All prior period earnings per share data have been restated to reflect 5% stock dividends effected May 13, 1996 and June 1, 1995.
TITAN Public Entity's consistent growth continued in 1996 as premiums written increased 14% to $61.2 million. For the year ended 1995 premiums written increased 13% to $53.7 million compared to $47.4 million in 1994. The increase resulted principally from states where additional state managers have been deployed to expand market coverage. In 1996, a new program, Horizon, was introduced providing a single, comprehensive package of coverages which simplifies the insurance policy for insureds and streamlines the underwriting and policy issuance processes. To further enhance TITAN Public Entity, the Company, in 1996, began offering a program to private schools and fire districts throughout the country and workers compensation insurance to its insureds in Pennsylvania. In 1996, workers compensation premiums written were not material to the Company and the majority of risk exposure associated with this line of coverage is ceded to a reinsurer. This workers compensation program will be expanded in 1997 to other states. TITAN Public Entity anticipates moderate growth in 1997 as the Company continues to be selective with its underwriting decisions in a highly competitive and price sensitive market.
Premiums earned are the result of net premiums written which are recognized as income on a pro rata basis over the terms of the respective insurance policies issued. Premiums earned increased approximately 30% for the second consecutive year to $152.5 in 1996 compared to $118.2 million in 1995 and $90.8 million in 1994. TITAN Auto earned premium increased to $93.9 million in 1996 versus $69.1 million in 1995 and $47.3 million in 1994. TITAN Public Entity earned premium for the three years ended 1996, 1995 and 1994 was $54.2 million, $44.9 million and $39.4 million, respectively. The increase in premiums earned is attributable to the overall increase in premiums written and reduced amounts ceded.
development on prior accident years and the severe winter storms in the northeast United States in early 1996. The development on prior accident years relates to certain claims ultimately settled at amounts in excess of established loss reserves. Such development is limited to select liability lines of coverage and certain territories within public entity. Management of the Company has since modified underwriting criteria for such coverages and adjusted its reserving practices. The improvement in the expense ratio in 1996 to 30.6% from 34.7% in 1995 is due to the realignment of corporate service costs in 1996 and to reinsured losses incurred in 1995 that reduced the Company's profit commission from its reinsurer in 1995. During 1995 TITAN Public Entity's loss ratio increased to 61.9% from 60% in 1994, primarily due to increased claim frequency.
The insurance companies transact business with independent insurance agents, who represent their insureds. Public entity and certain other premiums are due from agents ($5,555,000 and $5,755,000 at December 31, 1996 and 1995, respectively) and represent unpaid agents' balances, net of an allowance for doubtful accounts of approximately $160,000 at December 31, 1996 and 1995. Such agents' balances may be secured by the related unearned premium and the insured's coverage may be canceled if the insured fails to remit the premium to the agent. However, if the insured has paid the agent, the balance due to TITAN Indemnity from the agent is unsecured. Non-standard automobile insurance balances are due from policyholders ($16,293,000 and $10,203,000 at December 31, 1996 and 1995, respectively) and are secured by the related unearned premium. The insurance companies require policyholders to remit a minimum down payment at the policy origination date and subsequent scheduled payments are monitored in order to prevent coverage beyond the date for which payment has been received. If subsequent payments are not made timely, the policy is canceled at no loss to the insurance companies. In the opinion of management, the net amounts carried on the accompanying consolidated balance sheets are collectible.
Holdings has two fixed stock option plans. Under the 1993 Stock Option Plan, Holdings may grant options to employees, directors and consultants of Holdings for up to 992,250 shares of Common Stock. Holdings may also grant options to outside directors under the 1993 Directors' Stock Option Plan. Options issued under both plans were at exercise prices equal to the market price of Holdings' stock on the date of grant and an option's maximum term is ten years with vesting ranging from immediate to five years.
In February, 1997, WPAC executed an agreement to acquire a premium finance company, Elite Premium Services, Inc. ("Elite"), for approximately $400,000 in cash and additional consideration to be determined as a function of future amounts financed through sources provided by Elite. In connection with the acquisition, WPAC increased the limit of its credit facility to $50 million and increased its borrowings under the credit facility by approximately $11.5 million for finance contracts acquired in the acquisition.