felanders/preprocessed huggingface dataset:
Life insurance companies typically reinsure a portion of the death benefit on individual lives. Reinsurance is a method of transferring risk to another life insurance company to guard against an adverse effect on capital. In return for assuming this risk, a premium is charged by the reinsurance company. FAIC has a reinsurance agreement for its primary product with Businessmen's Assurance Company of Kansas City, Missouri. Under the terms of the agreement, FAIC is not required to make first year premium payments. However, Generally Accepted Accounting Principles require the amount of premium not paid in the first year to be recorded as a liability and amortized over the duration of the associated policies. Reinsurance premiums totaled $469,002, $89,240 and $58,279 for 1999, 1998 and 1997, respectively. These reinsurance premiums are a direct reduction of premium income. Credit insurance is 100% reinsured. The reinsurance premiums related to credit insurance were $368,727 in 1999.
During 1999 and 1997, death claims, net of reinsurance ceded, were $122,135 and $24,848 respectively. FAIC did not incur any death claims in 1998. Annuity premiums received are recorded as liabilities rather than income pursuant to Statement of Financial Accounting Standard 97 "Accounting and Reporting by Insurance enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments". Interest is paid on these annuity premium accumulations. As policies renew, the annuity fund balance increases which also increases the base on which interest is earned by the policyholder. Interest is credited to the fund balance. The growth in the annuity fund balance accounts for the increase in interest expense between years. Interest expense was $200,107, $111,171 and $58,642 for 1999, 1998 and 1997, respectively.
In May 1996, the Company resolved a litigation matter with an agreement for the mutual dismissal of all related claims and counterclaims as well as the Company's recovery of certain defense costs, with interest. As a result, the Company recorded a $9.4 million pre-tax gain for this recovery during the second quarter of 1996. Additionally, in February 1997, the Company determined it was necessary to increase its estimate of anticipated liability for the costs associated with a verdict in another litigation matter and as of December 31, 1996, recorded an additional $6.0 million for the costs in this matter.
improvements and office furniture, fixtures and equipment and costs relating to the internal development of software systems.
In connection with the termination of the AmHealth Acquisition Agreement entered into by the Company with AmHealth, Inc. ("AmHealth") on May 10, 1996 and terminated on July 24, 1996, the Company incurred a one-time charge to earnings of $0.9 million for the write-off of transaction costs related to the proposed AmHealth acquisition. Additionally, in connection with the proposed acquisition, the Company made a $1.0 million loan to AmHealth (the "AmHealth Loan"). Because there is substantial doubt about AmHealth's ability to repay the AmHealth Loan, the Company wrote-off the AmHealth Loan during the year ended December 31, 1996 resulting in an additional non-recurring charge to earnings of $1.0 million.
A comprehensive analysis of the results of operations of the Company would not be meaningful without consideration of the charge in lieu of taxes. The provision for income taxes, as reported in the historical financial statements, does not provide for any income taxes on certain subsidiaries of the Company prior to the combination on October 2, 1995. Prior to the combination on October 2, 1995, the Retail Partnerships and the Retail Brokerage Companies were either limited partnerships or S Corporations under the Internal Revenue Code, and therefore, the individual partners or shareholders, rather than the companies were liable for income taxes. Accordingly, the Company has presented a calculation of pro forma net income for the year ended December 31, 1995, which reflects a charge in lieu of income taxes, as if all subsidiaries were included in the Company's consolidated Federal income tax return for all years presented (see Note 2 of the consolidated financial statements of the Company). Management believes this presentation will better present current and future comparisons of the effective tax rate and income tax expense of the Company.
Loss before income taxes increased by $489,000 to $1,195,000 in 1996 from $706,000 in 1995. The benefit of decreased salaries and related taxes and fringes was offset by lower revenues as discussed below.
The Company leases approximately 255,000 square feet of office space throughout the United States ("U.S.") and the United Kingdom ("U.K."). The Company's major leasehold obligation relates to its corporate office located in Deerfield, Illinois. The Deerfield, Illinois office space consists of 120,000 square feet. The lease is for a term of fifteen years beginning July 1, 1991. The Company has the right to terminate this lease in the tenth and eleventh years of the lease under certain circumstances. Terms of the lease include an expansion option in July 1997 for 20,000 square feet. In 2001, the Company has the option of renting an additional 52,000 square feet. The Company's principal regional and subsidiary offices are in Atlanta, Georgia; San Francisco and San Diego, California; Independence, Missouri; and Washington, D.C.
Selected Consolidated Financial Data on page 13 of the MMI Companies, Inc. 1996 Annual Report to Stockholders is incorporated herein by reference.
OTHER EXPENSE decreased $26,000 primarily due to accruals related to AHO and a loss on the rollover financing of the Company's IBM AS/400 during 1999. These expenses were non-recurring.
