64, I65, I66
TOTAL - Modeled Plans 7,146 5,515 1,254,357 3,060,386 7,146 5,515 1,254,383 3,060,521
TOTAL - Unmodeled Plans - - - -
TOTAL EXHIBIT 6A (GROUP A&H) 7,146 5,515 1,254,357 3,060,386
TOTAL EXHIBIT 6B & EXHIBIT 8 (GROUP A&H) 181,956 181,956
* Equals tabular reserve plus net unearned premium reserve.

** Includes both policies and riders.
Chapter 5: Assumptions 19
Chapter 5
Assumptions
5.1 Interest Rates
Net Earned Rate: 4.0%, in all years.
5.2 Mortality Rates (Based upon 2018 Study using 2010-2017 data, unless otherwise noted)
A. Traditional Life
WL142/WL143/WL1444
100% of the 2015 Valuation Basic ALB Select & Ultimate Mortality Table (M/F, NS/SM), adjusted for
simplified underwriting as follows:
Policy Issue Age

Year 0-19 20-29 30-39 40-49 50-59 60-69 70-80
1 3.280 3.280 6.510 4.910 4.175 4.015 4.015

2 2.675 2.710 5.155 4.070 3.385 3.085 2.990
3 2.445 2.615 4.970 3.835 3.035 2.680 2.415
4 2.260 2.470 4.700 3.630 2.870 2.405 2.210
5 2.060 2.310 4.410 3.410 2.615 2.185 2.000
6 1.860 2.205 4.100 3.170 2.360 1.965 1.785
7 1.655 2.020 3.790 2.880 2.150 1.740 1.570
8 1.470 1.855 3.410 2.620 1.960 1.590 1.430
9 1.285 1.730 3.100 2.410 1.815 1.435 1.285
10 1.200 1.620 2.745 2.160 1.640 1.345 1.160
11 1.200 1.535 2.595 2.015 1.585 1.265 1.130
12 1.200 1.500 2.385 1.880 1.485 1.235 1.100
13 1.200 1.490 2.280 1.870 1.465 1.225 1.100
14 1.200 1.480 2.240 1.805 1.445 1.210 1.100
15 1.200 1.475 2.135 1.745 1.450 1.200 1.100
16 1.200 1.465 2.035 1.735 1.405 1.190 1.100
17 1.200 1.430 1.995 1.675 1.385 1.180 1.100
18 1.200 1.420 1.900 1.615 1.365 1.165 1.100
19 1.200 1.410 1.800 1.605 1.345 1.130 1.100
20 1.200 1.400 1.765 1.545 1.325 1.115 1.100
21 1.200 1.390 1.675 1.490 1.305 1.100 1.100
22 1.200 1.380 1.640 1.480 1.285 1.085 1.100
23 1.200 1.365 1.550 1.420 1.265 1.070 1.100
24 1.200 1.360 1.515 1.365 1.245 1.065 1.100
25 1.200 1.350 1.435 1.355 1.195 1.055 1.100
26+ 1.200 1.350 1.350 1.300 1.200 1.050 1.100
5.2 Mortality Rates (Cont'd)
Optimum Re Term (LT300 and LT400 series plans)
Policy Issue Age

Year 0-19 20-29 30-39 40-49 50-59 60-69 70-80
1 2.920 2.920 3.285 3.285 3.285 3.575 3.575

2 2.810 2.845 3.065 3.210 3.140 3.240 3.140
3 2.665 2.845 3.065 3.140 2.920 2.920 2.630
4 2.535 2.775 2.995 3.065 2.845 2.700 2.480
5 2.410 2.700 2.920 2.995 2.700 2.555 2.335
6 2.280 2.700 2.845 2.920 2.555 2.410 2.190
7 2.120 2.585 2.800 2.800 2.445 2.225 2.010
8 1.965 2.475 2.685 2.685 2.335 2.120 1.910
9 1.810 2.435 2.645 2.645 2.295 2.015 1.810
10 1.660 2.395 2.530 2.530 2.190 1.985 1.710
11 1.615 2.285 2.490 2.420 2.150 1.885 1.680
12 1.585 2.245 2.380 2.315 2.050 1.850 1.585
13 1.560 2.145 2.305 2.275 1.950 1.755 1.495
14 1.530 2.105 2.235 2.170 1.915 1.725 1.465
15 1.505 2.005 2.130 2.065 1.880 1.630 1.440
16 1.475 1.970 2.030 2.030 1.785 1.600 1.415
17 1.450 1.870 1.990 1.930 1.690 1.510 1.390
18 1.420 1.775 1.895 1.835 1.660 1.480 1.360
19 1.395 1.740 1.800 1.800 1.565 1.395 1.275
20 1.365 1.650 1.765 1.705 1.535 1.310 1.250
21 1.340 1.615 1.670 1.615 1.450 1.280 1.225
22 1.310 1.585 1.640 1.585 1.420 1.200 1.200
23 1.285 1.495 1.550 1.495 1.335 1.175 1.175
24 1.255 1.465 1.515 1.410 1.310 1.150 1.150
25 1.230 1.380 1.430 1.380 1.230 1.075 1.125
26+ 1.200 1.350 1.350 1.300 1.200 1.050 1.100
All Other Premium Paying WL and Term
Policy Issue Age

Year 0-19 20-29 30-39 40-49 50-59 60-69 70-80
1 2.000 2.000 2.250 2.250 2.250 2.450 2.450

2 1.923 1.950 2.100 2.200 2.150 2.220 2.150
3 1.825 1.950 2.100 2.150 2.000 2.000 1.800
4 1.738 1.900 2.050 2.100 1.950 1.850 1.700
5 1.650 1.850 2.000 2.050 1.850 1.750 1.600
6 1.563 1.850 1.950 2.000 1.750 1.650 1.500
7 1.475 1.800 1.950 1.950 1.700 1.550 1.400
8 1.388 1.750 1.900 1.900 1.650 1.500 1.350
9 1.300 1.750 1.900 1.900 1.650 1.450 1.300
10 1.213 1.750 1.850 1.850 1.600 1.450 1.250
11 1.200 1.700 1.850 1.800 1.600 1.400 1.250
12 1.200 1.700 1.800 1.750 1.550 1.400 1.200
13 1.200 1.650 1.750 1.750 1.500 1.350 1.150
14 1.200 1.650 1.750 1.700 1.500 1.350 1.150
15 1.200 1.600 1.700 1.650 1.500 1.300 1.150
16 1.200 1.600 1.650 1.650 1.450 1.300 1.150
17 1.200 1.550 1.650 1.600 1.400 1.250 1.150
18 1.200 1.500 1.600 1.550 1.400 1.250 1.150
19 1.200 1.500 1.550 1.550 1.350 1.200 1.100
20 1.200 1.450 1.550 1.500 1.350 1.150 1.100
21 1.200 1.450 1.500 1.450 1.300 1.150 1.100
22 1.200 1.450 1.500 1.450 1.300 1.100 1.100
23 1.200 1.400 1.450 1.400 1.250 1.100 1.100
24 1.200 1.400 1.450 1.350 1.250 1.100 1.100
25 1.200 1.350 1.400 1.350 1.200 1.050 1.100
26+ 1.200 1.350 1.350 1.300 1.200 1.050 1.100
Paid Up & ETI: 100% of the 2015 Valuation Basic ALB Select & Ultimate Mortality Table (M/F,
NS/SM)
Annuity: None. Mortality is included in lapse rates.
Exh 7: None. Mortality is included in lapse rates.
Actual-to-Expected factors: All Years

WL142, WL143, WL144 100.0%
LT220 95.0%
LT300's, LT400's 100.0%
All Other Whole Life 139.0%
All Other Term 124.0%
Paid up & ETI 100.0%
B. A&H
All A&H: Included in lapse rate shown below
5.3 A&H Claim Costs & Trend Assumptions
A. New Business
Pricing Loss Ratio Assumptions
B. In-force Business
Individual A&H
Inactive Current
Uncapped Capped Capped Intensive Lumpsum Lumpsum
Assumptions Cancer* Cancer Cancer Care Accident Heart Cancer
Beg. Loss Ratio: 80.0% 75.0% 45.0% 30.0% 35.0% 35.0% 30.0%
Total Trend:
2019 11.0% 5.0% 5.0% 4.0% 4.0% 3.0% 3.0%
2020 11.0% 5.0% 5.0% 4.0% 4.0% 3.0% 3.0%
2021 11.0% 5.0% 5.0% 4.0% 4.0% 3.0% 3.0%
2022 11.0% 5.0% 5.0% 4.0% 4.0% 3.0% 3.0%
2023 11.0% 5.0% 5.0% 4.0% 4.0% 3.0% 3.0%
Rate Increase**:
2019 15.0% 15.0% 0.0% 0.0% 0.0% 0.0% 0.0%
2020 15.0% 15.0% 0.0% 0.0% 0.0% 0.0% 0.0%
2021 10.0% 10.0% 0.0% 0.0% 0.0% 0.0% 0.0%
2022 10.0% 10.0% 0.0% 0.0% 0.0% 0.0% 0.0%
2023 10.0% 10.0% 0.0% 0.0% 0.0% 0.0% 0.0%
* The actual trend and rate increases are higher. However, lapse rates are a function of premium per policy.
The higher premium policies lapse at a higher rate than lower premium policies. Since higher premium
policies generally have higher claim costs (e.g., family coverage and older ages), the actual increase in loss
** Rate increases are assumed effective on the policy anniversary date for all rate increases.
5.3 A&H Claim Costs & Trend Assumptions (Cont'd)
Individual A&H Group A&H

Hospital Other
Assumptions Disability Indemnity Dental/Vision Group
Beg. Loss Ratio: 50.0% 35.0% 65.0% 75.0%
Total Trend:
2019 4.0% 3.0% 5.0% 5.0%
2020 4.0% 3.0% 5.0% 5.0%
2021 4.0% 3.0% 5.0% 5.0%
2022 4.0% 3.0% 5.0% 5.0%
2023 4.0% 3.0% 5.0% 5.0%
Rate Increase*:
2019 0.0% 0.0% 5.0% 10.0%
2020 0.0% 0.0% 5.0% 10.0%
2021 0.0% 0.0% 5.0% 10.0%
2022 0.0% 0.0% 5.0% 0.0%
2023 0.0% 0.0% 5.0% 0.0%
* Rate increases are assumed effective on the policy anniversary date for all rate increases.
5.4 Lapse Rates (Based upon 2016 Study using 2012-2015 data, unless otherwise noted)
A. Ordinary Life Plans
WL142,WL143 and WL144: LT220
Policy Issue Age Policy Issue Age

Year 0-39 40-49 50+ Year 0-39 40-49 50+
1 30.0% 28.0% 18.0% 1
2 17.0% 16.0% 10.0% 2
3 13.0% 10.0% 6.0% 3
4 9.0% 9.0% 6.0% 4 17.0% 10.0% 9.0%
5 8.0% 8.0% 6.0% 5 10.0% 9.0% 9.0%
6 7.0% 7.0% 5.0% 6 9.0% 9.0% 9.0%
7 7.0% 7.0% 4.0% 7 8.0% 8.0% 6.0%
8 7.0% 7.0% 4.0% 8 5.0% 8.0% 6.0%
9 7.0% 7.0% 4.0% 9 5.0% 7.0% 6.0%
10+ 7.0% 7.0% 4.0% 10-19 5.0% 7.0% 6.0%
20 100.0% 100.0% 100.0%
5.4 Lapse Rates (Cont'd)
All Other All Other

Policy DTA84 & Prem Pay Prem Pay
Year LT212* Whole Life Term Life Paid-Up ETI
1 30.0% 2.5% 0.0%
2 16.0% 2.5% 0.0%
3 14.0% 2.5% 0.0%
4 25.0% 12.0% 2.5% 0.0%
5 15.0% 10.0% 2.5% 0.0%
6 10.0% 9.0% 2.5% 0.0%
7 10.0% 8.0% 8.0% 2.5% 0.0%
8 8.0% 7.0% 7.0% 2.5% 0.0%
9 8.0% 5.0% 6.0% 2.5% 0.0%
10+ 6.0% 4.0% 5.0% 2.5% 0.0%
* Policy year 10: 50%, Policy year 20: 80% lapse rates.
Optimum Re Term (LT300's, LT400's):
Initial Term Period

Duration 10 Yr 15 Yr 20 Yr 30 Yr
1 30.0% 30.0% 30.0% 30.0%
2 20.0% 20.0% 20.0% 20.0%
3 15.0% 15.0% 15.0% 15.0%
4 10.0% 10.0% 10.0% 10.0%
5 9.0% 9.0% 9.0% 9.0%
6 9.0% 9.0% 9.0% 9.0%
7 to EITP 9% 9% 9% 9%
EITP +1 70% 80% 90% 100%
EITP +2 50% 35% 20% 0%
EITP +3 12% 15% 15% 0%
EITP +4 10% 10% 10% 0%
EITP +5+ 9% 9% 9% 0%
Iss Age = 18-29 30-39 40-49 50-59 60-65

Factor 115% 107.5% 95% 85% 75%
B. Annuity and Exhibit 7

Lapse Rate
Policy
Year Coupon Dividend PDTA SCWOLC All Others
All 3.0% 5.0% 5.0% 4.0% 6.0%
C. A&H *
Individual A&H - Issue Ages 0-39
Capped Unlimited Intensive
Policy Year Cancer Cancer ** Care Accident Disability
1 32% 10% 32% 45% 45%
2 21% 10% 21% 30% 35%
3 18% 10% 18% 25% 25%
4 15% 10% 15% 24% 22%
5 11% 10% 11% 20% 20%
6 9% 10% 9% 15% 18%
7 9% 10% 9% 15% 18%
8 9% 10% 9% 15% 18%
9 7% 10% 7% 10% 17%
10 6% 10% 6% 9% 16%
11 6% 10% 6% 9% 16%
12-19 6% 10% 6% 9% 16%
20+ 6% 10% 6% 9% 16%

1 26% 10% 26% 35% 35%
2 16% 10% 16% 25% 25%
3 13% 10% 13% 20% 20%
4 11% 10% 11% 15% 18%
5 9% 10% 9% 15% 18%
6 8% 10% 8% 12% 16%
7 8% 10% 8% 12% 15%
8 8% 10% 8% 12% 15%
9 6% 10% 6% 9% 15%
10 6% 10% 6% 9% 15%
11 6% 10% 6% 9% 15%
12-19 6% 10% 6% 9% 15%
20+ 6% 10% 6% 9% 15%
Individual A&H - Issue Ages 50+

1 16% 10% 16% 30% 30%
2 10% 10% 10% 20% 25%
3 9% 10% 9% 19% 20%
4 8% 10% 8% 15% 18%
5 7% 10% 7% 15% 18%
6 7% 10% 7% 12% 18%
7 6% 10% 6% 12% 18%
8 6% 10% 6% 12% 18%
9 6% 10% 6% 12% 18%
10 6% 10% 6% 8% 18%
11 6% 10% 6% 8% 18%
12-19 6% 10% 6% 8% 18%
20+ 6% 10% 6% 8% 18%

Critical Illness ***
Policy Year HIP Cancer (C88) Heart (H89) Lump sum Ret Prem
1 50% 37% 49% 20% 35%
2 45% 23% 26% 20% 18%
3 25% 17% 19% 15% 13%
4 20% 15% 17% 10% 10%
5 15% 14% 15% 10% 9%
6 10% 12% 13% 10% 8%
7 8% 11% 12% 8% 7%
8 7% 10% 11% 8% 6%
9 6% 9% 10% 8% 5%
10 6% 9% 10% 6% 4%
11 6% 9% 10% 6% 3%
12-19 6% 9% 10% 6% 2%
20+ 6% 9% 10% 6% 100%

1 30% 30% 33% 15% 35%
2 25% 17% 20% 15% 18%
3 20% 12% 14% 15% 13%
4 15% 11% 13% 10% 10%
5 12% 10% 11% 10% 9%
6 8% 8% 10% 8% 8%
7 8% 8% 9% 8% 7%
8 8% 7% 8% 8% 6%
9 8% 7% 8% 7% 5%
10 8% 7% 8% 6% 4%
11 8% 7% 8% 6% 3%
12-19 8% 7% 8% 6% 2%
20+ 8% 7% 8% 6% 100%
Individual A&H - Issue Ages 50+

