felanders/preprocessed huggingface dataset:
also impact premiums and commissions attributed by accident year, generally mitigating, in part, the impact of loss development and that such impacts are recorded as part of the overall reserve evaluation.
The segment components of the increase in incurred losses and LAE in 2003 from 2002 were a 36.2% ($59.1 million) increase in the International operation, a 52.7% ($263.8 million) increase in the U.S. Reinsurance operation and a 50.7% ($175.0 million) increase in the U.S. Insurance operation. These increases were partially offset by a 0.9% ($2.5 million) decrease in the Specialty Underwriting operation. These fluctuations generally reflected the changes in premiums earned, changes in the current year loss expectation assumptions for business written (generally reflecting continued improvement in market conditions) and pricing and the net prior period reserve development discussed above. Incurred losses and LAE for each operation were also impacted by variability relating to changes in the level of premium volume and mix of business by class and type.
The Company is subject to credit risk with respect to its reinsurers because the transfer of risk to a reinsurer does not relieve it of its liability to the insured. In addition, reinsurers may be unwilling to pay the Company even though they are able to do so. The failure of one or more of the Company’s reinsurers to honor their obligations to it in a timely fashion would impact its cash flow and reduce its net income and could cause it to incur a significant loss.
Our self-insured dental membership decreased by approximately 2,500 members in 2016 as a result of a decrease in membership of existing employer groups in the last twelve months offset by the addition of new self-insured dental HMO and dental PPO employer groups in the Southwest Ohio and Northern Kentucky markets.
In 2014, we paid approximately $47,000 of our outstanding mortgage balance and repaid approximately $124,000 related to the capital lease that we executed in December 2013. During 2014, we sold approximately $330,000 of Class B and Class C Redeemable Common Shares. Also during 2014, we repurchased Redeemable Common Shares of $362,000 from provider shareholders. In addition, we paid dividends to our institutional preferred shareholders and our common shareholders totaling approximately $425,000 in 2014.
Deferred Acquisition Costs- Deferred acquisition costs are those incremental direct costs related to the successful acquisition of new and renewal business. These incremental direct costs are those that are essential to the contract transaction and would not have been incurred had the contract transaction not occurred. Such incremental direct costs include commissions, costs of contract issuance and underwriting, state premium taxes and other costs the Company incurs to successfully acquire new business or renew existing business. The Company defers policy acquisition costs and amortizes them over the estimated life of the contracts, which are short-duration in nature, in proportion to premiums earned. The Company capitalized deferred acquisition costs of approximately $5,877,000, $4,358,000, and $3,989,000, and amortized approximately $4,780,000, $4,396,000, and $4,129,000 of these capitalized costs for the years ended December 31, 2016, 2015, and 2014, respectively. The amortization of these costs are recorded in commission expenses and other acquisition costs included in the consolidated statements of comprehensive income.
The Company leases space in its building to unrelated parties under non-cancelable leases. Income recorded by the Company under non-cancelable leases amounted to approximately $52,000 for the year ended December 31, 2016, and approximately $62,000 for the years ended December 31, 2015 and 2014. Such amounts are recorded as other income in the accompanying consolidated statements of comprehensive income.
DEPRECIATION AND AMORTIZATION--Capital expenditures as well as depreciation and amortization are summarized in Note 14 to the consolidated financial statements.
INCOME TAXES--The Company's effective income tax rate, which includes a provision for state income and franchise taxes for non-insurance subsidiaries, was 45.0% for 1995, 41.2% for 1994 and 40.3% for 1993. The increases in effective rate were primarily attributable to the reduction in the deductibility of certain business expenses, as mandated by the Revenue Reconciliation Act of 1993, and increases in state income and franchise taxes which resulted from the Company's non-insurance subsidiaries' contribution to pretax profits. The increase in effective rate for 1994 was partially offset by the utilization of $1.8 million of capital loss carryforwards, for which the Company had previously established a valuation allowance, pursuant to Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Information regarding items included in the reconciliation of the effective rate with the federal statutory rate is contained in Note 10 to the consolidated financial statements.
In February 1992, the Financial Accounting Standards Board issued Statement No. 109, "Accounting for Income Taxes," which became effective for 1993. This statement prescribes the use of the liability method of accounting for income taxes, whereby deferred tax assets and liabilities are calculated at the balance sheet date using current tax laws and rates in effect. The cumulative effect of this change in accounting principal was recognized in the first quarter of 1993 in the form of a one-time benefit totaling $4.2 million.
