Related Party

6 Months Ended

Jun. 30, 2022

Related Party

Related Party

Note 18. Related Party

Crestline

On April 24, 2020, we entered into a Securities Purchase Agreement with Crestline Assurance Holdings LLC (“Crestline”) an institutional alternative investment management firm under which we issued 444,444 shares of our voting common stock to Crestline. We contributed $5.0 million of the net proceeds to American Life and used $3.3 million of the proceeds to capitalize Seneca Re and its first protected cell. We also entered into a Stockholders Agreement along with Xenith and Vespoint that grants Crestline certain rights. Also, Douglas K. Bratton, a principal of Crestline, was appointed as a director of both our board of directors and the American Life board of directors.

In addition, on April 24, 2020, American Life entered into a three-year master letter agreement and related reinsurance, trust and asset management agreement with Seneca Re and a Crestline affiliate regarding the flow of annuity reinsurance and related asset management, whereby Crestline agreed to provide reinsurance funding for a quota share percentage of 25% of the liabilities of American Life arising from its MYGA and quota share percentage of 40% of American Life’s FIA products. From inception through June 30, 2022, American Life had ceded $334.0 million face amount of annuity premiums to Crestline SP1. American Life received total ceding commissions, inception-to-date, of $15.5 million and expense reimbursements of $28.4 million in connection with these transactions as of June 30, 2022.

The Reinsurance Agreement also contains the following agreements:

● American Life and Crestline SP1 each entered into investment management agreements with Crestline, pursuant to which Crestline manages the assets that support the reinsured business; and

● American Life and Crestline SP1 entered into a trust agreement whereby SRC2 maintains for American Life’s benefit a trust account that supports the reinsured business.

Currently, Crestline has approximately $311.9 million assets under management and is a subadvisor on approximately $419.0 million of additional investments.

Chelsea  

On June 29, 2020 Midwest’s subsidiary, American Life, purchased a 17% interest in Financial Guaranty UK Limited through an economic interest in Chelsea Holdings Midwest LLC.  American Life has a note receivable from Chelsea Holdings Midwest LLC with an interest rate of 5% per annum that was rated BBB+ by a nationally recognized statistical rating organization (“NRSRO”) and Class B preferred shares in Chelsea Holdings Midwest LLC.  The note is being carried at cost plus PIK of $6.1 million and the preferred shares are carried at a fair market value of $2.3 million, based upon valuations received from an independent third-party, as of June 30, 2022.