1 30% 19% 35% 13% 35%
2 25% 10% 13% 13% 18%
3 20% 8% 10% 13% 13%
4 15% 7% 9% 10% 10%
5 10% 6% 8% 10% 9%
6 8% 5% 7% 8% 8%
7 6% 5% 6% 8% 7%
8 6% 4% 6% 8% 6%
9 6% 4% 5% 7% 5%
10 6% 4% 5% 7% 4%
11 6% 4% 5% 6% 3%
12-19 6% 4% 5% 6% 2%
20+ 6% 4% 5% 6% 100%
* Termination rates used is the greater of the above lapse rates and 100% of the 2015 VBT ALB.
** Lapse rates for the Unlimited Cancer are model year lapse rates.
*** Lapse rates for Critical Illness are total termination rates and include mortality. Based upon pricing assumptions
adjusted for current experience..
C. A&H* (Continued)
Group A&H
Issue Ages 0-39 Issue Ages 40-49 Issue Ages 50+
Policy Year Dental Other Dental Other Dental Other
1 40% 4% 40% 4% 40% 3%
2 30% 4% 30% 4% 30% 3%
3 20% 4% 20% 4% 20% 3%
4 20% 4% 20% 4% 20% 3%
5 20% 4% 20% 4% 20% 3%
6 20% 4% 20% 4% 20% 3%
7 20% 4% 20% 4% 20% 3%
8 20% 4% 20% 4% 20% 3%
9 20% 4% 20% 4% 20% 3%
10+ 20% 4% 20% 4% 20% 3%
Att Age 65 85% 85% 85%
* Termination rates used is the greater of the above lapse rates and 100% of the 2015 VBT ALB.
5.5 Commissions
Commissions shown are the top level commissions for the primary representative product within a line of business.
A. Life
Optimum Re All Other
Policy Year WL142 LT220 Term Life Annuities
1 100.0% 95.0% 95.0% 90.0% 10.0%
2 15.0% 8.0% 8.0% 15.0% 0.0%
3 10.0% 6.0% 6.0% 10.0% 0.0%
4-10 10.0% 6.0% 6.0% 9.0% 0.0%
11+ 4.0% 3.0% 3.0% 3.0% 0.0%
The following Commission Adjustments were made as an Actual/Expected adjustment based upon 2016-2017
commissions paid.
Optimum Re All Other Life

Policy Year WL142 LT220 Term Term WL Annuities
FY 100.0% 100.0% 95.0% 100.0% 100.0% 100.0%
RY 94.0% 100.0% 85.0% 120.0% 90.0% 100.0%
B. A&H*
Inforce
Old Capped Can (Age Banded) Old Capped Can (One Prem All Ages)
Iss. Ages Iss. Ages Iss. Ages Iss. Ages Iss. Ages Iss. Ages
Policy Year 0-39 40-49 50+ 0-39 40-49 50+
1 95.0% 90.0% 45.0% 65.0% 65.0% 32.5%
2 23.0% 23.0% 15.0% 30.0% 30.0% 15.0%
3-10 22.0% 22.0% 14.0% 30.0% 30.0% 15.0%
11+ 21.0% 21.0% 13.0% 20.0% 20.0% 10.0%
New Capped Can (C75)

Age Banded One Prem Unlimited Intensive
Policy Year Premiums All Ages Cancer Accident Care
1 95.0% 65.0% 0.8% 85.0% 80.0%
2 23.0% 30.0% 0.8% 23.0% 23.0%
3-10 22.0% 30.0% 0.8% 22.0% 22.0%
11+ 21.0% 30.0% 0.8% 21.0% 21.0%
5.5 Commissions (Cont'd)
B. A&H (Continued)*
LS Heart & LS Cancer Other Individual

Iss. Ages Iss. Ages Iss. Ages Iss. Ages Iss. Ages Iss. Ages
Policy Year 0-39 40-49 50+ 0-39 40-49 50+
1 95.0% 90.0% 45.0% 90.0% 90.0% 40.0%
2 23.0% 23.0% 13.0% 18.0% 18.0% 11.5%
3-10 22.0% 22.0% 12.0% 16.0% 16.0% 11.0%
11+ 21.0% 21.0% 11.0% 15.0% 15.0% 10.5%
Critical Illness Group Other

Policy Year GI EZ/Simplified Fully U/W Dental/Vision Group
1 25.0% 35.0% 90.0% 20.0% 25.0%
2 25.0% 25.0% 15.0% 20.0% 25.0%
3-10 25.0% 25.0% 10.0% 20.0% 25.0%
11+ 25.0% 25.0% 10.0% 20.0% 25.0%
New Business
New Capped Can (C75)
Age Banded One Prem
Policy Year Premiums All Ages Accident Other A&H
1 95.0% 65.0% 85.0% 65.0%
2 23.0% 30.0% 23.0% 21.0%
3-10 22.0% 30.0% 22.0% 20.0%
11+ 21.0% 30.0% 21.0% 19.0%
Group Critical Illness

Policy Year Dental/Vision GI EZ/Simplified Fully U/W
1 20.0% 25.0% 35.0% 90.0%
2 20.0% 25.0% 25.0% 15.0%
3-10 20.0% 25.0% 25.0% 10.0%
11+ 20.0% 25.0% 25.0% 10.0%
* A&H renewal commissions not paid on rate increases except for Group Dental. The commissions above are
applied to commissionable premiums as of the valuation date. Effective commissions are shown for
Unlimited Cancer.
The following Commission Adjustments were made to take into account rate increases on certain policies within the line of
business as well as an Actual/Expected adjustment based upon 2016-2017 commissions paid.
Policy Year Capped Can Unl. Cancer Accident ICU LS/CI Disability HIP
FY 59.0% 530.0% 90.0% 65.0% 80.0% 80.0% 85.0%
RY 100.0% 135.0% 100.0% 85.0% 85.0% 130.0% 120.0%
Group Other
Policy Year Dental/Vision Group
FY 92.5% 255.0%
RY 97.5% 45.0%
5.6 Expenses
Issue Costs Percentage of Submitted Premium

Marketing Other Total
Life 16.5% 14.0% 30.5%
Ind Health (Underwritten 16.5% 10.0% 26.5%
Ind Health (no U/W) 16.5% 5.0% 21.5%
Group Health 16.5% 5.0% 21.5%
Maintenance 10.00 Per Policy (non-dental policies)

0.00 Per Policy (dental policies)
Overhead 17.5% Percentage of Collected Premium (Except paid up policies)

65.00 Per Policy (Paid up policies)
TLF (incl. Prem Tax) 3.0% Percentage of Collected Premium
Surrender Expense 25.00 Per Surrender
Annuity Expense 25.00 Per Annuitization
Claims Expense 2.5% Percentage of Health Claims Paid

350.00 Per Life Claim Yrs 1-2
150.00 Per Life Claim Yrs 3+
Investment Expense 0.4% Invested Assets
5.7 Other Assumptions
A. Non Forfeiture Options
Assumed only cash surrenders occur.
B. Reinsurance
LT212: 50% Coinsurance with retention not to exceed $50,000.

Reinsurance allowances: 100% first year, then 10%.
Modeling adjustment use 52.5% Coinsurance.
LT220: YRT Reinsurance above retention limit of $75,000.
Optimum Re Term, 50% Coinsurance 1st-Dollar, with retention not to exceed $100,000.
LT300's and LT400's Policy fee not reinsured
Series: Allowances as follows:
Initial Term Period
Duration 10 Yr 15 Yr 20 Yr 30 Yr
1 100% 100% 100% 100%
2 35% 35% 55% 55%
3-10 12% 17% 30% 30%
11+ 12% 12% 12% 12%
C. Federal Income Tax
22% increasing 1% per year
D. 1990 DAC Tax
Percent of Premium
Ind. Life and all A&H 7.70%
Annuity 1.75%
Group Life 2.05%
Amortize over 5 years

5.7 Other Assumptions (Cont'd)
E. Reserve Methods
Traditional Life: Mean reserves

Annuity & Exh 7: Fund value
Individual A&H: Net unearned premium plus tabular reserve
Group A&H: Gross unearned premium unless guaranteed renewable, then net unearned
premium plus tabular reserve.
F. Modal Frequency
All premium paying policies assumed to use either monthly or annual mode.
G. Policy Loans
Not considered
H. Credited Interest Rates
Annuities: All plans modeled at guaranteed interest rate, ranging from 3-4%.
Deposit Funds: 4.0% on entire fund value
Dividend Accum's: 4.0% on entire fund value
Coupon Accum's: 4.0% on entire fund value
5.8 Future New Business Production Assumptions
Not Taken
Rate Applied Annualized Premium Submitted (in 1,000's)
Line of Business in Model 4Q 2018 2019 2020 2021 2022 2023
Whole Life 25% 260 1,145 1,202 1,262 1,325 1,392
Term Life 25% 205 900 945 992 1,042 1,094
Capped Cancer 5% 465 1,950 2,048 2,150 2,257 2,370
Accident Disability (A35) 5% 260 1,100 1,155 1,213 1,273 1,337
Group Dental/Vision 15% 220 925 971 1,020 1,071 1,124
Disability (D75) 10% 225 975 1,024 1,075 1,129 1,185
Hospital Indemnity 5% 45 220 240 250 265 280
Critical Illness - Cancer 10% 10 40 45 45 45 45
Critical Illness - Heart 25% 10 50 55 60 65 70
Total 1,700 7,305 7,685 8,067 8,473 8,897
* Last quarter of 2018 only.
Disability and Hospital Indemnity make up what has previously been called Other A&H
Model should reflect issuing the number in the chart (so expenses are correct) and then adjust for not taken rates.
Life of Alabama Insurance Company
Chapter 6: Model Validation 31
Chapter 6
Model Validation
6.1 Initial Values
Initial Values as of September 30, 2018 -
Face
Amount Statutory
Model Plan Count (In $1,000's) Reserve
Ordinary Life Actual 26,418 989,346 44,535,655 *
Model 23,934 945,249 44,378,388 *
M/A Ratio 90.6% 95.5% 99.6%
Exhibit 7 Actual n/a n/a 1,136,559

Model n/a n/a 1,136,556
M/A Ratio n/a n/a 100.0%
Deferred Actual 141 n/a 1,499,903

Annuities Model 141 n/a 1,499,903
M/A Ratio 100.0% n/a 100.0%
Unlimited Cancer Actual 1,093 n/a 985,341 **

Model 1,093 n/a 985,339 **
M/A Ratio 100.0% n/a 100.0%
Capped Cancer Actual 196,230 n/a 14,367,060 **

Model 196,230 n/a 14,367,337 **
M/A Ratio 100.0% n/a 100.0%
Individual A&H Actual 94,237 n/a 10,386,699 **

Model 94,235 n/a 10,383,839 **
M/A Ratio 100.0% n/a 100.0%
Group Dental Actual 4,419 n/a 101,233 **

Model 4,419 n/a 101,227 **
M/A Ratio 100.0% n/a 100.0%
Other Group Actual 2,727 n/a 1,335,080 **

Model 2,727 n/a 1,335,112 **
M/A Ratio 100.0% n/a 100.0%
TOTAL MODELED Actual 325,265 989,346 74,347,530

BUSINESS Model 322,779 945,249 74,187,701
M/A Ratio** 99.2% 95.5% 99.8%
* Exhibit 5A, 5D and 5E reserves (ADB and Waiver of Premium are not modeled)
** Includes Exhibit 6A tabular plus unearned net premium and Exhibit 6B and Exhibit 8 claim
liabilities
Life of Alabama Insurance Company
Chapter 6: Model Validation 32
6.2 Actual versus Projected Analysis
Actual Projected
2015 2016 2017 2018* 2019 2020 2021 2022 2023
Premium Income 36,313,370 36,013,266 36,666,687 37,340,555 39,044,987 41,169,792 42,999,552 44,786,514 46,625,393
Investment Income 5,074,714 5,482,319 5,279,672 4,754,103 4,684,358 4,802,541 4,938,553 5,084,685 5,243,888
Other Income 16,559 114,645 85,743 36,569 0 0 0 0 0
Total Income 41,404,643 41,610,230 42,032,102 42,131,226 43,729,344 45,972,333 47,938,105 49,871,199 51,869,281
Death Benefits 3,239,306 2,820,754 2,592,533 3,187,569 2,966,362 2,926,729 3,111,226 3,266,424 3,406,148
A&H Benefits 16,202,132 15,371,374 15,387,558 16,555,683 17,010,814 17,236,511 17,719,095 18,251,550 18,863,519
Accumulated Fund Payments 212,099 180,612 164,003 72,317 174,807 169,502 164,168 159,729 155,270
Surrender Benefits 822,966 825,446 833,035 1,067,882 1,038,468 1,016,110 1,087,124 1,140,385 1,180,026
Increase In Rsv & Fund Accum 1,578,843 1,399,098 1,711,860 2,090,362 1,731,994 1,945,434 2,091,369 2,421,395 2,664,315
Policyholder Dividends 12,961 11,452 11,452 11,297 13,150 12,223 11,328 10,467 9,642
Total Policyholder Benefits 22,068,307 20,608,736 20,700,441 22,985,110 22,935,595 23,306,509 24,184,311 25,249,950 26,278,919
Commissions 6,839,254 6,899,348 7,302,359 7,885,874 8,071,771 8,470,658 8,867,045 9,290,805 9,740,065
Taxes Licenses & Fees 1,023,389 1,042,287 1,255,357 1,079,428 1,191,154 1,255,920 1,312,642 1,368,925 1,427,627
General Expenses 8,859,834 9,920,324 10,217,839 11,045,471 10,491,656 10,996,881 11,372,639 11,755,211 12,237,637
Increase in Loading 28,354 36,124 135,315 175,702 152,296 142,895 149,746 160,191 146,138
Total Expenses 16,750,831 17,898,083 18,910,870 20,186,476 19,906,877 20,866,354 21,702,072 22,575,132 23,551,467
Total Benefits & Expenses 38,819,138 38,506,819 39,611,311 43,171,585 42,842,472 44,172,863 45,886,383 47,825,082 49,830,386
Net Gain from Operations Before FIT 2,585,505 3,103,411 2,420,791 (1,040,359) 886,872 1,799,470 2,051,722 2,046,117 2,038,895
*Actual Q1-Q3 2018 plus projected Q4 2018

EXHIBIT
N
Clarence W. Daugette, Ill
216 Dogwood Circle
Gadsden, AL 35901
256-393-0316
October 15, 2019
Lori Urban
P. 0. Box 349
Gadsden, AL 35902
Dear Ms. Urban:
In response to your letter of October 1, 2019, please include me in your list

of people to purchase stock should it become available. I can be reached
at the above address and phone number.
Sincerely,
~
Clarence Dauget
/cwd
October 17,2019
Billy Joe Watson

