MESSAGES SALES CUSTOMER EXPERIENCE AFC &AFFILIATES OUR COMMUNITY OUR RESULTS BOARD OF DIRECTORS
AF Corporate2

AMERICAN FIDELITY CORPORATION

2019 ANNUAL REPORT

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MESSAGE FROM OUR CEO
Bill Cameron

“While so many things have changed in the past six decades, our dedication to our Customers has remained steadfast even as we’ve grown to serve more than 1.5 million policyholders in 49 states.”

Bill Cameron, Chairman and CEO


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In 2019, I celebrated 35 years of working for the company that has been an integral part of my life. My grandfather, C.W. Cameron, and my father, C.B. Cameron, started American Fidelity Assurance Company nearly 60 years ago with the goal of helping their Customers through hard times.

While so many things have changed in the past six decades, our dedication to our Customers has remained steadfast even as we’ve grown to serve more than 1.5 million policyholders in 49 states. Through services provided by the Cameron family of companies, we also have Customers and business interests in 20 countries around the world. It is our goal to deliver superior value and market-leading convenience for evaluating, purchasing and utilizing all necessary services to help our Customers achieve their health and financial wellness goals. We must be doing something right! American Fidelity continues to grow and strengthen our reputation in the industry as well as in the communities in which we do business. We are recognized year after year for our sound business practices that benefit both our Customers and our Colleagues.

One of the insurance industry’s oldest and most-respected ratings agencies, A.M. Best, reaffirmed our A+ rating, which is a testament to our dedication to Customers. Fortune magazine recognized our commitment to Colleagues by including American Fidelity on its list of 100 Best Companies to Work For, an honor we’ve earned 14 times since 2004. In addition, we’ve been recognized in several other “best” lists compiled by the magazine and the Great Place to Work Institute. In 2019, we were honored to be among People magazine’s 50 Companies That Care, a testament to our dedication to both our Colleagues and our community.

That kind of recognition is due to the excellent team of Colleagues we have, and their singular aligned focus on providing a different opinion for our Customers. We have a unique advantage with our understanding of our Customers’ needs. While many providers offer general coverage, as a specialist, we offer a different perspective – a different opinion. We are proud to serve you, and look forward to the next six decades and beyond.



MESSAGE FROM OUR PRESIDENT
Jeanette Rice

“We have aggressive aspirations to re-invent how we provide services.”

Jeanette Rice, President,
American Fidelity Assurance Company


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Our strategic focus on growing sales, managing expenses and the continued work on building American Fidelity’s brand was an emphasis in 2019. Our success in meeting our goals is a testament to the expertise and dedication of our leadership and Colleagues.

It is remarkable how much we have accomplished, not only in terms of our financial performance but in our ability to deliver on our promise to be a different opinion for our Customer. We believe in our products, services and the value proposition we provide to our niche markets.

Our sales growth was largely dependent on our ability to add new Customer groups to our portfolio combined with expanding our capabilities to serve the Customers who have been with us for years and in some cases, decades. It is through these relationships that we continue to learn what we will need to do in the future to serve for them for years to come.

Innovation is a core driver in our technology efforts. American Fidelity is experiencing large-scale systems transformation while at the same time transitioning to a culture that embraces robotic automation as a way to bring immediate efficiencies to our administration. These combined efforts support our ability to increase our speed to market with products and services aligned to our Customers' needs.

It is important to recognize not only our strengths but also our challenges and turn them into opportunities. We look to our Customers for their feedback, and are building out our net promoter score to benchmark our services and benefits specifically designed for our niche markets in accordance with our brand. We have aggressive aspirations to re-invent how we provide services. Some of these efforts include our ability to execute on our quick claim strategy where our insureds can receive payment for claims as quickly as possible, even as little as one day for annual wellness and physician expenses when enrolled in direct deposit.

As we prepare to celebrate 60 years since the founding of American Fidelity, we will keep a watchful eye on our long-term vision and our proven ability to use the collective efforts of our Colleagues to continue to make things as simple and hassle-free as possible for our Customers.


SALES
Keith Johnson

Keith Johnson, Chief Sales Officer

AMERICAN FIDELITY EDUCATIONAL SERVICES

Who We Are

American Fidelity Educational Services (AFES) provides supplemental insurance and added value to our Customers by delivering employer and employee value-based services. We focus on taking work off our Customers’ plates and making their lives easier. AFES strives to be fair and transparent while following through on promises and welcoming feedback and opportunities to improve.