As security for its obligations to the lenders under the credit agreement, the Company has pledged the capital stock of its direct wholly owned operating subsidiaries, First American Title Insurance Company, First American Trust Company and First American Real Estate Information Services, Inc., which, in the aggregate, represent substantially all of its assets.
Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." SFAS No. 109 provides that deferred tax assets and liabilities be recognized for temporary differences between the financial statement carrying amount and the tax basis of certain of the Company's assets and liabilities. In addition, SFAS No. 109 requires that deferred tax assets and liabilities be measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. The impact on deferred taxes of changes in tax rates and laws, if any, is reflected in the financial statements in the period of enactment. In some situations, SFAS No. 109 permits the recognition of expected benefits of utilizing net operating loss and tax credit carryforwards.
hindsight testing of prior loss estimates - the loss estimates on some product lines will vary from actual loss experience more than others.
Acquisition costs relating to disposed lines of business (group term life, group disability, group dental and group vision) consist primarily of compensation to sales representatives. These acquisition costs are front-end loaded; thus, they are deferred and amortized over the estimated terms of the underlying contracts.
Accident and Health Premiums. First year accident and health premiums earned by the Company in 1995, including long-term care and Medicare supplement, increased 36.3% to $36,769,835, compared to $26,967,973 in 1994.
On August 30, 1996, the Company acquired Health Insurance of Vermont. The resultant wholly-owned subsidiary of the Company was incorporated under the laws of the state of Vermont as ANIC. Pursuant to the merger, HIVT shareholders received stock consideration consisting of 472,644 shares of the Company's common stock and cash consideration of $2,200,380. Using the market value of the Company's common stock at the date of closing, the value of the shares of Company common stock issued on the merger was $10,870,817. As of December 31, 1996, ANIC had a total of 16,674 disability policies in-force and approximately $7,092,000 of in-force annualized premiums. For the four-month period ended December 31, 1996, ANIC generated premiums of $2,274,442 and net income of $299,354. The acquisition was accounted for as a purchase.
Mortgage loan with interest rate fixed for two years at 7.3% effective September 1996, which repriced from 6.6% in 1995. Although carrying a variable rate, the loan has an effective fixed rate due to an offsetting swap with the same institution. Current monthly payment of $20,103 based on a twelve year amortization schedule with a balloon payment due September 14, 1998; collateralized by property with depreciated cost of $2,630,429 and $2,700,968 as of December 31, 1996 and 1995, respectively. 1,951,176 2,060,069
Network America is party to a Reinsurance Agreement to cede 100% of certain whole life and deferred annuity policies to be issued by Network America to a third party insurer. These policies are intended for the funeral arrangement or "pre-need" market. Total reserve credits taken related to this agreement as of December 31, 1996 and 1995 were approximately $3,862,000 and $3,735,000, respectively. The third party reinsurer maintains securities at least equal to the statutory reserve credit in escrow with a bank. Effective January 1, 1996, this Agreement was modified, and as a result, no new business is reinsured under this facility.
Network America is party to a coinsurance agreement on a previously acquired block of long term care business whereby 66% is ceded to a third party. At December 31, 1996 and 1995, reserve credits taken related to this treaty were approximately $1,615,000 and $2,130,000, respectively.
The following is a brief year-to-date comparison of the Partnership's results of operations for the periods ended December 31, 2001, 2000, and 1999.
Partnership's net investment income for the twelve months ended December 31, 2001 was $12.4 million, a decrease of $1.2 million from the corresponding period in the prior year. This decrease was primarily due to the sale of an office property located in Morristown, NJ in the fourth quarter of 2000.
The three industrial properties owned by the Partnership experienced a net unrealized loss of approximately $0.9 million in 2000. The majority of the decrease for 2000 was attributable to the
estate partnerships for the period ended December 31, 1999 represents only three months of activity, while activity for the period ended December 31, 2000 represents a full year of activity.
Management also considers and evaluates performance by analyzing the non-GAAP measure operating income, and believes it is a useful metric for investors, potential investors, securities analysts and others because it isolates the “core” operating results of the Company before considering certain items that are either beyond the control of management (such as taxes, which are subject to timing, regulatory and rate changes depending on the timing of the associated revenues and expenses) or are not expected to regularly impact the Company’s operational results (such as any realized investment gains, which are not a part of the Company’s primary operations and are, to a limited extent, subject to discretion in terms of timing of realization).
