Business Watch: USAlliance buys North Dakota company

Morgan Chilson is The Capital-Journal’s business reporter.

A Topeka business is working its way toward profitability and sustainability, a process helped by the recent acquisition of a North Dakota company.


USAlliance Corp., a financial holding company, acquired North Plains Capital Corp. and Dakota Capital Life Insurance Co., said Jack Brier, chair of the USAlliance board.

In a transaction with a book value of $3.4 million, each share of Northern Plains common stock was converted to 0.5841 shares of USAlliance common stock. The merger added $6.6 million of assets to USAlliance and around 1,500 shareholders, Brier said.

The acquisition is the first by USAlliance, he said, and it is a step toward positive growth for the company and USAlliance Life &Security Co.

”We believe they bring us lots of opportunity for additional distribution of our products in North Dakota,” Brier said. “North Dakota and Kansas are both very rural by nature, and we think there are a lot of synergies there.”

All four of Northern Plains’s staff will remain with USAlliance, which has six full-time and four part-time employees in Topeka.

In its ninth year as a financial holding company and fourth year since the life insurance company was founded, USAlliance isn’t yet operating in the black. Revenue is growing, as is the face amount of insurance policies.

“We’re pleased by that, but it’s not enough for us yet to be profitable,” Brier said. “Life insurance operates under the law of large numbers, and we’re currently in the law of small numbers. That’s where we live right now.”

Building a life insurance business is a challenge, and Brier said USAlliance launched as a holding company as the country began to leave the recession. The original prospectus, he said, indicated it would take five to seven years after the insurance company launched to reach profitability.

The acquisition should help to accelerate the time frame, he said.

“One of the huge headwinds that we face, along with everyone else in the financial world, is the low interest rates, which mean the capital that we’ve raised has not produced anywhere near the kind of income that we would have expected,” Brier said.

The company’s focus on the Heartland of America, from Canada to Mexico, will pay off, he said.

“The financial industry on both coasts really doesn’t care about middle America and that’s what we care about,” he said. “We think that as they continue to get larger, they’re going to continue to get further away from the customer, and we intend to get closer and closer to the customers and our shareholders.”

For now, Brier said USAlliance will continue to look at building sustainability.

“Is the capital that we’ve raised sustainable, the investable assets and the return we’re getting, is that sustainable? Are the sales sustainable? Are the distribution models sustainable? All of those things have to be able to be sustained in order to have an opportunity to go forward,” he said. “We can increase volume and that will help.

We can increase capital and that will help, and increase opportunities and providing back office to other folks.”

Before the acquisition, USAlliance Corp. was owned by approximately 1,930 shareholders in Kansas and has raised over $22 million in private and public offerings. In its financial report ending in December 2016, USAlliance reported a loss of $1.3 million.

AAA establishes its first “entrepreneurial” agent in Kansas

Julie Fischer has opened a new Topeka branch office of AAA insurance, the first such stand-alone office in the state.

Although customers at Fischer’s office, 6220 S.W. 29th St., will be able to buy AAA membership, the new office does not offer travel services.

Fischer operates as an independent agent, and although she sells other products, she’s primarily a AAA representative.

“It is something new for our region,” said Jennifer Haugh, manager of public and government affairs for AAA Kansas. “They have been doing that in Oklahoma for a little while now, and it’s going quite well for them. It allows us to expand our footprint beyond our retail stores.”

Fischer said she has worked with AAA for more than a year, and she’s excited about introducing AAA’s stand-alone office concept in Kansas.