3435 Indian Lake Trail
Pelhwn, AL 35124
(205) 533-1033
Mr. Lori Urban

P.O. Box 349
Ondsden, AL 35902
RE: Stock Purchase

I
Dear Ms. Urban,
I "ould like for my name 10 be added on lhc stock purcha>ing list for Life Insurance Company of
Alabama.
My contact infonnotion is above.
~~~
Bill) Joe Watson
October 24, 2019
Lori Urban
P.O. Box 349
Re: Stock Purchasing
Dear Ms. Urban,
I would be interested in purchasing up to 200 additional shares of stock. Please add my

information to the listing of persons interested in purchasing stock. My contact information is:
Adris ("Gene") Eugene Ludlum Jr.

P.O. Box 1809
Auburn, Alabama 36831
(334) 655-1010
Should you need anything further, please let me know.
Sincerely,
.~
October 25, 2015
1891 Dobbs Road
Ms. Lori Urban

P. 0. Box 349
Gadsden, AL 35902
Dear Lori, I only have a few stocks which my father had bought for me many
years ago. I would like to be put on the list. My name on the stocks is Barbara
Ann Bresler. My married name is Barbara Ann Bresler Sokol.
Telephone: 256-749-6164
barbarasokol@charter.net
If there is any other information you need, please contact me.
Sincerely,
FROM lHE DESK OF
M ICHAEL J. BURTON
November 1, 2019
Michael Burton
3074 Booger Hollow Road
Cave Spring, Georgie 30l24
Dear lod Urban,
I arn interested in selling my Llt'e Insurance Compony of Alabama stock. Pl&as& send a
fist of persons interested in pvri;hasing the stock to t he above address.
Sincerely yovr$,
Sincerely,
~d/~~
Michael Burton
3074 BOOGER HOLLOW ROAD• CAVE SPRING• GEORGIA 30 124 • 710-748-85-42

..
-
IZ(ol<'i W 0001-/\ND t).R._
fo1..,tY, 11(\, 3'-5~S
-../Jc,.,,,..., ~ ~ ~ ~ /4,J...., _
~ ~~ ~ aJ::, 2'5I 4 7 fl- C,3 ( 5
~ ~ Id I ~yeeete~.....,,~ i\ ·'-"""" .
October 2S, 2019
LO<ll/rban
life ln$urance Comp,iny of AlatNma
P.O. Box 349
Gadsden, Al 35902
Dl!'ar Ms. Vtban,
AJ. • stockholder •lore with my de<e•se<I lather RusseU W. Dallas I am formally notifying you that I wish
to sell whatever shares that Life ln.su,ance of Alabama holds in the n.1me •Russefl W. Oa"as C/O Clyde
Dall-as"
Plea.SC? let me know any other Information that vou may require.
Rus>ell W. Dallos C/0 Clyde Dal~

3121 Forest Drive
Columbia, SC 29204
October 16 , 2019
Ms. Lori Urt:>an

P. 0 . Box 349
Gadsden, AL 35902
RE: Notlce to All Stockholders (Herbert E. Lambert)
Dear Ms. Urban:
In response to your letter of October 1, 2019, regarding the above-referenced

subject, please add Herbert E. Lambert (des;eased} to the list of persons interested In
selling stock. Mr. Lambert was my father.
Please forward any information to the following:
Comefia A. Lambert
P.O. Box 1389
Atmore. Al 36504
Cell No. (251) 294 -6404
Sincerely.
Cot.(_~()./ {;._
Cornelia A Lambert
LICe~"~=-----------
Life ln$uronee Compony of Alobomo
October 1, 2019
Notice To All Stockholders
In order to assist those wishing to sell their Life Insurance Company of Alabama st ock, the
Company is compiling a list of persons interested in purchasing the st ock. If you would
like to be on this list, please let us know in writing at the address below and provide
us with your contact information. When the home office is contacted by shareholders
about selling their Life Insurance Company of Alabama stock, we will provide them with
this list. This will allow them to contact a buyer directly to discuss the transaction.
Sincerely,
life Insurance Company of Alabama
Contact : Lori Urban

life Insurance Company of Alabama
P. 0. Box 349
Gadsden,AL 35902
r (.h~ ~ 6£,r,) -r.o·C.:.-'"1
h,,.,1- 4- f..., -' ;._.,, ,.t
HOME OfFICE • P.O. Bo~ 349 • Godsdetl, Nobomo 35902 • Phone: 256-5.-13-2022 • 800,226,2371 , - . licocu;om
~ 1ce~~=-------
l ife ln.svronce Compa ny of Alabama
October 1, 2019
Notice To All Stockhofder:s
In order to assist t hose wishing to sell their life Insurance Company of Alabama stock, the
Company is compiling a list of per:sons interested in purchasing the stock. If you would
like to be on this fist, please let us know in writing at the address below and provide
about selling their Life Insurance Company of Alabama stock, we will provide t hem with
t his fist . This will allow them to contact a buyer directly t o discuss th e transaction.
Sincerelv.,
Contact: Lori Urban

P.O. Box 349
Gadsden,AL 35902
HOME 0FF1CE • P.O. Sox J.19• GQd$08n, Alobomo 35902 • Phone: 256,$43-2022 • 800.'2?6•2371 • www.llcoo.oom
1 November, 2019
Ms Lori A. Urban
P.O. Box349
Gadsden, Al 35902
RB; Stockholder numbers 37990 and 37991
Dear Ms Urban:
As discussed with you on the telephone, we are unable to locate certificates for
Class A Common .stock we own in Life Insurance Company of Alabama. We are
returning the completed and notarited forms that you sent after our inquiry.
Please reissue the 34 shares under the name of William B. R. Pennington Jr and the
33 shares under the names of William Belle Raiford Pennington Jr and Beverly M.
Pennington.
We are interested in selling our shares. Do you have any information on the selling
price of the last sale ?
Thank you for your help.
William B. R. Pennington
And
,t_v_er~ ~:!'n .:,..,o.,_n,_'.;-f>',r/
e ~'J;!gt
~~7
Collinsville, Ms 39325
I November IS, 2019
Lori Urban
Llfe lnwrance Company of Alabama
P, O. Box 349
Gadsden. AL 35902
RE: Sale of Stock
Dear Ms Urban:
Thank you for your letter concerning~ list of thooc who are interested in buying Life
Insurance Company of Alabama stock.
I actually would like to sell my stock, and would appreciate a copy of the list once it is
compiled.
Thank y0U for your assistance.
Sincerely,
Q.lRJ~~~
C. WilliamPhillips
6 Monterey Circle
Ormond Beo<:h, FL 32176
!t/~!:J~~-k?vst
CA,l~~AJ -3.z 5'5
J;JIJC, JJ,:J~A
_1c~=--=IA=--------
•-Compony"'-
October 1, 2019
Notlce To All Stocl<holders
In Older to assist those wishing to sett their Ufe Insurance Company of Alabilma stodc, the
Company is comprting a list of persons interested in purchasing the stock. If you would
like to be on this list, please let us know In writtng at the address below and provide
us with your contact infonnation. When the home office Is contacted by shareholders
about selling their Uk Insurance Company of Alabilma stock. we wm provide them with
Sincerely,
life Insurance Company of Alabilma
Contact: Lori Urban

P.O. Box349
Gadsden, Al 3S902 / t?-/:,'-/7'
;Cw.dtdd /,~ 1-o 15,e/l~ ~ ~=ffee,pe

§R#d/A!Z 4 /41 t?l /~-l~W/Vd~~ p ~
111~ L!,;;>~kW. 4~~ d~~
HOMf OfflCE• l'O. b3•9•--IJobon,o3S902 • - 2 2371•
-
LIC~-~- - - - - -
lifo lntul'onct C-ornp0ny of Alobomo
October 1, 2019
Notice To All Stockholders
In order to assist those wishing to sell their Life Insurance Company of Alabama stock, t he
Company is compiling a list of persons interested In purchasing the stock. If you would
like to be on t his list , please let us know in writing at the address below and provide
about selling their Life Insurance Company of Alabama st ock, w e will provide them with
Sincerely,
Lile Insurance Company of Alabama
Contact : Lo ri Urban
Life lnsucance Company of Alabama
P. 0. Box349
Gadsden, AL 35902
,
, n -(e_ <e .;-)<' ,I ' '' '"'\
\'IS°"! a,.,J VI•
I:,._ \, t•<-- !.. t "Ii~ ,,CA
) s, I t s,
'--" "'P"':::.) ~ "
- --
EXHIBIT
O
ANALYSIS OF OPERATIONS BY LINE OF BUSINESS 30-Jun-19 Qtr: = 2
(1) (3) (4) (5) (7) (9) (9) (11) Total

TOTAL LIFE INS ANNUITIESSUPP/CON GP LIFE GP Dent/VisOth GP A&H INDV A&H TOTAL GP A&H
1. Premiums & annuity considerations for Life & A&H policies18,757,669 3,821,160 11,728 - 302 1,200,253 245,370 13,478,859 18,757,669 1,445,622.67
2. Considerations for supplementary contracts with life contingencies - - - - - - - - - -
3. Net investment income 2,211,856 1,326,893 26,985 21,234 - (442) 43,352 793,835 2,211,858 42,910.00
4. Amortization of Interest Maintenance Reserve (IMR) 179,357 107,596 2,188 1,722 - (36) 3,515 64,373 179,358 3,479.00
5. Separate Accounts net gain / excluding unrealized gains & loses- - - - - - - - - -
6. Commissions & expense allowances on reinsurance ceded - - - - - - - - - -
7. Reserve adjustments on reinsurance ceded - - - - - - - - - -
8. Miscellaneous income: - - - - - - - - - -
8.1 Income from fees -Seperate Accounts - - - - - - - - - -
8.2 Changes and fees for deposit-type contracts - - - - - - - - - -
8.3 Aggregate write-ins for miscellaneous income 11,299 11,299 - - - - - - 11,299 -
9. Totals (Lines 1 to 8.3) 21,160,181 5,266,948 40,901 22,956 302 1,199,775 292,237 14,337,067 21,160,184 1,492,011.67
10. Death benefits 1,270,982 1,270,983 - - - - - - 1,270,983 -
11. Matured endowments (excluding pure endowments) - - - - - - - - -
12. Annuity benefits 102,094 - 102,094 - - - - - 102,094 -
13. Disability benefits and benefits under A&H policies 8,673,615 - - - 779,302 175,258 7,719,055 8,673,616 954,560.04
14. Coupons, guaranteed annual pure endowments/similar benefits- - - - - - - - -
15. Surrender benefits and withdrawals for life contracts 447,521 447,521 - - - - - - 447,521
16 Group conversions - - - - - - - - -
17. Interest and adjustments on policy / deposit-type contract funds
18,140 15,605 - 2,535 - - - - 18,140
18. Payments on supplementary contracts with life contingencies - - - - - - - - -
19. Increase in aggregate reserves for life and A&H policies 1,224,278 1,107,411 (52,827) - 9 70 20,871 148,743 1,224,277 20,941.00
20. Totals (Lines 10 to 19) 11,736,631 2,841,521 49,267 2,535 9 779,372 196,129 7,867,798 11,736,632 975,501.04
21. Commissions on premiums, annuities and deposit contracts 4,068,745 749,385 - - 230,875 24,670 3,063,816 4,068,745 255,544.16
22. Commissions and expense allowances on reinsurance assumed - - - - - - - - -
23. General insurance expenses 5,883,931 1,452,743 588 - 2,354 401,284 62,958 3,964,004 5,883,931 464,242.15
24. Insurance taxes, licenses & fees, excluding federal income596,077
tax 119,990 - - - 39,520 7,511 429,056 596,077 47,030.46
25. Increase in loading on deferred and uncollected premiums166,249 166,249 - - - 166,249
26. Net transfers to or (from) Seperate Accounts - - - - - - - - -
27. Aggregate write-ins for deductions 8,765 8,765 - - - - - - 8,765 -
28. Totals (Lines 20 to 27) 22,460,398 5,338,653 49,856 2,535 2,363 1,451,051 291,267 15,324,674 22,460,399 1,742,317.80
29. Net gain from operations before dividends (Line 9 less Line
(1,300,216)
28) (71,705) (8,954) 20,421 (2,061) (251,276) 971 (987,609) (1,300,214) (250,305.13)
30. Dividends to policyholders 3,374 3,374 - - - - - - 3,374 -
31. Net gain from operations after dividends (Line 29 - Line(1,303,591)
30) (75,079) (8,954) 20,421 (2,061) (251,276) 971 (987,610) (1,303,589) (250,305.13)
EXHIBIT
P
Form 8925 Report of Employer-Owned Life Insurance Contracts OMB No. 1545-2089
(Rev. September 2017)

I Attach to the policyholder's tax return - See instructions. Attachment
Department of he Treasury
Internal Revenue Service (99)
Name(s) as shown on return
I Go to www.irs.gov/Form8925 for the latest information. Sequence No.
Identifying number
160
LIFE INSURANCE COMPANY OF ALABAMA

Name of policyholder, if different from above r, if different from above
Type of business

1 Enter the number of employees the policyholder had at the end of the tax year mmmmmmmmmmmm 1 65.
2 Enter the number of employees included on line 1 who were insured at the end of the tax
year under the policyholder’s employer-owned life insurance contract(s) issued after August
3
mmmmmmmmmmmmmm
17, 2006. See Section 1035 exchanges on page 2 for an exception
Enter the total amount of employer-owned life insurance in force at the end of the tax year
2 13.
4a
mmmmmmmmmmm
for employees who were insured under the contract(s) specified on line 2
Does the policyholder have a valid consent for each employee included on
3 12,448,673.
line 2? See instructions mmmmmmmmmmmmmmmmmmmmmmmmmmm X Yes No

If "No," enter the number of employees included on line 2 for whom the policyholder does
mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm
b
not have a valid consent 4b
Section references are to the Internal Policyholder. For purposes of Form The written notification must include a
Revenue Code unless otherwise noted. 8925 and these instructions, a disclosure of the face amount of life
policyholder is an "applicable insurance, either in dollars or as a
Future Developments policyholder" as defined in section multiple of salary, that the policyholder
For the latest information about 101(j)(3)(B). Generally, a policyholder is reasonably expects to purchase with
developments related to Form 8925 the person who owns the employer- regard to the employee during the
and its instructions, such as legislation owned life insurance contract, and who course of the employee’s tenure.
enacted after they were published, go to is (a) engaged in a trade or business that Additional notice and consent are
www.irs.gov/Form8925. employs the person insured under the required if the aggregate face amount of
employer-owned life insurance contract the employer-owned life insurance
General Instructions and (b) the direct or indirect beneficiary contracts with regard to an employee
of the employer-owned life insurance exceeds the amount of which the
Purpose of Form contract. employee was given notice and to which
Use Form 8925 to report the number of Related person. A related person is the employee consented. See Q&A-9
employees covered by employer-owned considered a policyholder if that person and Q&A-12 in Notice 2009-48.
life insurance contracts issued after is (a) related to the policyholder (defined 2. Provide written notification to the
August 17, 2006, and the total amount of earlier) under sections 267(b) or 707(b) employee that the policyholder will be a
employer-owned life insurance in force (1), or (b) engaged in a trade or business beneficiary of any proceeds payable
on those employees at the end of the tax under common control with the upon the death of the employee.
year. Policyholders must also indicate policyholder. See sections 52(a) and (b). 3. Received written consent from the
whether a valid consent has been Employee. Employee includes an employee. See Valid consent under the
received from each covered employee, officer, director, or highly compensated instructions for line 4a.
and the number of covered employees employee under section 414(q).
for which a valid consent has not been Electronic notification and consent.
Insured. An individual must be a U.S. The written notification and consent
received.
citizen or resident to be considered requirement can be met electronically
For more information, see sections insured under an employer-owned life only if the system for electronic
101(j) and 6039I, and Notice 2009-48, insurance contract. Both individuals notification and consent meets
2009-24 I.R.B. 1085, available at covered by a contract covering the joint requirements 1 through 3, above. See
www.irs.gov/irb/2009-24_IRB/ar11.html. lives of two individuals are considered Q&A-11 in Notice 2009-48 for more
insured. information.
Definitions Notice and consent requirements. To
Employer-owned life insurance Issue date of contract. Generally, the
qualify as an employer-owned life issue date of a life insurance contract is
contract. For purposes of Form 8925, insurance contract, the policyholder
an insurance contract is an employer- the date on the policy assigned by the
must meet the notice and consent insurance company on or after the date
owned life insurance contract if it is requirements listed below before the of application. For purposes of meeting
owned by a policyholder as defined issuance of the contract. the notice and consent requirements, the
below, and covers the life of the issue date of the employer-owned life
1. Provide written notification to the
policyholder's employee(s) on the date insurance contract is the later of (1) the
employee stating the policyholder