For 2018, we anticipate Global Housing net income, excluding reportable catastrophes, to be down before taking into account recently enacted tax reform. Further declines in lender-placed insurance are expected as the housing market continues to improve. We expect declines to be partially offset by continued growth in multi-family housing and improved performance in mortgage solutions. Additional savings from ongoing expense management efforts are expected to be realized towards the end of 2018 and into 2019. Net operating income is expected to increase after reflecting a lower effective tax rate of approximately 20%, with a portion of the tax savings to be reinvested for future growth. Revenue expected to approximate 2017 levels as declines in lender-placed are offset by growth in multi-family housing and mortgage solutions.
Many of the factors affecting reserve uncertainty are not directly quantifiable and not all future events can be anticipated when reserves are established. Reserve estimates are refined as experience develops. Adjustments to reserves, both positive and negative, are reflected in the consolidated statement of operations in the period in which such estimates are determined.
If the actual level of loss frequency and severity are higher or lower than expected, the ultimate reserves required will be different than management’s estimate. The effect of higher and lower levels of loss frequency and severity levels on our ultimate costs for claims occurring in 2017 would be as follows:
Global Preneed includes pre-funded funeral life insurance and annuity contracts and legacy traditional life insurance (no longer offered). The reserve assumptions for future policy benefits and expenses are determined based upon pricing, which approximates actual experience.
(7) During 2008, we recorded a $84,864 tax benefit due to the sale of a non-operating subsidiary and the related deferred tax assets on a capital loss carryover.
Credit spreads represent the credit risk premiums required by market participants for a given credit quality, e.g. the additional yield that a debt instrument issued by a AA-rated entity must produce over a risk-free alternative (e.g., U.S. Treasury instruments). Changes in credit spreads have an inverse relationship to the value of investments. See Note 3 to the Financial Statements for the impact of changes in credit spreads on the value of investments.
At December 31, 2003, Merrill Lynch Life’s assets were $14.6 billion, or $1.5 billion higher than the $13.1 billion in assets at December 31, 2002 primarily due to a increase in separate accounts assets. Separate accounts assets increased $1.7 billion (or 18%) to $10.7 billion. Changes in separate accounts assets during each quarter of 2003 were as follows:
Policy charge revenue decreased $10.1 million (or 4%) to $228.9 million during 2003 as compared to $239.0 million in 2002. During 2003, asset-based policy charge revenue decreased $5.4 million (or 4%). The decrease in asset-based policy charge revenue is attributable to lower average variable account balances. During the same comparative period, average variable account balances decreased $429.1 million (or 4%). In addition, non-asset based policy charge revenue decreased $4.7 million (or 5%) during 2003 as compared to 2002 primarily due to a decrease in cost of insurance charges on variable life insurance contracts. The decrease in cost of insurance charges is primarily due to the decrease in life insurance inforce.
Financial position on 31 December, 1900. CAPITAL fully subscribed (25 0/o paid-up) Frs. 8,000,000. RESERVE FUND ... , 1,000,000. SPECIAL RESERVE ... , 500,000.
Shareholders House Property Mortgages Government securities and Bonds Loans on securities Deposits bearing interest Cash in Bank Cash in Hand
The year 1921 was one of the most unpropitious which we have experienced in insurance. If, in spite of these adverse influences, we are able to show satisfactory re­ sults, we owe this to the careful policy which we have followed in the past.
The primary investment objective of the Company's general account is to maximize after-tax returns consistent with acceptable risk parameters (including the management of the interest rate sensitivity of invested assets relative to that of policyholder obligations) as discussed in the Capital Markets Risk Management section under "Market Risk - Interest Rate Risk".
Hartford Life Insurance Company's general and guaranteed separate account exposure to market risk relates to the market price and/or cash flow variability associated with changes in market interest rates. The following discussion focuses on the Company's exposure to interest rate risk, asset/liability management strategies utilized to manage this risk, and characteristics of the Company's insurance liabilities and their sensitivity to movements in interest rates.