Interest expense increased $0.1 million, or 9.3%, in 2016 as compared to 2015 due to an increase during the year in the London Interbank Offered Rate (“LIBOR”), as the interest rates on the Company’s outstanding junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) are directly related to LIBOR.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
The fair value of prepayments and deposits, fees drawn in excess of bank balance, accounts payable and accrued liabilities and balances due to related parties approximate the carrying amount of these financial instruments due to their short-term maturity.
During the period from August 1, 2019 to April 30, 2020, Apple ISports, Inc., a company owned by Copper Hill, advanced $30,408 to the Company to meet its working capital requirements. The advances were unsecured, interest free and due on demand.
No shares of preferred stock were issued or outstanding during the years ended April 30, 2020 and 2019.
As a result of the reverse stock split, the number of issued and outstanding shares of the Company’s common stock was reduced from 22,340,081 to 2,234,474. All share numbers in this Form 10-K have been retrospectively restated to reflect the impact of this reverse stock split.
During the year ended September 30, 1996, the demand for life insurance and mutual fund investments marketed by the Company to U.S. military personnel remained strong and total current sales continued to increase. Commission revenue for the year ended September 30, 1996 increased 7.6% to $116,632,069 from $108,443,810 recorded during the year ended September 30, 1995. This compares to a 7.9% increase from fiscal year 1994 to 1995. The percentage increase in commission revenue for fiscal year 1996 is the second lowest increase since fiscal year 1992. However, the largest increase in recent years has been 11.8%. After factoring in the recent low inflation rates, the increase in commission revenue of 7.6% is still very comparable to the past several years. These variances are attributable to IRA, Inc. and each of its subsidiaries. This overall increase in commission revenue is considered to be continuing a trend which has occurred over the past several years, and is expected to continue in the future due to the long term personal financial management philosophy espoused to clients, an effectively trained sales force and efficient marketing practices used by the Company's sales agents.
From its inception, the Company has exercised its option of purchasing the Company stock owned by agents and employees when their active association with the Companies ended. During the years ended September 30, 1996 and 1995 the Company redeemed 129,963 shares and 39,325 shares, respectively. The Company plans to continue to exercise this option so as to limit stock ownership to those actively involved in the business.
The consolidated financial statements include the accounts of IRA, Inc. and its wholly-owned subsidiaries, USPA, IRA Hawaii, IRA Wyoming, IRA Montana, IRA New York, IRA Nevada and IRA Alabama. All intercompany accounts and transactions have been eliminated.
At September 30, 1996, 1995 and 1994, the common stock of IRA, Inc. is as follows:
Loss before preferred securities' dividends and accretion and discontinued operations was $73.5 million for the year ended December 31, 1999, versus a loss of $1.4 million in 1998. The $72.1 million increase in loss in 1999 from 1998 was primarily the result of a $49.9 million valuation allowance recorded in 1999 against our deferred tax asset, a $7.6 million expense recorded in 1999 associated with the recognition of deferred debt acquisition costs and a $5.0 million accrual recorded in 1999 for litigation expenses associated with the FHC Litigation. See "Legal Proceedings". Furthermore, $10.3 million in interest expense was recorded in 1999 associated with the $110.0 million senior debt financing obtained in December 10, 1998, as compared to $0.6 million in 1998.
Pursuant to the terms of the Stock Purchase Agreement dated as of May 5, 1998 (the "Stock Purchase Agreement") among SNTL and IP Delaware, IP Bermuda and Cap Z (Cap Z subsequently assigned its rights and obligations thereunder to IP II) (collectively, the "Purchasers"), SNTL agreed to pay a commitment fee in the form of warrants to purchase an aggregate of 734,000 shares of our common stock at $16.75 per share to the Purchasers or their designees (or, in the case of Cap Z, assignee) and Zurich Centre Investments Limited ("ZCIL") or its designee as compensation, in the case of the Purchasers, for agreeing to purchase that number of shares necessary to bring the total proceeds of the Rights Offering, Employee Participation and the IP Stock Issuance to $200.0 million, and, in the case of ZCIL, for ZCIL's providing certain financing commitments to the Purchasers under the Stock Purchase Agreement. See "Certain Relationships and Related Transactions-Sale of Common Stock to the IP Partnerships and Limitations on Related Party Control of SNTL." In addition, SNTL paid to designees of the Purchasers fees totaling $3.9 million in consideration of their providing SNTL with the opportunity to undertake the acquisition of BIG, originating a portion of the financing for the acquisition of BIG and assisting in negotiating the terms of the acquisition of BIG.
