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November 3, 2018
James E. Hohmann
Chief Executive Officer
Vericity, Inc.
8700 W. Bryn Mawr Avenue
Suite 900S
Chicago, Illinois 60631
Re: Vericity, Inc.
Draft Registration Statement on Form S-1
Submitted October 5, 2018
CIK No. 0001575434
Dear Mr. Hohmann:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Form DRS S-1 dated October 5, 2018
Cover Page
1. Please revise the third sentence of the fifth paragraph to clearly state
that the sale of the
minimum number of shares is guaranteed.
2. Please clearly disclose here and elsewhere as appropriate, including in
the chart on page 6,
the anticipated ownership of Apex Holdco, L.P. following completion of
the offering and
conversion, including the intent of Apex to obtain a majority interest,
to the extent
James E. Hohmann
FirstName LastNameJames E. Hohmann
Vericity, Inc.
Comapany 3, 2018
November NameVericity, Inc.
November 3, 2018 Page 2
Page 2
FirstName LastName
accurate. Please also disclose the minimum ownership percentage of the
directors and
officers based on their intended purchases.
Prospectus Summary, page 1
3. Please include a materially complete description of the business of
Apex Holdco L.P. and
J.C. Flowers & Co. LLC, including their dates of formation, operating
history, controlling
members or management, and current business operations. Please also
add a discussion of
the control position held by Apex Holdco L.P following completion of
the offering and
the conversion, including the expected percentage of stock ownership,
board
designees, and the ability to control corporate actions of the
company.
Risk Factors
Legal and regulatory investigations and actions are increasingly common...,
page 16
4. Please disclose the minimum level of statutory capital you must
maintain as required by
the Illinois Department of Insurance.
A significant decline in Fidelity Life's risk-based capital..., page 24
5. Please file the reserve financial agreement with Hannover Re as an
exhibit to the
registration statement. Please also disclose the reserve credit under
the agreement as of
the most recent practicable date.
A challenge to the Illinois Department of Insurance's approval ..., page 26
6. We note that your plan is the first of its kind in Illinois, and
therefore may be challenged.
Please revise your risk factor to explain the particular structure of
the plan that makes it
the first of its kind, including the reason the validity of this
structure could be challenged.
If we are unable to realize the anticipated benefits of being a public
reporting company..., page
30
7. We note that if you are able and determine to deregister your common
stock under the
Exchange Act in the future, it would enable you to save significant
expenses. Please tell
us if you have any current intent to deregister or delist your shares,
and, if so, the
timeframe under which you plan to do so.
Market for the Common Stock , page 33
8. Please disclose whether approval to listi on NASDAQ is a condition to
the offering. If
not, please revise to clarify the possibility that you will not obtain
a listing and provide a
relevant risk factor discussion.
Use of Proceeds, page 33
9. Please clearly disclose here and in the Summary that the Capital Needs
Assessment is a
James E. Hohmann
FirstName LastNameJames E. Hohmann
Vericity, Inc.
Comapany 3, 2018
November NameVericity, Inc.
November 3, 2018 Page 3
Page 3
FirstName LastName
requirement of the Standby Stock Purchase Agreement and that if as a
result of the
assessment, management determines that the amount of capital retained
exceeds the
reasonable current and near term projected capital requirements,
management shall
determine the amount of excess capital that may be available for
distribution and may
recommend the declaration of a special dividend to shareholders.
Please also disclose an
estimation of the amount of excess capital that may be available and
the potential amount
of a special dividend, if such a dividend were to be issued.
Unaudited Pro Forma Financial Information, page 38
10. Please revise the headers of the final columns of your Pro Forma
Condensed Balance
Sheet and Statement of Operations to be labeled as that of Vericity,
Inc., the registrant.
Clearly confirm in your disclosure on page 38 that the pro forma
presentations reflect all
adjustments associated with the demutualization transaction.
Business
Affinity Partners, page 73
11. We note that nearly all of your affinity business is derived from a
single affinity partner.
Please tell us whether you have entered into an agreement with this
partner, and, if so,
please file the agreement as an exhibit to the registration statement
and disclose the
material terms of the agreement. In the alternative, please tell us
why you believe you are
not required to file this agreement.
