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DEPARTMENT OF INSURANCE, FINANCIALINSTITUTIONS AND PROFESSIONAL REGISTRATIONP.O. Box 690, Jefferson City, Mo. 65102 0690RE:Examination Report of Liberty Dental Company of Missouri, Inc. for the period endedDecember 31, 2014ORDERAfter full consideration and review of the report of the financial examination of Liberty DentalCompany of Missouri, Inc. for the period ended December 31, 2014, together with any writtensubmissions or rebuttals and any relevant portions of the examiner's workpapers, I, John M.Huff, Director, Missouri Department of Insurance, Financial Institutions and ProfessionalRegistration pursuant to section 374.205.3(3)(a), RSMo., adopt such examination report. Aftermy consideration and review of such report, workpapers, and written submissions or rebuttals, Ihereby incorporate by reference and deem the following parts of such report to be my findingsand conclusions to accompany this order pursuant to section 374.205.3(4), RSMo: summary ofsignificant findings, subsequent events, company history, corporate records, management andcontrol, fidelity bond and other insurance, pension, stock ownership and insurance plans,territory and plan of operations, growth of the company and loss experience, reinsurance,accounts and records, statutory deposits, financial statements, financial statement changesresulting from examination, and comments on financial statement items.Based on such findings and conclusions, I hereby ORDER, that the report of the FinancialExamination of Liberty Dental Company of Missouri, Inc. as of December 31, 2014 be and ishereby ADOPTED as filed and for Liberty Dental Company of Missouri, Inc. to take thefollowing action or actions, which I consider necessary to cure any violation oflaw, regulation orprior order of the Director revealed by such report: (1) implement, and verify compliance witheach item, if any, mentioned in the Comments on Financial Statement Items and/or Summary ofRecommendations section of such report; (2) account for its financial condition and affairs in amanner consistent with the Director's findings and conclusions.So ordered, signed and official seal affixed this 2nd day of March, 2016.Department of Insurance, Financial Institutionsand Professional Registration
/REPORT OF THEFINANCIAL EXAMINATION OFLiberty Dental Plan of MissouriASOFDECEMBER 31, 2014:'l,1STATE OF MISSOURIDEPARTMENT OF INSURANCE, FINANCIAL INSTITUTIONS ANDPROFESSIONAL REGISTRATIONJEFFERSON CITY, MISSOURI
TABLE OF CONTENTSSCOPE OF EXAMINATION . 1Period Covered . 1Procedures . 1Reliance Upon Others . 2SUMMARY OF SIGNIFICANT FINDINGS . 2SUBSEQUENT EVENTS . 2COMPANY ms TORY . 2General . 2Capital Contributions . 3Dividends . 3Mergers and Acquisitions . 3CORPORATE RECORDS . 3MANAGEMENT AND CONTROL . 3Board of Directors . 3Principal Committees . 3Senior Officers . 3AFFILIATED COMPANIES . 4Holding Company, Affiliates, and Subsidiaries . 4Organizational Chart . 4Intercompany Transactions . 5TERRITORY AND PLAN OF OPERATIONS . 5REINSURANCE . 6STATUTORY DEPOSITS . 6Deposits with the State of Missouri . 6Deposits with Other States. 6FINANCIAL STATEMENTS . 6Assets . 7Liabilities, Surplus and Other Funds . 7Statement of Income . 8Capital and Surplus Account . 8FINANCIAL STATEMENT CHANGES RESULTING FROM EXAMINATION . 9COMMENTS ON FINANCIAL STATEMENT ITEMS . 9
SUMMARY OF RECOMMENDATIONS . 9ACKNOWLEDGMENT . 10VERIFICATION . 10SUPERVISION . 10ii
LDP M0 - 12/31/14 ExamDecember 30, 2015Honorable John M. Huff, DirectorMissouri Department of Insurance, FinancialInstitutions and Professional Registration301 West High Street, Room 530Jefferson City, Missouri 65102Director Huff:In accordance with your financial examination warrant, a full scope financial examination hasbeen made of the records, affairs and financial condition ofLiberty Dental Plan of Missourihereinafter referred to as LOP MO, or as the Company. Its administrative office is located at 340Commerce Suite 100, Irvine, California, 92602. This examination began on April 14, 2015 andconcluded on the above date.SCOPE OF EXAMINATIONPeriod CoveredThis is the first examination for the Company and covers the period from September 23, 2010through December 31, 2014. This examination also included the material transactions or eventsoccurring subsequent to December 31, 2014.ProceduresWe conducted our examination in accordance with the National Association of InsuranceCommissioners' (NAIC) Financial Condition Examiners' Handbook except where practices,procedures and applicable regulations of the Missouri