For liabilities whose cash flows are not substantially affected by changes in interest rates (fixed liabilities) and where investment experience is substantially absorbed by the Company, the sensitivity of the net economic value (discounted present value of asset cash flows less the discounted present value of liability cash flows) of those portfolios to 100 basis point shifts in interest rates is shown in the table below. These fixed liabilities represented approximately 60% and 55% of the Company's general and guaranteed separate account liabilities at December 31, 2000 and 1999, respectively. The remaining liabilities generally allow the Company significant flexibility to adjust credited rates to reflect actual investment experience and thereby pass through a substantial portion of actual investment experience to the policyholder. The fixed liability portfolios are managed and monitored relative to defined objectives and
Deposits bearing interest . . Cash in Bank ... „ 641,872 44 i Cash in hand . . . . 17,254.28 51,779,197 77 Due by other Companies .... .... • • t . 4,777,051 95 Due for Premium Reserve, Life Dept-, in hand of ceding Offices . . . . . 9,680,373 59 Accrued interest . 550,128 50
As stated above under LOSS OF SIGNIFICANT CUSTOMERS, the revenue from PHS will be reduced in 2004 as a result of the termination of this contract. UMC will receive placements from PHS through March 31, 2004. Management expects revenues from PHS to ramp down rapidly through the second quarter of 2004. During the first quarter of 2004 UMC has executed two new accounts receivable management services contracts that will generate revenue in 2004. Assuming that there are no other significant changes in
During 2003, the Company applied and was approved for two $100,000 unsecured lines of credit, with two different banks. The first line was approved July 17, 2003, and carries an annual interest rate of prime plus 6 3/4 %. The Company drew $50,000 from this line in November of 2003, and repaid the full amount in December 2003. There was no outstanding balance on this line at December 31, 2003. The second line of credit was approved July 30, 2003 and bears interest at an annual rate of prime minus 1% for the first six months, and prime plus 2% thereafter. The Company drew $100,000 from this line in September of 2003. The outstanding balance on this line was $96,000 at December 31, 2003.
We had revenue of $ 311,789 for the current fiscal year ended June 30, 2014, of which $134,731 was from commissions due to sales of insurance products, including mortgage life insurance and funeral expense insurance, and $177,058 from the sales of leads during the current fiscal year ended June 30, 2014.
Our primary business is title insurance and settlement-related services. We close transactions and issue title policies on homes, commercial properties and other real property located in all 50 states, the District of Columbia and a number of international markets through more than 8,500 policy-issuing offices and agencies. We also provide post-closing lender services, mortgage default management services, automated county clerk land records, property ownership mapping, geographic information systems, property information reports, flood certificates, document preparation, background checks and expertise in tax-deferred exchanges. Our current levels of international operations are immaterial with respect to our consolidated financial results.
These two categories of expenses are discussed below in terms of year-to-year monetary changes.
Income before minority interest and income taxes decreased in 1996 by $1,631,000 to $7,051,000 from $8,682,000 in 1995. This decrease was the result of reduced investment income and the increase in the combined ratio in 1996 to 78.9% from 69.9% in 1995 partially offset by an increase in net premiums earned, as discussed above.
The purpose of this section is to discuss and analyze the Company's consolidated results of operations, financial condition and liquidity and capital resources. This analysis should be read in conjunction with the consolidated financial statements and related notes, which appear elsewhere in this report. The Company reports financial results on a consolidated basis. The consolidated financial statements include the accounts of FCC and its subsidiaries at December 31, 1999.
The Company has three principal needs for cash - the insurance companies' contractual obligations to policyholders, the payment of operating expenses and the servicing of its long-term debt. Cash and cash equivalents as a percentage of total assets were 6% and 8% as of December 31, 1999 and 1998, respectively. Fixed maturities as a percentage of total invested assets were 80% and 82% as of December 31, 1999 and 1998, respectively.
Mortgage loans on real estate -- at unpaid balances, adjusted for amortization of premium or discount, less allowance for possible losses.
The following summary sets forth selected financial data with respect to AIIG for the five fiscal years ended December 31, 1996. The balance sheet and income statement data have been derived from AIIG's consolidated financial statements, which have been audited by Johnson Lambert & Co. (1994-1996) and Altschuler, Melvoin and Glasser (1992-1993), AIIG's independent auditors. The data set forth below should be read in conjunction with the audited financial statements and notes thereto included elsewhere herein.
Incorporated herein by reference from pages 14 through 38 of the 1997 Annual Report to Shareholders.
For other investment products and universal life insurance products, DAC is set each quarter to reflect revised best estimate assumptions, including the use of a reversion to the mean methodology over the next three years as it relates to net separate account performance. Any resulting DAC unlocking adjustments are reflected currently in the consolidated financial statements.
The Company sells its products through a diverse distribution network. Unaffiliated entities that sell the Company’s products to their own customer base include independent broker/dealers, wirehouse and regional firms, financial institutions, pension plan administrators and life insurance specialists. Representatives of affiliates who market products directly to a customer base include Nationwide Retirement Solutions and Nationwide Provident agents. The Company also distributes retirement savings products through the agency distribution force of its ultimate parent company, NMIC.
Other operating expenses in 2002 increased 1%, compared to a 6% decrease in 2001. The increase in 2002 reflects the growth in the number of cases being administered and an increase in employee benefit costs. The decrease in 2001 reflects the Company’s commitment to aggressively manage expenses in response to declining revenues and lower sales as a result of declining and volatile equity markets and a slowing economy throughout the year.