AFES Accomplishments 2019

AFES Goals 2020



ASSOCIATION AND WORKSITE DIVISION

Who We Are

The Association and Worksite Division (AWD) strives to offer our Customers single-source, solution-based benefits while determining how to be profitable and in line with overall growth and expense strategies. The division provides services to enable employer groups to manage expenses in addition to supplemental benefits for employees. AWD remains focused on the needs of our Customers.


AWD Accomplishments 2019

AWD Goals 2020

Ron Byrne

“We look forward to our ability to leverage the unique qualities of AF in creating prompt solutions for our partners and clients.”

Ron Byrne, Senior Vice President,
Strategic Alliances


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STRATEGIC ALLIANCES

Who We are

Strategic Alliances’ primary solutions are medical stop loss and direct first dollar benefits. Employers and health plans use stop loss coverage as a risk management tool to mitigate catastrophic risk. Employers offer our direct benefits to employees as an affordable way to support their individual health insurance needs. We also maintain distribution and operating relationships with a variety of insurance marketing and administrative partners. After being in the Medicare Supplement insurance market for several years, we are exiting it in 2020.

Strategic Alliances Accomplishments 2019

  • 2019 marked the second full year of our AF Direct stop loss sales and operation model. With a robust production throughout the year, we exceeded our sales goals for 2019. This success reflected our team’s initiative and focus on key third-party administrators (TPA) and broker distribution relationships. Although our Managing General Underwriter (MGU) production declined in 2019, we maintained stop loss distribution relationships with a number of quality MGUs. Total earned premium for all products exceeded our budgeted level by 16.1%, a reflection of the continued success of AF Direct stop loss, continued MGU support and increased sales of Medicare Supplement coverage.
  • The ongoing soft market for stop loss pricing adversely impacted our 2019 earnings significantly. Due to the soft market we increased prices and imposed tighter underwriting standards, causing a significant loss in Jan. 1 business; however, we expect this to improve our profitability in 2020.

Strategic Alliances Goals 2020

  • Strategic Alliances’ earned premium target is a decrease of 11.4%, a key part of our goal to return to profitability in 2020. We are terminating our unprofitable block of Medicare Supplement business. Several of our distribution partners have also decreased their volume of business to improve our underwriting results. Our direct line of business is expected to have much lower growth as we implement more underwriting control and increasing prices. Our move to the direct stop loss model gives us more control over loss ratio management, underwriting control and expense management as it becomes a larger part of our total business. Within AF, we are continuing to build on distribution relationships with AWD and AFES that have already created new sales and show excellent promise for future collaboration.
  • As always 2020 will remain a dynamic legislative and regulatory period. We will continue to respond effectively to evolving client needs. We look forward to our ability to leverage the unique qualities of AF in creating prompt solutions for our partners and clients.

CUSTOMER EXPERIENCE
Lisa Knatvold

“Living our brand and being a different opinion for our Customers remained our focus in 2019 and will continue into 2020.”

Lisa Knatvold, Senior Vice President,
Operations

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OPERATIONS

Living our brand and being a different opinion for our Customers remained our focus in 2019 and will continue into 2020.

2019 saw great accomplishments for us including:

In 2020, our focus will be on:
Alex Bagby

Alex Bagby, Chief Product Officer

PRODUCTS

Our focus continues to be on maintaining and enhancing our broad suite of voluntary supplemental products that are easy to purchase and easy to understand, and to utilize Customer friendly processes for policyholders to access benefits when the need arises.


In 2019, we expanded our product suite with controlled releases of our new Group Hospital Indemnity and Group Cancer products with early sales results that exceeded our expectations. We will be conducting further releases in additional states in 2020.


Our 403(b) Compliance and Retirement Readiness education seminars are widely attended by our employer and employee Customers, and we continue to expand this widely requested value added service to provide solutions to our Customers’ pain points.

Kim Fisher

Kim Fisher, Chief Information Officer

INFORMATION TECHNOLOGY

IT, we’re always looking for ways to ensure our Colleagues can easily support our Customers and provide tools and technology to make it easier for them to do business with AF.

Our major accomplishments in 2019 included:
In 2020, we will continue our focus on the following key areas:
Larry Alkire

"We once again focused on Customer experience as well as enhanced tools used at all points of Customer interactions."

Larry Alkire, Chief Marketing Officer

MARKETING

2019 was a very active year for our Marketing and Revenue Support division. We once again focused on Customer experience as well as enhanced tools used at all points of Customer interactions. The division focused on key improvements to make acquiring coverage and using online tools easier for our Customers.

