Foxo Life Insurance Company

12 Months Ended

Dec. 31, 2023

Foxo Life Insurance Company [Abstract]

FOXO LIFE INSURANCE COMPANY

Note 13 FOXO LIFE INSURANCE COMPANY

Acquisition

On August 20, 2021, the Company completed its acquisition of MICOA and renamed it FOXO Life Insurance Company. The acquisition was accounted for as an asset acquisition as MICOA did not have inputs (employees) to create outputs. Purchase consideration for the acquisition of MICOA totaled $1,155, which included an indefinite-lived insurance license intangible asset recorded at a fair value of $63 and cash of $1,092. The Company recorded the reinsurance recoverables and policy reserves at their fair values as part of the acquisition.

The existing statutory capital and surplus of $1,092 remained with MICOA post-acquisition. As part of the transaction, the former owners of MICOA continued to administer and 100% reinsure all policies outstanding as of the acquisition date. The Company did not issue any new insurance policies since the acquisition and all premiums, reinsurance recoverables, and policy reserves related to the 100% reinsured business. For ceded reinsurance transactions, the Company remained liable in the event the reinsuring company was unable to meet its obligations under the reinsurance agreement. Further, the reinsurer was required to maintain accreditation from all applicable state insurance regulators so the Company may obtain full credit for the reinsurance agreement. If the reinsurer was unable to meet this obligation, they were required to compensate the Company so that the Company could take full credit for the reinsurance. As of December 31, 2021, the Company had determined there was a remote probability the reinsurer would fail to meet its obligations and any allowance would be immaterial. The policy reserves of $18,573 for the year ended December 31, 2022 on the consolidated balance sheet represented the benefits and claims reserves ceded as part of the acquisition. There were no earned and ceded premiums and claims incurred and ceded included on the consolidated statement of operations for the year ended December 31, 2023. The consolidated statement of operations for the year ended December 31, 2022, includes $362 of earned and ceded premiums as well as $1,349 of claims incurred and ceded. With the sale of FOXO Life Insurance Company on February 3, 2023, which is more fully discussed below, the $18,573 of policy reserves were transferred to the new owners at closing.

Statutory Capital and Surplus

The approval granted by the Arkansas Insurance Department to the Company to acquire MICOA required the Company to maintain statutory capital and surplus of no less than $5,000 and a risk-based capital ratio of 301% or greater. As of December 31, 2022, FOXO Life Insurance Company had statutory capital and surplus of at least $5,000, which included $100 of cash maintained in a trust account at First Horizon Advisors, as required by the State of Arkansas, with the remaining amount of additional statutory capital and surplus held in cash and cash equivalents. The statutory capital and surplus for FOXO Life Insurance Company exceeded the minimum risk-based capital requirements for the year ended December 31, 2022. As more fully discussed below, at the closing of the sale of FOXO Life Insurance Company on February 3, 2023, the Company gained access to all capital and surplus amounts outstanding as of the closing date, net of transaction related amounts, or $4,751.

Statutory Net Loss

FOXO Life Insurance Company was required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the Arkansas Insurance Department. Statutory accounting practices primarily differ from U.S. GAAP in that policy acquisition costs are to be expensed as incurred, future policy benefit liabilities are to be established using different actuarial assumptions, and the accounting for investments in certain assets and deferred taxes are stated on a different basis. FOXO Life Insurance Company did not issue any policies after the acquisition. Additionally, MICOA did not issue any policies in 2021 before the acquisition and its policies were separately 100% reinsured by the seller, Security National Life Insurance Company. The operations of FOXO Life Insurance Company are included in the Company’s consolidated financial statements from the acquisition date to the February 3, 2023, the date of sale, in accordance with U.S. GAAP. FOXO Life Insurance Company had a statutory net loss of de minimus and $105 for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the Company had an authorized control level of $0 and $62, respectively.

Insurance Liabilities

Policy reserves are liabilities for traditional life insurance reserves and annuities. Traditional life reserves primarily include term and whole life products, which totaled $0 and $14,246 at December 31, 2023 and 2022, respectively.  

The following table provides information about deferred annuity contracts for the years ended December 31, 2023 and 2022:

	2023			2022
Balance at beginning of the period	$	4,327		$	4,717
Deposits received		27			7
Interest credited		-			139
Withdrawals		(82	)		(536	)
Transfers to new owners upon sale of business		(4,272	)		-
Balance at end of period	$	-		$	4,327

Sale of FOXO Life Insurance Company

As of October 19, 2022, the Company made the decision to sell FOXO Life Insurance Company and terminate this business activity due to sustained losses. On February 3, 2023, the business was sold. Therefore, there were no traditional life insurance reserves and deferred annuity contracts at December 31, 2023 versus $18,573 at December 31, 2022. The terms of sale and additional information about FOXO Life are presented below.

FOXO Life - Insurance Company

Due to market conditions, the Company’s capitalization following the Business Combination did not materialize in the way the Company anticipated, and the Company did not possess the funding that it believed would be required to satisfy state regulations and regulatory bodies to issue new life insurance policies through FOXO Life Insurance Company. As such, management decided to not move forward with the launch of FOXO Life Insurance Company.

On January 10, 2023, the Company entered into a merger agreement (the “Security National Merger Agreement”) with Security National Life Insurance Company, a Utah corporation (the “Security National”), FOXO Life, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“FOXO Life”), and FOXO Life Insurance Company (fka MICOA), an Arkansas corporation and wholly-owned subsidiary of the Seller, pursuant to which, subject to the terms and conditions of the Security National Merger Agreement, the Company agreed to sell FOXO Life Insurance Company to Security National. Specifically, pursuant to the Security National Merger Agreement, FOXO Life Insurance Company merged with and into the Security National, with Security National continuing as the surviving corporation.

On February 3, 2023 (the “Closing Date”), the Company consummated the sale of FOXO Life Insurance Company to Security National pursuant to the Security National Merger Agreement. As a result of the merger, the Company was no longer required to hold cash and cash equivalents required to be held as statutory capital and surplus, as required under the Arkansas Insurance Code (the “Arkansas Code”).

At the closing, all of FOXO Life Insurance’s shares were cancelled and retired and ceased to exist in exchange of an amount equal to FOXO Life Insurance’s statutory capital and surplus amount of $5,002 as of the Closing Date, minus $200 (the “Merger Consideration”).

After the Merger Consideration and Security National’s third-party expenses, the transaction resulted in the Company gaining access to $4,751 that was previously held as statutory capital and surplus pursuant to the Arkansas Code. The Company recorded a $251 loss on the sale of MICOA during the year ended December 31, 2023.