Pursuant to a cost sharing agreement among NMIC and certain of its direct and indirect subsidiaries, including the Company, NMIC provides certain operational and administrative services, such as investment management, advertising, personnel and general management services, to those subsidiaries. Expenses covered by such agreement are subject to allocation among NMIC and such subsidiaries. Measures used to allocate expenses among companies include individual employee estimates of time spent, special cost studies, salary expense, commission expense and other methods agreed to by the participating companies that are within industry guidelines and practices. In addition, Nationwide Services Company, a subsidiary of NMIC, provides computer, telephone, mail, employee benefits administration, and other services to NMIC and certain of its direct and indirect subsidiaries, including the Company, based on specified rates for units of service consumed. For the years ended December 31, 2002, 2001 and 2000, the Company made payments to NMIC and Nationwide Services Company, LLC totaling $135.6 million, $139.8 million and $150.3 million, respectively. The Company does not believe that expenses recognized under these agreements are materially different than expenses that would have been recognized had the Company operated on a stand-alone basis.
The provision for federal income taxes was a current tax expense of approximately $10,000 for the year ended December 31, 1994, which was derived from alternative minimum tax calculations resulting from the use of tax loss carryforwards.
Medical premiums earned in the Reform business increased by $8.0 million, or 2.4%, to $348.1 million during the year ended December 31, 2009. This fluctuation is due to an increase in premium rates, effective July 1, 2008, of approximately 10%, offset in part by a lower member months enrollment in the Reform’s fully-insured membership by 85,573, or 2.1% and premium adjustments of approximately $8.3 million to provide for unresolved reconciling items with the government of Puerto Rico.
Claims incurred during the year ended December 31, 2009 increased by $5.2 million, or 12.4%, to $47.3 million. The loss ratio increased by 4.3 percentage points, to 49.2% during the year ended December 31, 2009, primarily due to an unfavorable loss experience in the Commercial Multi-peril, Dwelling and Property Mono-line, and Personal Auto insurance.
We repaid upon its maturity on August 1, 2007 the outstanding balance of $10.5 million of one of our secured term loans.
Directors & Officers Liability Insurance. In late 2001, the Insurance Companies began to write D&O, and professional liability insurance. The coverage being offered is primarily D&O for privately held and publicly traded corporations.
Net Income/(Loss). The Company had net income/(loss) of $3.7 million in 2001, $7.0 million in 2000 and ($3.7) million in 1999. The decrease in net income from 2000 to 2001 was primarily due to the losses resulting from the September 11, 2001 terrorist attack on the World Trade Center. The loss in 1999 was primarily due to unrecoverable reinsurance, price competition, higher loss ratios in the Lloyd's Operations and expenses related to the expansion in London.
New insurance written was $2.2 billion in 1996 compared to $1.6 billion in 1995, an increase of 36.4%. New insurance written was $557 million in the fourth quarter of 1996 compared to $479 million in the same period of 1995. The increase in new insurance written in 1996 is the result of the continued penetration of Triad's products in the marketplace coupled with a favorable interest rate environment for much of 1996, which caused both refinance and home buying activities to remain strong for the year. Refinance activity accounted for 16.9% of new insurance written in 1996 compared to 9.3% for 1995.
In the fourth quarter of 1996, Triad introduced a new product in which a certificate of insurance is issued based on a borrower's credit score. Under this new product, if a borrower has a predetermined minimum credit score, Triad will issue a certificate of insurance without the usual underwriting process. Management expects the percentage of commitments processed through the Company's delegated underwriting program to decrease slightly in 1997 as a result of this new product.
The mortgage loan portfolio at December 31, 1997, which aggregated $70.7 million, consisted of residential mortgages of $2.2 million and commercial mortgages of $68.5 million (with no concentration in any particular industry), all of which were first mortgages on properties. There were no non-performing mortgage loans in the portfolio at December 31, 1997.
The effective federal income tax rates on earnings before income taxes (amounts in thousands) were lower than the maximum statutory rates as follows:
The increase in interest expense is related to interest on the Subordinated debentures issued in 2006 and the outstanding Note payable. See “Capital Transaction - 2006 Subordinated Debentures.”
As of December 31, 2006, the Company believes it is more likely than not that the amount of the deferred tax asset recorded will ultimately be recovered. However, should circumstances cause this belief to change, the tax provision would increase in the period in which determination that recovery is not likely occurred. As of December 31, 2006, the net deferred tax asset before valuation allowance was $25,862,000 and the valuation allowance was $15,516,000.
Ultimate liability may be greater or lower than current reserves. Reserves are monitored by the Company using new information on reported claims and a variety of statistical techniques. The Company does not discount to present value that portion of its claim reserves expected to be paid in future periods.
Deferred tax assets are evaluated and a valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. The Company has recorded a substantial gross deferred tax asset related to the expected realization of net operating loss carryforwards for federal income tax purposes. Due to the uncertainty of utilization of the Company’s net operating losses and in consideration of other factors, management recorded a full valuation allowance on the gross deferred tax asset in 2001.