Department of Insurance, FinancialInstitutions and Professional Registration (DIFP) and the statutes of the State of Missouriprevailed. The Handbook requires the planning and performance of the examination to evaluatethe Company's financial condition, assess corporate governance, identify current and prospectiverisks of the Company and evaluate system controls and procedures used to mitigate those risks.An examination also includes identifying and evaluating significant risks that could cause aninsurer's surplus to be materially misstated both currently and prospectively.All accounts and activities of the Company were considered in accordance with the risk-focusedexamination approach. This may include assessing significant estimates made by managementand evaluating management's compliance with Statutory Accounting Principles. Thet
LDP M0 - 12/31/14 Examexamination does not attest to the fair presentation of the financial statements included herein. If,during the course of the examination an adjustment is identified, the impact of such adjustmentwill be documented separately following the Company's financial statements.The examination report includes significant findings of fact and general information about theinsurer and its financial condition. There may be other items identified during the examinationthat, due to their nature, are not communicated within the examination report but separatelycommunicated to other regulators and/or the Company.The examination was a coordinated examination with the State of Nevada serving in the capacityof the lead state and Missouri (MO DIFP) as the participating state.Reliance Upon OthersAlthough each of the affiliated companies within the holding company group write in a specificjurisdiction, the affiliated companies share the same operating systems, employees andmanagement. Various workpapers, documents, and other information provided by the lead statewere relied upon during our examination of LDP MO. This information included, but was notlimited to, actuarial review, IT review, and control and substantive testing for key activities.SUMMARY OF SIGNIFICANT FINDINGSThere were no material adverse findings, significant non-compliance issues, or material changesto the financial statements noted during the examination.SUBSEQUENT EVENTSThere were no significant subsequent events noted from December 31, 2014 through the date ofthis report.COMPANY HISTORYGeneralLiberty Dental Plan of Missouri was incorporated on September 23, 2010 under the laws ofMissouri and was issued a certificate of authority on April 29, 2011. The Company operatesunder provisions of Chapter 354 (Health Services Corporations - Health MaintenanceOrganizations - Prepaid Dental Plans). LOP MO offers administration and management of acomplete array of dental management and benefit services in Missouri.The Company is a wholly-owned subsidiary of Liberty Dental Plan Corporation (LibertyCorporation). LDP MO is authorized to issue 100,000 shares of common stock. As of December31, 2014 there were 50,000 shares outstanding and all shares are entitled to vote.2
LDP M0 - 12/31/14 ExamCapital ContributionsThe Company received a 20,000 cash contribution from its parent, Liberty Corporation onJanuary 31, 2012.DividendsLDP MO paid no dividends during the examination period.Mergers and AcquisitionsNo mergers or acquisitions occurred during the examination period.CORPORATE RECORDSThe Company's Articles of Incorporation and Bylaws were reviewed. There were no revisions toeither document during the examination period. The Company appears to be in compliance withthe provisions ofits Articles oflncorporation and Bylaws.The minutes of the Board of Directors' meetings, committee meetings, and policyholdermeetings were reviewed for proper approval of corporate transactions. In general, the minutesappear to properly reflect and approve the Company's major transactions and events for theperiod under examination.MANAGEMENT AND CONTROLBoard of DirectorsThe property and business of the Company is controlled and managed by a Board of Directors.Pursuant to the Company's Articles of Incorporation and Bylaws, the Board shall consist of asole director and shall meet on an annual basis.The Company's sole director is the CEO and President, Amir Neshat, of Newport Coast,California.Principal CommitteesThe Company's Bylaws allow for the establishment of committees of the Board of Directors.However, as of the examination date, the Company has not established any such committees.Senior OfficersPursuant to the Company's Bylaws, the officers shall consist of a President, a Secretary, andsuch other officers as deemed necessary, including one or more Vice Presidents, Treasurer, and3
