felanders/preprocessed huggingface dataset:
Employer Medical Stop-Loss policy approved in 15 states and Provider Excess Loss policy approved in 13 states.
Net Investment Income. Net investment income decreased $4,584,000 to $1,730,000 for fiscal 2002, compared to $6,314,000 for fiscal 2001, as a result of lower interest rates, a decrease in cash and cash equivalent, and short-term investments.
Loss Attributed to Discontinued Operations. The Company recognized a $5,926,000 loss attributed to discontinued operations for the year ended September 30, 2002, compared to a loss of $34,455,000 for the year ended September 30, 2001. For the year ended September 30, 2002, the loss attributed to discontinued operations consisted of a $4,949,000 loss from operations of Intellicom, a $1,127,000 loss on disposition of Micrographic Technology Corporation ("MTC"), as a result of a preliminary arbitration decision related to a dispute with Applications Informatiques Multimedia and a dispute related to the sale of MTC to Global Information Distribution GmbH 9"GID"), a $900,000 gain on disposition of ISP Channel, resulting from the lower than anticipated costs of closing ISP Channel, and a $750,000 loss on disposition of Aerzone, resulting from a superior court decision related to a breach of contract and other legal matters. For the year ended September 30, 2001, the loss attributed to discontinued operations consisted of a $29,557,000 net loss from the operations of Intellicom, a $10,008,000 gain due to the revision of the loss on disposition of ISP Channel, resulting from lower than anticipated costs of closing ISP Channel, and a $14,906,000 loss on disposition of Aerzone, resulting primarily from the reduction of the estimated sales proceeds of Laptop Lane.
Extraordinary Item-Gain on Settlement of Obligation. The Company recognized a gain of $1,326,000 for the year ended September 30, 2001, resulting from the cash payment made in lieu of the Company's obligation to pay off the 8.5% promissory note and interest, and to settle business acquisition liabilities to former Intellicom stockholders with common stock.
The Company manages interest rate risk by seeking to maintain a portfolio with a duration and average life that falls within the band of the duration and average life of the applicable liabilities. Options may be utilized to modify the duration and average life of such assets.
Changes in reserves resulting from different types of claims that may arise an the development of judicial interpretations relating to the scope of insurers' liability; and
Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2003,
As of September 30, 2002, the Company owned common stock with a cost of $16,000, gross unrealized loss of $6,000, and a fair value of $10,000.
Major categories of net investment income for fiscal years 2003, 2002 and 2001 and the quarter ended December 31, 2002 are summarized as follows:
Supplemental cash flow information for fiscal years 2003, 2002, 2001, and for the quarter ended December 31, 2002 is as follows (in thousands):
Separate account products are those for which a separate investment and liability account is maintained on behalf of the policyholder. Separate accounts reflect two categories of risk assumption: non-guaranteed separate accounts totaling $102.6 billion and $81.3 billion as of December 31, 1999 and 1998, respectively, wherein the policyholder assumes substantially all the risk and reward; and guaranteed separate accounts totaling $9.1 billion and $10.3 billion as of December 31, 1999 and 1998, respectively, wherein The Hartford contractually guarantees either a minimum return or the account value to the policyholder.
As of December 31, 1999 and 1998, over 97% of the fixed maturity portfolio was invested in securities rated investment grade.
The life operations' general account and guaranteed separate account investment portfolios primarily consist of investment grade, fixed maturity securities, including corporate bonds, asset backed securities, commercial mortgage backed securities and collateralized mortgage obligations. The fair value of these and the life operations' other invested assets fluctuates depending on the interest rate environment and other general economic conditions. During periods of declining interest rates, paydowns on mortgage backed securities and collateralized mortgage obligations increase as the underlying mortgages are prepaid. During such periods, the Company generally will not be able to reinvest the proceeds of any such prepayments at comparable yields. Conversely, during periods of rising interest rates, the rate of prepayments generally declines, exposing the Company to the possibility of asset/liability cash flow and yield mismatch. (For further discussion of the Company's risk management techniques to manage this market risk, see the "Asset and Liability Management Strategies Used to Manage Market Risk" discussed below.)