Family Life and Investors Life lease their home offices at the Sedgwick James Building, 2101 Fourth Avenue, in Seattle, Washington. The lease currently covers approximately 7,776 rentable square feet of office space for a term expiring on October 31, 2003. The base rental is approximately $16,362 per month, which includes Family Life's proportionate share of the building's operating expenses, including utilities, property taxes, insurance, maintenance and management. Actual increases from those initial operating expenses during the lease term are passed on to Family Life on a proportionate basis.
Sources of cash for FIC's insurance subsidiaries consist of premium payments from policyholders and annuity holders, charges on policies and contracts, investment income, and proceeds from the sale of investment assets. These funds are applied primarily to provide for the payment of claims under insurance and annuity policies, payment of policy withdrawals, surrenders and loans, operating expenses, taxes, investments in portfolio securities, and shareholder dividends.
A primary liquidity consideration with respect to life insurance and annuity products is the risk of early policyholder and contractholder withdrawal. Deposit fund liabilities for universal life and annuity products as of December 31, 2001 were $556.1 million. Individual life insurance policies are less susceptible to withdrawal than are annuity contracts because policyholders may incur surrender charges and undergo a new underwriting process in order to obtain a new insurance policy. At December 31, 2001, the bulk of the liabilities for contractholder deposit funds on FIC's balance sheet, $416.1 million, were related to insurance products, as compared to only $140.0 million of annuity product liabilities.
Invested real estate at December 31, 2001 was $61.0 million. At December 31, 2000, FIC did not have any assets invested in real estate. The change is attributable to the consolidation of ILCO's financial results with FIC following the May 18th Merger. The real estate investment is primarily related to the development of the River Place Pointe project ("River Place Pointe") by Investors Life, a subsidiary of ILCO. In October 1998, Investors Life purchased River Place Pointe, two adjoining tracts of land located in Austin, Texas totaling 47.995 acres. The aggregate purchase price for these tracts was $8.1 million. Investors Life obtained a Site Development Permit for the tracts from the City of Austin allowing for the construction of seven office buildings totaling 600,000 square feet, with associated parking, drives and related improvements. Construction on the first section of the Project, which consists of four office buildings, an associated parking garage, and related infrastructure was completed during 2000 and 2001. Construction on the second section continued during the third and fourth quarter of 2001, including work on buildings six and seven. Completion of the entire project is expected by the end of 2002.
The Company and its subsidiaries rent office space at various locations. In connection with the AEGON Transaction, the Company will acquire AEGON's insurance center located in North Richland Hills, Texas.
Health Insurance. Operating income for the Health Insurance segment increased to $64.5 million in 1995 from $51.9 million in 1994, an increase of $12.6 million, or 24%. This increase was due primarily to a 14% increase in health premiums and a decrease in the combined health ratio to 91% in 1995 from 93% in 1994. Operating income increased $11.8 million for the Self-Employed Health Insurance Division and $0.8 million for the Student Health Insurance Division.
Corporate and Other. The operating loss for Corporate and Other was $6.5 million in 1994 compared to operating income of $4.0 million in 1993. The HealthCare Solutions and Credit Services Divisions did not have significant operations in 1993. The decrease was primarily due to losses on the sale of investments and partially offset by the increase in invested income not allocated to the other segments.
During October 1995, the Company acquired two companies related to the HealthCare Solutions Division. The acquisitions were funded with cash and the issuance of promissory notes to the former stockholders in the amount of $12.0 million due in January 1996. The promissory notes were non-interest bearing loans and were repaid in January 1996.
Our cost of the capital required to fund the acquisition or recapture.
Amortization of DAC was $1,456,000, $1,221,000 and $1,142,000 for the years ended December 31, 1997, 1996 and 1995, respectively. The increase in current year amortization expense resulted primarily from increased amortization of DAC as gross profits from business sold in recent years began to emerge. DAC of $18,309,000 at December 31, 1996 and additions to policy acquisition costs of $7,005,000 for business produced during the year ended December 31, 1997 are generally being amortized over the expected lives of the policies, a period of approximately 20 years, in a constant relationship to the present value of estimated future gross profits. Interest is being accreted at 7% during year one and 5% thereafter, the projected crediting rate on the policies. DAC is increased for the estimated effect of realizing unrealized investment losses and decreased for the estimated effect of realizing unrealized investment gains. The offset to these amounts is recorded directly to shareholders' equity, net of taxes. Future expected amortization of DAC for the next five years before the effect of net realized and unrealized gains and losses, based on DAC at December 31, 1997 and current assumptions, is as follows (in thousands):
OTHER OPERATING EXPENSES. Other operating expenses decreased $320,000 or 4% to $6,991,000 for 1997 from $7,311,000 for 1996. The decrease in other operating expenses resulted primarily from eliminating in 1997 the additional cost to convert the operations and expand the marketing effort in Dixie National Life incurred in 1996 and a reduction in international operating expenses due to the strengthening of the U.S. dollar.