the life insurance contract is issued. If intends to insure the employee's life and date of application of coverage, (2) the
you have master contracts, see section the maximum face amount for which the effective date of coverage, or (3) the
101(j)(3) for additional information. employee could be insured at the time formal issuance of the contract. See
the contract was issued. Q&A-4 in Notice 2009-48 for more
information.
For Paperwork Reduction Act Notice, see instructions. Form 8925 (Rev. 9-2017)
JSA
7X9019 2.000
0466FU M726 07/16/2018 14:41:18 30

Regulation Section 1.263(a)-1(f) - De Minimis
Safe Harbor Election
Taxpayer Name: LIFE INSURANCE COMPANY OF ALABAMA

Taxpayer Address: P.O. BOX 349 GADSDEN AL 35902
Taxpayer ID Number:
Year-End: 12/31/2017
Under IRC Regulation Section 1.263(a)-1(f), the taxpayer hereby elects to apply the de minimis
safe harbor election.
7XE147 1.000
0466FU M726 07/16/2018 14:41:18 31
12/31/2017
FEIN:
Date Date Sale Cost/Carrying Gain/
ST/LT Acquired Sold Description Price Value (Loss)
ST 02/09/2016 01/05/2017 FEDERATED DEPT STORES INC DEL Co:1 Lot:1 556,625 532,853 23,772
ST 02/11/2016 02/09/2017 FEDERATED DEPT STORES INC DEL Co:1 Lot:2 537,063 529,548 7,514
ST 04/14/2016 02/09/2017 FEDERATED DEPT STORES INC DEL Co:1 Lot:3 517,500 551,988 (34,488)
ST 07/25/2016 05/26/2017 AMBEV SA Co:1 Lot:1 283 288 (5)
ST 07/26/2016 05/30/2017 AMBEV SA Co:1 Lot:2 189 196 (7)
ST 07/27/2016 05/30/2017 AMBEV SA Co:1 Lot:3 280 288 (8)
ST 07/27/2016 05/30/2017 AMBEV SA Co:1 Lot:4 69 70 (2)
ST 07/27/2016 05/30/2017 AMBEV SA Co:1 Lot:5 274 283 (9)
ST 07/27/2016 05/30/2017 AMBEV SA Co:1 Lot:6 57 59 (2)
ST 07/28/2016 05/30/2017 AMBEV SA Co:1 Lot:7 34 35 (1)
ST 07/28/2016 05/30/2017 AMBEV SA Co:1 Lot:8 114 118 (4)
ST 07/29/2016 05/30/2017 AMBEV SA Co:1 Lot:9 708 722 (14)
ST 07/29/2016 05/30/2017 AMBEV SA Co:1 Lot:10 57 58 (1)
ST 07/29/2016 05/31/2017 AMBEV SA Co:1 Lot:11 1,702 1,732 (30)
ST 07/29/2016 05/31/2017 AMBEV SA Co:1 Lot:12 274 279 (4)
ST 07/29/2016 05/31/2017 AMBEV SA Co:1 Lot:13 103 104 (1)
ST 08/01/2016 06/01/2017 AMBEV SA Co:1 Lot:14 394 401 (7)
ST 08/01/2016 06/01/2017 AMBEV SA Co:1 Lot:15 507 516 (9)
ST 08/02/2016 06/01/2017 AMBEV SA Co:1 Lot:16 701 713 (13)
ST 08/02/2016 06/01/2017 AMBEV SA Co:1 Lot:17 17 17 (0)
ST 08/02/2016 06/01/2017 AMBEV SA Co:1 Lot:18 758 769 (11)
ST 08/03/2016 06/01/2017 AMBEV SA Co:1 Lot:19 614 619 (5)
ST 08/03/2016 06/01/2017 AMBEV SA Co:1 Lot:20 256 258 (2)
ST 08/03/2016 06/01/2017 AMBEV SA Co:1 Lot:21 432 436 (4)
ST 08/04/2016 06/01/2017 AMBEV SA Co:1 Lot:22 136 140 (4)
ST 08/04/2016 06/01/2017 AMBEV SA Co:1 Lot:23 57 57 (1)
ST 08/04/2016 06/01/2017 AMBEV SA Co:1 Lot:24 131 135 (4)
ST 08/05/2016 06/01/2017 AMBEV SA Co:1 Lot:25 409 432 (22)
ST 08/05/2016 06/01/2017 AMBEV SA Co:1 Lot:26 370 389 (20)
ST 08/08/2016 06/02/2017 AMBEV SA Co:1 Lot:27 296 317 (21)
ST 08/08/2016 06/02/2017 AMBEV SA Co:1 Lot:28 148 158 (10)
ST 08/09/2016 06/02/2017 AMBEV SA Co:1 Lot:29 119 129 (10)
ST 08/09/2016 06/02/2017 AMBEV SA Co:1 Lot:30 230 252 (22)
ST 08/10/2016 06/02/2017 AMBEV SA Co:1 Lot:31 488 534 (46)
ST 12/22/2016 06/02/2017 AMBEV SA Co:1 Lot:32 17 14 3
ST 12/23/2016 06/02/2017 AMBEV SA Co:1 Lot:33 123 107 16
ST 12/27/2016 06/02/2017 AMBEV SA Co:1 Lot:34 314 275 39
ST 12/28/2016 06/02/2017 AMBEV SA Co:1 Lot:35 309 272 37
ST 12/29/2016 06/02/2017 AMBEV SA Co:1 Lot:36 376 334 42
ST 12/30/2016 06/02/2017 AMBEV SA Co:1 Lot:37 426 376 51
ST 01/04/2017 06/02/2017 AMBEV SA Co:1 Lot:38 269 246 23
ST 01/04/2017 06/02/2017 AMBEV SA Co:1 Lot:39 157 143 14
ST 01/05/2017 06/02/2017 AMBEV SA Co:1 Lot:40 140 130 11
ST 01/06/2017 06/02/2017 AMBEV SA Co:1 Lot:41 331 300 31
ST 01/06/2017 06/02/2017 AMBEV SA Co:1 Lot:42 600 548 53
ST 01/09/2017 06/02/2017 AMBEV SA Co:1 Lot:43 247 227 20
ST 01/09/2017 06/02/2017 AMBEV SA Co:1 Lot:44 337 310 26
ST 01/10/2017 06/02/2017 AMBEV SA Co:1 Lot:45 460 420 40
ST 01/10/2017 06/02/2017 AMBEV SA Co:1 Lot:46 337 308 29
ST 01/11/2017 06/02/2017 AMBEV SA Co:1 Lot:47 751 674 77
ST 01/03/2017 06/02/2017 AMBEV SA Co:1 Lot:48 292 264 28
ST 01/27/2017 09/28/2017 AMERICAN AIRLS GROUP INC Co:1 Lot:3 1,092 1,084 7
ST 05/18/2016 01/17/2017 CANADIAN PAC RY LTD Co:1 Lot:3 729 952 (223)
ST 01/06/2017 07/27/2017 COMPASS GROUP PLC Co:1 Lot:1 2 2 0
ST 07/13/2016 05/31/2017 CONTINENTAL RESOURCES INC Co:1 Lot:1 24,081 26,849 (2,768)
ST 06/02/2016 01/23/2017 FRONTIER COMMUNICATIONS CORP Co:1 Lot:5 12,155 18,192 (6,037)
ST 06/24/2016 01/31/2017 MONOLITHIC PWR SYS INC Co:1 Lot:1 38,480 29,368 9,112
ST 06/02/2016 02/03/2017 OCCIDENTAL PETROLEUM CORP Co:1 Lot:8 8,646 10,309 (1,663)
ST 06/15/2016 02/03/2017 OCCIDENTAL PETROLEUM CORP Co:1 Lot:9 6,917 7,479 (562)
ST 10/20/2016 04/05/2017 PORTLAND GEN ELEC CO Co:1 Lot:3 33,571 31,417 2,154
STATEMENT A
ST 08/08/2016 01/18/2017 SHOPRITE HOLDINGS LTD SPONSORED AD Co:1 Lot:3 1,281 1,495 (214)
ST 08/10/2016 01/18/2017 SHOPRITE HOLDINGS LTD SPONSORED AD Co:1 Lot:4 2,823 3,420 (598)
ST 08/16/2016 01/18/2017 SHOPRITE HOLDINGS LTD SPONSORED AD Co:1 Lot:5 536 645 (109)
ST 04/25/2017 09/26/2017 UNITI GROUP INC Co:1 Lot:2 15,714 27,664 (11,950)
ST 05/02/2017 09/26/2017 UNITI GROUP INC Co:1 Lot:3 4,714 8,205 (3,491)
1,777,621 1,796,923 (19,302)
Realized Short-Term Gain/(Loss) (19,302)
STATEMENT A
12/31/2017
FEIN:
Date Date Sale Cost/Carrying Gain/

ST/LT Acquired Sold Description Price Value (Loss)
LT 04/18/2008 01/05/2017 AEGIS ALABAMA VENTURE FUND, LP 287,477 299,455 (11,978)
LT 07/24/2013 02/02/2017 ALLEGHENY TECHNOLOGIES INC Co:1 Lot:1 459,000 454,925 4,075
LT 01/29/2014 02/02/2017 ALLEGHENY TECHNOLOGIES INC Co:1 Lot:2 561,000 569,572 (8,572)
LT 06/07/2011 11/10/2017 AMERITECH CAP FUNDING CORP Co:1 Lot:1 1,178,100 1,075,002 103,098
LT 02/02/2016 06/14/2017 ARROW ELECTRS INC Co:1 Lot:1 582,431 534,700 47,730
LT 04/19/2011 11/10/2017 AT&T CORP Co:1 Lot:1 586,000 530,332 55,668
LT 07/24/2014 03/17/2017 BBV INTL FIN LTD Co:1 Lot:1 1,140,000 1,133,315 6,685
LT 01/04/2011 06/07/2017 CNF INC Co:1 Lot:1 287,250 286,738 512
LT 12/04/2014 02/27/2017 CONTINENTAL RESOURCES INC Co:1 Lot:1 877,500 875,859 1,641
LT 11/03/2010 09/29/2017 DELL INC Co:1 Lot:1 273,000 290,653 (17,653)
LT 07/16/2002 07/06/2017 DUKE CAP CORP Co:1 Lot:1 255,888 224,353 31,535
LT 07/24/2002 07/06/2017 DUKE CAP CORP Co:1 Lot:2 113,728 96,070 17,658
LT 04/09/2015 07/27/2017 FREEPORT-MCMORAN INC Co:1 Lot:1 1,882,500 1,899,293 (16,793)
LT 02/16/2016 06/01/2017 GOLDMAN SACHS GROUP INC Co:1 Lot:2 632,145 551,804 80,341
LT 03/10/2016 06/01/2017 GOLDMAN SACHS GROUP INC Co:1 Lot:3 632,145 570,523 61,622
LT 06/03/2015 06/01/2017 IRONSHORE HOLDINGS U.S. Co:1 Lot:1 1,186,930 1,120,703 66,227
LT 03/12/2015 05/23/2017 MURPHY OIL CORP Co:1 Lot:1 973,750 973,006 744
LT 11/14/2013 05/24/2017 NABORS INDS INC Co:1 Lot:1 1,012,500 1,007,336 5,164
LT 01/23/2014 01/10/2017 PETROBRAS INTL FIN CO Co:1 Lot:1 996,350 1,004,348 (7,998)
LT 05/28/2015 09/26/2017 SCOTTRADE FINL SVCS INC Co:1 Lot:1 2,280,000 2,125,222 154,778
LT 10/03/2001 04/03/2017 TENNESSEE GAS PIPELINE CO Co:1 Lot:1 300,000 300,000 -
LT 09/17/2014 06/20/2017 TRANSOCEAN INC Co:1 Lot:1 1,060,000 1,063,996 (3,996)
LT 01/12/2011 03/09/2017 US WEST COMMUNICATIONS INC Co:1 Lot:1 147,375 150,000 (2,625)
LT 12/04/2015 12/13/2017 VERIZON COMMUNICATIONS INC Co:1 Lot:1 544,070 517,160 26,910
LT 12/11/2014 04/19/2017 WESTERN UN CO Co:1 Lot:1 521,150 516,484 4,666
LT 04/08/2015 04/19/2017 WESTERN UN CO Co:1 Lot:2 521,150 525,674 (4,524)
LT 06/03/2015 09/28/2017 AMERICAN AIRLS GROUP INC Co:1 Lot:1 17,546 15,388 2,158
LT 06/08/2015 09/28/2017 AMERICAN AIRLS GROUP INC Co:1 Lot:2 18,984 15,868 3,116
LT 08/06/2014 01/04/2017 AMERICAN EXPRESS CO Co:1 Lot:1 7,169 4,836 2,333
LT 05/18/2016 12/18/2017 CHARTER COMMUNICATIONS INC NEW Co:1 Lot:1 48,136 33,657 14,479
LT 03/10/2016 06/07/2017 CIMAREX ENERGY CO Co:1 Lot:1 19,823 18,097 1,726
LT 08/01/2011 05/18/2017 CISCO SYS INC Co:1 Lot:3 30,069 15,710 14,359
LT 08/06/2014 05/18/2017 CISCO SYS INC Co:1 Lot:5 12,679 10,270 2,409
LT 07/22/2015 12/21/2017 COLOPLAST A/S Co:1 Lot:1 6,883 6,221 662
LT 09/17/2012 06/09/2017 CORNING INC Co:1 Lot:1 13,484 5,973 7,511
LT 10/10/2013 06/09/2017 CORNING INC Co:1 Lot:2 1,960 962 998
LT 10/30/2015 11/01/2017 CTRIP COM INTL LTD Co:1 Lot:1 3,768 3,554 214
LT 11/06/2015 11/02/2017 CTRIP COM INTL LTD Co:1 Lot 5 3,067 3,355 (288)
LT 11/06/2015 11/02/2017 CTRIP COM INTL LTD Co:1 Lot:6 2,592 2,832 (240)
LT 11/09/2015 11/02/2017 CTRIP COM INTL LTD Co:1 Lot:7 751 815 (64)
LT 05/13/2014 04/06/2017 EBAY INC Co:1 Lot:2 4,253 2,535 1,718
LT 08/06/2014 04/06/2017 EBAY INC Co:1 Lot:3 5,614 3,469 2,145
LT 07/16/2015 06/23/2017 EDISON INTL Co:1 Lot:2 24,230 17,677 6,553
LT 10/28/2015 06/23/2017 EDISON INTL Co:1 Lot:3 16,153 12,210 3,943
LT 06/18/2014 03/07/2017 EXPRESS SCRIPTS HLDG CO Co:1 Lot:2 6,338 6,395 (57)
LT 08/06/2014 03/07/2017 EXPRESS SCRIPTS HLDG CO Co:1 Lot:3 13,148 13,759 (611)
LT 05/20/2011 03/24/2017 EXXON MOBIL CORP Co:1 Lot:1 8,170 8,194 (24)
LT 05/18/2011 06/12/2017 GENERAL ELECTRIC CO Co:1 Lot:2 26,727 17,854 8,873
LT 08/06/2014 09/07/2017 GENERAL ELECTRIC CO Co:1 Lot 5 21,227 22,695 (1,468)
LT 08/10/2011 06/09/2017 INTEL CORP Co:1 Lot:1 16,526 9,276 7,251
LT 05/18/2011 07/18/2017 JOHNSON & JOHNSON Co:1 Lot:3 8,627 4,309 4,318
LT 05/17/2011 01/17/2017 LVHM MOET HENNESSY LOUIS VUITTON Co:1 Lot:1 838 691 147
LT 11/03/2014 06/09/2017 MARTIN MARIETTA MATLS INC Co:1 Lot:1 17,579 8,804 8,775
LT 08/06/2014 09/01/2017 MICROSOFT CORP Co:1 Lot:3 18,851 10,991 7,861
LT 08/06/2014 09/01/2017 MICROSOFT CORP Co:1 Lot:4 5,589 3,235 2,354
LT 05/18/2011 01/17/2017 NOVOZYMES A/S SPONS ADR Co:1 Lot:2 728 679 49
LT 12/03/2014 02/03/2017 OCCIDENTAL PETROLEUM CORP Co:1 Lot:13 6,917 7,525 (608)
LT 10/28/2016 12/21/2017 PG&E CORP Co:1 Lot:4 12,618 18,244 (5,626)
LT 09/08/2011 10/31/2017 PNC FINL SVCS GROUP INC Co:1 Lot:3 5,494 1,924 3,570
STATEMENT B
FEIN:
Form 4562 (2017) Part I Line 6 - Section 179
Description Acquired Cost Sec 179
Computer - Printshop/Olivia 01/11/17 1,378 1,378
APC Smart-UPS X 3000 Rack/Tower LCD 01/30/17 2,561 2,561
Envelope printer with Fiery RIP 02/27/17 27,377 27,377
New Imaging Sys - HPE ProLiant DL380 Gen9-Xeon E5-2620V4 03/10/17 23,605 23,605
Intel I7 Computer sytem w/ 27" LCD - Clarence 03/22/17 2,027 2,027
HP Color Laser Printer to replace color copier 04/18/17 3,651 3,651
48 Port Managed Fiber Switch 04/27/17 6,191 6,191
Desk - Accounting - Amy Hudgins 08/09/17 1,434 1,434
Desk - Accounting - Cassie Chapman 08/09/17 1,270 1,270
Desk - Accounting - Chakeeta Boateng 08/09/17 1,270 1,270
Desk - Accounting - Cindy Abbott 08/09/17 1,259 1,259
Desk - Accounting - Jina Capes 08/09/17 1,292 1,292
Desk - Accounting - Karmen Grant 08/09/17 1,270 1,270
Computer system - Agency - Janice Garrett-Intel 15, 3 monitors 08/31/17 1,623 1,623
iPad Pro 12.9" - Agency 09/19/17 1,253 1,253
Lenovo Yoga 710 I7 - Steve Keck 10/12/17 1,853 1,853
Computer for Call Center - Intel 15 processor 11/21/17 1,050 1,050
Lenovo Yoga I5 - Ray - Agency 11/21/17 1,100 1,100
Lenovo Yoga I7 - Accounting 11/21/17 1,320 1,320
iPad Pro 10.5 inch - Pro Wi-Fi + Cellular 512GB Space Gray - Lynn 12/05/17 1,378 1,378
iPad Pro 10.5 inch Wi-Fi + Cellular 512 GB Space Gray - Hoyt 12/05/17 1,378 1,378
Rounding Difference 1 1
85,541 85,541
STATEMENT C
1120-L, PAGE 1 DETAIL

==============================================================================
PAGE 1, LINE 7: OTHER INCOME

----------------------------
DETAIL OF WRITE-INS FOR MISCELLANEOUS INCOME:
MISCELLANEOUS INCOME 52,830.
CHANGE IN LIABILITY FOR BENEFITS FOR 32,913.
---------------
TOTAL OTHER INCOME 85,743.
===============
PAGE 1, LINE 18: OTHER DEDUCTIONS

---------------------------------
OTHER DEDUCTIONS FROM SCHEDULE G, LINE 11 16,165,623.

---------------
TOTAL OTHER DEDUCTIONS 16,165,623.
===============
STATEMENT 1
0466FU M726 07/16/2018 14:41:18 32

==============================================================================
SCHEDULE B, LINE 1:
INTEREST (EXCLUDING TAX EXEMPT INTEREST)
------------------------------------------
U.S. GOVERNMENT BONDS 34,135.
TAX EXEMPT INTEREST 347,155.
OTHER BONDS (UNAFFILIATED) 4,518,655.
CONTRACT LOANS 264,574.
CASH AND SHORT TERM INVESTMENTS 8,791.
OTHER INVESTED ASSETS 81,811.
AGGREGATE WRITE-INS FOR INVESTMENT INCOME 1,272.
OTHER INTEREST TAX ADJUSTMENTS -57,822.
---------------
SUBTOTAL: GROSS INTEREST INCOME INCLUDING TAX EXEMPT 5,198,571.
LESS: TAX EXEMPT INTEREST 347,155.
---------------
SUBTOTAL 4,851,416.
===============
ADJUSTMENT FOR ACCRUAL OF MARKET DISCOUNT DETAIL

------------------------------------------------
TOTAL FROM NAIC EXHIBIT 2 54,464.
---------------
SUBTOTAL 54,464.
---------------
OTHER INTEREST TAX ADJUSTMENTS DETAIL

-------------------------------------
CHANGE UNEARNED INTEREST -57,822.
---------------
SUBTOTAL -57,822.
---------------
TAX EXEMPT INTEREST DETAIL

--------------------------
TAX EXEMPT INTEREST COLLECTED DURING THE YEAR 347,155.
---------------
SUBTOTAL 347,155.
---------------
STATEMENT 2
0466FU M726 07/16/2018 14:41:18 33

==============================================================================
SCHEDULE B, LINE 7:
INCOME FROM TRADE OR BUSINESS OTHER THAN INSURANCE
--------------------------------------------------
ORDINARY INCOME FROM 4797 500.
---------------
500.
===============
STATEMENT 3
0466FU M726 07/16/2018 14:41:18 34

==============================================================================
BEGINNING ENDING OF TAX YEAR

-------------- ------------------
SCHEDULE F, LINE 1: LIFE INSURANCE RESERVES
-------------------------------------------
60,478,478. 62,217,907.
--------------- ---------------
60,478,478. 62,217,907.
=============== ===============
SCHEDULE F, LINE 2:
UNEARNED PREMIUMS AND UNPAID LOSSES
-----------------------------------
497,975. 579,060.
--------------- ---------------
497,975. 579,060.
=============== ===============
SCHEDULE F, LINE 3: SUPPLEMENTARY CONTRACTS

-------------------------------------------
164,209. 157,768.
--------------- ---------------
164,209. 157,768.
=============== ===============
SCHEDULE F, LINE 4:
DIVIDEND ACCUMULATIONS AND OTHER AMOUNTS
----------------------------------------
1,038,359. 1,034,119.
--------------- ---------------
1,038,359. 1,034,119.
=============== ===============
SCHEDULE F, LINE 5: ADVANCE PREMIUMS

------------------------------------
304,972. 344,242.
--------------- ---------------
304,972. 344,242.
=============== ===============
STATEMENT 4
0466FU M726 07/16/2018 14:41:18 35

==============================================================================
SCHEDULE F, LINE 6:
SPECIAL CONTINGENCY RESERVES
----------------------------
NONE NONE
--------------- ---------------
NONE NONE
=============== ===============
MEAN REQ. INTEREST

SCHEDULE F, LINE 10A ---------------
REQUIRED INTEREST ON RESERVES
-----------------------------
SECTION 807(C)(1) SUMMARY 61,348,193. 3,036,225.
SECTION 807(C)(3) SUMMARY 160,989. 8,854.
SECTION 807(C)(4) SUMMARY 1,036,239. 51,812.
SECTION 807(C)(5) SUMMARY 324,607. NONE
SECTION 807(C)(6) SUMMARY NONE NONE
---------------
3,096,891.
===============
REQUIRED INTEREST FOR

SEC. 807(C)(1) RESERVES DETAIL
------------------------------
61,348,193. 3,036,225.
--------------- ---------------
SUBTOTALS 61,348,193. 3,036,225.
--------------- ---------------

------------------------------
STATEMENT 5
0466FU M726 07/16/2018 14:41:18 36

==============================================================================
160,989. 8,854.
--------------- ---------------
SUBTOTALS 160,989. 8,854.
--------------- ---------------

------------------------------
1,036,239. 51,812.
--------------- ---------------
SUBTOTALS 1,036,239. 51,812.
--------------- ---------------