Fixed income investment funds are generally invested in securities with short-term and intermediate-term maturities with an objective of optimizing total return while allowing flexibility to react to changes in market conditions. At December 31, 1996, the average life of AFG's bonds and redeemable preferred stocks was just over 6 years.
Investments in mortgage-backed securities ("MBSs") represented approximately one-fourth of AFG's bonds and redeemable preferred stocks at December 31, 1996. AFG invests primarily in MBSs which have a reduced risk of prepayment. Interest only (I/Os), principal only (P/Os) and other "high risk" MBSs represented approximately two percent of AFG's total mortgage-backed securities portfolio. In addition, the majority of MBSs held by AFG were purchased at a discount. Management believes that the structure and discounted nature of the MBSs will minimize the effect of prepayments on earnings over the anticipated life of the MBS portfolio. More than 90% of AFG's MBSs are rated "AAA" with substantially all being of investment grade quality. The majority are collateralized by GNMA, FNMA and FHLMC single-family residential pass-through certificates. The market in which these securities trade is highly liquid. Aside from interest rate risk, AFG does not believe a material risk (relative to earnings or liquidity) is inherent in holding such investments.
Results for 1996 include $203 million in pretax gains primarily on the sales of Citicasters and Buckeye, reduced by a charge of $80 million resulting from a decision to strengthen insurance reserves relating to asbestos and other environmental matters ("A&E").
NSA Group The NSA Group has implemented premium rate increases in various states over the last three years. The higher rate levels along with competitive pressures in the nonstandard automobile insurance industry resulted in an 11% decline in net written premiums in 1996 and adversely impacted premium growth during 1995. These rate increases contributed to an improvement, however, in the combined ratio for 1996. The increase in the combined ratio for 1995 was due primarily to inadequate rate levels in certain markets and weather- related losses (principally from hailstorms in Texas) which more than offset a reduction in underwriting expenses due largely to cost control measures.
On January 26, 2006, the Service officially closed the audit of the Company’s and its subsidiaries’ federal income tax returns for the 1997 to 2001 periods. As a result of certain favorable resolutions, our consolidated statement of operations for the year ended December 31, 2005 included an income tax benefit of $33 million, reflecting a reduction in our liability for income taxes. The statute of limitations has closed for these tax years; however, there were tax attributes in the closed years which were utilized in subsequent tax years for which the statute of limitations remains open.
Elsewhere, Gallagher generally operates in leased premises as well. Certain of Gallagher’s office space leases have options permitting renewals for additional periods. In addition to minimum fixed rentals, a number of leases contain annual escalation clauses generally related to increases in an inflation index. See Note 17 to the Consolidated Financial Statements of Gallagher’s 2007 Financial Statements, which is incorporated herein by reference, for information with respect to Gallagher’s lease commitments at December 31, 2007.
(4) Based on the number of employees at year end related to continuing operations.
ProAssurance has available approximately $55 million in Federal tax loss carryforwards. These carryforwards begin to expire in the year 2018. Approximately $44 million of the carryforwards relate to the consolidation with Professionals Group. As such, the amount which can be utilized by ProAssurance in any one year is limited to approximately $12.5 million.
The level of short-term investments at the end of 1996 was $91.6 million, as compared to $86.0 million at the end of 1995.
Net premiums earned in the surety bond program decreased 29% in both 1995 and 1996 and increased 11% in 1997 compared to the prior years. NAICO and Midwest Indemnity Corporation ("Midwest"), the underwriting manager for a large portion of the surety bond program agreed to terminate the underwriting and production contract effective December 31, 1995. Midwest produced $1.0 million and $251,000 in gross written and assumed premiums in 1996 and 1997, respectively, during the runoff of that portion of the program. Midwest produced $8.2 million in gross written and assumed premiums in 1995. Direct surety premiums written for NAICO by L&W personnel were $4.8 million in 1995, $8.0 million in 1996 and $9.6 million in 1997. The increase is primarily a result of expansion in New Mexico and California.
Net investment income decreased in 1996 compared to 1995 primarily as a result of a reduction in invested assets and a decrease in net realized capital gains. Invested assets declined primarily as a result of the payment of loss and loss adjustment expense reserves corresponding to the planned reduction of certain insurance programs within the Company's book of insurance business during 1991 through 1994. Net investment income increased 9% in 1997 compared to the prior year primarily as a result of an increase in net realized capital gains.
In 1997, NAICO provided $5.1 million in cash from operations and Chandler Barbados used $2.9 million cash in operations. To augment maturities and reposition their portfolios, Chandler Barbados and NAICO chose to liquidate certain fixed maturity securities that were available for sale prior to their maturities.
In addition, NAICO sold the common stock of Century Business Services, Inc. (formerly International Alliance Services, Inc.) for a total of $2,459,000. The Century Business Services common stock was received as a part of its 1996 settlement with Midwest. The Company realized net capital gains before income taxes in 1997 in the amount of $764,000 from the sale of investments. In 1997, Chandler Barbados and NAICO received proceeds of $3.5 million and $18.7 million, respectively, from the sale of fixed-income securities that were available for sale prior to their maturity. The average maturity of the Company's investments was 4.81 years and 4.59 years at December 31, 1996 and 1997, respectively.