LOP M0 - 12/31/14 Examone or more Assistant Treasurers or Assistant Secretaries. These officers shall be chosenannually and will hold office until their successors are elected and qualify. The officers electedand serving as of December 31, 2014 are as follows:AmirNeshatJohn CarvelliMajaKapicDonald ReganPresident/Chief Executive OfficerSecretaryNice PresidentChief Financial OfficerAssistant SecretaryAFFILIATED COMPANIESHolding Company, Afilliates, and SubsidiariesLDP MO is a wholly owned subsidiary of Liberty Dental Plan Corporation. Liberty Corporationis licensed as a for-profit corporation domesticated in the State of Nevada. Liberty Corporationexercises control over 10 different dental service plans which are affiliated through commonownership and control. The only business of the Liberty Companies is the administration andmanagement of a complete array of dental management and benefit services.Organizational ChartThe following organizational chart depicts the ownership and holding company structure ofLiberty Dental Plan Corporation, as of December 31, 2014:Liberty Dental PlanCorporation(Nevada)100%8 Dental Plans inVarious States andTerritories85%100%"Liberty Dental PlanEast, LLC.(New Jersey)Liberty Dental Planof Missouri(Missouri)-I100%Liberty Dental Plan,New Yorlc, LLC(New York)4
LDP MO - 12/31114 ExamIntercompany TransactionsThe Company has the following agreements with its affiliated companies:1. Type:Parties:Intercompany Services AgreementLOP MO and Liberty CorporationEffective: April 27, 2011Terms:2. Type:Parties:Liberty Corporation will provide administrative services to LOP MO includingeligibility related services, marketing, administration, information technology,member services, provider relations, credentialing, financial reporting, regulatorycompliance management, fraud and abuse investigation/prevention, data analysisand reporting, retrospective reviews, clinical determination of services, benefitadministration, member and provider history tracking case management, and IDcard and fulfillment processing. Liberty Corporation will collect on behalf of anddistribute to, LOP MO administrative fees due LOP MO for services provided byLDPMO.Tax Allocation AgreementLOP MO and Liberty CorporationEffective: May 12, 2011Terms:For all tax reporting periods from and after June 1, 2011, LOP MO will be filingconsolidated Federal income tax returns and LOP MO will file a combined,consolidated or unitary group tax return under applicable Missouri law. During allperiods in which consolidated returns are filed, LOP MO will a) join in the filingof each consolidated return, b) file such consents, elections and other documentsas necessary, c) appoint Liberty Corporation, as applicable, as its exclusive agentand attorney-in-fact, to a) file such Consolidated returns, b) pay such taxes and c)take any action reasonably necessary or appropriate in connection with thedetermination of ultimate liability of each subsidiary for such taxes.TERRITORY AND PLAN OF OPERATIONSLiberty Dental Plan of Missouri is licensed as a for-profit pre-paid dental provider in Missouriunder Chapter 354 RSMo. The Company is not currently licensed in any jurisdictions other thanMissouri.LOP MO offers administration of a complete array of dental management and benefit services,including group dental and Medicare plans. Its target customers include employers, trusts,associations, unions and municipalities. LOP MO focuses primarily on relationship buildings
LDP M0 - 12/31/14 Examand partnering with medical managed care companies to provide dental benefits. LDP MOmarkets its dental plans through the utilization of internal Missouri-licensed personnel.REINSURANCELDP MO does not participate in reinsurance in its nonnal course of business. During the periodunder examination, the Company did not assume or cede any reinsurance.STATUTORY DEPOSITSDeposits with the State of MissouriThe funds on deposit with the DIFP as of December 31, 2014, as reflected below, were sufficientto meet the capital deposit requirements for the State of Missouri in accordance with RSMoSection 379.098 (Securities to be deposited by all companies). The Company's required depositwas 50,000. The funds on deposit were as follows:DescriptionU.S. Treasury NotesFair Value 51,354Par Value 51,000Book/AdjustedCarrying Value 51,874Deposits with Other StatesThe Company is only licensed in the State of Missouri and therefore does not have any funds