felanders/preprocessed huggingface dataset:
At December 31, 2003, $110.9 million, or 65.2%, of the gross unrealized losses were on securities rated investment grade. In general, unrealized losses on investment grade securities reflect changes in interest rates or changes in credit spreads since the securities were acquired and are generally temporary. The Company's policy is to subject any security with a gross unrealized loss of greater than 20% to a comprehensive asset impairment process. Securities at any level of the SVO rating scale would be subject to such review should a drop in market valuation or any other event signal a potential problem.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150 requires certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity to be classified as liabilities. SFAS No. 150 was effective July 1, 2003 for the Company. The adoption of SFAS No. 150 did not have a material effect on the Company's financial position or results of operations.
In July 2002, the AICPA issued Statement of Position 03-1 ("SOP 03-1"), "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts." SOP 03-1 provides guidance on accounting and reporting by insurance enterprises for certain nontraditional long-duration contracts and for separate accounts. SOP 03-1 is effective for financial statements for fiscal years beginning after December 15, 2003. The Company is in the process of evaluating the provisions of SOP 03-1 and its impact on the Company's financial position or results of operations.
On April 2, 2003, the Company and its affiliate, Keyport, filed a Form D (Prior Notice of a Transaction) with the Division of Insurance, Department of Business Regulation of Rhode Island. On April 3, 2003, the Company and Keyport filed similar documents with the Delaware Department of Insurance. Both filings sought regulatory approval for a contemplated merger of Keyport with and into the Company.
Key economic assumptions used in measuring the retained interests at the dates of securitizations completed during the year ended December 31, 2002 were as follows:
The following table presents the carrying amounts and estimated fair values of the Company's financial instruments:
The Company has agreements with SLOC and several unrelated companies, which provide for reinsurance of portions of the net-amount-at-risk under certain individual variable universal life, bank owned life insurance ("BOLI"), and corporate owned life insurance ("COLI") policies. These amounts are reinsured on either a monthly renewable or a yearly renewable term basis.
Activity in the liability for unpaid claims and claims adjustment expenses related to the Company's group life, group disability and stop loss products is summarized below:
Pursuant to a lease dated August 10, 1998 and expiring on August 31, 2005, Health Card occupies approximately 1,500 square feet at 63 Manorhaven Boulevard, Port Washington, New York, which is used as a pharmacy. The landlord for these premises is 61 Manorhaven Boulevard, LLC, of which the Company's Chairman is the sole member. The monthly rent is $1,654 per month through August 31, 2002. The annual rent increases by 5% per year. Additional rent, in the form of certain expenses, is also payable.
On August 2, 1999, Health Card completed the sale of 1,600,000 shares of its common stock in an underwritten public offering (the "Public Offering"). Pursuant to the Public Offering, Health Card received net proceeds of approximately $9,538,037. Concurrently, the Bert E. Brodsky Revocable Trust (the "Brodsky Trust") sold 400,000 shares of common stock of Health Card in an underwritten offering. Of the proceeds received by the Brodsky Trust, it used approximately $1,992,900 to partly repay certain indebtedness owed by certain affiliates of the Brodsky Trust to Health Card.
Gross profit increased from $14.3 million for the fiscal year ended June 30, 2000 to $22.5 million for the fiscal year ended June 30, 2001; an $8.2 million, or 58%, increase. PAI and PMP accounted for $7.9 million, or 96%, of the increase. Gross profit as a percentage of revenue declined from 8.5% to 8.3% for the fiscal years ended June 30, 2000 and June 30, 2001, respectively. The decline is partially attributable to the impact of the one-time adjustment, described in the explanation for the $736,000 change in cost of claims above. The Company has also seen a decline in profit margins due to competitive pressures.
(3) During March 2001, we sold 6.9 million shares of our Common Stock in a public offering at a price of $23.35 per share. Most of the net proceeds of approximately $152.8 million was used to pay down our notes payable. The unaudited pro forma balance sheet data shows the effect of the transactions as if they had occurred December 31, 2000.
The following table sets forth certain premium revenue information for the three years ended December 31, 2000 (dollars in thousands):
acquisition. Interest expense will be down substantially in 2001 as a result of our reduced level of debt following our equity offering in March, 2001.
Our revenue increased 11% to $341.9 million in 1999, from $308.0 million in 1998. The revenue increase was principally a result of increases in non-risk bearing management fees and commission income. This growth is from new business and acquisitions.
Our net investment income increased 5% to $30.9 million in 1999 from $29.3 million in 1998, reflecting a slightly higher level of investment assets and increased interest rates earned on short-term investments.