Surety and Marine Dep^. Premium Reserve . Frs. 17,809,803.— . Reserve for outstanding Losses .... „ 16,126,304. — Reserve for extraordinary Losses ... „ 6,000,000.— onnomnn ot/jyoojiUi. — LIFE Department
The total operating expense, including rent expense, for all office space we occupied in 2006 was $22.4 million. This amount was reduced by allocations to the Property and Casualty Group of $14.3 million for claims operations. This net amount after allocations is reflected in our cost of management operations.
SAFECO's property and casualty insurance companies lease their home office complex located in Seattle, Washington from General America Corporation (a wholly-owned subsidiary of the Corporation). This complex totals 567,000 gross square feet. A 700-car parking garage is connected to the complex. SAFECO's life insurance companies lease their headquarters building located in Redmond, Washington from General America Corporation. This complex totals 220,000 gross square feet.
Incurred losses and loss adjustment expenses (including the increase in reserve for extended reporting period claims) for 1995 totaled $36.9 million, down 18.6%, as compared to incurred losses and loss adjustment expenses of $45.4 million for 1994. As a percentage of premiums earned, the incurred loss and loss adjustment expense ratio (including the increase in reserve for extended reporting period claims) improved to 66.3% in 1995 from 93.5% in 1994. The 1995 loss and loss adjustment expense ratio was favorably impacted by 22.1 percentage points due to the Company's reduction of its reserves by $12.3 million at year-end 1995 because of favorable development of prior years' loss
PROFESSIONALS INSURANCE COMPANY MANAGEMENT GROUP AND SUBSIDIARY Consolidated Balance Sheets December 31, 1996 and 1995
The accompanying consolidated financial statements include the accounts of Professionals Group, its wholly owned subsidiary, PICOM and the following wholly owned subsidiaries of PICOM:
The Company files a consolidated federal income tax return which includes PICOM and all of PICOM's subsidiaries. Income tax expense is computed under the liability method, whereby deferred income taxes reflect the estimated future tax effects of temporary differences between the carrying value of assets and liabilities for financial reporting purposes and those for income tax purposes. A valuation allowance is then required to be established to reduce a deferred tax asset if it is "more likely than not" that the related tax benefits will not be realized.
The Company reported total benefits and other expenses of $25.4 million and $25.7 million for the twelve-month period ended December 31, 2017 and 2016, respectively. Benefits, claims and settlement expenses represented approximately 66% and 69% of the Company's total expenses for 2017 and 2016, respectively. The other major expense category of the Company is operating expenses, which represented 31% and 28% of the Company's total expenses for 2017 and 2016, respectively.
The Company had cash and cash equivalents of approximately $25.4 million and $15.2 million as of December 31, 2017 and 2016, respectively. The Company has a portfolio of marketable fixed and equity securities that are available for sale, if an unexpected event were to occur. These securities had a fair value of approximately $238 million and $239 million at December 31, 2017 and 2016, respectively. However, the strong cash flows from investing activities, investment maturities and the availability of the line of credit facilities make it unlikely that the Company would need to sell securities for liquidity purposes. See Note 2 - Investments in the Notes to the Consolidated Financial Statements for detailed disclosures regarding the Company's investment portfolio.
Accounting Standards Update (ASU) 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory - The amendments included in ASU 2016-16 require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments eliminate the exception for an intra-entity transfer of an asset other than inventory. The amendments do not include new disclosure requirements; however, existing disclosure requirements might be applicable when accounting for the current and deferred income taxes for an intra-entity transfer of an asset other than inventory. ASU 2016-16 is effective for public companies for fiscal years beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.
The following table represents the total funding commitments and the unfunded commitment as of December 31, 2017 related to certain investments:
We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following accounting policies, judgments and estimates are the most critical to the preparation of our consolidated financial statements.
Investment income was $96,678 for the year ending December 31, 2017, an increase of $4,790 from $91,888 for the year ended December 31, 2016. The increase is from bank interest in 2017 on accounts that were not open until the later part of 2016. Total revenues were $401,213 for the year ended December 31, 2017, an increase of $309,325 from $91,888 for the year ended December 31, 2016.
The Company analyzes market valuations received to verify reasonableness and to understand the key assumptions used and the sources. Since the fixed maturity securities owned by the Company do not trade on a daily basis, the third-party investment service prepares estimates of fair value measurements using relevant market data, benchmark curves, sector groupings and matrix pricing. As the fair value estimates of the Company’s fixed maturity securities are based on observable market information rather than market quotes, the estimates of fair value on these fixed maturity securities are included in Level 2 of the hierarchy. The Company’s Level 2 investments include corporate bonds.