RSUI leases approximately 115,000 square feet of office space in Atlanta, Georgia for its headquarters and approximately 34,000 square feet of office space in Sherman Oaks, California.
Other income. Other income decreased to $37.5 million in 1998 from $45.9 million in 1997, a decrease of $8.4 million or 18%. The decrease is attributed to the disposition of business units that were sold in 1998 which was partially offset by the $9.7 million gain on sale of assets of a business.
Special Risk Division. Operating income for the Special Risk Division decreased to $5.8 million for the year in 1998 from $8.0 million in 1997. Included in 1997 is a gain of $2.7 million from the sale of a discontinued Health Care Solutions company. Revenue for the Special Risk Division was $66.8 million in 1998 compared to $56.1 million in 1997, an increase of 19%. The major operations of this Division were acquired in the second and third quarter of 1997.
National Motor Club. Operating income for the National Motor Club was $5.1 million in 1998 compared to $2.0 million in 1997. The National Motor Club was acquired by the Company in the third quarter of 1997. Revenue for the twelve months ended December 31, 1998 was $27.3 million compared to $10.3 million for the five months ended December 31, 1997.
Investment income. Investment income increased to $78.0 million in 1997 from $63.4 million in 1996, an increase of $14.6 million, or 23%. The increase was due to an increase in invested assets and yield on invested assets. Invested assets increased to $1,060.9 million at December 31, 1997 from $1,032.4 million at December 31, 1996.
Other fee income. Other fee income increased to $70.3 million in 1997 from $46.9 million in 1996, an increase of $23.4 million or 50%. The increase related primarily from companies acquired in 1995 and administrative fees from the administrative operations acquired from AEGON on April 1, 1996.
The OCC imposes certain capital adequacy requirements on the Company's national credit card bank subsidiary. The capital adequacy is measured by the method prescribed by the OCC in its rules and regulations for maintaining capital adequacy. The Company has established a conservative capital policy which exceeds the requirements of the regulatory authorities. Dividends paid by the national credit card banks are also limited under agreements with the OCC.
RISKS OF YEAR 2000 NON-READINESS AND CONTINGENCY PLANS. The economy in general, and the insurance industry in particular, may be adversely affected by risks associated with the Year 2000. The Company's business, financial condition, and results of operations could be materially adversely affected if systems that it operates or licenses to third parties, or systems that are operated by other parties (e.g., utilities, telecommunications service providers, data providers, associates, credit card transaction processors) with which the Company's systems interface, are not Year 2000 Ready in time. There can be no assurance that these systems will
The Company reported a non-recurring write down of value of agency force of $0 and $8,297,000 in 1996 and 1995, respectively. The write down was directly related to the Company's change in distribution systems. The Company changed its focus from primarily a broker agency distribution system to a captive agent system. Business produced by the broker agency force in recent years did not meet Company expectations. With the change in focus of distribution systems, most of the broker agents were terminated. The termination of most of the agents involved in the broker agency force caused management to re-evaluate the value of the agency force carried on the balance sheet.
Interest expense of $89,000 and $59,000 was incurred in 1995 and 1994, respectively. The interest expense is directly attributable to the convertible debentures. The Debentures bear interest at a variable rate equal to one percentage point above the prime rate published in the Wall Street Journal from time to time.
Another factor that caused the increase in operating expenses is directly related to increased legal costs. During the third quarter of 1994, UG became aware that certain new insurance business was being solicited by certain agents and issued to individuals considered to be not insurable by Company standards. These policies had a face amount of $22,700,000 and represent 1/2 of 1% of the insurance in force of the Company. As of December 31, 1995, there remained approximately $5,738,000 of the original face amount which have not been settled. The Company will continue its efforts to repurchase as many of the policies as possible and
The Company receives funds from its insurance affiliates in the form of managementand cost sharing arrangements and through dividends. Annual dividends in excess of maximum amounts prescribed by state statutes ("extraordinary dividends") may not be paid without the prior approval of the insurance commissioner in which an insurance affiliate is domiciled.