Our net earnings in 1999 decreased to $25.1 million from $72.3 million in 1998, due to the provision for reinsurance, which equated to $28.3 million after income taxes, or $0.57 per diluted share, the higher net loss ratio and the restructuring expense, which, after income taxes, amounted to $0.07 per diluted share. Diluted earnings per share decreased to $0.51 per share from $1.48 per share during the same period.
The overall increase in underwriting activity by our insurance companies and the Centris acquisition in December, 1999 resulted in increases in gross loss reserves, life and annuity policy benefits and gross unearned premiums. Related amounts of reinsurance recoverables, ceded life and policy benefits and ceded unearned premium also increased.
implementation of the statements. Prior to the codification project, a comprehensive guide to statutory accounting principles did not exist. Codification is new and will evolve over time. The cumulative effect of codification is expected to increase statutory policyholders' surplus of our insurance company subsidiaries by approximately $6.0 million. We expect that the statutory surplus of our insurance company subsidiaries after adoption will continue to be in excess of their regulatory risk-based capital requirements.
The Company has experienced substantial growth in membership and revenues since it began operations in 1986. The membership and revenue growth has been accompanied by increases in the cost of providing health care in New York, New Jersey, Pennsylvania, Connecticut and New Hampshire. Since the Company provides services on a prepaid basis, with premium levels fixed for one-year periods, unexpected cost increases during the annual contract period cannot be passed on to employer groups or members.
Although the rate of inflation has remained relatively stable in recent years, health care costs have been rising at a higher rate than the consumer price index. The Company employs various means to reduce the negative effects of inflation. The Company has in prior years increased overall premium rates in order to maintain margins; nevertheless, these rate increases have tended to be below those of traditional indemnity health plans and comparable to competing health plans, thereby maintaining the Company's competitive position. The Company's cost control measures and risk-sharing arrangements with various health care providers also mitigate the effects of inflation on its operations. There is no assurance that the Company's efforts to reduce the impact of inflation will be successful or that the Company will be able to increase premiums to offset cost increases associated with providing health care.
Historical experience, judgmental factors, adherence to a strategy of targeting rate adequacy, continual monitoring of reserve levels, and paying claims in a prompt fashion have all contributed to a favorable development of loss reserves during the past several years. A historical perspective of the Registrant's loss reserve developments is included in Note 4 to the consolidated financial statements on pages 55 and 56, and is incorporated herein.
The Registrant utilized a combination of its revolving credit facility, a portion of the proceeds from the sale of investments, and funds generated by its subsidiaries operating activities to finance its capital management program. Funds provided by the Registrant's principal subsidiary, AVEMCO Insurance Company, were paid through dividends. Regulatory restrictions on such dividends are detailed in Note 10 of the Registrant's consolidated financial statements.
Incurred losses in 1996 were also affected by Hurricane Fran which struck the eastern portion of the United States in September. This storm resulted in an after-tax earnings reduction of $548,000 or $.07 per share. There were no significant weather-related losses in 1995.
Net investment income of $8.5 million was slightly above 1994's $8.2 million, principally due to an increase in average invested assets.
non-aviation lines of business were $18.9 million versus $11.4 million for 1993, principally due to increased claims on the lenders single interest and short- term health lines of business. Those increases are consistent with the premium growth in those businesses during the course of 1994.
Income tax expense decreased in 1994 to $2.7 million from $4.2 million in 1993, principally as a result of the decline in realized investment gains from 1993's level. Those 1993 gains were taxed at the full 34% tax rate.
Income taxes. The Company estimates its effective income tax rate based upon a variety of factors including, but not limited to, the expected revenues and resulting pretax income for the year, the composition and geographic mix of the pretax income and the ratio of permanent differences to pretax income. Any changes to the estimated rate are made prospectively in accordance with Accounting Principles Board Opinion No. 28, “Interim Financial Reporting.” Additionally, management makes estimates as to the amount of reserves, if any, that are necessary for known and potential tax exposures.
Overview-Substantially all of the revenues for the Company’s title insurance and services and mortgage information segments result from resales and refinancings of residential real estate and, to a lesser extent, from commercial transactions and the construction and sale of new housing. Over one-half of the revenues in the Company’s property information segment and in excess of 20% of the revenues from the Company’s risk mitigation and business solutions segment also depend on real estate activity. The remaining portion of the property information and risk mitigation and business solutions segments’ revenues, as well as the revenues of the Company’s specialty insurance segment are isolated from the volatility of real estate transactions. Traditionally, the greatest volume of real estate activity, particularly residential resale, has occurred in the spring and summer months. However, changes in interest rates, as well as other economic factors, can cause fluctuations in the traditional pattern of real estate activity.