Change in Net Economic Value 1999 1998 ---------------------------------------- Basis point shift - 100 + 100 - 100 + 100 - ------------------------------------------------------------------- Amount $ (4) $ (5) $ 7 $ (16) Percent of liability value (0.03)% (0.03)% 0.05% (0.10)% - --------------------------------------------------------------------
A special committee of the Board of Directors of the Company comprising the independent directors, Ute Scott-Smith, J. Daniel Speight, Jr. and Donald Ratajczak, approved the amount of consideration. In connection with the committee’s deliberations the Company obtained a fairness opinion from an independent third party stating that the total value of the transaction to the Company was within an acceptable range of estimated fair values of the future trail commission cash flows. A portion of the proceeds was used to pay the $6 million note payable, to Washington National Insurance Company and interest accrued thereon. The remainder of the proceeds is available for general corporate purposes.
In recent years, the SEC has been examining whether all equity-indexed annuities need to be registered under the Securities Act of 1933. Additionally, FINRA has issued guidance to its members indicating that broker-dealers regulated by the FINRA have certain responsibilities with respect to the offer and sale of equity-indexed annuities, including an obligation to determine the suitability of such products for their customers, regardless of whether equity-indexed annuities are deemed to be securities. Finally, some state insurance regulators are considering whether additional suitability and disclosure regulations should be implemented with respect to all sales of fixed annuities, particularly with respect to senior citizens.
Our revenue decreased $5.9 million (23%) in 2007 compared to 2006 primarily due to decreased marketing allowances and commissions of $4.9 million and administrative fees of $2.1 million, partially offset by an increase in other revenue of $1.5 million. Marketing allowances and commissions decreased $4.9 million (36%) primarily due to an overall decrease in the sales of fixed annuity products and lower marketing allowance rates on some of the products.
The carrying values of the Company’s financial instruments, including cash equivalents, trading investments, accounts receivable, accounts payable, accrued liabilities and notes payable reflect their respective fair value in accordance with Statement of Accounting Standards (“SFAS”) No. 157, which is based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value hierarchy established in SFAS No. 157 prioritizes the inputs used in valuation techniques into three levels as follows:
Both of the Company’s non-qualified deferred compensation plans follow the guidelines of the IRC 401A. In 2008, the IRS mandated that all companies offering such plans be in compliance by December 31, 2008. The Company has successfully complied with these requirements within the IRS’ established time frame.
Management’s Discussion and Analysis of Financial Conditions and Results of Operations
Expected volatility-As we do not have a significant trading history for our common stock, the expected stock price volatility for our common stock was estimated by taking the average historic price volatility for identified peers based on daily price observations over a period equivalent to the expected term of the stock option grants and warrant issuances. We did not rely on implied volatilities of traded options or warrants in our industry peers’ common stock
Effective January 1, 2015, the Company formed a segregated account in Bermuda as part of Wyndham Insurance Company (SAC) Limited (WICL), and entered into a revised fronting and reinsurance arrangement with Omega General Insurance Company (Omega) to include its newly formed segregated account. The Company maintains all risk with the business written in Canada and consolidates the entity in its financial statements. Contractual requirements restrict dividends from this entity until after 2016, at which time dividends will be allowed subject to the Segregated Accounts Company Act of 2000, which allows for dividends only to the extent that the entity remains solvent and the value of its assets remain greater than the aggregate of its liabilities and its issued share capital and share premium accounts. WICL required the Company to invest initial capital of CAD $1.3 million.
Convertible preferred stock is presented on an as converted basis to reflect the applicable conversion ratio at December 31, 2013.