------------------------------
324,607. NONE
--------------- ---------------
SUBTOTALS 324,607. NONE
--------------- ---------------
------------------------------
NONE NONE
--------------- ---------------
SUBTOTALS NONE NONE
--------------- ---------------
STATEMENT 6
0466FU M726 07/16/2018 14:41:18 37

==============================================================================
SCHEDULE F, LINE 28: NET INVESTMENT INCOME

------------------------------------------
GROSS INVESTMENT INCOME (LINE 9) 5,328,832.
APPLICABLE PERCENTAGE 90.00
---------------
NET INVESTMENT INCOME 4,795,949.
===============
STATEMENT 7
0466FU M726 07/16/2018 14:41:18 38

============================================================================================================================================
RESERVES RECONCILIATION PRIOR YEAR CURRENT YEAR DIFFERENCE SCH N ADJ.

----------------------- -------------- -------------- -------------- --------------
1 SECTION 807(C)(1), SCHEDULE F, LINE 1:

A RESERVE FOR LIFE POLICIES CONTRACTS 43,315,831. 44,878,376. 1,562,545.
B RESERVES FOR A & H POLICIES 22,493,747. 22,643,062. 149,315.
C LESS:
UNEARNED PREMIUMS AND UNPAID LOSS RES. ON
A & H POLICY & CONTRACTS - NET OF REINS. CEDED 22,004,064. 22,185,846. 181,782.
RECLASS OF NAIC EXHIBIT 6 CLAIM RESERVE 489,683. 457,216. -32,467.
-------------- -------------- --------------
E SUBTOTAL OF SCHEDULE F, LINE 1 RESERVE 43,315,831. 44,878,376. 1,562,545.
A UNEARNED PREMIUM AND UNPAID LOSS RESERVE ON
A & H POLICY & CONTRACTS - NET OF REINSURANCE CEDED 22,004,064. 22,185,846. 181,782.
C RECLASS OF NAIC EXHIBIT 6 CLAIM RESERVE 489,683. 457,216. -32,467.
-------------- -------------- --------------
F SUBTOTAL OF SCHEDULE F, LINE 2 RESERVE 22,493,747. 22,643,062. 149,315.
A SUPPLEMENTARY CONTRACTS 1,202,568. 1,191,887. -10,681.
-------------- -------------- --------------
D SUBTOTAL OF SCHEDULE F, LINE 3 1,202,568. 1,191,887. -10,681.
A ADVANCE PREMIUMS AND PREMIUM DEPOSIT FUNDS 304,972. 344,242. 39,270. -39,270.
-------------- -------------- --------------
C SUBTOTAL OF SCHEDULE F, LINE 5 304,972. 344,242. 39,270.
-------------- -------------- --------------
7 TOTAL OF SCHEDULE F SUBTOTALS 67,317,118. 69,057,567. 1,740,449.
8 AMOUNTS REPORTED ON SCHEDULE F, LINE 7 62,483,993. 64,333,096. 1,849,103.
-------------- -------------- --------------
9 ANNUAL STATEMENT TO TAX DIFFERENCES 4,833,125. 4,724,471. -108,654.
============== ============== ==============
STATEMENT 8
0466FU 07/16/2018 14:41:18 39


==============================================================================
SCH G, LINE 9: GENERAL DEDUCTIONS

---------------------------------
GENERAL EXPENSES:
RENT 164,666.
SALARIES AND WAGES 5,015,788.
CONTRIBUTIONS FOR BENEFIT PLANS FOR EMPLOYEES 878,726.
OTHER AGENT WELFARE 122,684.
LEGAL FEES AND EXPENSES 37,098.
MEDICAL EXAMINATION FEES 124,939.
INSPECTION REPORT FEES 19,520.
FEES FOR PUBLIC ACCOUNTANTS AND CONSULTING ACTUARIES 459,379.
EXPENSE OF INVESTIGATION AND SETTLEMENT OF POLICY CLAIMS 7,401.
TRAVELING EXPENSES 255,048.
ADVERTISING 40,813.
POSTAGE, EXPRESS, TELEGRAPH AND TELEPHONE 253,237.
PRINTING AND STATIONERY 45,881.
COST OR DEPRECIATION OF FURNITURE AND EQUIPMENT 130,724.
RENTAL OF EQUIPMENT 137,416.
BOOKS AND PERIODICALS 7,181.
BUREAU AND ASSOCIATION FEES 31,073.
INSURANCE, EXCEPT ON REAL ESTATE 135,872.
MISCELLANEOUS LOSSES 663.
COLLECTION AND BANK SERVICE CHARGES 97,753.
SUNDRY GENERAL EXPENSES 281,121.
GROUP SERVICE AND ADMINISTRATIVE FEES 11,143.
AGENTS' BALANCES CHARGED OFF 31,703.
AGENCY CONFERENCES OTHER THAN LOCAL MEETINGS 492,217.
REAL ESTATE EXPENSES 66,701.
WRITE-INS FOR GENERAL EXPENSES 147,421.
OTHER GENERAL EXPENSE RECLASSED ITEMS 1,324,519.
SUNDRY GENERAL EXPENSES DETAIL
------------------------------ ---------------
SUBTOTAL 281,121.
---------------
INVESTMENT EXPENSES NOT INCLUDED ELSEWHERE
------------------------------------------
---------------
SUBTOTAL 178,677.
---------------
TOTAL - GENERAL EXPENSES 10,499,364.
---------------
CONTINUED ON NEXT PAGE STATEMENT 9

0466FU M726 07/16/2018 14:41:18 40

==============================================================================
SCH G, LINE 9: GENERAL DEDUCTIONS (CONT'D)

------------------------------------------
TAXES, LICENSES AND FEES:
-------------------------
REAL ESTATE TAXES 19,821.
STATE INSURANCE DEPT. LICENSES AND FEES 242,645.
STATE TAXES ON PREMIUMS 629,377.
OTHER STATE TAXES 88,093.
U.S. SOCIAL SECURITY TAXES 269,809.
ALL OTHER TAXES 32,525.
---------------
TOTAL - TAXES LICENSES AND FEES 1,282,270.
---------------
ALL OTHER EXPENSES:
-------------------
COMMISSIONS ON PREMIUMS AND ANNUITY CONSIDERATIONS 7,302,359.
DEPREC. ON REAL ESTATE & OTHER INVESTED SSETS 51,954.
---------------
TOTAL - ALL OTHER EXPENSES 7,354,313.
---------------
ADDITIONAL ITEMS AND ADJUSTMENTS:
---------------------------------
HOME OFFICE RENTAL EXPENSE -98,941.
LESS: MEALS AND ENTERTAINMENT DISALLOWED 46,011.
OTHER ADDITIONAL DEDUCTIONS RECLASSED ITEMS 39,526.
OTHER ADDITIONAL DEDUCTIONS TAX ADJUSTMENTS -32,474.
---------------
TOTAL ADDITIONAL ITEMS AND ADJUSTMENTS -137,900.
---------------
GRAND TOTAL - OTHER DEDUCTIONS 18,998,047.
===============
DEPRECIATION DETAIL
-------------------
COST OR DEPRECIATION OF FURNITURE AND EQUIPMENT 53,625.
COST OR DEPRECIATION OF EDP EQUIPMENT AND SOFTWARE 1,420,928.
STATUTORY GAIN OR LOSS ON SALE OF SECTION 1245
1250, ETC. PROPERTY INCLUDED IN THE LINE ABOVE
---------------
NAIC AMOUNT 1,474,553.
ELIMINATION OF DEPR. FROM NAIC ANNUAL STMT. -1,474,553.
ALLOWABLE TAX DEPRECIATION FROM FORM 4562 130,724.
---------------
130,724.
SUBTOTAL
---------------

0466FU M726 07/16/2018 14:41:18 41

==============================================================================

------------------------------------------
WRITE-INS FOR ADDITIONAL DEDUCTIONS DETAIL
------------------------------------------
---------------
SUBTOTAL OF WRITE-INS FOR GENERAL EXPENSES 51,801.
SUMMARY OF REMAINING WRITE-INS FROM OVERFLOW PAGE 95,620.
---------------
SUBTOTAL 147,421.
---------------
SUMMARY OF REMAINING WRITE-INS

FROM OVERFLOW PAGE (GENERAL EXPENSES) DETAIL
----------------------------------------------
DEPRECIATION - AUTO 3,203.
RETIREMENT BENEFIT 92,417.
---------------
SUBTOTAL 95,620.
---------------
OTHER GENERAL EXPENSE RECLASSES ITEMS DETAIL

--------------------------------------------
COST OF FURNITURE AND EQUIPMENT 1,324,519.
---------------
SUBTOTAL 1,324,519.
---------------
OTHER ADDITIONAL DEDUCTIONS RECLASSED ITEMS DETAIL

--------------------------------------------------
NET AMORTIZATION TAX EXEMPT BONDS 39,526.
---------------
SUBTOTAL 39,526.
---------------
OTHER ADDITIONAL DEDUCTIONS TAX ADJUSTMENTS DETAIL

--------------------------------------------------
NONDEDUCTIBLE PENALTIES -191.
NONDEDUCTIBLE DUES -25,585.
NONDEDUCTIBLE OFFICER LIFE INSURANCE -24,241.
NONDEDUCTIBLE ACCRUED SICK LEAVE 32,913.

0466FU M726 07/16/2018 14:41:18 42

==============================================================================

------------------------------------------
NONDEDUCTIBLE CONTRIBUTIONS -15,370.
---------------
SUBTOTAL -32,474.
---------------
STATEMENT 12
0466FU M726 07/16/2018 14:41:18 43

=============================================================================================================================
SCHEDULE G, LINE 19
SPECIFIED POLICY ACQUISITION EXPENSES
CAPITALIZED IN PRIOR YEARS AND DEDUCTIBLE THIS YEAR
---------------------------------------------------
YEAR, UNAMORTIZED CURRENT YR. ADJUSTED AMOUNT AMORT. ADJUSTED
AMORT'N BALANCE NEGATIVE OFFSET BALANCE IN CURRENT YR. BALANCE
PERIOD BEGIN OF YEAR (LINE 14) BEGIN OF YEAR (LINE 19) END OF YEAR
---------- --------------- --------------- --------------- --------------- ---------------
2016 / 120
2016 / 60 2,506,874. 2,506,874. 557,083. 1,949,791.
2015 / 120
2015 / 60 1,963,089. 1,963,089. 560,883. 1,402,206.
2014 / 120
2014 / 60 1,442,936. 1,442,936. 577,174. 865,762.
2013 / 120
2013 / 60 856,522. 856,522. 571,015. 285,507.
2012 / 120
2012 / 60 293,118. 293,118. 293,118.
2011 / 120
2010 / 120
2009 / 120
2008 / 120
2007 / 120
--------------- --------------- --------------- --------------- ---------------
7,062,539. 7,062,539. 2,559,273. 4,503,266.
=============== =============== =============== =============== ===============
0466FU 07/16/2018 14:41:18 STATEMENT 13

44

============================================================================================================================================
FMV OTHER NET

BEGINNING ENDING ADJ. ADJ. TOTAL
-------------- -------------- -------------- -------------- --------------
SCHEDULE L, PART I, LINE 4: OTHER ASSETS
----------------------------------------
BONDS 101,227,881. 101,745,053. 101,745,053.
CASH 1,173,782. 2,970,102. 2,970,102.
CONTRACT LOANS 3,608,069. 3,815,341. 3,815,341.
OTHER INVESTED ASSETS 685,545. 386,090. 386,090.
INVESTMENT INCOME DUE AND ACCRUED 1,269,659. 1,260,843. 1,260,843.
UNCOLLECTED PREMIUMS AND AGENT BALANCES 492,965. 476,466. 476,466.
LIFE INSURANCE PREMIUMS & ANNUITY CONSIDERATIONS
DEFERRED AND UNCOLLECTED ON IN FORCE BUSINESS 2,589,449. 2,653,254. 2,653,254.
AMOUNTS RECOVERABLE FROM REINSURERS 77,034. 37,191. 37,191.
OTHER AMOUNTS RECEIVABLE UNDER REINSURANCE CONTRACTS 3,437. 3,323. 3,323.
FEDERAL AND FOREIGN INCOME TAX RECOVERABLE 180,570. 55,209. 55,209.
DEFERRED TAX ASSETS 1,592,270. 1,445,704. 1,445,704.
ELECTRONIC DATA PROCESSING EQUIPMENT AND SOFTWARE 109,314. 103,117. 103,117.
AGGREGATE WRITE-INS FOR OTHER THAN INVESTED ASSETS:
CASH SURRENDER VALUE CO 2,399,093. 2,658,360. 2,658,360.
-------------- -------------- -------------- -------------- --------------
SUBTOTAL 115,409,068. 117,610,053. 117,610,053.
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
TOTAL - OTHER ASSETS 115,409,068. 117,610,053. 117,610,053.
============== ============== ============== ============== ==============
STATEMENT 14
0466FU 07/16/2018 14:41:18 45


==============================================================================
SCHEDULE M, QUESTION #: 3 END OF CY END OF PY

TOTAL RESERVES COMPUTATION --------------- ---------------
----------------------------
AGGREGATE RESERVES FOR

LIFE POLICIES AND CONTRACTS 44,878,376. 43,315,831.
AGGREGATE RESERVE FOR
GUARANTEED RENEWABLE A & H 20,992,790. 20,824,433.
POLICY AND CONTRACT CLAIMS
ON GUARANTEED RENEWABLE A & H 452,975. 485,560.
ADJUSTMENTS:
LESS: POLICY LOANS 3,815,341. 3,608,069.
--------------- ---------------
TOTAL LIFE INSURANCE RESERVES 62,508,800. 61,017,755.
=============== ===============
AGGREGATE RESERVE FOR
LIFE POLICIES AND CONTRACTS 44,878,376. 43,315,831.
AGGREGATE RESERVE FOR A & H POLICIES 22,643,062. 22,493,747.
POLICY AND CONTRACT CLAIMS A & H 4,078,329. 4,465,079.
ADJUSTMENTS:
LESS: POLICY LOANS 3,815,341. 3,608,069.
--------------- ---------------
TOTAL RESERVES 67,784,426. 66,666,588.
=============== ===============
MEAN OF TOTAL LIFE INSURANCE RESERVES 61,763,278.
MEAN OF TOTAL RESERVES 67,225,507.
PERCENTAGE TO SCHEDULE M, QUESTION 3 91.8748
STATEMENT 15
0466FU M726 07/16/2018 14:41:18 46

==============================================================================
SCHEDULE M, QUESTION 5 DETAIL

-----------------------------
NAME LICOA BROKERAGE SERVICE
IDENTIFYING NUMBER......................................... 63-0994993
PERCENTAGE OWNED........................................... 100.00
TAXABLE INCOME OR (LOSS)................................... NONE
STATEMENT 16
0466FU M726 07/16/2018 14:41:18 47
================================================================================================================================================================================
SCHEDULE N: RECONCILIATION OF NA IC ANNUAL STATEMENT INCOME TO TAXABLE INCOME
-------------------------------- --------------------------------------------
PREMIUM INVESTMENT OTHER OTHER SPECIAL GAIN FROM
INCOME RESERVES INCOME INCOME BENEFITS DEDUCTIONS ITEMS OPERATIONS
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
GFO PER NAIC ANNUAL STATEMENT........ 36,666,687. -1,711,860. 5,065,072. 300,343. -19,022,404. -18,910,870. -11,452. 2,375,516.
RECLASSES OF STATUTORY GFO........... 10,681. 379,707. -10,681. -1,743,752. -1,364,045.
RECLASSED GFO BEFORE TAX ADJUSTMENTS. 36,666,687. -1,701,179. 5,444,779. 300,343. -19,033,085. -20,654,622. -11,452. 1,011,471.
TAX ADJUSTMENTS:
CHANGE IN DEFERRED & UNCOL. PREMIUMS. -179,184. -179,184.
CHANGE IN ADV. PREM'S & DEPO. FUNDS.. 39,270. -39,270.
EXCESS INT., PREM. ADJ'S AND REFUNDS. 4,031. -4,031.
ELIMINATION OF TAX-EXEMPT INT,, NET 224,508. -347,155. -122,647.
ELIM. OF ACCRUAL OF MARKET DISCOUNT.. -54,464. -54,464.
ELIMINATION OF HOME OFFICE RENT...... -91,140. 91,140.
CHANGE IN DUE AND ACCRUED DIVIDENDS.. 793. 793.
ORDINARY INCOME PORTION OF FORM 4797. 500. 500.
OTHER INVESTMENT INCOME ADJUSTMENTS.. -57,822. -57,822.
ELIMINATION OF NAIC AMORT./(IMR)..... -214,600. -214,600.
ELIMINATION OF CHANGE IN LOADING..... 135,315. 135,315.
ELIMINATION OF NAIC DEPRECIATION..... 1,474,553. 1,474,553.
ALLOWABLE TAX DEPRECIATION........... -130,724. -130,724.
AMORTIZATION OF POLICY ACQ. EXPENSES. -2,842,516. -2,842,516.
OTHER TAX ITEMS & ADJ. TO OTHER DED.. 2,864,898. 2,864,898.
DIVIDENDS-RECEIVED DEDUCTION......... -32,011. -32,011.
NET LONG TERM CAP. GAINS FROM SCH. D 728,690. 728,690.
SMALL LIFE INSURANCE CO. DEDUCTION... -1,563,598. -1,563,598.
CHANGE IN PROVISION FOR DIVID'S PAY. -490. -490.
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
TOTAL TAX ADJUSTMENTS................ -135,883. 185,238. -549,288. -214,600. 1,592,666. -871,440. 6,693.
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
TAXABLE INCOME....................... 36,523,690. -1,624,595. 4,981,677. 85,743. -19,033,085. -19,008,139. -882,892. 1,042,399.
=============== =============== =============== =============== =============== =============== =============== ===============
0466FU 07/16/2018 14:41:18 48 STATEMENT 17

================================================================================================================================================================================
-------------------------------- --------------------------------------------
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
OTHER INVESTMENT
INCOME ADJUSTMENTS DETAIL
-------------------------
OTHER INTEREST ADJ'S................... -57,822.
---------------
SUBTOTAL ............................ -57,822.
---------------
0466FU 07/16/2018 14:41:18 49 STATEMENT 18

================================================================================================================================================================================
-------------------------------- --------------------------------------------
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
SUMMARY OF STATUTORY RECLASS ITEMS
----------------------------------
INVESTMENT EXPENSES -379,707. -379,707.
--------------- --------------- --------------- --------------- ---------------
TOTAL INCOME RECLASSES 10,681. 379,707. 390,388.
INVESTMENT EXPENSES 379,707. 379,707.

OTHER DEDUCTIONS 1,364,045. 1,364,045.
--------------- --------------- --------------- ---------------
TOTAL DEDUCTIONS RECLASSES -10,681. -1,743,752. -1,754,433.
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
TOTAL RECLASSES 10,681. 379,707. -10,681. -1,743,752. -1,364,045.
=============== =============== =============== =============== =============== =============== =============== ===============
0466FU 07/16/2018 14:41:18 50 STATEMENT 19

SCHEDULE M-3, PART II DETAIL

=========================================================================================================================