Financial Services. The Company’s title insurance segment comprises over 95% of total salaries and other personnel costs for the Financial Services group. The title insurance segment (primarily direct operations) is labor intensive; accordingly, a major variable expense component is salaries and other personnel costs. This expense component is affected by two competing factors: the need to monitor personnel changes to match the level of corresponding or anticipated new orders, and the need to provide quality service. In addition, this segment’s growth in operations that specialize in builder and lender title business has created ongoing fixed costs required to service accounts.
The provision for property and casualty insurance claims, expressed as a percentage of property and casualty insurance operating revenues, was 52.0% in 2005, 68.4% in 2004, and 63.6% in 2003. The decrease in rate in 2005 from 2004 was primarily due to high claims experience in 2004 resulting mostly from $6.2 million of claims associated with the Florida hurricanes. The rate for 2003 excludes $5.0 million of catastrophe losses related to the Southern California wildfires, which represents the Company’s deductible on its reinsurance treaty.
For the three years ended December 31, 2005, 2004 and 2003, 0.05 million, 0.5 million and 0.3 million options, respectively, were excluded from the weighted-average diluted common shares outstanding due to their antidilutive effect.
Weighted average actuarial assumptions used to determine benefit obligations for the plans were as follows:
(4) Year-end data for 1998 includes General Re Corporation acquired by Berkshire on December 21, 1998.
(ii) AcSEC issued Statement of Position ("SOP") No. 98-7 "Deposit Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not Transfer Insurance Risk". SOP No. 98-7 provides guidance on accounting and disclosure for insurance and reinsurance contracts that do not transfer insurance risk. This SOP is effective for fiscal years beginning after June 15, 1999. Berkshire will adopt this pronouncement as of the beginning of 2000.
The following tables discloses the net fair value or carrying amount at December 31, 1999 and 1998 as well as the average fair value during 1999 for each class of derivative financial contract held or issued by GRFP.
Premiums written and earned by Berkshire's property/casualty and life/health insurance businesses during each of the three years ending December 31, 1999 are summarized below. Dollars are in millions.
Commission revenues increased by $27.8 million or 7% in 2000. This increase generated by the Insurance Brokerage Services segment is the result of new business and rate increases partially offset by lost business and a reduction in revenue from national insurance revenue sharing programs. Commission revenues increased by $21.2 million or 6% in 1999. This increase was the result of new business production partially offset by lost business.
Fixed assets are carried at cost in the accompanying consolidated balance sheets. Furniture and equipment with a cost of $104,210,000 and $106,468,000 at December 31, 2000 and 1999, respectively, are depreciated using the straight- line method over the estimated useful lives (three to ten years) of the assets. Leasehold improvements with a cost of $16,151,000 and $16,698,000 at December 31, 2000 and 1999, respectively, are amortized using the straight-line method over the shorter of the estimated useful lives of the assets or the lease terms. Gallagher periodically reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. If the fair value is less than the carrying amount of the asset, a loss would be recognized for the difference.
In 2000, Gallagher and one of its significant subsidiaries entered into an unsecured revolving credit agreement, which expires on September 10, 2003, with a group of five financial institutions. The credit agreement provides for short-term and long-term revolving credit commitments of $100,000,000 and $50,000,000, respectively. The facility provides for loans and letters of credit. Letters of credit are limited to $50,000,000 and are applied against the $50,000,000 long-term facility in the determination of net funds available for future borrowing. The credit agreement provides for borrowings to be denominated in either U.S. dollars or Alternative Currencies, as defined in the credit agreement. In addition, the credit agreement has two borrowing options, Domestic Rate Loans, as defined in the credit agreement, or Eurocurrency Loans. Interest rates on borrowings under the Domestic Rate Loan option are based on the prime commercial rate and interest rates on borrowings under the Eurocurrency Loan option are based on LIBOR plus .425% and LIBOR plus .400% for short-term and long-term revolving credit commitments, respectively. The facility fee related to this credit agreement is based on .075% and .100% of the used and unused portions of the short-term and long-term revolving credit commitments, respectively.
The table below summarizes certain information about Gallagher's capital stock at December 31, 2000 and 1999 (in thousands, except per share data):
A reconciliation of the provision for income taxes with the United States federal income tax rate is as follows (in thousands):
Claims Incurred. Our largest expense is medical claims incurred, or the cost of medical services we arrange for our members. Medical claims incurred include the payment of benefits and losses, mostly to physicians, hospitals, pharmacies, and other service providers, and to policyholders. We generally pay our providers on one of three forms: (1) fee-for-service contracts based on negotiated fee schedules; (2) capitation arrangements, generally on a fixed PMPM payment basis, whereby the provider generally assumes some of the medical expense risk; and (3) risk-sharing arrangements, whereby we advance a PMPM payment and share the risk of certain medical costs of our members with the provider based on actual experience as measured against pre-determined sharing ratios. Claims incurred also include claims incurred in our life insurance and property and casualty insurance businesses. Each segment’s results of operations depend to a significant extent on our ability to accurately predict and effectively manage claims and losses. A portion of the claims incurred for each period consists of claims reported but not paid during the period, as well as a management and actuarial estimate of claims incurred but not reported during the period.