The amortized cost, gross unrealized holding losses, and fair value of available-for-sale and short-term investments by major security type and class of security were as follows as of December 31, 2015 and 2014 (in thousands):
Stock-based compensation expense includes stock options, restricted stock units and restricted stock awards granted to employees and non-employees, and is reported in the Company’s consolidated statement of operations in claims expenses, other cost of revenue, sales and marketing, technology and development, and general and administrative expenses depending on the function performed by the employee or non-employee. Stock-based compensation expense recognized in each category of the consolidated statement of operations for the years ended December 31, 2015, 2014 and 2013 was as follows (in thousands):
Under regulatory requirements at December 31, 2015, the amount of dividends that may be paid by the Company’s insurance subsidiary in New York to the Company without prior approval by regulatory authorities was less than $0.1 million. The initial dividend payment to be paid from the segregated cell business to the Company, will not be calculated until 24 months from the effective date and annually thereafter. During 2015, 2014 and 2013, the Company’s insurance subsidiaries did not pay any dividends to the Company.
The reported statutory capital and surplus of the life insurance subsidiaries was $6.4 million at December 31, 1997 and $5.9 million at December 31, 1996. The insurance companies combined statutory net loss was $1.4 million in 1997. In 1996, the companies reported combined net income of $29,000 and in 1995 they reported a net loss of $3.6 million.
On July 28, 1997, the Merger Agreement with LaSalle was terminated because, despite continued assurances to the contrary, LaSalle was unable to provide the cash funds necessary to complete the Merger transaction. On July 28, 1997, the Company entered into a letter of intent to sell its credit insurance operations to Life of the South Corporation, a Georgia-based financial services holding company (LOTS), as described more fully in Note 5.
As indicated in Note 4, the Company renewed its search for either another acquiror or a purchaser of its credit insurance business in May 1997, following notification from LaSalle that its original source of funding for the pending Merger would probably not be available within a reasonable period of time. The Company requested that certain previous bidders for its credit insurance business (the Company s only remaining business segment at that time) resubmit their bids for consideration. Following the receipt and evaluation by the Company of four new offers for its credit insurance business, the Company signed a letter of intent on July 28, 1997 to sell the credit insurance and related operations to LOTS, subject to a due diligence review by LOTS. In September 1997, an amended letter of intent was signed by the parties and an Asset Purchase Agreement was subsequently signed on December 30, 1997.
In November 1997, the Company and a third party reinsurer were sued by a former general agency with whom the Company had a partnership agreement. The partnership agreement provided that the agency would market universal life insurance business for the Company, pursuant to specific criteria established by the Company, and would also be entitled to a share of the profits, if any, which arose from the business produced. The claimant is seeking monetary damages to compensate it for the Company s alleged failure to share profits and for other alleged losses resulting from the Company s rejection of policy applications involving unacceptable risks. While management believes this claim is completely without merit and intends to vigorously defend itself in this matter, the ultimate outcome of this claim cannot be determined at this time.
During 1997, 17,000 SAR s were exercised, resulting in cash payments of $24,708 based on an average market price of $3.70 on the dates of exercise. At December 31, 1997, 133,117 shares were reserved for options which are available to be granted and all of the 132,000 outstanding options were exercisable.
The Company believes its facilities have been generally well-maintained, are in good operating condition, and are adequate for its current requirements.
The Selected Financial Data on pages 21 and 22 of the annual shareholder report for the year ended December 31, 1996, an excerpt of which is included in Exhibit 13, is incorporated by reference in response to this item.
Contract premiums totaled $76.7 million during 1997 compared to $50.6 million for 1996, an increase of 52%. Contract premiums and their impact on total revenues in any period are determined directly by the number of active Contracts in force during any such period. The active Contracts in force are determined by both the number of new Contracts sold in any period together with the persistency, or renewal rate, of existing Contracts. New Contract sales increased 46% during 1997 to 283,723 from 194,483 during 1996. At December 31, 1997, there were 425,381 active Contracts in force compared to 294,151 at December 31, 1996. Additionally, the average annual premium per Contract has increased from $216 for all Contracts in force at December 31, 1996 to $225 for all Contracts in force at December 31, 1997, a 4.0% increase, as a result of a higher portion of active Contracts containing the additional pre-trial hours benefit at an additional cost to the member together with increased sales of the Small Business Legal Defense plan.
Primarily as a result of the increase in Contract premiums, total revenues increased to $92.5 million for 1997 from $59.2 million during 1996, an increase of 56%.
Primarily as a result of the increase in Contract premiums, total revenues increased to $59.2 million for 1996 from $37.0 million during 1995, an increase of 60%.