As states in which the Company does business adopt the regulation or adopt a modified version of the regulation, the Company will be required to comply with this new regulation. The Company may need to modify existing products or sales methods.
The table below summarize the foregoing conversion of preferred stock and loans:
In 2018, subsequent to the change in control described above, we embarked upon our new business plan to become a leading, capital efficient, technology-enabled, services-oriented life and annuity fronting insurance company. Our objective is to leverage American Life, and our ancillary services business, to create and sell life and annuity products through third party independent marketing organizations using third-party reinsurance as the primary form of capital to support our growth and to bear the financial risk associated with out insurance products. Our targeted third party field marketing organizations offer products, infrastructure and other services to independent insurance agents across the United States. Although we may retain some business, we expect third-party reinsurers to ultimately assume substantially all of the insurance risk on our business through reinsurance agreements. In connection with these arrangements we will earn ceding fees from the reinsurers. We currently offer multi-year guaranteed annuity (“MYGA”) and fixed index annuity (“FIA”) through three independent marketing organizations.
in the fixed income security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default.
An increase in inflation could affect our business in several ways. During inflationary periods, the value of our fixed income investments falls which could increase realized and unrealized losses. Inflation also increases expenses for labor, potentially putting pressure on profitability if such increases cannot be passed through our product prices. Prolonged inflation could constrain overall economic activity, inhibit revenue growth and reduce the number of investment opportunities.
Incurred losses were $215.5 million (30.7 points) lower at $344.5 million in 2009 compared to $560.0 million in 2008, primarily as a result of the $172.5 million (25.2 points) decrease in catastrophe losses due to the absence of current year catastrophes in 2009. Attritional losses were $43.4 million (5.6 points) lower, primarily due to improved results on property business.
Set forth below is a summary of items increasing (decreasing) Wesco’s consolidated net income that are viewed by management as unrelated to the operations of the insurance, furniture rental and industrial segments. (Amounts are in thousands.)
Wesco’s effective consolidated income tax rate typically fluctuates somewhat from period to period based mainly on the relation of dividend income, which is substantially exempt from income taxes, to other pre-tax earnings or losses, including realized investment gains, which are fully taxable. The respective income tax provisions, expressed as percentages of income before income taxes, amounted to 32.2%, 34.8% and 35.4% in 2003, 2002 and 2001. (See Notes 1 and 7 to the accompanying consolidated financial statements for further information on income taxes.)
Consolidated Statement of Income--Years ended December 31, 1997, 1996 and 1995--page 54.
materially from forward-looking statements may depend on numerous foreseeable and unforeseeable developments. Some may be national in scope, such as general economic conditions, changes in tax law and changes in interest rates. Some may be related to the insurance industry generally, such as pricing competition, regulatory developments and industry consolidation. Others may relate to the Company specifically, such as credit, volatility and other risks associated with the Company's investment portfolio. The Company disclaims any obligation to update forward-looking information.
These Agreements usually require us to pay penalties for any time delay in filing the required registration statements, or in the registration statements becoming effective, beyond dates specified in the Agreement. These penalties are usually expressed as a fixed percentage, per month, of the original amount the Company received on issuance of the debt or preferred stock, common shares, options or warrants. The Company accounts for these penalties when it is probable that a penalty will be incurred. At December 31, 2009, the Company has no registration rights agreement requiring penalties to be recorded.
applicable to losses incurred up to the reporting date are established, with no allowance for the establishment of loss reserves to account for expected future loss events.
Bonus Accruals. Under the Company's bonus program, each employee’s target bonus consists of two components: a discretionary component based on a qualitative assessment of each employee’s performance and a quantitative component based on the return on deployed equity (‘‘RODE”) for each underwriting year relating to reinsurance operations. The qualitative portion of an employee’s annual bonus is accrued at each employee's target amount, which may differ significantly from the actual amount awarded. The quantitative portion of each employee’s annual bonus is accrued based on the expected RODE for each underwriting year and adjusted for changes in the expected RODE and actual investment return each quarter until all losses are settled and the underwriting year is declared closed. The quantitative bonus is calculated and paid in annual installments between two to five years from the end of the fiscal year in which the business was underwritten. Any further changes are incorporated into the following open underwriting year. The Compensation Committee of our Board of Directors approves all quantitative bonuses prior to being paid. The expected RODE calculation utilizes proprietary models which require significant estimation and judgment. Actual RODE may vary significantly from the expected RODE and any adjustments to the quantitative bonus estimates, which may be material, are recorded in the period in which they are determined.