Medical premiums generated by the Medicaid business increased by $176.0 million to $783.2 million, primarily as the result of the change in the Medicaid service model, from an ASO agreement to a fully-insured model effective April 1, 2015.
Cash flow from operating activities decreased by $222.6 million for the year ended December 31, 2016 as compared to the year ended December 31, 2015, principally as a result of higher claims paid by $257.4 million and an increase cash paid to suppliers and employees by $34.3 million, offset in part by an increase in premiums collections of $67.5 million. The increase in claims paid and premiums collected is principally the result of the change in the Medicaid delivery model from an ASO agreement to a fully insured model effective April 1, 2015.
On April 18, 2017, TSA entered into a $10.0 million revolving loan agreement with a commercial bank in Puerto Rico. This line of credit has an interest rate of 30-day LIBOR plus 25 basis points, matures on April 17, 2018, and includes certain financial and non-financial covenants that are customary for this type of facility. As of December 31, 2017, there were $2.0 million outstanding in this line of credit.
Assumes (decrease) increase in the claims trend factors for the most recent twelve months.
Non-investment-grade securities generally provide higher yields and involve greater risks than investment-grade securities because their issuers typically are more highly leveraged and more vulnerable to adverse economic conditions than investment-grade issuers. In addition, the trading market for these securities is usually more limited than for investment-grade securities. The Company had no material concentrations of non-investment-grade securities at September 30, 1997. The following table summarizes the Company's rated bonds by rating classification as of September 30, 1997.
Management is aware that prevailing market interest rates may shift significantly and has strategies in place to manage either an increase or decrease in prevailing rates. In a rising interest rate environment, the Company's average cost of funds would increase over time as it prices its new
The increase in the combined ratio in 2000 compared to 1999 resulted from the increase in prior years' reserves and other provisions described above. Additionally, 1999 only includes the U.S. reinsurance and primary insurance operations of Chartwell Re Corporation subsequent to October 27, 1999. Any prior year loss development on this business was covered by an adverse loss development reinsurance agreement purchased by Chartwell Re Corporation prior to October 27, 1999.
A 100 basis point increase in market interest rates would have resulted in an estimated pre-tax loss in the fair value of these instruments of $31.1 million and $43.4 million at year end 2000 and 1999, respectively. Similarly, a 100 basis point decrease in market interest rates would have resulted in an estimated pre-tax gain in the fair value of these instruments of $28.2 million and $46.8 million at year end 2000 and 1999, respectively.
See the Consolidated Financial Statements and Notes thereto and the Schedules on pages through F- 26 and S-1 through S-6 included in Part IV, Item 14.
McM ant its subsidiaries lease home office properties in various locations. The major locations are set forth in the following table:
Management's discussion is incorporated by reference from the Annual Report to Shareholders for the year ended December 31, 1997. See pages 37 through 45 of this report.
13,000 hits (visits) per day during the year ended December 31, 2001. The acquisition of Forever Network was accounted for in a manner that is similar to a pooling-of-interests.
Our income before income taxes increased approximately $2.0 million in the year ended December 31, 2001 compared to 2000. The operating loss as a percentage of revenues improved from a loss of 26.8% in 2000 to income of 4.4% in 2001. This was due to increased revenues and operating cost containment.
Insurance revenues decreased approximately $13.2 million, or 23.1%, in the year ended December 31, 2000 compared to 1999. The decrease was attributable to realized losses on investments of $2.8 million, a shift in the types of insurance products sold and our reinsurance of significant blocks of our life insurance policies.
Of the $163.9 million increase in property reinsurance gross written premiums in 2005, 43.3% related to reinstatement premiums receivable as a result of the 2005 hurricane losses (up $56.3 million over 2004). New business written by our then recently formed team at Aspen Re America contributed $27.5 million of the increase and the property component of a proportional reinsurance of a participant in a Lloyd’s syndicate contributed a further $50.5 million.
• the issuance of preference shares raising net proceeds of $225.4 million;
• an accelerated share repurchase for a fixed dollar amount of $44.0 million in December 2006.