Supplemental disclosure of cash flow information: Cash paid for interest....................... $ 6 $ 26 $ 10 ======= ======= ======= Cash paid for income taxes................... $ - $ - $ 18 ======= ======= =======
A summary of the amortized cost, unrealized gains and losses and fair values of held to maturity investment securities at December 31, 1997 and 1996 follows:
December 31, --------------- 1997 1996 ------ ------ Held-to-maturity investments -current portion................ $1,875 $ 500 Held-to-maturity investments.... 650 989 Investments pledged............... 975 950 ------ ------ Total........................... $3,500 $2,439 ====== ======
On February 27, 1995, all of the Company's remaining outstanding $2.40 Cumulative Convertible Preferred Stock automatically converted into Common Stock pursuant to its terms. Approximately 3.9 million shares of Common Stock were issued as a result of this conversion.
Weighted Average Range of Exercise Number Remaining Weighted Average Prices Outstanding Contractual Life Exercise Price ----------------- -------------- -------------------- -------------------
During 2006, revenue from this segment was $51.2 million, which accounted for 32.4% of our total revenue. For the year ended December 31, 2005, revenue from this segment was $49.7 million or 34.9% of our total revenue. Our business strategy in this segment is to continue to serve existing customers in Louisiana as well as expand the business through new marketing management that we put in place in early 2005.
Accident and health benefits of $541,000 in 2006 are nominal, and have been since the cession of the majority of our accident and health business in force according to coinsurance agreements effective January 1, 2004.
Our cash balances at our primary depositories were significantly in excess of Federal Deposit Insurance Corporation coverage at December 31, 2006 and December 31, 2005. Management monitors the solvency of all financial institutions in which we have funds to minimize the exposure for loss. Management does not believe we are at significant risk for such a loss. During 2007, we intend to continue to utilize high grade commercial paper as a cash management tool to minimize excess cash balances and enhance returns.
Realized gains (losses) on securities includes gains of $5.2 million in 2001 and $1.5 million in the fourth quarter of 2000 to adjust the carrying value of AFC's investment in warrants to market value under SFAS No. 133.
GAINS ON SALES OF SUBSIDIARIES In 2001, AFC recognized a $7.1 million pretax gain on the sale of a small insurance subsidiary. In connection with the sale of the Japanese division in 2001, AFC recognized a $6.9 million pretax loss and deferred a gain of approximately $21 million on ceded insurance which is being recognized over the estimated settlement period (weighted average of 4 years) of the ceded claims.
2000 COMPARED TO 1999 Other income increased $78.5 million (45%) in 2000 due primarily to increased fee income generated by certain insurance operations, income from the sale of lease rights and lease residuals and increased revenues from real estate operations.
A. ACCOUNTING POLICIES I. MINORITY INTEREST B. ACQUISITIONS AND SALES OF SUBSIDIARIES J. SHAREHOLDERS' EQUITY AND INVESTEES K. INCOME TAXES C. SEGMENTS OF OPERATIONS L. EXTRAORDINARY ITEMS D. INVESTMENTS M. COMMITMENTS AND CONTINGENCIES E. INVESTMENT IN INVESTEE CORPORATIONS N. QUARTERLY OPERATING RESULTS F. COST IN EXCESS OF NET ASSETS ACQUIRED O. INSURANCE G. PAYABLE TO AMERICAN FINANCIAL GROUP P. ADDITIONAL INFORMATION H. LONG-TERM DEBT Q. SUBSEQUENT EVENT - -------------------------------------------------------------------------------
losses of these two companies during 2001 and the fourth quarter of 2000 of $16.6 million and $4.1 million, respectively, is included in investee losses in the Statement of Operations.