Basic adjusted book value per share is a non-GAAP measure as it excludes the non-controlling interest in a joint venture from total equity. In addition, fully diluted adjusted book value per share is also a non-GAAP measure and represents basic adjusted book value per share combined with the impact from dilution of all in-the-money stock options and restricted stock units issued and outstanding as of any period end. We believe that long-term growth in fully diluted adjusted book value per share is the most relevant measure of our financial performance. In addition, fully diluted adjusted book value per share may be of benefit to our investors, shareholders and other interested parties to form a basis of comparison with other companies within the property and casualty reinsurance industry.
Life insurance benefit claims were abnormally high in 1997 at $13.5 million compared to $10.6 million in 1996 and $9.3 million in 1998. As previously described for domestic life insurance operations, mortality claims fluctuate from period to period. These deviations, which can at times be significant, are not uncommon in the life insurance industry.
The Company diversified its annuity products offered to customers by introducing an equity-indexed annuity in late 1997. This product is a flexible premium deferred annuity which combines the features associated with traditional fixed annuities, with the option to have interest rates that are linked in part to an equity index, the S&P 500 Composite Stock Price Index. This new annuity is a long-term contract designed as a planning vehicle for retirement security. Sales totaling $222 million in 1998 indicate that this product is attractive to customers, as it has guaranteed minimum interest rates, coupled with the potential for significantly higher returns based on an equity index component. Also, because the Company does not offer variable products or mutual funds, this new product provides a key equity-based alternative to the Company's existing fixed annuity products.
In June, 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. SFAS No. 133 defines several designations of derivatives based on the instrument's intended use and specifies the appropriate accounting treatment for changes in the fair value of the derivative based on its resulting designation. The statement is effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
The Company has reviewed Year 2000-related costs incurred to date and is monitoring potential future costs to complete its Year 2000 plan. Such costs are not expected to exceed $200,000. A significant amount of these costs have not and will not be incremental costs to the Company, as internal resources are primarily being used and will continue to be utilized and reallocated as needed. Also, for externally developed systems under licensing contracts, costs are primarily borne by the software developer. Costs already incurred as of December 31, 1998, related to the Year 2000 plan total approximately $150,000.
A quota share arrangement exists between X.L. and CIGNA based on pre agreed percentages by line of coverage for blended covers written through Risk Solutions. These percentages vary from 12.5% to 90%, but do not exceed X.L.'s normal capacity on individual lines of cover. X.L. may underwrite an account 100% without CIGNA participation.
On November 19, 1996 the Company established a $200 million revolving line of credit with Mellon Bank.
Both the Company's revolving credit facilities and letters of credit on behalf of VUA are collateralized by the Company's investment portfolio.
For the year ended March 31, 1995, the Company had a net loss of $2,999,823 or $.65 per share. For the year ended March 31, 1994, the Company had a net loss of $946,164 or $.20 per share. The increased net loss resulted primarily from the costs associated with the expansion of AutoLend which were only partially offset by the increase in revenues.
During the year ended March 31, 1996 the Company had a cash flow deficit from financing activities of $15,848,000 as compared with a cash flow deficit from financing activities of $1,970,000 for the year ended March 31, 1995 and a cash flow deficit of $717,828 for the year ended March 31, 1994. This increase in the cash flow deficit resulted from an increase in the early extinguishment of the Company's Debentures.
The Company regularly evaluates the assumptions used to establish these liabilities, as well as actual experience and adjusts GMDB and GMIB liabilities with a related charge or credit to earnings (“unlocking”), if actual experience or evidence suggests that the assumptions should be revised. For the years ended December 31, 2011, 2010 and 2009, the favorable (unfavorable) impact to pre-tax income related to GMDB and GMIB unlocking was ($2.4) million, $2.3 million and ($0.2) million, respectively.
Loss severity assumptions were determined by obtaining historical rates from broader market data and by adjusting those rates for vintage, specific pool performance, collateral type, mortgage insurance and estimated loan modifications. Prepayments were estimated by examining historical averages of prepayment activity on the underlying collateral. Once the entire pool is modeled, the results are closely analyzed by our asset specialists to determine whether or not our particular tranche or holding is at risk for not collecting all contractual cash flows taking into account the seniority and other terms of the tranches held. The Company impaired its particular tranche to the net present value of projected future cash flows where it would not be able to receive all contractual cash flows.