Sources of information. Claims information received typically includes the loss date, details of the claim, the recommended reserve and reports from the loss adjusters dealing with the claim. In respect of pro rata treaties we receive regular statements (bordereaux) which provide paid and outstanding claims information, often with large losses separately identified. Following widely reported loss events such as natural catastrophes and aeroplane crashes we adopt a proactive approach to establish our likely exposure to claims by reviewing policy listings and contacting brokers and policyholders as appropriate.
Actuarial range of gross reserves. The following table sets out the actuarial range of gross reserves for each of our segments and compares it to management’s selected best estimate as at December 31, 2006.
Uncertainties. While the reported reserves make a reasonable provision for unpaid loss and loss adjustment expense obligations, we note that the process of estimating required reserves does, by its very nature, involve uncertainty and therefore the ultimate claims may fall outside the actuarial range. The level of uncertainty can be influenced by such factors as the existence of coverage with long duration reporting patterns and changes in claims handling practices, as well as the other factors described above.
Total expenses in 2005 increased by 16.4% compared to 2004, largely as a result of increases in gross premiums earned in this segment. The expense ratio increased slightly in 2005 by 2.8 percentage points. The rate of increase in expenses was consistent with the rate of increase in gross premiums earned which was 15.8% in 2005.
Reserves by segment. The following presents our loss reserves by business segment as at December 31, 2006 and 2005:
Specialty Insurance and Reinsurance. As at December 31, 2004 the specialty segment held net claims reserves of $157.9 million, partly derived through the Wellington quota share arrangements. These have developed better than anticipated resulting in a release of $7.2 million. A better than expected development from the 2004 windstorms saw a favorable development of $1.3 million, while a significantly lower than anticipated development of IBNR claims, particularly in the specialty reinsurance lines led to a favorable development of $18.9 million.
Since 1996, the Company has focused its acquisition activities on expanding its insurance agency and services operations for three principal reasons. Firstly, is an attempt to increase the management fee and commission income revenue component of the Company's total revenue, which management believes to be a more predictable and more stable source of revenue than the potential underwriting gain from insurance company operations. Secondly, is an effort to insulate the Company from a decline in its net earnings growth rate as insurance premium rates become more competitive in the lines of business in which the Company specializes in and the Company becomes more selective in its underwriting approach, resulting in reduced written premium. Thirdly, is to provide a future source of premium revenue to the Company's insurance company subsidiaries.
Interest expense during 1997 increased 20% to $6.0 million from $5.0 million during 1996 due to the increased level of indebtedness primarily to fund the cash portion of acquisitions.
Loss and LAE increased $9.1 million in 1996, to $114.5 million, reflecting the overall increase in business. During 1996, the Company had net loss and LAE redundancy of $4.9 million relating to prior year losses compared to a redundancy of $2.8 million in 1995. During 1996, the Company had gross loss and LAE deficiency of $42.5 million compared to a deficiency of $15.9 million in 1995. The gross deficiency comes from two primary sources. Firstly, the development of several large claims on individual policies which were either reported late or reserves were increased as subsequent information became available, however, as most of these policies were substantially reinsured, there is no material effect to the
Income tax expense remained unchanged at $9.9 million in 1996, compared to 1995 despite higher pretax income in 1996. This was a result of a deferred tax benefit of $9.6 million which was recorded in connection with the compensatory stock grant to certain LDG employees. The compensation expense was a non-cash item; however, $9.6 million of actual cash tax savings will be recognized beginning from the grant date. Also, as an S corporation, LDG was exempt from Federal income taxes through May 21, 1996. Had LDG been subject to Federal income taxes for both years, additional income tax expense of $2.3 million and $722,000 would have been recorded during the years ended December 31, 1996 and 1995, respectively.
The Company underwrites risks which are denominated in a number of foreign currencies. It establishes and maintains loss reserves with respect to these policies in their respective currencies. These reserves are subject to exchange rate fluctuations which can have an effect on the Company's net earnings. The Company's principal area of exposure is with respect to fluctuation in the exchange rate between the major European currencies and the United States Dollar. For the years ended December 31, 1997, 1996 and 1995, the loss from currency conversion was $884,000, $181,000 and $209,000, respectively.
The intergenerational gap threatens the balance of pay-as-you-go schemes. Today, CNP Assurances offers a range of pension solutions that meet the needs of all companies, from the individual entrepreneur to very large international customers. But that is not enough. There is an urgent need to innovate. CNP Assurances is contributing to the debate with those involved in pensions and the public authorities, in both France and Europe, to secure a regulatory framework that is more appropriate to long-term commitments, and to speed up the implementation of new solutions. It was for this ambition to become a reality that CNP Assurances, together with AG2R La Mondiale, formed a new leading player in additional pension cover.