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E ------------------------------------------------------------------------- (a) RESERVES FOR DEFERRED UNPAID CLAIMS (b) AFFILIATION POLICY AND CLAIMS DISCOUNT (c) WITH ACQUISITION ADJUSTMENT DEDUCTED IN UNEARNED REGISTRANT COSTS EXPENSES COLUMN C PREMIUMS -------------------------------------------------------------------------
A variety of health care reform measures are currently pending or have been recently enacted at the Federal and state levels. Recent Federal legislation seeks, among other things, to insure the portability of health coverage and mandates minimum maternity hospital stays. These and other proposed measures may have the effect of dramatically altering the regulation of the provision of health care and of increasing the Company's loss ratio.
Investment income increased to $135.3 million for the year ended December 31, 1995 as compared to $107.4 million in 1994 due in part to 1995 pretax net gains on the sales of investment securities of $15.4 million as compared to pretax net gains in 1994 of $5.0 million. As discussed below under the heading "Liquidity and Capital Resources", there were increased sales of investment securities in 1995 in anticipation of the 1996 cash requirements for the Company's Recapitalization and the MMHD Acquisition. The increase also reflected a higher average yield on a larger average portfolio balance, resulting in interest income of $120.1 million for the year ended December 31, 1995 compared to $102.0 million for the prior year.
building. The lower operating cash flow in 1995 resulted primarily from nonrecurring costs and the timing of payment of settlements related to experience rated policies.
The Company's future results will depend in large part on accurately predicting health care costs and upon the Company's ability to control future health care costs through underwriting criteria, utilization management and negotiation of favorable provider contracts. Changes in utilization rates, demographic characteristics, health care practices, inflation, new technologies, clusters of high-cost cases, the regulatory environment and numerous other factors are beyond the control of any health plan and may adversely affect the Company's ability to predict and control health care costs and claims, as well as the Company's
Net securities gains (losses) for 2002 include a provision of $37,100,000 to write down the Company's investments in certain available for sale securities and its equity investment in a non-public fund. The write down of the available for sale securities resulted from a decline in market value determined to be other than temporary. Net securities gains (losses) for 2000 include pre-tax security gains related to the Company's investments in Fidelity National Financial, Inc. ($90,900,000) and Jordan Telecommunication Products, Inc. ($24,800,000).
Historically, our liquidity requirements have been met by funds provided by operations. Due to the short-term nature of our products, a decrease in premiums or demand for our products could have a significant impact on the availability of our funds. Also, a substantial increase in paid claims, the occurrence of multi-catastrophe events or insolvency of our reinsurers could negatively impact our cash flows and our timing and ability to pay our liabilities.
In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the balance sheets and revenues and expenses for the periods then ended. Actual results may differ from those estimates.
are calculated as a percentage of base compensation. The charge to income under this plan was approximately $560,000 in 2001, $660,000 in 2000, and $575,000 in 1999.
MEEMIC is required to file financial statements prepared in accordance with statutory insurance accounting practices ("SAP") prescribed or permitted by the State of Michigan Office of Financial and Insurance Services ("OFIS"). The Company does not utilize any permitted accounting practices.
The Financial Accounting Standards Board also issued SFAS No. 142 "Goodwill and Other Intangible Assets" which supersedes Opinion 17 "Intangible Assets," and is effective for fiscal years beginning after December 15, 2001. SFAS No. 142 addresses how goodwill and other intangible assets should be accounted for subsequent to acquisition. Contrary to Opinion 17, SFAS No. 142 does not
The information required by this Item is included on pages 36-37 of the Registrant's Annual Report to Stockholders for the year ended December 31, 1996, under the caption "Selected Financial Data" and is incorporated herein by reference.
(vi) adverse state and federal legislation and regulation, including limitations on premium levels, increases in minimum capital and reserves, and other financial viability requirements; restrictions on mutual fund distribution payment arrangements such as revenue sharing and 12b-1 payments; and regulation changes resulting from industry practice investigations;
For investments valued with the assistance of independent pricing services, the Company obtained the pricing services’ methodologies and classified these investments accordingly in the fair value hierarchy. The Company periodically reviews and tests the pricing and related methodologies obtained from these independent pricing services against secondary sources to ensure that management can validate the investment’s fair value and related categorization. If large variances are observed between the price obtained from the independent pricing services and secondary sources, the Company analyzes the causes driving the variance and resolves any differences.