The Conversion and Offering
Maximum Purchase Limitations, page 101
12. Please clearly disclose the low end and high end of the individual
maximum purchase
limitations. Please also disclose the total number of shares that
would be issued by you if
each eligible member subscribed for their individual maximum amount.
Federal Income Tax Considerations, page 110
13. Please revise your disclosure in this section to state, if true, that
the disclosure is the
opinion of counsel. Ensure that counsel provides a firm opinion for
each material tax
consequence or explain why such an opinion cannot be given. If the
opinion is subject to
uncertainty, please have counsel provide an opinion that reflects the
degree of uncertainty
(e.g., "should" or "more likely than not") and explain why counsel
cannot give a "will"
opinion. For guidance, refer to Sections III.B.2 and III.C.4 of Staff
Legal Bulletin No. 19
(October 2011). Alternatively, please tell us why you believe a tax
opinion is not
required.
Management , page 114
14. Please revise your executives' biographies to clearly identify the
time periods associated
James E. Hohmann
FirstName LastNameJames E. Hohmann
Vericity, Inc.
Comapany 3, 2018
November NameVericity, Inc.
November 3, 2018 Page 4
Page 4
FirstName LastName
with their business experience over the past five years. Refer to Item
401(e) of Regulation
S-K for guidance.
Apex Holdco Equity Incentive Plan, page 121
15. Please tell us what exemption from registration under the Securities
Act you intend to rely
upon to issue Class B units of Apex Holdco L.P. and the facts
supporting your use of the
exemption. Please also add a risk factor discussing the potential
conflicts of interest
between investors in the offering and directors and employees that may
receive awards
under the equity incentive plan. Please file a copy of the equity
incentive plan as an
exhibit to the registration statement.
Forum for Adjudication of Disputes, page 126
16. We note that your forum selection provision identifies that a state or
federal court located
within the State of Delaware as the exclusive forum for certain
litigation, including any
"derivative action." Please disclose whether this provision applies to
actions arising under
the federal securities laws. Also ensure that the exclusive forum
provision in your
proposed organizational documents states this clearly. In this regard,
we note that Section
27 of the Exchange Act creates exclusive federal jurisdiction over all
suits brought to
enforce any duty or liability created by the Exchange Act or the rules
and regulations
thereunder. Please also include a risk factor noting the specific
types of actions subject to
the exclusive forum provision and that such provisions may limit a
shareholder s ability to
bring a claim in a judicial forum that it finds favorable for disputes
with directors, officers
or other employees, and may discourage lawsuits with respect to such
claims.
Consolidated Financial Statements, page F-3
17. We note that you have provided financial statements for Members Mutual
Holding
Company. Please tell us how you considered whether to present the
audited financial
statements of Vericity, Inc., the registrant, or at a minimum an
audited balance sheet to
comply with Rule 3-01(a) of Regulation S-X. If you believe that the
audited registrant
financial statements of the registrant may be omitted from your
filing, please explain your
reasoning to us.
Note 2--Investments
Mortgage Loans, page F-13
18. Revise to address the following regarding your mortgage loans:
Quantify the amount of loans that were past due 90 days or more as
of the balance
sheet dates presented pursuant to ASC 310-10-50-7.
Disclose your policy for placing loans on nonaccrual status pursuant
to ASC 310-10-
50-6.
James E. Hohmann
Vericity, Inc.
November 3, 2018
Page 5
Exhibits
19. Please file the Actuarial Contribution Principles and Methodology
memorandum and the
Actuarial Contribution Memorandum that are Exhibit B and Exhibit C,
respectively, to
Exhibit 2.1.
General
20. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
21. Please provide us proofs of all graphics, visual, or photographic
information you will
provide in the printed prospectus prior to its use, for example in a
preliminary prospectus.
Please note that we may have comments regarding this material.
You may contact Ibolya Ignat at 202-551-3636 or Kevin Vaughn at
202-551-3494 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Jeff Gabor at 202-551-2544 or Erin Jaskot at 202-551-3442 with any
other questions.
FirstName LastNameJames E. Hohmann Sincerely,
Comapany NameVericity, Inc.
Division of
Corporation Finance
November 3, 2018 Page 5 Office of
Healthcare & Insurance
FirstName LastName