The costs associated with acquiring contract owner deposits (DAC) are amortized based on the estimated gross profits for a group of contracts, as noted in the Critical Accounting Policies section above. Insurance expenses and taxes reported in the Statements of Income are net of amounts deferred. In addition, the Company incurs expenses associated with the maintenance of in force contracts.
Reinsurance premiums ceded increased $0.3 million during 2010 as compared to 2009 principally due to refined calculations related to a system conversion. At December 31, 2010, the Company had recaptured the majority of its life reinsurance which had started in second quarter of 2008.
type of plan designs toward PPO/indemnity plan designs, which have higher premium rates than HMO plan designs, and HMO plan designs with higher benefit levels and higher premium rates. Substantially all of the Company's premium revenue was derived from dental benefit plans in 2000 and 1999. Premium revenue from vision benefit plans and other products was not material in 2000 or 1999.
If the entities to which the dental office leases have been assigned fail to make a significant amount of the lease payments, this could have a material adverse affect on the Company. See Note 8 to the accompanying consolidated financial statements for more information on other long-term liabilities, and see Note 10 for more information on operating lease commitments and contingent lease obligations.
The Company's operations are potentially impacted by inflation, which can affect premium rates, health care services expense, and selling, general and administrative expenses. The Company expects that its earnings will be positively impacted by inflation in premium rates, because premium rates for dental benefit plans in general have been increasing due to inflation in recent years. The Company expects that its earnings will be negatively impacted by inflation in health care costs, because fees charged by dentists and other dental providers have been increasing due to inflation in recent years. The impact of inflation on the Company's health care expenses is mitigated in the short-term by the fact that approximately 35% of total health care services expense consists of capitation (fixed) payments to providers. In addition, most of the Company's selling, general and administrative expenses are impacted by general inflation in the economy.
The combined loss and expense ratio for the Company's property and casualty insurance operations was 91.0% in 1997 compared to 98.7% in 1996 and 91.1% in 1995. The underwriting profit from these operations was $38.6 million in 1997, $5.5 million in 1996, and $38.2 million in 1995. The Company believes that its emphasis on rate adequacy, disciplined underwriting, catastrophe exposure
In 1989 and 1990, Foremost Life Insurance Company assumed credit life premiums under various reinsurance treaties. In the fourth quarter of 1990, the ceding companies were declared insolvent and placed into liquidation. In accordance with the sales document, in June of 1996 the amount reserved to cover these reinsurance treaties was transferred to an escrow account. On July 31, 1997, the Company and the Liquidator settled all outstanding reinsurance and legal issues regarding these treaties. The escrow account was closed with the Company recording an after tax gain of $110,000 which is included in discontinued operations.
In February 1994, the Company's Board of Directors approved a stock buy-back program on a pre split basis, of up to 1 million shares, which was raised to 2 million shares by subsequent Board approval of 500,000 share increments in March and December of 1996. In December 1997, the Board of Directors raised the program to 3 million shares by authorizing the repurchase of an additional 1 million shares. Since the inception of this buy-back program, the Company has repurchased 1,762,238 shares. During 1997, the Company repurchased 480,258 of its shares, of which 143,646 were repurchased from employees who exercised stock options during the year. After the adjustment for the three-for-one stock split in January 1998, the total shares available under the authorization for the repurchase program is 3,666,786 shares. The Company will continue to evaluate the purchase of its common stock from excess capital.
As required, the Company adopted and incorporated into its Consolidated Financial Statements for the year ended December 31, 1997, the following two Financial Accounting Standards Board ("FASB") Statements; Statement No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", and Statement No. 128, "Earnings Per Share." The adoption of these pronouncements did not have a significant impact on the Company's financial statements.
Financial Statements: Consolidated Balance Sheets at December 31, 1997 and 1996 24
To conform with statutory requirements, bonds and certificates of deposit in principal amounts totaling $12,925,000 were on deposit with various regulatory agencies at December 31, 1997.
The following is a summary of the Company's stock option transactions during 1997 and 1996:
Life Depl. Premium Reserve and Armuity Fund from 1901 Reserve for outstanding losses from 1901 ... Premiums, less cancellations Consideration for Annuities, less commissions Interest Interest, after deduction of interest on Life Dep'. account