Interest spread income increased primarily due to higher average general assets (up 6%) caused by improved net flows in both variable and fixed annuities and favorable investment performance. The improvement in net flows was driven by lower withdrawals and surrenders in 2009 across all product lines. Withdrawals and surrenders declined by 33% in variable annuities and 43% in fixed annuities. In addition, interest spread margins improved to 176 basis points in 2009 compared to 154 basis points in 2008.
The decrease in other income, which includes administrative fees from administration-only plans and asset fees from non-insurance deferred compensation plans and the NTC platform, primarily was driven by lower other asset fees and mutual fund revenue of $17.0 million and $5.1 million, respectively, resulting from lower average non-insurance assets.
Contractual provisions exist that could increase or accelerate those lease obligations presented, including various leases with early buyouts and/or escalation clauses. However, the impact of any such transactions would not be material to the Company’s financial position or results of operations.
Provisions for title losses, as a percentage of title premiums, fees and other revenues, were 4.4%, 4.5% and 5.6% in 1998, 1997 and 1996, respectively. The continued improvement in industry trends in claims and the Company's improved experience in claims have led to lower loss ratios. An increase in refinancing transactions, which results in lower loss exposure, also reduced loss ratios. Such transactions were at record levels in 1998.
The Company is dependent on computers to process and report its business. Information technology ("IT") systems are used for billing and collecting premiums, issuing policies, processing claims, managing assets and reporting financial results. A failure of the Company's IT systems to function properly would have a material adverse effect on the Company's financial condition and results of operations. The process of becoming ready for the Year 2000 consists of (i) identifying and assessing IT systems requiring renovation (whether through modification or replacement); (ii) renovating systems; (iii) validating or testing systems for Year 2000 compliance; and (iv) implementing compliance solutions. The Company has identified and assessed its IT systems which require renovation to properly process the Year 2000. As described below, with respect to its most important IT systems, the Company is at various stages of the process ranging from renovating the system to having implemented a new system.
Underwriting Expenses. The acquisition expense ratio for the year ended December 31, 2003 was 23.6%, compared to 21.0% for the year ended December 31, 2002, and the other operating expense ratio for the year ended December 31, 2003 was 2.5%, compared to 3.8% for the year ended December 31, 2002. Movements in the acquisition expense ratio reflect changes in the percentage of net premiums earned from pro rata contracts along with the mix of business. While aggregate operating expenses were higher for the year ended December 31, 2003 compared to the year ended December 31, 2002, the operating expense ratio decreased primarily due to the growth in net premiums earned in the 2003 period.
Other Underwriting-Related Fee Income. During the 2003 fourth quarter, the insurance segment entered into a reinsurance agreement pursuant to which we assumed certain surety contracts that were in force in October 2003. Since the reinsurance agreement provides coverage for losses both prior and subsequent to such date, the contract was bifurcated into its prospective and retroactive elements. We accounted for the retroactive element pursuant to the accounting guidance under SFAS No. 113, which prescribes that underwriting income generated in connection with retroactive contracts be deferred and amortized into income over the settlement period of the associated claims. Of the total estimated gain of $4.6 million, $1.7 million was recognized in the 2003 fourth quarter as other underwriting-related fee income and the balance of $2.9 million will be recognized over the settlement period.
values or cash flows of our financial instruments as of December 31, 2003. Market risk represents the risk of changes in the fair value of a financial instrument and consists of several components, including liquidity, basis and price risks.
Benefits, claims and settlement expenses, net of reinsurance benefits, increased approximately 3% in 2013 compared to 2012. The increase primarily relates to changes in the Company's death claim experience. Policy claims vary from year to year and therefore, fluctuations in mortality are to be expected and are not considered unusual by Management.
As mentioned above in the Overview section of the Management Discussion and Analysis, UTG has a strong philanthropic program. The Company generally allocates a portion of its GAAP net income to be used for its philanthropic efforts primarily targeted to Christ-centered organizations or organizations that help the weak or poor. Charitable contributions made by the Company are expected to vary from year to year depending on the earnings of the Company.
