Tower Loan of Mississippi, Inc. - Page 4

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          disability of the debtor, depending on the type of policy.  Prior           
          to the formation of AFLIC, petitioner employed licensed insurance           
          agents who sold insurance policies underwritten by outside                  
          insurance companies.  Petitioner was not and never has been                 
          licensed under Mississippi law as an insurance agent; it has                
          always employed licensed agents who sold the insurance.  Some               
          portion of the premiums from these sales was remitted to                    
          petitioner as commissions.                                                  
               After the formation of AFLIC, petitioner offered only AFLIC            
          credit insurance to its customers.  Petitioner required all of              
          its branch managers to acquire a license to sell the insurance.             
          If a customer chose to purchase insurance, then the premiums were           
          added to the amount of the loan.  Petitioner would then remit the           
          entire premium amount to AFLIC.  AFLIC would not pay the licensed           
          branch managers or petitioner commissions or other compensation             
          for selling AFLIC insurance.  Petitioner, however, would pay                
          bonuses to its licensed branch managers based on the amount of              
          insurance each manager sold.                                                
               AFLIC sells credit insurance to debtors of other creditors             
          besides petitioner through agents who are not employees of                  
          petitioner.  AFLIC pays these other agents sales commissions,               
          usually between 45 and 65 percent of the premium.                           
               AFLIC has no employees or offices.  It does not advertise.             
          It pays another company to do its tax returns, compute its                  
          reserves, and do its actuarial work.                                        

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Last modified: May 25, 2011