ondeposit with other states.FINANCIAL STATEMENTSThe following financial statements are based on the statutory financial statements filed by theCompany with the MO DIFP and present the financial condition of the Company for the periodending December 31, 2014. Any examination adjustments to the amounts reported in thefinancial statements and/or comments regarding such are made in the "Comments on FinancialStatement Items". The failure of any column of numbers to add to its respective total is due torounding or truncation.There may have been additional differences found in the course of this examination, which arenot shown in the "Comments on Financial Statement Items". These differences were detenninedto be immaterial concerning their effect on the financial statements and therefore were onlycommunicated to the Company and noted in the workpapers for each individual activity.6
LDP M0 - 12/31/14 ExamAssetsBondsCash, Cash Equivalents and Shortterm InvestmentsAssets 51,874Uncollected Premiums and Agents'Balances in Course ofCollectionNet Deferred Tax AssetHealth Care and Other AmountsReceivableAggregate Write-ins for Other ThanInvested Assets - PrepaidsTotal AssetsNon AdmittedAssets Net AdmittedAssets 1 496,327Claims UnpaidGeneral Expenses Due or AccruedCurrent Federal and Foreign Income Tax Payable and Interest ThereonAmounts Due to Parent, Subsidiaries and Affiliates 38,61626,56832,7135,801Total LiabilitiesAggregate Write-ins for Special FundsRestricted SurplusACA Assessment FeeCommon Capital StockGross Paid In and Contributed SurplusUnassigned Funds (Surplus)Total Capital and SurplusTotal Liabilities, Capital and Surplus 103,698 498,4482,121 2,121Liabilities, Surplus and Other Funds 750,0003,02650,000120,000169,603392,629496,327
LOP M0 - 12/31 /1 4 ExamStatement of IncomeNet Premium IncomeRisk RevenueTotal RevenuesLess:Hospital and MedicalOther Professional ServicesEmergency Room and Out of AreaClaims Adjustment ExpensesGeneral Administrative ExpensesTotal Underwriting DeductionsNet Underwriting GainInvestment Income:Net Investment Income EarnedNet Investment Gains or (Losses)Net Income or (Loss) after Capital Gains Taxes and before All Other FederalIncome TaxesFederal and Foreign Income Taxes IncurredNet Income 30211,687 733733 212,420 74,000138,420 Capital and Surplus AccountCapital and Surplus, December 31, 2013Net IncomeChange in Net Deferred Income TaxesChange in Non-Admitted Assets 239,385138,4202,30912,515Net Change in Capital and SurplusCapital and Surplus at December 31, 2014 153,244392,629 8
LDP M0 - 12/31/14 ExamFINANCIAL STATEMENT CHANGES RESULTING FROM EXAMINATIONNoneCOMMENTS ON FINANCIAL STATEMENT ITEMSNoneSUMMARY OF RECOMMENDATIONSNone9
LOP MO - 12/31/14 ExamACKNOWLEDGMENTThe assistance and cooperation extended by the officers and the employees of Liberty DentalPlan of Missouri during the course of this examination is hereby acknowledged and appreciated.VERIFICATIONState of MissouriCounty of))I, Sara McNeely, CFE, on my oath swear that to the best of my knowledge and belief the aboveexamination report is true and accurate and is comprised of only facts appearing upon the books,records or other documents of Liberty Dental Plan of Missouri, its agents or other personsexamined or as ascertained from the testimony of its officers or agents or other persons examinedconcerning its affairs and such conclusions and recommendations as the examiners findreasonably warranted from the facts.Missouri Departme t of Insurance, FinancialInstitutions and Pro essional RegistrationSworn to and subscribed before me this 5-t\My commission expires:04- i'-I- 9JJ I lo,-- f{(J .SUPERVISIONBEVERLY · WE B: :"NOTARY. :.My Convnlss1on Expires··%·SEAL,. .;-April 14,2016: ·· : ;···,ff: --Clay CountyCommisslonl12484070The examination process has been monitored and supervised by the' undersigned. Theexamination report and supporting workpapers have been reviewed and approved. Compliancewith NAIC procedures and guidelines as contained in the Financial Condition ExaminersHandbook has been confirmed, except where practices, procedures and applicable regulations ofthe MO DIFP and statutes of the State of Missouri prevailed. Audit ManagerMissouri Department of Insurance, FinancialInstitutions and Professional RegistrationlO
Liberty Dental Plan Corporation, as of December 31, 2014: Liberty Dental Plan Corporation (Nevada) 100% 100% 85% 8 Dental Plans in " Liberty Dental Plan Liberty Dental Plan Various States and of Missouri East, LLC. Territories (Missouri) (New Jersey) -I 100% Liberty Dental Plan, New Yorlc, LLC (New York) 4