(5) Diluted book value per share is calculated by dividing shareholders' equity, as increased by the proceeds and tax benefit from the assumed exercise of outstanding stock options, by total shares outstanding, also increased by shares issued upon the assumed exercise of the options and deferred shares.
The Company regularly analyzes the results of its asset/liability matching through cash flow analysis and duration matching under multiple interest rate scenarios. These analyses enable the Company to measure the potential gain or loss in fair value of its interest-rate sensitive financial instruments due to hypothetical changes in interest rates. Based on these analyses, if interest rates were to immediately increase by 10% from their year-end levels, the fair value of the Company's interest-sensitive assets, net of corresponding changes in the fair value of cost of business acquired and insurance and investment-related liabilities, would decline by approximately $55.0 million at December 31, 2000 as compared to a decline of approximately $79.7 million at December 31, 1999. These analyses incorporate numerous assumptions and estimates and assume no changes in the composition of the Company's investment portfolio in reaction to such interest rate changes. Consequently, the results of this analysis will likely be materially different from the actual changes experienced under given interest rate scenarios.
VOBA is also reviewed on an ongoing basis to determine that the unamortized portion does not exceed the expected recoverable amounts. If it is determined from emerging experience that the premium margins or gross profits are less than the unamortized value of business acquired, then the asset will be adjusted downward with the adjustment recorded as an expense in the current period.
On January 28, 2008, the court entered a final judgment denying Gulf Liquid's claims against NAICO and Gulsby, denying all of NAICO's claims against Gulf Liquids and Williams, and entering judgment for Gulsby against Gulf Liquids for $15,651,927 plus interest at 7.25% compounded annually from January 28, 2008 until paid. The court also ordered Gulf Liquids to pay Gulsby's taxable court costs, estimated at $100,000. Gulf Liquids has appealed the judgment entered in favor of Gulsby and the denial of its claims against NAICO and Gulsby. NAICO has appealed the trial court's denial of its claims against Gulf Liquids and Williams and seeks entry of judgment upon the jury verdicts for the amounts the jury found should be awarded to NAICO. Gulsby has also appealed the trial court's final judgment, contending that judgment should be entered in its favor against Gulf Liquids and Williams in accordance with the jury verdicts. The recoverable amounts deducted from Chandler USA's net liability for losses and loss adjustment expenses related to this litigation were approximately $10.1 million at December 31, 2008 and December 31, 2009.
Claims activities are performed in Atlanta, Indianapolis, Tampa, and Anaheim locations. Underwriting, customer service, and accounting and administration activities are performed at the headquarters location in Indianapolis, Indiana.
Under generally accepted accounting principles, or GAAP, premium and deposit collections for variable life, universal life and annuity products are not recorded as revenues. These collections are reflected on our balance sheet as an increase in separate account liabilities for certain investment options of variable products. Collections for fixed annuities and certain investment options of variable annuities are reflected on our balance sheet as an increase in policyholder deposit funds. Collections for other products are reflected on our balance sheet as an increase in policy liabilities and accruals.
The costs of acquiring new business, principally commissions, underwriting, distribution and policy issue expenses, all of which vary with and are primarily related to production of new business, are deferred. In connection with our 2002 acquisition of the variable life and annuity business of Valley Forge Life Insurance Company, we recognized an asset for the present value of future profits (PVFP) representing the present value of estimated net cash flows embedded in the existing contracts acquired. This asset is included in deferred acquisition costs (DAC).
Adjustments (reserve movements) in 2008: Releases of mathematical reserves for temporary disability (€222 million or €145 million after tax) The discount rate used to calculate the reserves was changed from 1.25% at 31 December 2007 to 2.75% at 31 December 2008
The gradual renewal of the product line-up boosted technical results and productivity also improved, with costs rising at a slower pace than revenue.
(182)(354)10% fall in equity prices 49849810% reduction in costs 2,36910,440Central Value 25(101)100-bp increase in yield curve
Note S&P limits subordinated debt to 25% of Total Adjusted Capital (TAC) TAC corresponds to equity and hybrid securities, certain reserves (policyholders’ surplus reserve, deferred participation reserve), 50% of in-force business less goodwill At 31 December 2008, TAC was an estimated €17.3bn (vs €21.5bn at 30 June 2008). The decline was primarily due to the falling stock markets which affected deferred participation.
The following table shows the net par insured obligations at December 31, by asset type:
(c) an incentive payment of $1,000 per job per calendar year (for a maximum of $80,000) for each FTEE from the 41st up to and including the 50th FTEE employed in its Pampa operations center during each of the eight calendar years of the Agreement commencing with the year ending December 31, 2001. UMC recognized $10,000 in revenue from this incentive for each of the years 2001 and 2002.
accounting pronouncements. More detailed information about UMC's accounting policies is contained in Note B, Summary of Significant Accounting Policies, to the Consolidated Financial Statements. Other accounting policies not discussed here are described there, and readers should review that information carefully. We have summarized below the accounting policies that we believe are most critical to understanding UMC's financial statements.