Our team is well positioned in 2020 and enthusiastic about building on the many accomplishments that we had in 2019. Some of those accomplishments include:
These are just a few of the marketing highlights from 2019. The Marketing and Revenue Support division continues to find new ways to make acquiring coverage easier and to provide the online tools to simplify the service needs of our Customers.
AMERICAN FIDELITY CORPORATION
& AFFILIATES
Dave Carpenter

"...we provide the product and back it up with caring and empathetic Customer service Colleagues."

Dave Carpenter, President, American Fidelity Corporation

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At American Fidelity we have what you deserve:important products and service! More relevant than the product offerings, is the excellent service that comes with them. Many companies talk about service, we provide high-quality service. Whether it be banking, homeowners’ insurance, payroll, investment management or employer benefit solutions, we provide the product and back it up with caring and empathetic Customer service Colleagues. One of our guiding principles is being always fair. We work hard to be fair to you, our Colleagues and our shareholders.

One of the more exciting ventures we are working on is the real estate development adjacent to our corporate headquarters. Plans for this development include a movie theater, restaurants, corporate offices, hotels and an apartment complex. The entire development will further enable Oklahoma City to grow and prosper and will provide an excellent venue for work or play.
INSURICA

INSURICA

Founded in 1959, INSURICA is among the 50 largest insurance brokers in the US, providing access to insurance coverage and risk management programs for person and commercial clients across the country.


FFB

First Fidelity Bank

Founded in 1920, First Fidelity Bank offers community-centered financial services and solutions for commercial and retail customers. This includes checking, loans, investments and cash management services.

FFB

First Financial Group of America

Founded in 1966, the companies of First Financial Group of America provide employee benefit solutions, administration service solutions, insurance benefit consulting and enrollment solutions for school systems, hospitals, counties and city governments.


American Fidelity

American Fidelity Assurance Company

Founded in 1960, American Fidelity Assurance Company offers employer benefit solutions, such as expense management services, enrollment support and stop loss insurance, as well as employee benefits including disability, accident and cancer insurance.

AFPC

AF PROPERTY COMPANY, INC. (AFPC)

Founded in 1964, American Fidelity Property Company, Inc. acquires, develops and manages real estate properties for many of the American Fidelity entities and related Cameron companies. AFPC, through a variety of subsidiaries and LLCs, provides services such as grills, clinics and fitness centers.


Dallas Wings

DALLAS WINGS BASKETBALL

Founded in 1998, Cameron Enterprises purchased the Detroit Shock WNBA franchise in 2010 and formed Tulsa Pro Hoops, LLC dba Tulsa Shock. In 2015, the franchise moved to Arlington, Texas, and joined Cameron Enterprises under the name Full Court Partners, LLC dba Dallas Wings.

AFAS

AF ADMINISTRATIVE SERVICES (AFAS)

Founded in 2012, American Fidelity Administrative Services, LLC (AFAS) offers health and welfare benefit plan analysis and consulting services, as well as compliance assistance with the Affordable Care Act (ACA).


APL

AMERICAN PUBLIC LIFE

Founded in 1945, American Public Life Insurance Company offers a wide variety of supplemental health and voluntary insurance products through a select group of brokers across the country.

AFIBL

AMERICAN FIDELITY INTERNATIONAL (BERMUDA)

Founded in 2000, American Fidelity International (Bermuda) Ltd. offers high-quality financial protection solutions to individuals throughout Latin America and Asia through an international consultant distribution system.


INVESTRUST

INVESTRUST

Founded in 1997, InvesTrust is a full-service retirement savings plan provider and investment management firm for individuals, families, trusts, corporate entities and charitable organizations.

ALCOTT

ALCOTT HR

Founded in 1987, Alcott HR is an HR outsourcing solution
that includes HR compliance, administration and
technology, including payroll and taxes, employee benefits, training and development.

OUR COMMUNITY
Tom McDaniel

"We believe it’s always the right time to do the right thing."

Tom McDaniel, President,
American Fidelity Foundation

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We believe it’s always the right time to do the right thing. That’s why our Company remains dedicated to the communities where we live and work. The American Fidelity Foundation and the family of companies are proud to be strong corporate citizens committed to building a vibrant community for our Colleagues and Customers.