LINE 25 - OTHER INCOME (LOSS) ITEMS WITH DIFFERENCES

----------------------------------------------------
INCOME (LOSS) TEMPORARY PERMANENT INCOME (LOSS)

DESCRIPTION PER INCOME STMT DIFFERENCE DIFFERENCE PER TAX RETURN
--------------------------------------------------------------------- ----------------------------------------------------
CHANGE IN ADVANCE PREMIUMS NONE 39,270. 39,270.
CHANGE IN PREMIUM DEPOSIT FUNDS 7,114. -7,114.
CASH BASIS DIVIDENDS NONE 792. 792.
--------------- --------------- --------------- ---------------
TOTAL 7,114. 32,948. 40,062.
=============== =============== =============== ===============
0466FU M726 07/16/2018 14:41:18 51 STATEMENT 20

SCHEDULE M-3, PART II DETAIL

==============================================================================
LINE 28 - OTHER INCOME (LOSS) AND

EXPENSE/DEDUCTION ITEMS WITH NO DIFFERENCES
-------------------------------------------
OTHER INCOME/EXPENSE ITEMS WITH NO DIFFERENCES -1,172,189.
---------------
TOTAL -1,172,189.
===============
STATEMENT 21
0466FU M726 07/16/2018 14:41:18 52
SCHEDULE M-3, PART III DETAIL

=========================================================================================================================
LINE 40 - OTHER EXPENSE/DEDUCTION ITEMS WITH DIFFERENCES

--------------------------------------------------------
EXPENSE TEMPORARY PERMANENT DEDUCTION

DESCRIPTION PER INCOME STMT DIFFERENCE DIFFERENCE PER TAX RETURN
--------------------------------------------------------------------- ----------------------------------------------------
NONDEDUCTIBLE DUES 25,585. -25,585.
CHANGE IN LOADING 135,315. -135,315.
POLICYHOLDER DIVIDENDS NONE 490. 490.
CHANGE IN DEPOSIT TYPE CONTRACTS NONE 10,681. 10,681.
NONDEDUCTIBLE ACCRUED SICK LEAVE NONE 32,913. 32,913.
--------------- --------------- --------------- ---------------
TOTAL 160,900. -91,231. -25,585. 44,084.
=============== =============== =============== ===============
0466FU M726 07/16/2018 14:41:18 53 STATEMENT 22

FORM 4626 DETAIL

============================================================================================================================
LINE 4D - ACE ADJUSTMENT

------------------------
2008 2009 2010 2011 2012 2013
-------------- -------------- -------------- -------------- -------------- --------------
ACE ................ 4,585,839. 3,512,000.
AMTI ............... 2,251,867. 1,082,125.
ACE OVER AMTI ...... 2,333,972. 2,429,875.

AMTI OVER ACE ......
75% ACE PREFERENCE . 1,750,479. 1,822,406.

75% ACE REDUCTION ..
CARRYOVER CREATED .. 1,750,479. 1,822,406.
PRIOR YR CARRYOVER
(REDUCTION ALLOWED) 1,750,479.
CARRYOVER USED
(REDUCTION CLAIMED)
CARRYOVER REMAINING 1,750,479. 3,572,885.
0466FU M726 07/16/2018 14:41:18 54 STATEMENT 23

FORM 4626 DETAIL

============================================================================================================================
LINE 4D - ACE ADJUSTMENT

------------------------
2014 2015 2016 2017
-------------- -------------- -------------- --------------
ACE ................ 8,652,967. 4,106,238. 3,009,199. 2,766,397.
AMTI ............... 6,955,023. 2,108,964. 1,175,960. 1,048,141.
ACE OVER AMTI ...... 1,697,944. 1,997,274. 1,833,239. 1,718,256.

AMTI OVER ACE ......
75% ACE PREFERENCE . 1,273,458. 1,497,956. 1,374,929. 1,288,692.

75% ACE REDUCTION ..
CARRYOVER CREATED .. 1,273,458. 1,497,956. 1,374,929. 1,288,692.
PRIOR YR CARRYOVER
(REDUCTION ALLOWED) 3,572,885. 4,846,343. 6,344,299. 7,719,228.
CARRYOVER USED
(REDUCTION CLAIMED)
CARRYOVER REMAINING 4,846,343. 6,344,299. 7,719,228. 9,007,920.
0466FU M726 07/16/2018 14:41:18 55 STATEMENT 24

ACE WORKSHEET DETAIL

==============================================================================
LINE 4E - OTHER DISALLOWANCE ITEMS

----------------------------------
SMALL LIFE INSURANCE COMPANY DEDUCTION 1,563,598.
---------------
TOTAL 1,563,598.
===============
STATEMENT 25
0466FU M726 07/16/2018 14:41:18 56
EXHIBIT
Q
CAMARA & SIBLEY LLP
4400 POST OAK PKWY, SUITE 2700, HOUSTON, TEXAS 77027
T: 713.966.6789 - F: 713.583.1131
JOE SIBLEY - SIBLEY@CAMARASIBLEY.COM - EXT. 3002
September 9, 2019
Sent via Certified Mail, Return Receipt Requested

c/o M. Lynn Lowe, Registered Agent
Attn: Board of Directors of the Life Insurance Company of Alabama
302 Broad Street
Gadsden, AL 35901
Sent via facsimile to (256)-399-0667
Sent vie email to skeck@licoa.com
Re: Demand for Action by Board of Directors Pursuant To ALA. R. CIV. P. § 23.1.
Dear Board of Directors of the Life Insurance Company of Alabama:
My firm represents Trondheim Capital Partners LP (“Trondheim”) and MTP 401K

Plan (“MTP” and, together with Trondheim, the “Shareholders”). As you know,
Trondheim maintains an ownership interest in the Life Insurance Company of Alabama
(“LICOA”) of (1) 25,000 of the LINSA class shares; and (2) 5 shares of the of the LINS
class shares. MTP maintains an ownership in LICOA of (1) 6,700 of the LINSA class
shares; and (2) 5 shares of the of the LINS class shares.
By this demand letter, the Shareholders – who have been record owners more than
180 days prior to this Demand – are hereby demanding that the Board of Directors of
LICOA (the “Board”) take appropriate action on behalf of LICOA based on the following
wrongful actions that were injurious to LICOA:
1. Depressed share purchases that wrongfully deprived LICOA of a

corporate opportunity.
As we are sure you know by now, the Shareholders currently have direct claims
pending against Directors ROSALIE RENFROW CAUSEY (“Director Causey”) and
CLARENCE WILLIAM DAUGETTE III (“Director Daugette”) for breach of fiduciary
duty for violating AL CODE § 10A-2-8.32 by deflating share values with the intent to
purchase them for less than market value. That action is pending in the United States
District Court for the Northern District of Alabama, Case No. 4:19-cv-01413-KOB.
CAMARA & SIBLEY LLP
However, the actions described in the Shareholders’ Complaint (attached hereby as

Exhibit 1), at paragraphs 15-18 and under Count II also constitute a breach of fiduciary
duty by Directors Causey and Daugette. These purchases of depressed shares by Directors
Causey and Daugette—and very likely other family members of the Directors of LICOA—
constitute a taking of a corporate opportunity of LICOA. These Directors owed a fiduciary
duty to both LICOA and its shareholders to present the opportunity to LICOA for accretive
share repurchases that would have increased demand for the shares, price of the shares, and
intrinsic value per share for all LICOA shareholders.
The Board should investigate all circumstances surrounding any and all purchases
of LICOA shares by any Director and/or their family members and determine whether such
share purchase opportunity was properly presented to LICOA. To the extent the Board
lacks “independence” within the meaning of Alabama and federal law, then the Board
should appoint independent directors to properly assess these claims.
2. Failure to assess prospective buy-out proposals deprived LICOA of a

corporate opportunity.
The conduct described in the Shareholders’ Complaint (attached hereby as Exhibit

1), at paragraphs 15-18 and under Count II also constitutes a breach of fiduciary duty by
Director Daugette and perhaps other Directors. If LICOA has received buyout offers from
third parties, those buyout offers must be assessed and evaluated to determine whether
taking them would be in the best interest of the shareholders of LICOA. However, it seems
clear that any buyout offers were “Dead on Arrival” because it is in the interest of Director
Daugette and perhaps other Directors not to sell LICOA so as to maintain the nepotistic
and wasteful compensation and family jobs program that enriches them, while the minority
shareholders receive no return on their investment.
The Board should investigate all circumstances surrounding any and all buyout
offers and ensure each was properly evaluated by LICOA. To the extent the Board lacks
“independence” within the meaning of Alabama and federal law, then the Board should
appoint independent directors to properly assess these claims.
3. Waste.
In addition, the conduct described in the Shareholders’ Complaint (attached hereby

as Exhibit 1), at paragraphs 15-25 and under Counts I and II also constitutes waste in two
different ways.
First, as stated in the Complaint, the Directors are authorizing excessive and
unnecessary salaries to family members of the Defendant Directors for either duties that
are not even being performed or for which they are unqualified. They are also receiving
director pay and executive compensation, which is highly unusual. The excessive
compensation is really just a de facto dividend to only the majority shareholders and their
families. This is waste and should be recovered by LICOA.
2
CAMARA & SIBLEY LLP
Second, as stated in the Complaint, the Defendant Directors failure to respond to

the Shareholders’ document requests has now subjected LICOA to substantial liabilities.
LICOA should recovery any attorneys’ fees or penalties incurred by LICOA from the
Defendant Directors as there is no excuse for the blatant failure to comply with Alabama
law.
The Board should investigate all circumstances surrounding these events. To the
extent the Board lacks “independence” within the meaning of Alabama and federal law,
then the Board should appoint independent directors to properly assess these claims.
We demand that LICOA respond to this Letter with its intentions and whether it
will agree to conduct the appropriate investigation (including whether it will appoint
independent board members) within 7 business days from the receipt of the Letter.
Please contact me with any further questions.
Respectfully,
/s/ Joe Sibley
Joe Sibley
3
EXHIBIT
1
Case 4:19-cv-01413-KOB Document 1 Filed 08/28/19 Page 1 of 12 FILED
2019 Aug-28 PM 03:20
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA
TRONDHEIM CAPITAL PARTNERS )

LP and MTP 401K PLAN, )
)
Plaintiffs, )
)
v. ) Case No. ______________________
)
LIFE INSURANCE COMPANY OF ) JURY DEMANDED
ALABAMA, MARVIN LYNN )
LOWE, RAYMOND RUDOLPH )
RENFROW, JR., ANNE DAUGETTE )
RENFROW, ROSALIE RENFROW )
CAUSEY, ALBURTA DAUGETTE
LOW, and CLARENCE WILLIAM
DAUGETTE III,
Defendants.
______________________________________________________________________________
PLAINTIFF’S ORIGINAL COMPLAINT

______________________________________________________________________________
COMES NOW, TRONDHEIM CAPITAL PARTNERS LP (“Trondheim”)
and MTP 401K PLAN ("MTP" and, collectively,"Plaintiffs") and hereby assert
their Complaint against Defendants LIFE INSURANCE COMPANY OF
ALABAMA (“LICOA”), MARVIN LYNN LOWE, RAYMOND RUDOLPH
RENFROW, JR., ANNE DAUGETTE RENFROW, ROSALIE RENFROW
CAUSEY, ALBURTA DAUGETTE LOW, and CLARENCE WILLIAM
DAUGETTE III (collectively "Director Defendants" and, together with LICOA,

Case 4:19-cv-01413-KOB Document 1 Filed 08/28/19 Page 2 of 12
the “Defendants”) and seek legal and equitable relief. Plaintiffs allege as
follows:
I. INTRODUCTION
1. This lawsuit arises from an attempt by Plaintiffs—both of whom have
been shareholders of record in LICOA for approximately two years from the date
of this filing—to exercise their statutory rights under Alabama law to inspect the
books and records of LICOA. LICOA and the Director Defendants knowingly and
in bad faith have repeatedly denied Plaintiffs their statutory rights of inspection.
Plaintiffs now sue to enforce their statutory rights, for statutory damages, and also
for breaches of fiduciary duty and securities law violations.
II. PARTIES
2. Trondheim is a Delaware limited partnership headquartered in
Arizona.
3. MTP is a Trust headquartered in Texas.
4. LICOA is an Alabama life insurance company headquartered in
Gadsden, Alabama. It may be served with process through its registered agent,
Marvin Lynn Lowe, at 302 Broad Street, Gadsden, AL 35901.
5. MARVIN LYNN LOWE is a natural person and resident of
Alabama. He may be served with process at 220 Dogwood Circle, Gadsden,
Alabama 35901.
2
6. RAYMOND RUDOLPH RENFROW, JR. is a natural person and
resident of Alabama. He may be served with process at 340 Wildwood Road,
Gadsden, Alabama 35901.
7. ANNE DAUGETTE RENFROW is a natural person and resident of
Alabama. She may be served with process at 340 Wildwood Road, Gadsden,
Alabama 35901.
8. ROSALIE RENFROW CAUSEY is a natural person and resident of
Alabama. She may be served with process at 411 Country Club Drive, Gadsden,
Alabama 35901
9. ALBURTA DAUGETTE LOW is a natural person and resident of
Alabama. She may be served with process at 220 Dogwood Circle, Gadsden,
Alabama 35901.
10. CLARENCE WILLIAM DAUGETTE III is a natural person and
resident of Alabama. He may be served with process at 302 Broad Street,
Gadsden, Alabama 35901.
III. JURISDICTION AND VENUE

11. This Court has jurisdiction over this case pursuant to 28 U.S.C. §
1332. There is complete diversity between the parties and the amount in
controversy exceeds $75,000.00.
12. Venue is proper pursuant to 28 U.S.C. § 1391(b)(1) and (2).
3
IV. FACTS
A. Plaintiffs Purchase Shares In LICOA And Then Learn Of

Disturbing Nepotistic Practices.
13. Plaintiff Trondheim purchased (1) 25,000 of the LINSA class shares;
and (2) 5 shares of the of the LINS class shares in LICOA between July 2017 and
the present.
14. Plaintiff MTP purchased (1) 6,700 of the LINSA class shares; and (2)
5 shares of the of the LINS class shares in LICOA between July 2017 and the
present.
15. In May of 2018, Trondheim’s principal, Colin Peterson (“Peterson”),
met personally with CLARENCE WILLIAM DAUGETTE III (“Daugette”)—
president of LICOA and chairman of its board—and the chief operating officer of
LICOA, Mr. Steven Keck. Peterson was disconcerted by the poor operating results
and nonsensical capital allocation policy of the company. During this meeting,
Daugette made some startling admissions to Peterson.
16. First, Daugette said that he does not mind the fact that the company is
overcapitalized and the stock is cheap because it allows him and his family to buy
back the stock at a good price personally. This is consistent with the limited
disclosures that are provided annually by LICOA, which show the Directors’
personal holdings in LICOA increasing. However, Daugette also disclosed that he
4
buys the stock on behalf of other family members, which allows him to hide some
of the purchases.
17. The concerns raised in this meeting caused Peterson to obtain a copy
of an examination report from the State of Alabama Department of Insurance’s
examination of LICOA. See Ex. 1. The report disclosed that management was
“not avoiding the appearance of impropriety” because of nepotistic practices and
noted that the hiring and salaries of family members was “highly unusual”.
Among the items red-flagged by the examiners were as follows:
i. Defendant ROSALIE RENFROW CAUSEY (“Rosalie”), who is the
granddaughter of Daugette and whose parents are both Director-
Defendants, was hired as a “management trainee” in 2002.
ii. Rosalie was paid approximately $24,000.00 per year between 2002-04
and given a car allowance of between $300-$550 during that time
frame.
iii. The examiners found that Rosalie did not keep regular business hours
and was routinely not in the office despite allegedly being a “full-time
employee in training for upper management”. Her hours were not
tracked on a time sheet.
5
iv. Rosalie reports only to her father – Director Defendant RAYMOND
RUDOLPH RENFROW, JR. No other LICOA employee can give a
complete account of Rosalie’s work activities.
v. LICOA admitted to the examiners that the reason for Rosalie’s
presence is to ensure a dynastic nepotistic succession of the Daugette