Real estate acquired through foreclosure, consisting of properties obtained through foreclosure proceedings or acceptance of a deed in lieu of foreclosure, is reported on an individual asset basis at the lower of cost or fair value, less disposal costs. Fair value is determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources. When properties are acquired through foreclosure, any excess of the loan balance at the time of foreclosure over the fair value of the real estate held as collateral is recognized and charged to the income statement. Based upon Management's evaluation of the real estate acquired through foreclosure, additional expense is recorded when necessary in an amount sufficient to reflect any declines in estimated fair value. Gains and losses recognized on the disposition of the properties are recorded as realized gains and losses in the consolidated statements of income.
On September 28, 2011 UTG entered a joint ownership agreement with Bandyco, LLC and First Southern National Bank, for an 8.08% interest in an aircraft. Bandyco, LLC is affiliated with Ward F Correll, who is a director of the Company. The Company was responsible for an initial payment of $150,000 on September 30, 2011, along with a $125,000 payment on October 30, 2011. The Company pays a monthly operational fee of $25,000 starting in November 2011 and lasting through July 2016. The aircraft is issued for business related travel by various officers and employees of the Company. For years 2013 and 2012, UTG paid $427,776 and $573,393 for costs associated with the aircraft.
Because UTG serves primarily individuals located in four states, the ability of our customers to pay their insurance premiums is impacted by the economic conditions in these areas. As of December 31, 2013, approximately 54% of the Company's total direct premium was collected from Illinois, Ohio, Texas and West Virginia. As of December 31, 2012, approximately 55% of the Company's total direct premium was collected from Illinois, Ohio, Texas and West Virginia. Thus, results of operations are heavily dependent upon the strength of these economies.
Arista's gross premiums earned for the year 1997 were approximately $20.8 million as compared with approximately $23.2 million for 1996. This decrease was due to Arista's continued net loss of covered lives and policyholders. The continuing net loss in covered lives is a function of increased competition for experience-rated groups and a lower competitive rate structure for non-experience-rated groups. Arista expects this trend to continue.
The loss ratio was 66.3% in 1998 compared with 64.5% in 1997 and 66.2% in 1996. The loss ratio continues to reflect the favorable experience resulting from the consistent application of our disciplined underwriting standards. Losses from catastrophes represented 3.3 percentage points of the loss ratio in 1998 compared with 1.1 percentage points in 1997 and 3.1 percentage points in 1996. The significant catastrophes affecting results in 1998 included the winter ice storms in Canada in the first quarter, the wind and hail storms in the United States in the second quarter and Hurricane Georges in Puerto Rico in the third quarter. Catastrophe losses in 1996 resulted primarily from the winter storms in the eastern part of the United States in the first quarter.
Our automobile business produced substantial profits in each of the last three years. Results in each year benefited from stable loss frequency and severity.
Our Year 2000 plans have been developed with the intention of minimizing the need for actual implementation of contingency activities. We anticipate that a substantial portion of 1999 will be used to monitor systems already remediated for Year 2000 for any unidentified problems and to perform additional remediation and testing as necessary. Nonetheless, in order to address any unexpected difficulties that may arise, we will keep our core Year 2000 readiness team intact until June 2000. Additionally, we are studying the development of contingency plans to continue business in the unlikely event that one or more of our critical systems fail.
(c) Source: Best's Aggregates & Averages, Property/Casualty, 1997 Edition. Industry Combined Ratios may not be fully comparable as a result of, among other things, differences in geographical concentration and in the mix of property and casualty insurance products.
The investment portfolios of the Company's insurance subsidiaries are principally fixed maturity investments rated "investment grade" or U.S. governmental agency issued or guaranteed obligations, although limited investments in "non-rated" or rated less than investment grade securities have been made from time to time. The investment strategy of the insurance subsidiaries has been to maintain a high quality portfolio of publicly traded, fixed income securities with a relatively short duration. Principally as a result of changes in market interest rates during 1997, the unrealized gain on investments at the end of 1996 of approximately $1,759,000 (net of taxes) increased to approximately $5,630,000 (net of taxes) as of December 31, 1997.