Speeding up the energy transition €3OO MILLION IN BONDS OF COMPANIES OPERATING IN THE CARBON ENERGY SECTOR, SOLD IN 2O15 1604340_CNP_RA_GB_2015.indd 28 13/05/2016 14:57
In 2015, CNP Assurances entered the league table of the top 50 institutional investors in private equity funds worldwide(1).
Frédéric Lavenir. First of all, I would like to thank them very much for their questions, which certainly refl ect the challenges that we face today. Our sector, like all the others, is entering into an era of usages, this is a compelling movement. All the staff at CNP Assurances know this. We are gaining ground, at risk, and undergoing change. We are currently living in this state of alertness, creativity and mobility so that we can seize the new opportunities offered by the new economy. It’s so exciting! We have the chance to be a major fi nancial group and, at the same time, to be a business of human size, agile and responsive. These are major advantages against a background of rapid changes that are diffi cult to predict.
Jean-Paul Faugère. These discussions clearly illustrate the way in which CNP Assurances is determined to respond to the needs of its customers, in all their diversity. The rules of the game are changing, and fast! I would like to thank those participating in these conversations for having highlighted the great capacity for adaptation and innovation of the staff, in collaboration with all our partners so as to always be working for our insured.
J.-P. F. The contemporary world poses risks to people. Our role is to prevent, to protect and also facilitate our customers’ lives. This is an exciting challenge from a technical standpoint and also from the point of view of general interest: what an attractive mission, to contribute to warding off the elements of insecurity that weigh on people’s lives, and on their creative dynamism! The services offered by CNP Assurances contribute to a form of collective utility. Our staff can be proud of carrying this attractive responsibility together.
Marie Grison Group Chief Risk Offi cer 1604340_CNP_RA_GB_2015.indd 48 13/05/2016 14:57
Net premium income in Latin America (€921 million) was affected by the fall in the exchange rate (–4.1%; +12.6% at constant scope and exchange rates).
by geographical areaby segment * Personal risk and protection, health, term credit and property and casualty insurance.
4. MORTGAGE LOANS: The Company invests in commercial first mortgage loans throughout the United States. The Company monitors the condition of the mortgage loans in its portfolio. In those cases where mortgages have been restructured, appropriate provisions have been made. In those cases where, in management's judgement, the mortgage loans' values are impaired, appropriate losses are recorded.
11. STATUTORY INVESTMENT VALUATION RESERVES: The asset valuation reserve (AVR) provides a reserve for losses from investments in bonds, stocks, mortgage loans, real-estate and other invested assets with related increases or decreases being recorded directly to surplus.
Traditionally, it has been the Company's policy not to invest in high yield or "junk" bonds. In 1995, the Company adopted a policy to place a small proportion of its investments in the taxable sector in bonds rated lower than investment grade, but not lower than Ba by Moody's or BB by Standard & Poor's. At December 31, 1995 bond holdings rated below investment grade totaled $16.4 million at market (cost $16.0 million), or 1.8% of total investments. All but $2.7 million of such holdings were downgraded to their current ratings subsequent to purchase. The average rating of the $652 million bond portfolio (at amortized cost) was A, while the average effective maturity, giving effect to anticipated early call, approximates 7.2 years. The modified duration of the bond portfolio at year-end was 5.8 years, reflecting the heavy weighting of high coupon issues, including housing issues subject to sinking funds and other issues which are pre-refunded or are expected to be called prior to their maturities. Duration measures the length of time it takes to receive all the cash flows produced by a bond, including reinvestment of interest. Because it measures four factors
The amortized cost and estimated market values of investments in fixed maturities available for sale as of December 31, 1995 are as follows:
Traditionally, it has been the Company's policy not to invest in high yield or non-investment grade bonds. In 1995, the Company adopted a policy allowing a small percentage of its investments to be placed in bonds rated lower than investment grade, but not lower than Ba by Moody's or BB by Standard & Poor's. At December 31, 1995 bond holdings rated below investment grade totaled approximately 1.7% of total investments. All but $2.7 million of such holdings were downgraded subsequent to purchase. The average Standard and Poor's rating of the bond portfolio is A.
These historic results are not necessarily indicative of results for any future period. You should read the following selected financial data in conjunction with our consolidated financial statements and related notes thereto contained in Item 8 - ‘‘Financial Statements and Supplementary Data’’ and
The following is a discussion and analysis of our results of operations for the years ended December 31, 2007, 2006 and 2005 and financial condition as of December 31, 2007. The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes, which appear elsewhere in this filing.