family in controlling LICOA.
vi. The examiners found it “highly unusual” that a recent college
graduate such as Rosalie would be allowed to set their own schedule
while supposedly in training, all while receiving a full-time salary and
benefits.
vii. The examiners noted that the above-referenced conduct created an
appearance of impropriety that would make LICOA vulnerable to
shareholder litigation.
viii. The examiners further found that that LICOA was paying for cell
phones for certain family members of the Director Defendants.
ix. The examiners also noted that the Directors who are also employees
of LICOA were receiving both Director fees and their employee
salaries, which they noted was also “highly unusual” since “only
family members” were receiving these benefits.
6
x. Finally, the examiners found that LICOA was paying for some travel
expenses for family members travelling to LICOA events.
18. The red flags raised by this report are even further underscored by the
fact that the Department of Insurance’s primary function is to protect policy
holders – not shareholders. So the fact that the conduct made it into this report
demonstrates how out of the ordinary it is. LICOA is not being ran as a company
to maximize value for shareholders – it is being operated as a “family jobs
program” for the Director Defendants and their families.
B. Plaintiffs Are Denied Their Statutory Rights Of Inspection.

19. On June 28, 2019, Plaintiffs sent a letter to LICOA requesting an
inspection of LICOA’s books and records pursuant to AL CODE § 10A-2-16.02(b),
which allows any shareholder who has been a record owner for more than six
months to inspect the books, papers, records of account, minutes, and record of
shareholders. Under AL CODE § 10A-2-16.02(b), a corporation is required to
provide the records within five business days. However, Plaintiffs gave LICOA
fourteen calendar days to respond. See Ex. 2.
20. On July, 2 2019, however, LICOA—through its counsel—responded
that Plaintiffs were only permitted to a limited inspection because they were not
record owners of more than 5% of the shares of LICOA, but still failing to provide
those records or a date for inspection. See Ex. 3.
7
21. Plaintiffs responded by pointing out that AL CODE § 10A-2-16.02(b)
permits a record owner of more than 5% of the shares or a record owner of shares
for more than 180 days to conduct an inspection under that section.
22. LICOA then agreed to produce records, but claimed to need more
time. Even though LICOA’s statutory time frame had long since lapsed, on July
15, 2019, Plaintiffs agreed to give LICOA an additional twenty-one days to
provide an inspection date and that, in any event, documents should be produced
not later than August 23, 2019.
23. The deadline given by Plaintiffs for compliance, August 5, 2019 came
and went with no date identified by LICOA. Plaintiffs informed LICOA that it
was in default of the extension agreement and reserved all rights under AL CODE §
10A-2-16.02(b).
24. Nine days after the deadline, on August 14, 2019, LICOA sent a letter
agreeing to make documents available for inspection and copying with some
exceptions. See Ex. 4. Disturbingly, despite the fact that Daugette admitted in the
meeting with Peterson that he regularly receives—and then ignores—offers to buy
LICOA, the response states that there are no documents relating to the value of
LICOA. See id.
8
25. Plaintiffs immediately demanded a date to coordinate receipt of the
requested documents. However, to date, LICOA has not responded or provided
any date for inspection and copying.
V. CAUSES OF ACTION
COUNT I
VIOLATION OF SHAREHOLDER RIGHTS UNDER

AL Code § 10A-2-16.02(b) (All Defendants)
26. Plaintiffs re-allage all of the preceding allegations as if fully stated
herein.
27. Plaintiffs tendered demand for inspection of records to LICOA on
June 28, 2019. Plaintiffs are entitled to records under AL CODE § 10A-2-16.02(b)
because they were record shareholders of LICOA for more than six months prior to
the June 28, 2019 request for inspection pursuant to AL CODE § 10A-2-16.02(b).
Defendants failed to provide the requested records by the time specified by
Plaintiffs.
28. Pursuant to AL CODE § 10A-2-16.02(c), both LICOA and the
Directors are liable to Plaintiffs for 10% of their share values, which Plaintiffs
believe total at least $1,001,250.00 (based on 12/31/18 book value) for Trondheim
and $268,335.00 (based on 12/31/18 book value) for MTP. However, as discussed
herein, Plaintiffs believe this value is suppressed and lower than actual value due
to the actions of the Director Defendants and seek an award of 10% of the actual
9
value of the shares, which, in no event, can be less than the aforementioned values.
In addition, Plaintiffs demand their costs and reasonable attorneys’ fees incurred in
prosecuting their shareholder rights.
COUNT II
BREACH OF FIDUCIARY DUTY UNDER

AL Code § 10A-2-8.32 (Director Defendants Daugette and Rosalie)
29. Plaintiffs reallege all of the preceding allegations as if fully state
herein.
30. Director Defendants Daugette and Rosalie had and have a duty under
AL Code § 10A-2-8.32 not to depreciate LICOA shares or to purchase LICOA
shares at less than market value.
31. These Director Defendants have admitted to a scheme whereby they
have purposefully overcapitalized LICOA and overpaid family members to depress
share value, personally benefit themselves, which allows them to purchase the
shares at a lower than market value either through their own purchase or through
third-party family members to maintain a controlling interest in LICOA to further
their nepotistic shareholder oppression tactics.
32. By reason of their position of Directors of LICOA, they owe fiduciary
duties to the shareholders of LICOA, including the duties of good faith and fair
dealing and the duty to put the interests of LICOA and its shareholders above their
own interests. In addition, the Directors are and were required to comply with AL
10
Code § 10A-2-8.32.
33. These Director Defendants breached their fiduciary duties toward
Plaintiffs by their conduct of violating AL Code § 10A-2-8.32. Specifically, the
LICOA Annual Meeting of Shareholders Report shows that Director Defendant
Daugette increased his holdings in LICOA from 20,985 common shares and
31,735 in class “A” shares in 2017 to 21,177 common shares and 32,747 in class
“A” shares in 2019. Likewise, Director Defendant Rosalie increased her holdings
in LICOA from 265 common shares and 3,288 in class “A” shares in 2017 to 3,421
in class “A” shares in 2019.
34. Plaintiffs have been damaged as a direct and proximate result of the
Director Defendants breach of their fiduciary duties in the amount of the depressed
share values and the Director Defendants have also been unjustly enriched by
acquiring shares at below market value. Plaintiffs demand damages and
disgorgement as well as their reasonable attorneys’ fees and costs.
VI. PRAYER FOR RELIEF

Such other and further relief as the Court may deem just and proper.
Respectfully submitted,
s/ Sharonda C. Fancher
SHARONDA C. FANCHER
Attorney for Plaintiff
11
OF COUNSEL
BAKER DONELSON BEARMAN
CALDWELL & BERKOWITZ, P.C.
420 20th Street North, Suite 1400
Birmingham, Alabama 35203
Tel. 205-326-0480
CERTIFICATE OF SERVICE
I hereby certify that the foregoing has been served upon the following
parties by Certified Mail and/or by electronically filing the foregoing with the
Clerk of Court using the Ala-file electronic filing system, on this the 27th day of
August, 2019.
Life Insurance Company of Alabama Raymond Rudolph Renfrow, Jr.

c/o Registered Agent 340 Wildwood Road
M. Lynn Lowe Gadsden, Alabama 35901.
302 Broad Street
Gadsden, AL 35901
Anne Daugette Renfrow Rosalie Renfrow Causey

340 Wildwood Road 411 Country Club Drive
Gadsden, Alabama 35901 Gadsden, Alabama 35901
Alburta Daugette Low Clarence William Daugette III

220 Dogwood Circle 302 Broad Street,
Gadsden, Alabama 35901 Gadsden, Alabama 35901
Marvin Lynn Lowe

220 Dogwood Circle
s/ Sharonda C. Fancher
Of Counsel
12
Case 4:19-cv-01413-KOB Document 1-1 Filed 08/28/19 Page 1 of 4 FILED
2019 Aug-28 PM 03:20
U.S. DISTRICT COURT
N.D. OF ALABAMA

Case 4:19-cv-01413-KOB Document 1-1 Filed 08/28/19 Page 2 of 4
2019 Aug-28 PM 03:20
U.S. DISTRICT COURT
N.D. OF ALABAMA

CAMARA & SIBLEY LLP

4400 POST OAK PKWY, SUITE 2700, HOUSTON, TEXAS 77027
T: 713.966.6789 - F: 713.583.1131
JOE SIBLEY - SIBLEY@CAMARASIBLEY.COM - EXT. 3002

June 28, 2019
Sent via Certified Mail, Return Receipt Requested

c/o M. Lynn Lowe, Registered Agent
302 Broad Street
Gadsden, AL 35901
Sent via facsimile to (256)-399-0667
Sent vie email to skeck@licoa.com
Re: Notice Of Request To Conduct Inspection Of Records Pursuant To AL CODE § 10A-

2-16.02.
To Whom It May Concern:
My firm represents Trondheim Capital Partners LP (“Trondheim”) and MTP 401K

Plan (“MTP” and, together with Trondheim, the “Shareholders”). As you know,
Trondheim maintains an ownership interest in Life Insurance Company of Alabama
(“LICOA”) of (1) 25,000 of the LINSA class shares; and (2) 5 shares of the of the LINS
class shares. MTP maintains an ownership in LICOA of (1) 6,700 of the LINSA class
shares; and (2) 5 shares of the of the LINS class shares.
By this demand letter, the Shareholders – who have been record owners more than
180 days prior to this request – are hereby providing you notice that, pursuant to AL CODE
§ 10A-2-16.02(b), they intend to conduct an inspection of LICOA's books, papers, records
of account, minutes, and record of shareholders. The purposes for the inspection demand
fit into two categories, which we will refer to as Inspection Categories I and II.
As part of Inspection Category I (“Category I”), the Shareholders specifically

demand the following records:
(a) A complete record or list of the holders of the outstanding shares of

both classes of LICOA common stock, certified by LICOA or its
transfer agent or registrar, showing the name, address, and account
number of each such holder and the number of shares registered in the
name of each such holder.
CAMARA & SIBLEY LLP
(b) All information in or that comes into the possession or control of

LICOA or its proxy solicitor, transfer agent, or registrar, or that can
reasonably be obtained from brokers, dealers, banks, clearing agencies,
or voting trustees or their nominees, concerning the names, addresses,
and number of shares of both classes of LICOA common stock held by
the participating brokers and banks named in the individual nominee
names of Cede & Co. and other similar nominees, including omnibus
proxies and respondent bank proxies and listings from LICOA’s most
recent meeting of shareholders and Cede & Co. depository participant
listings.
(c) All information in the possession or control of (or that comes into the
possession or control of) LICOA or its proxy solicitor, transfer agent,
or registrar, or that can reasonably be obtained from brokers, dealers,
banks, clearing agencies, or voting trustees or their nominees, relating
to the non-objecting beneficial owners of shares of both classes of
LICOA common stock.
(d) Copies of any stockholder agreements, voting trusts, or similar

agreements for LICOA that are currently in effect.
(e) All interim balance sheets and profit and loss statements of LICOA for
the period from January 1, 2019 to the date of this letter.
(f) All appraisals or reviews by LICOA relating to the value of real

property owned by the Company, giving the most recent appraisal or
review for each property that is currently owned.
(g) All risk management reports prepared by or for LICOA for the period
from January 1, 2019 to the date of this letter.
(h) A summary of the material terms of any transactions by LICOA with

any related parties (including employees, directors, or officers or
entities controlled by them) or affiliates.
(i) All documents evidencing any settlement agreements entered into by

LICOA with any of its shareholders or with any of its employees,
directors, or officers.
(j) A complete set of actions by written consent and minutes (final versions
or the most recent drafts to the extent that final versions are not
available) of meetings of the LICOA's Board of Directors (the "Board")
and all committees thereof, and of LICOA's shareholders, for the
period from January 1, 2000 to the date of this letter.
2
CAMARA & SIBLEY LLP
(k) Copies of all materials provided to the Board and all committees
thereof in connection with the actions by written consent and meetings
identified in the previous paragraph.
(l) A schedule showing compensation (including the components thereof)

and any expense reimbursements paid by LICOA to each of its
directors and officers, as well as any family members of such directors
and officers, for the period from January 1, 2000 to the date of this
letter.
(m) All employment contracts and severance or termination agreements

that are currently applicable to any officer or director of LICOA or to
any family member of any officer or director.
(n) Copies of all code of conduct, corporate opportunity, code of ethics,

corporate governance, related party, expense reimbursement, insider
stock trading, and any similar policies of LICOA.
(o) A summary of any succession plans relating to the management of

LICOA currently in effect, and any minutes of any meetings whereby
such succession plans were discussed or adopted.
(p) All information regarding any inquiries made by parties interested in

acquiring, merging, or engaging in any business combination with
LICOA, together with any memos, correspondence, records, or
analyses prepared by or for LICOA that are related to the same.
(q) Any materials or records made by or prepared for LICOA regarding

planning for the future of the company, including but not limited to
those regarding business planning, future business projections, share
repurchases, reverse splits of any of LICOA's share classes of common
stock, merger and acquisition transactions, or a sale of the company.
(r) The following current and forward-looking financial information with

respect to LICOA and any of its subsidiaries for the most recent periods
available: (1) business plans; (2) budgets and projections (with
supporting schedules and summaries); and (3) capital expenditure
plans; and all documents discussing or supporting such plans.
(s) A schedule of the amounts spent by LICOA on capital expenditures for

the years 2017, 2018, and from January 1, 2019 to the date of this letter
showing each expenditure, its purpose, the vendor, and the amount
spent.
3
CAMARA & SIBLEY LLP
(t) Any records or analyses prepared by or for LICOA related to capital

budgeting or to calculations of the return on investment for the capital
expenditures described in the previous paragraph.
(u) All information in or that comes into LICOA’s possession or control,

or that can reasonably be obtained from related parties, employees,
officers, or directors, relating to purchases of shares of any of LICOA's
classes of common stock, by any related parties, officers, directors, or
employees of LICOA.
(v) Copies of any LICOA policies, internal memos, or correspondence

(including correspondence with third parties) regarding the purchase
of shares of any of LICOA's classes of common stock by any related
parties, officers, directors, or employees of LICOA.
The purposes of the inspection by Shareholders of the LICOA records demanded

in Category I are as follows:
• Independently assessing and verifying the value of the Shareholders’

shares;
• Independently verifying and assessing whether the issues relating to

