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| The Strategic Alliances Division (SA) forms strategic partnerships
with managing general underwriters, managing general agents and third-party
administrators to provide AFA coverage for employers and worksite
employees. Our main coverage lines are medical stop loss, mini-medical
business and Latin America life business.
Our medical
stop loss coverage is provided to employers with 50 or more employees.
Medical stop loss coverage protects employers from large claims
incurred by any one employee or their dependents.
SA also provides mini-medical business on a voluntary basis to employers
with 50 or more employees. This coverage is typically provided to
high-turnover, lower-paid employees who are not offered or cannot
afford the high cost of comprehensive major medical coverage.
During 2005, Connecticut General Life Insurance Company assumed
AFA’s government contract mini-medical business, which is
marketed by the Boon Insurance Agency. In addition to access to
the CIGNA PPO network, we will also be getting referrals from CIGNA
sales representatives for
government contract business. We continue to take risk on this program
as Connecticut General cedes all the risk back to AFA.
SA sells universal life and term life through AFA and AFIBL (American
Fidelity International (Bermuda) Limited) to upper-income residents
of Latin America. During 2005, the consolidation of the Latin America
life operations with those of the AFAmeriLife® division began.
Full consolidation is expected to take place in 2006, providing
a more efficient and cost-effective operation.
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| We substantially exceeded our sales goals in 2005. With the continued
leadership from Charles Jorge, marketing director for Latin America,
our life sales reached $7.3 million in 2005.
This exceeded
budgeted sales of $4.5 million, a substantial 235 percent increase
over 2004. This was accomplished
in addition to the conversion of our business to the LifePro administration
system.
Changing third-party administrators for our mini-medical business
on January 1, 2005, led to decreased marketing efforts during the
year as much time was spent implementing the administrative changes.
Marketing efforts increased dramatically during the second half
of 2005. Large enrollments and re-servicing efforts during the fourth
quarter resulted in large premium growth for January 1, 2006.
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| With the consolidation of the Latin America and AFAmeriLife®
life operations, the vast majority of our earned premium comes from
medical stop loss and mini-medical programs.
We are working
on additional programs involving dental, occupational accident and
student accident in order to diversify our premium base. We expect
these programs to be implemented during 2006.
SA continues to expand its relationship with CIGNA. During 2006,
we will form a partnership with Boon and CIGNA to market limited
benefit medical through the CIGNA sales network. Access to the CIGNA
sales network and PPO should allow for large sales growth in 2006.
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