For the year ended December 31, 2007, the increase in premiums written for frequency business compared to 2006 was due to the fact that no frequency contracts were written until the third quarter of 2006 while a number of frequency contracts were entered into throughout 2007. Similarly, premiums written for severity business in 2007 reflect a full year of underwriting whereas the 2006 comparative results reflect premiums written from April 2006 (commencement of our underwriting operations) to December 31, 2006.
The loss ratio is calculated by dividing loss and loss adjustment expenses incurred by net premiums earned. For the year ended December 31, 2007, our frequency business reported a loss ratio of 47.9%, compared to 19.9% reported by our severity business. Favorable loss experience due to benign natural peril loss experience during the year allowed our severity business to report a lower loss ratio. However, we expect that the loss ratio will be volatile for our severity business and may exceed that of our frequency business in certain periods.
Net investment income decreased to $19.0 million in 2000 from $19.8 million in 1999. The decrease resulted from a slight decrease in average invested assets from 1999 to 2000. Average invested assets at cost decreased from $294.7 million at the end of 1999 to $283.8 million at the end of 2000. Investment gains and losses are realized in the normal investment process in response to market opportunities.
The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. Application of the nonamortization provisions of the Statements is expected to result in an increase in net income of approximately $2.7 million per year. The Company will perform the first of the required impairment tests of goodwill and intangible assets deemed to have indefinite lives in 2002, effective as of January 1, 2002, by comparing the fair value of the Company's reporting units to their carrying amounts (book value), including goodwill. In determining the fair value of the Company's reporting units, management will consider valuation techniques such as the quoted market price of the Company's stock, the present value of future cash flows and market comparison of similar assets and liabilities.
At December 31, 2001, the Company's book value per share was $16.30 and was significantly higher than the $12.45 quoted market price per share. The Company has not yet determined what the effect of these tests will be on the earnings and financial position of the Company. If management determines that the quoted market price per share is the appropriate measure of the Company's fair value, the resulting impairment would be greater than 50% of the amount of goodwill and other intangibles on the Company's December 31, 2001 balance sheet. If it is determined that an impairment exists as of January 1, 2002, the charge would be reported as the cumulative effect of a change in accounting principle in the Company's consolidated financial statements and would have no impact on cash flows or the statutory-basis capital and surplus of the Company's insurance subsidiaries.
o The Company's ability to maintain attractive preferred provider networks for its insureds.
Effective January 1, 2001, the National Association of Insurance Commissioners revised the Accounting Practices and Procedures Manual in a process referred to as Codification. Codification has changed certain prescribed statutory accounting practices resulting in changes to the accounting practices that the insurance subsidiaries of the Company use to prepare their statutory-basis financial statements. The impact of Codification to the Company's insurance subsidiaries' statutory-basis capital and surplus was not material.
Selected quarterly financial data for the years ended December 31, 2001 and 2000 are as follows:
We experienced a net decrease of $3.8 million in our cash and cash equivalents during 2018 and a net increase of $1.3 million during 2017.
International and utilized by the Manager. The exposure of each cedant potentially affected by the event is analyzed on the basis of this output. As the amount of information received from cedants increases during the period following an event, so does our reliance on this information.
The following table reflects net realized investment gains (losses) for the years ended December 31:
The Company’s total investments represented 84% and 85% of the Company’s total assets as of December 31, 2019 and 2018, respectively. Fixed maturities consistently represented a substantial portion, 49% and 48%, respectively, of the total investments during 2019 and 2018. The overall investment mix, as a percentage of total investments, remained fairly consistent when comparing the respective investments held as of December 31, 2019 and 2018.
The Company held below investment grade investments with an estimated market value of $1,031,570 and $2,618,594 as of December 31, 2019 and December 31, 2018, respectively. The investments are all classified as “All other corporate bonds”.
The insurance industry has experienced a number of civil jury verdicts which have been returned against life and health insurers in the jurisdictions in which the Company does business involving the insurers' sales practices, alleged agent misconduct, failure to properly supervise agents, and other matters. Some of the lawsuits have resulted in the award of substantial judgments against the insurer, including material amounts of punitive damages. In some states, juries have substantial discretion in awarding punitive damages in these circumstances. In the normal course of business, the Company is involved from time to time in various legal actions and other state and federal proceedings. Management is of the opinion that the ultimate disposition of the matters will not have a materially adverse effect on the Company’s results of operations or financial position.
