While management considers a wide range of factors in its strategic planning, the overriding consideration is underwriting profitability. Management's assessment of trends in healthcare and in the medical stop-loss market play a significant role in determining whether to expand Independence American's health insurance premiums. In addition, management focuses on controlling operating costs. By sharing employees with IHC and sharing resources among our subsidiaries, we strive to maximize our earnings.
Management believes that the Company's methods of estimating the liabilities for policy benefits and claims provided appropriate levels of reserves at December 31, 2015. Changes in the Company's reserve estimates are recorded through a charge or credit to its earnings.
Fee and Agency Income. Fee and agency income increased $3,045,000 from 2014 to 2015. Excluding income related to GAF, totaling $3,324,000, total fee and agency income decreased $279,000. Risk Solutions fee income-administration increased $4,158,000 to $15,813,000 for 2015, compared to $11,655,000 for 2014 primarily due to an increase in the volume of premiums produced. Risk Solutions fee income-profit commission decreased $649,000 to $619,000 for 2015, compared to $1,268,000 for 2014 due to an increase in loss ratios, offset by an increase in the volume of premiums produced. Profit commissions for a given year are based primarily on the performance of business written during portions of the three preceding years. Therefore, profit commissions for 2015 are based on business written during portions of 2012, 2013 and 2014. In 2015, agency income consisted of commission income and other fees of $1,803,000, $2,111,000 and $3,324,000 from IPA Family, IPAD and GAF, respectively, and revenue of $1,235,000 and $6,058,000 from HIO and Specialty Benefits, respectively. In 2014, agency income consisted of commission income and other fees of $1,874,000 and $1,067,000 from IPA Family and IPAD, respectively, and revenue of $5,181,000 and $6,873,000 from HIO and Specialty Benefits, respectively. The decrease in revenue for HIO is primarily due to decreased lead generation income at HIO due to changes brought about by the ACA, although such decrease in income is substantially offset by a decrease in expenses below.
Other Income. Other income increased $810,000 from 2014 to 2015 primarily due to the recognition of a net gain of $503,000 relating to the acquisition of GAF and an increase in income from the Company’s equity investment in Majestic.
Net Income attributable to American Independence Corp. The net income attributable to the Company decreased to $3,529,000, or $.44 per share, diluted, for 2015, compared to $5,250,000, or $.65 per share, diluted, for 2014.
At December 31, 2015 and 2014, the Company had $21,735,000 and $18,881,000 of restricted cash, respectively. These amounts are directly offset by corresponding liabilities for Premium and Claim Funds Payable. The amount decreased $2,854,000 due to the timing of paid claims during the year. This asset, in part, represents the premium that is remitted by the insureds and is collected by Risk Solutions on behalf of the insurance carriers they represent. Each month the premium is remitted to the insurance carriers by Risk Solutions. Until such remittance is made the collected premium is carried as an asset on the balance sheet with a corresponding payable to each insurance carrier. In addition to the premium being held at Risk Solutions, Risk Solutions is in possession of cash to pay claims. The cash is deposited by each insurance carrier into a bank
The Company had receivables from reinsurers of $4,950,000 at December 31, 2015. All of the business ceded to such reinsurers is of short-duration. All of such receivables are either due from related parties, highly rated companies or are adequately secured. No allowance for doubtful accounts was deemed necessary at December 31, 2015.