- - Collection Agency Services revenue of $1,450,000 in 2002 increased by $74,000 compared to 2001 due primarily to the addition of bad debt accounts to a collection agency services contract executed October 13, 2000. This contract generated revenues of $1,040,000 and $965,000 in 2002 and 2001 respectively. This increase was offset by decreased revenue from a collection agency services contract executed in March of 2000 that was canceled in May 30, 2002. This contract provided revenues of $245,000 and $272,000 in 2002 and 2001 respectively. Assuming that there are no significant changes in the existing volume and mix of accounts placed by the Company's customers as of December 31, 2002, Collection Agency Services will generate revenues from such customers of approximately $1.25 million in 2003.
The Company experienced an underwriting loss (net premiums earned minus losses and LAE incurred and underwriting expenses) of $68.6 million for the year ended December 31, 1997, compared to an underwriting gain of $95.4 million in 1996. On a pro forma basis, the Company experienced an underwriting gain of $71.0 million in 1996. The Company's loss ratio increased to 69.0% for the year ended December 31, 1997 from 67.2% on a pro forma basis in 1996, while the underwriting expense ratio increased to 33.8% in 1997 from 30.0% on a pro forma basis in 1996. The combined ratio for the year ended December 31, 1997, increased to 102.8% from 97.2% on a pro forma basis in 1996.
The following selected consolidated statement of operations data and balance sheet data as of and for the years ended December 31, 1995, 1996, 1997, 1998 and 1999, have been derived from our Consolidated GAAP Financial Statements, which have been audited by PricewaterhouseCoopers LLP, independent accountants.
Net Investment Income. Net investment income for 1998 increased 19.8% to $20,376 from $17,009 for 1997, which is a result of higher invested assets achieved through cash receipts from premiums, with corresponding reserve increases. During 1998, we sold our entire equity securities portfolio, or approximately $21,000 of invested assets. From this sale, we recognized an approximate $6,400 capital gain. We subsequently reestablished our equities portfolio in future periods. Also, we liquidated our tax-exempt bond holdings in order to recognize higher tax equivalent yields. This sale generated an approximate $1,500 gain. We recognized $1,417 of capital gains in 1997. Our average yield on invested assets and cash balances was 6.1% in 1998, compared to 6.0% in 1997.
During 1998, we evaluated and changed our investment policy to allow for the acquisition of debt and equity securities rated "B" or better by bond rating agencies. Included in our investment strategy was the decision to purchase convertible or preferred securities. We hired an investment management firm that specializes in convertible securities to manage this portfolio. The management firm is also a principle shareholder of our common stock.
As stated in our previous report, provision was made in our Accounts for 1931 for additional depreciation of our Investments which had occurred before our Annual State­ ment was published in 1982. We are now able to derive the benefits from this measure, with the result that only a comparatively small sum is now needed to provide for sub­ sequent depreciation.
Capital (5000 shares of Frs. 2000 each) , 10,000,000 — Reserve Fund ... . 1,000,000 — Special Reserve Fund . . . . , 2,200,000 — Due to other Companies 9,657,020 72 Life and other funds deposited by ceding Companies . . 16,117,281 92 Sundry Creditors 206,648 19 Reserves
OPERATING REVENUES--A summary by segment of the Company's operating revenues is as follows:
Operating revenues from direct title operations increased 21.6% in 1997 over 1996 and 21.0% in 1996 over 1995. These increases were attributable to increases in the number of title orders closed by the Company's direct operations, as well as increases in the average revenues per order closed. The Company's direct operations closed 885,600, 775,100 and 667,200 title orders during 1997, 1996 and 1995, respectively, representing increases of 14.3% in 1997 over 1996 and 16.2% in 1996 over 1995. These increases were primarily due to the continuation of lower mortgage interest rates, the improved national real estate economy (including California, a state highly concentrated with direct operations) and an increase in the Company's national market share. The average revenues per order closed were $860, $808 and $776 for 1997, 1996 and 1995, respectively, representing increases of 6.4% in 1997 over 1996 and 4.1% in 1996 over 1995. These increases were primarily attributable to an increased mix of residential resale activity, appreciating home values and a resurgence in commercial real estate activity. Operating revenues from agency operations increased 9.1% in 1997 over 1996 and 24.1% in 1996 over 1995. These fluctuations were primarily attributable to the same factors affecting direct operations mentioned above, compounded by the inherent delay in the reporting by agents.
The Company's only potential dilutive common shares are stock options (see Note 11). Stock options are reflected in diluted earnings per share by application of the treasury stock method. All earnings per share amounts presented have been restated to reflect the adoption of SFAS No. 128.