nepotism and to compensation and expenses identified in the State of Alabama Department
of Insurance examination report of LICOA (attached, in pertinent part, as Exhibit A to this
Letter) are still ongoing or have been cured;
• Determining whether LICOA's business is being properly conducted;
• Determining whether LICOA's officers and/or directors have engaged in

tortious conduct such as shareholder oppression, nepotism, waste, usurpation of corporate
opportunities, or other breaches of fiduciary duty;
• Determining whether LICOA, its officers, and/or directors have engaged in

securities fraud; and
• Communicating with other LICOA shareholders regarding matters of

corporate governance.
As part of Inspection Category II (“Category II”), and to the extent not already
called for by Category I, the Shareholders specifically demand the following records:
(a) Five years of year-end audited financial statements.
(b) Five years of internal financial statements with granular operating cost
categories.
4
CAMARA & SIBLEY LLP
(c) Q1 2019 YTD financial statements with comparable period from

previous year.
(d) Five years of year-end regulatory financial statements filed with the
NAIC, Alabama Department of Insurance and/or other regulatory
agencies.
(e) Copies of any regulatory examinations conducted by the NAIC,

Alabama Department of Insurance and/or other regulatory agencies
for the past five years.
(f) Copies of all U.S. income tax returns for the past five years.
(g) Copy of any current business plans or multi-year projections.
(h) Detailed schedule of operating expenses for each year (if not provided
in financial statements).
(i) Detailed schedule of other income (or other income/expense) for each
year.
(j) Aged accounts receivable list.
(k) Aged accounts payable list.
(l) Depreciation schedules and Fixed Asset List.
(m) Schedule of officer's compensation including bonuses, expense

allowances, benefits and other perks during the past five years.
(n) Schedule of shareholder and/or member dividends or distributions

paid during the last five years.
(o) Management Letter from outside auditors for last two years.
(p) Any filings or correspondence with regulatory agencies not already

requested elsewhere herein.
(q) Information about off balance sheet assets and liabilities (pension
plans, pending litigation and other contingent liabilities).
(r) Copies of all actuarial reports prepared for LICOA during the past five
years.
(s) Copies of any ratings agency reports, such as AM Best or Fitch, issued
about LICOA.
5
CAMARA & SIBLEY LLP
(t) Information about any reinsurance agreements between LICOA and

other insurance companies.
(u) Copies of the articles of incorporation.
(v) Copies of all original shareholder agreements and amendments.
(w) Copies of any independent appraisal reports prepared during the past
five years (real estate, equipment, business).
(x) Copies of any formal purchase offers, Letters of Interest, Letters of

Intent, draft stock sale agreements, buy/sell agreements or
correspondence that documents any indications of interest to acquire
LICOA for the past five years.
(y) Copies of all existing loan agreements and/or other significant

financing vehicles.
(z) Provide a list of all significant operating facilities and non-operating

investments.
(aa) Any additional assets that may be considered temporary or not directly
related to the LICOA's normal operations (non-operating assets)
including dollar amount.
(bb) Copies of any current budgets or projections and strategic or

marketing plans.
(cc) Provide copies of recent marketing materials, sales brochures, catalogs,

or other descriptive sales materials.
(dd) Information about sales and distribution channels, agency agreements

etc.
(ee) Unit volume and revenue analysis for existing products, product lines,
services, or service lines for the last five years.
(ff) Any lists of known direct competitors.
(gg) Any chart or listing of all major operating entities of LICOA, whether
divisions, subsidiaries or departments and location including sales
breakout by location.
6
CAMARA & SIBLEY LLP
(hh) Any available industry or trade association studies; surveys showing

trends in the industry, comparative financial and/or operating
performance.
(ii) Contracts relative to leases, suppliers, customers and franchise or

distributor agreements.
(jj) Organization chart and professional bios for all key executives.
(kk) Corporate organization chart.
(ll) A brief description of all subsidiaries and/or financial interests in other

companies including relevant financial data.
(mm) List of any "related" companies (common ownership, common

shareholders, etc.) and description of the relationship(s).
(nn) Year-end financials for the subsidiaries if not in audited statements or

in consolidating financial statements.
Attached as Exhibit B to this letter is correspondence from the Shareholders’

retained expert valuation consultant who has specifically requested these documents. The
purposes of the inspection by Shareholders of the LICOA records demanded in Category
II are as follows:
• Assessing and verifying the value of the Shareholders’ shares in a status

quo scenario;
• Assessing the value of the Shareholders’ shares in a scenario where the

company cuts costs;

company sells to an acquirer;

company suffers a loss because of an interest rate increase or a credit market shock;
• Determining whether Shareholders should seek representation on the

Board;
• Determining whether Shareholders should make one or more shareholder

proposals on a platform that compares the status quo of LICOA with a sale of the company
or with cost-cutting to improve performance; and
• Sharing with other LICOA shareholders the range of possible values

realized depending on the path that the company chooses.
7
CAMARA & SIBLEY LLP
Additionally, to the extent not included in Categories I and II, the Shareholders
request all of the other information to which they are entitled as of right pursuant to AL
CODE § 10A-2-16.02(a):
1. LICOA's articles or restated articles of incorporation and all amendments to

them currently in effect;
2. LICOA's bylaws or restated bylaws and all amendments to them currently

in effect;
3. Resolutions adopted by LICOA's board of directors creating one or more

classes or series of shares, and fixing their relative rights, preferences, and
limitations, if shares issued pursuant to those resolutions are outstanding;
4. The minutes of all LICOA shareholders' meetings, and records of all actions
taken by shareholders without a meeting, for the past three years;
5. All written communications to shareholders generally within the past three

years;
6. A list of the names and business addresses of LICOA's current directors and
officers; and
7. LICOA's most recent annual report delivered to the Secretary of State under
Section 10A-2-16.22, or public record information filed with the
Department of Revenue in lieu thereof.
While the statute only requires that we provide LICOA with five business days
prior to our inspection, out of courtesy, we will afford you with fourteen (14) calendar days
from the date of this Letter to provide us with a time and date for the inspection during
regular business hours at a reasonable location within the state of Alabama. In the case of
accounting records, if the records are maintained outside Alabama and copying within
Alabama is impracticable, then you may specify a reasonable location outside of Alabama.
In addition to their own general partners and trustees, the Shareholders designate
and authorize Camara & Sibley LLP and its attorneys and other employees, and any other
persons designated by any of the foregoing, acting alone or in any combination, to conduct
the inspection and copying requested by this letter.
In the absence of prompt notice to the contrary, the Shareholders will assume that
the LICOA agrees that this demand complies in all respects with the requirements of AL
CODE § 10A-2-16.02. The Shareholders reserve the right to withdraw or modify this
request at any time. If LICOA does not respond to this letter or fails to permit inspection
and copying of the demanded materials as required by AL CODE § 10A-2-16.02, the
Shareholders will seek appropriate relief to the fullest extent permitted under law.
8
CAMARA & SIBLEY LLP
Please contact me with any further questions.
Respectfully,
/s/ Joe Sibley
Joe Sibley
9


#

*."&#-*("&."(-(2)*.","!&'20&''"+'"-"+,*0&!"/-)"-.&(."1%")-/ %&."(-
1&''"+,*0&!"!

,$".
*(+)2("-

),%&",%2!('!!&'' !'&0
),%&"!'%!!!&'' !'&*'%!(%"#%'!"&''"%&0
8978;!!&'' !'&*'" #%#%"%" #%)"(&,%0
) ,%& " ,%2! %('"%, !! &'' !'& *' ' .
#%' !'"!&(%!!1"%"'%%('"%,!&0
"#& " !, %('"%, + !'"!& "!(' , ' . #%' !' "
!&(%!!1"%"'%%('"%,!&"%'#&'),%&0
"#&"00!" '+%'(%!&"%'#&'),%&0
"#,"!,(%%!'(&!&&#!&"% ('2,%#%"'"!&0

' &( " "#%'! +#!&& "% ,% 3 !"' #%") ! !!
&'' !'&40
'&(""'%!" 3"%"'%!" 1+#!&4"%,%0
"(!'&%)&'0
"(!'&#,&'0
#%'"!&(&!+&&' &'0
( " "%5& " #!&'"! !(! "!(&&. +#!& "*!&. !'& !
"'%#%&(%!'#&'),%&0
("&%"%!1"% %)!&"%&'%('"!&#(%!'&')
,%&0

! !' ''%%" "('&('"%&"%&''*",%&0


!,!&"%"%%&#"!!*'%('"%,!&!"'%,%%!")!'
!!'' !'&&'"!"'&%$(&'
!"% '"!"('"!&'&&'&!'&3#!&"!#!&.#!!''"!
!"'%"!'!!''&40
"#&"'(%%#"%'&#%#%"%'" #!,(%!'#&'),%&0
"#&"!,%'!&!,%#"%'&.&(&
&'"%'.&&("(''" #!,0
!"% '"!"('!,%!&(%!% !'&'*!'" #!,!"'%!&(%!
" #!&0

"#&"'%'&"!"%#"%'"!
"#&""%!&%"%% !'&! ! !'&0
"#&"!,!#!!'##%&%#"%'&#%#%(%!'#&'),%&3%&''.
$(# !'.(&!&&40
"#&"!,"% #(%&"%&. ''%&"!'%&'. ''%&"!'!'.%'&'"&
% !'&. (,1& % !'& "% "%%&#"!! '' "( !'& !, !'"!& "
!'%&''"$(%'" #!,"%'#&'),%&0
"#&"+&'!"!% !'&!1"%"'%&!!'!!!)&0

%")&'"&!!'"#%'!'&!!"!2"#%'!!)&' !'&0
!, '"! &&'& '' , "!&% ' #"%%, "% !"' %', %' '" '
" #!,5&!"% "#%'"!&3!"!2"#%'!&&'&4!(!"% "(!'0

"#&"!,(%%!'('&"%#%"'"!&!&'%'"% %'!#!&0
%")"#&"%!' %'! '%&.&&%"(%&.'"&."%"'%&%#')
&& '%&0
!"% '"!"('&&!&'%('"!!!&.!,% !'&'0
!')"( !%)!(!,&&"%+&'!#%"('&.#%"('!&.&%)&."%&%)!&
"%'&'),%&0
%")&'"!"*!%'" #''"%&
&&'!%9


%") %' "% &'! " "% "#%'! !''&. *'% )&"!&. &(&%& "%
#%' !'&!"'"!!(!&&%"(',"'"!0
&#%")"#&"!,)!(&'%,"%'%&&"'"!&'(&/&(%),&&"*!
'%!&!'!(&'%,." #%')!!!1"%"#%'!#%"% !0
"!'%'&%')'"&&.&(##%&.(&'" %&!%!&"%&'%('"%% !'&0

%!-'"!%'0
%"&&"!"&"%,+(')&

&#%")"%#"%'"%!-'"!%')0
%&%#'"!"&(&%&!1"%!!!'%&'&!"'%" #!&!(!
%)!'!!'0
&'"!,6%'6" #!&3" "!"*!%&#." "!&%"%&.'04!%,
&%'%'"!&#3&40
%"),%2!!!&"%'&(&%&!"'!('&'' !'&"%!"!&"'!
!!&'' !'&0

&&'!%:

2019 Aug-28 PM 03:20
U.S. DISTRICT COURT
N.D. OF ALABAMA

2019 Aug-28 PM 03:20
U.S. DISTRICT COURT
N.D. OF ALABAMA

EXHIBIT
R
A.M. Best Affirms Ratings of Life Insurance Company of Alabama – Ins... https://insurancenewsnet.com/oarticle/AM-Best-Affirms-Ratings-of-Life...
A.M. Best Co. has affirmed the financial strength rating of B+ (Good) and issuer credit rating of "bbb-" of
Life Insurance Company of Alabama (LICOA) (Gadsden, AL). The outlook for both ratings is stable.
The rating affirmations reflect LICOA's established niche marketing of supplemental accident and health
and life insurance products primarily via worksite sales, relatively stable profitability and significant
reduction in its liability exposure resulting from the settlement of two class-action lawsuits in 2011.
Offsetting rating factors include LICOA's concentration of business in the cancer insurance market,
continuing litigation expenses and its business concentration in Alabama, Tennessee, Mississippi and
Georgia.
LICOA, licensed in 10 southeastern states and Oklahoma, is a small, closely held public company that has
provided supplemental insurance products to employer groups and individuals since 1952.
Future positive rating actions could occur if LICOA significantly grows its non-cancer lines of business
while maintaining profitability, sizably reduces litigation expenses and appreciably grows business beyond
its core four state marketing territory. Alternatively, negative rating actions could occur if profitability
trends downward or if its sufficient capital and surplus level materially deteriorates.
1 of 3 3/21/2021, 2:44 PM
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a
comprehensive explanation of A.M. Best's rating process and contains the different rating criteria
employed in the rating process. Key criteria utilized include: "Rating Health Insurance Companies"; "Risk
Management and the Rating Process for Insurance Companies"; "BCAR for Life/Health Insurers"; and
"Assessing Country Risk." Best's Credit Rating Methodology can be found at www.ambest.com/ratings
/methodology (http://www.ambest.com/ratings/methodology). Founded in 1899, A.M. Best Company is the world's
oldest and most authoritative insurance rating and information source. For more information, visit
www.ambest.com (http://www.ambest.com). Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS
RESERVED.
2 of 3 3/21/2021, 2:44 PM
3 of 3 3/21/2021, 2:44 PM

LICOA Third Complaint Exhibits

Uploaded by

Copyright:

Available Formats

LICOA Third Complaint Exhibits

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

LICOA Third Complaint Exhibits

Uploaded by

Copyright:

Available Formats

What is the document primarily about?

What is the document primarily about?

What type of insurance products does LICOA provide?

What type of insurance products does LICOA provide?

EXHIBIT

INTERNAL AUDIT REPORT

Controls tested and definition of risk 3

Travel and entertainment policy 14

Internal policies and procedures 18

Summary of suggestions for improvement 19

Appendix A - Example investment procedures manual 21

Appendix B - Investment policy guidelines 25

Appendix C - Example internal audit charter 37

Appendix D - Example internal audit policy statement 42

Appendix F - Talking Points for a Travel and Entertainment Policy 47

Appendix G - Example Travel and Entertainment Policy 49

Appendix H - General IRS Guidelines for Travel and Entertainment 60

Internal Audit Summary Report Observations by Risk

Scope and Approach:

Suggestions for Improvement or Observations Noted:

Internal Audit Summary Report

Suggestions for Improvement or Observations Noted – Continued:

Internal Audit Summary Report Observations by Risk

Scope and Approach:

Internal Audit Summary Report

Key Highlights –-Continued:

Suggestions for Improvement or Observations Noted:

Internal Audit Summary Report Observations by Risk

Scope and Approach:

Internal Audit Summary Report

Suggestions for Improvement or Observations Noted:

Internal Audit Summary Report Observations by Risk

Scope and Approach:

Internal Audit Summary Report

Key Highlights –-Continued:

Suggestions for Improvement or Observations Noted:

Internal Audit Summary Report Observations by Risk

Scope and Approach:

Internal Audit Summary Report

Key Highlights –-Continued:

Suggestions for Improvement or Observations Noted:

Internal Audit Summary Report Observations by Risk

Scope and Approach:

Internal Audit Summary Report

Internal Audit Summary Report

Suggestions for Improvement or Observations Noted:

Internal Audit Summary Report

Appendix F - Talking Points for a Travel and Entertainment Policy

Appendix G - Example Travel and Entertainment Policy

Appendix H - General IRS Guidelines for Travel and Entertainment

Internal Audit Summary Report Observations by Risk

Suggestions for Improvement or Observations Noted:

Summary of Suggestions for Improvements

Summary of Suggestions for Improvements - Continued

Travel and Entertainment

Internal Policies and Procedures

EXAMPLE INVESTMENT PROCEDURES MANUAL

4. Investment and derivative activity is reviewed at regular intervals by an appropriate level

Managing Derivatives (complete if applicable)

2. Third-party statements are reconciled to subledger and general ledger account(s).

Approved this ____ day of _, _____.