Here are some of the ways we demonstrated that commitment in 2019.
AWARDS AND RECOGNITION
policy holder

1.5 MILLION

POLICYHOLDERS


2.5 MILLION

POLICIES IN FORCE


policy holder

*BEST Workplaces

for Women


Workplaces

*BEST Workplaces in

Financial Services & Insurance


Millennials

*BEST Workplaces

for Millennials


Best Companies to Work for in America

*BEST Companies to

Work For

14 times on the list


Strength & Stability
rated A+ by A.M. Best*

OUR RESULTS
John Cassil

“AFA’s robust operating performance continues to be driven by providing a strong Customer experience.”

John Cassil, Chief Financial Officer

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American Fidelity Corporation and Subsidiaries (AFC) had record operating results in 2019 with consolidated GAAP net income of $174 million and our flagship company, American Fidelity Assurance (AFA), reporting $90 million of statutory net income. AFA’s robust operating performance continues to be driven by providing a strong Customer experience that resulted in over 7% earned premium growth in 2019. Our commitment to continue providing the best Customer experience is reflected in the investment in AFA’s new policy administration system and our investment in Cameron Ventures, a venture capital fund focused on identifying and implementing the latest technology innovations in the InsurTech/FinTech space. A guiding principal at AFC is a strong balance sheet to meet the future needs of our Customers and that is reflected in the $39 million statuatory surplus increase at AFA, which totaled $544 million as of Dec. 31, 2019.
FINANCIAL STATEMENTS
TOTAL REVENUE
Total Revenue

GAAP EQUITY
GAAP Equity

ACCUMULATED BENEFITS PAID TO CUSTOMERS
Accumulated Benefits Paid To Customers

CONSOLIDATED ASSETS
Consolidated Assets

2019 (CONSOLIDATED GAAP, IN THOUSANDS)
Assets 2019 2018
Cash $384,541 $454,126
Bonds $4,183,762 $3,629,029
Preferred & Common Stocks $147,088 $142,063
Trading Investments $841,266 $719,187
Short Term & Other Investments $29,442 $11,575
Mortgage Loans $553,162 $487,446
Real Estate & Policy Loans $190,265 $194,569
Accrued Investment Income $42,988 $42,800
Accrued Receivable $1,186,183 $1,174,803
Deferred Policy Acquisition Costs $800,986 $760,708
Other Assets $167,538 $180,967
Separate Account Assets $982,333 $756,669
Total Assets $9,509,554 $8,553,942
RESERVES, OBLIGATIONS & EQUITY 2019 2018
Policy & Other Contract Reserve
Funds Set Aside & Invested to
Assure Payment of Future Benefits
to Policy Owners & Beneficiaries
$4,918,749 $4,603,244
Unearned Premiums $9,207 $10,783
Notes Payable $633,883 $643,761
Income Tax Liability & Other Obligations $1,374,718 $1,257,502
Separate Account Liabilities $982,333 $756,669
Capital Surplus and Retained Earnings
for the Future Protection of Policy Owners
& Beneficiaries
$1,590,780 $1,282,106
TOTAL LIABILITIES
& SHAREHOLDERS'
EQUITY APPLICABLE TO AFC
$9,509,670 $8,554,065
Non Controlling Interest ($116) ($123)
TOTAL LIABILITIES
& SHAREHOLDERS' EQUITY
$9,509,554 $8,553,942
RECONCILIATION OF CAPITAL, SURPLUS
& RETAINED EARNINGS (IN THOUSANDS)
2019 2018
Capital & Surplus Reported on Statutory Basis $578,128 $540,421
Net Deferred Policy Acquisition Costs $732,847 $693,534
Policy Liabilities ($27,508) ($28,988)
Deferred Federal Income Taxes ($147,475) ($102,333)
Other $250,436 $16,203
Stockholder’s Equity of Noninsurance
Subsidiaries, Net of Consolidating Eliminations
$204,352 $163,269
BALANCE AS DETERMINED
IN ACCORDANCE WITH
GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
$1,590,780 $1,282,106
BOARD OF DIRECTORS
building

Greg Allen, CEO Maine Street Holdings, Inc.

Bill Cameron, Chairman & CEO, American Fidelity Corporation

Bill Durrett, Senior Chairman, American Fidelity Corporation

Ted Elam, Attorney McAfee & Taft

Tom McDaniel, President American Fidelity Foundation

John Bendheim, Jr., President Bendheim Enterprises, Inc.

Lynda Cameron, Director, AFA, AFC VP Cameron Associates, Inc.

Charles Eitel, CEO Eitel Times Investments

Paula Marshall, CEO The Bama Companies, Inc.

Stephen Prescott, MD, President Oklahoma Medical Research Foundation



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