The following table reflects UG’s statutory basis net income and capital and surplus (shareholders’ equity) as of December 31:
On February 20, 2003, UG purchased $4 million of a trust preferred security offering issued by First Southern Bancorp, Inc. (“FSBI”). The security has a mandatory redemption after 30 years with a call provision after 5 years. The security pays a quarterly dividend at a fixed rate of 6.515%. The Company received dividends of $198,297 and $283,151 during 2019 and 2018, respectively. On March 30, 2009, UG purchased $1 million of FSBI common stock. The sale and transfer of this security is restricted by the provisions of a stock restriction and buy-sell agreement. During 2019, the Company received a preferred pay down of $558,000 leaving a cost basis of $3,002,000.
INCOME BEFORE INCOME TAXES decreased to $8,637,000 in 1998 compared to $13,763,000 in 1997. The decrease resulted primarily from less favorable development on loss liabilities estimated in prior years and added expenses from operating two non-insurance companies newly formed at the beginning of 1998.
The anticipated completion dates for Year 2000 compliance and the Company's contingency plans and the cost estimates for the completion of Year 2000 modifications are based on management's best estimates utilizing current data regarding available resources, coordination with third parties and other relevant factors and information about systems conversion. No assurances, however, can be given that these estimates will be achieved and actual results may differ from those anticipated.
We have audited the accompanying consolidated balance sheets of Midwest Medical Insurance Holding Company and Subsidiaries as of December 31, 1998 and 1997, and the related consolidated statements of income, changes in other shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1998. Our audits also included the financial statement schedules listed in the index at Item 14(a). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
Interest expense for the year ended December 31, 2001 increased $1.6 million to $12.1 million from $10.5 million in 2000. This increase resulted from increased interest rates that increased from prime plus 1.0% (10.50%) on January 1, 2001 to prime plus 6.0% (10.75%) at December 31, 2001. In addition, we incurred significant bank charges that are included in interest expense associated with amendments to the credit facility during 2001 and the Forbearance Agreement, as amended.
The existence of these registration rights may have a depressing effect upon the price of our common stock and may restrict the ability of investors in our common stock to sell their shares.
Delaware law and provisions of our Certificate of Incorporation could make it more difficult for a third party to acquire, or discourage a third party from attempting to acquire, control of PlanVista. Our Certificate of Incorporation allows us to issue preferred stock with rights senior to those of the common stock without any further vote or action by the common stockholders. In addition, we are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which could have the effect of delaying or preventing a change in control of PlanVista. These provisions could deprive stockholders of an opportunity to receive a premium for their common stock as part of a sale of PlanVista or may otherwise discourage a potential acquiror from attempting to obtain control of PlanVista. This could have a material adverse effect on the market price of its common stock. The board of directors may in the future issue shares of preferred stock or rights to acquire preferred shares to implement a stockholder rights plan. A stockholder rights plan creates financial impediments that discourage persons seeking to gain control of a company by means of a merger, tender offer, proxy contest or otherwise if the board of directors determines that a change in control is not in the best interests of stockholders.
The assumed rate of return on invested cash and desired spreads during the period that insurance policies or annuity contracts are in force also affects pricing of products and currently includes an assumption of a specified rate of return and/or spread on our investments for each year that such insurance or annuity product is in force.
The Company derives a predominant portion of its total revenues from investment income. The Company manages most of its investments internally. All investments made on behalf of the Company are governed by the Statement of Investment Policy established and approved by the Finance and Investment Committee and the Board of Directors of the Insurance Company and the Company and by qualitative and quantitative limits prescribed by applicable insurance laws and regulations. The Finance and Investment Committee meets regularly to set and review investment policy and to approve current investment plans. The actions of the Finance and Investment Committees are subject to review and approval by the Board of Directors of the Insurance Company and the Company. The Company's Statement of Investment Policy must comply with NYSID regulations and the regulations of other applicable regulatory bodies.
The Company's investment philosophy generally focuses on purchasing investment grade securities with the intention of holding such securities to maturity. However, as market opportunities, liquidity or regulatory considerations may dictate, securities may be sold prior to maturity. The Company has categorized all fixed maturity securities as available for sale and carries such investments at market value.
Universal life and investment type policy fee income totaled $2.1 million, $2.2 million and $2.7 million in fiscal years 2010, 2009 and 2008, respectively. Policy fee income consists principally of amounts assessed during the period against policyholders' account balances for mortality charges and surrender charges.
The following information summarizes the components of the unrealized investment gains (losses):
The market value of our fixed maturity portfolio changes as interest rates change. In general, rate decreases cause asset prices to rise, while rate increases cause asset prices to fall. Based on market values and prevailing interest rates as of December 31, 2010, a hypothetical instantaneous increase in interest rates of 100 basis points would produce a loss in fair value of our fixed maturity assets of approximately $186.5 million. Conversely, a hypothetical instantaneous decrease in interest rates of 100 basis points would produce a gain in fair value of our fixed maturity assets of approximately $200.5 million.