Premium revenue receipts on the VA product of the life insurance subsidiaries (which are not reflected as revenues) were $53,178,000 in 1997, $47,265,000 in 1996 and $43,717,000 in 1995. In February 1998, the Company agreed to reinsure all of its remaining life insurance business to Allstate in the Life Reinsurance Transaction. Consummation of this transaction, which is expected to occur in the second quarter of 1998, is subject to regulatory approval and the satisfaction of certain other conditions. The premium to be received on this transaction is approximately $30,000,000. The gain on the reinsurance transaction will be deferred and amortized into income based upon actuarial estimates of the premium revenue of the underlying insurance contracts or will be recognized earlier in income if converted to assumption reinsurance. In connection with the sale of the Colonial Penn Life Group, the Company reinsured certain life insurance policies
revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this Report or to reflect the occurrence of unanticipated events.
The merger with ProCentury was completed following the close of business on July, 31, 2008. Therefore, the above table includes only five months of financial results for ProCentury for the year ended December 31, 2008 and twelve months of financial results for the years ended December 31, 2009, 2010, 2011, and 2012.
We use the accident year loss and LAE ratio as one component to assess our current year performance and as a measure to evaluate, and if necessary, adjust our pricing and underwriting. Our net loss and LAE ratio is based on calendar year information. Adjusting this ratio to an accident year loss and LAE ratio allows us to evaluate information based on the current year activity. We believe this measure provides investors with valuable information for comparison to historical trends and current industry estimates. We also believe that it is useful for investors to evaluate the accident year loss ratio and LAE and net loss and LAE ratio separately when reviewing and evaluating our performance.
The average accident year combined ratio since the beginning of 2009 was 109.4%. Our current accident year combined ratio is 110.4%.
(4) Relates to the junior subordinated debentures acquired in conjunction with the ProCentury merger.
Refer to list of Financial Statement Schedules (including the Reports of Independent Registered Public Accounting Firm referenced therein) set forth in Item 15 of this Annual Report on Form 10-K and Note 18 ~ Quarterly Financial Data (Unaudited) of the Notes to the Consolidated Financial Statements.
Claim costs, the Company's most significant expense, represent actual payments made and changes in estimated future payments to be made to or on behalf of its policyholders, including expenses required to settle claims and losses. These costs include a loss estimate for future assignments and assessments, based on current business, under state-mandated involuntary automobile programs. Claim costs are influenced by inflation and loss severity and frequency, the impact of which is mitigated by adequate pricing. Increases in the rate of inflation increase loss payments, which are made after premiums are established. Accordingly, anticipated rates of inflation are taken into account when the Company establishes premium rates and loss reserves. Claim costs, expressed as a percentage of premiums earned, were 68% in 1998, compared to 71% in 1997 and 70% in 1996. In recent years, the industry has had favorable loss experience driven by continuing trends with respect to safer cars and roads, the impaired driving crackdown, better law enforcement and insurers operating more efficiently.
Policy acquisition and other underwriting expenses as a percentage of premiums earned were 23% in 1998 and 1997 and 22% in 1996. During 1998, the Company expanded its television advertising campaign on a national level. The Company also introduced its local advertising campaign to 14 more states during 1998, bringing the total number of states in which the Company advertises to 32 plus Washington D.C. (83 markets).
YEAR 2000 COMPLIANCE The year 2000 problem exists because many computer programs only use the last two digits to refer to a year and could recognize "00" as 1900 instead of 2000. If not corrected, many computer and other microchip supported applications could fail or create erroneous results. The extent of the potential impact is still unknown but could affect the global economy. In response to this issue, the Company has evaluated its applications and operating software (including its claims reporting, financial reporting, policy issuance, policy maintenance and other internal production systems), hardware and software products, and third-party data exchanges and business relationships, and is in the process of evaluating its end user computing activities and facilities implications (including public utility services), and has established a dedicated, tenured project team responsible for overseeing progress on the Company's compliance program and periodically reporting to management.
Marine results were again very gratifying, although there are signs of a less favour­ able trend.
We were able to record a surplus in the Accident account.
Premiums for Retrocession, less cancellations Commission, less Retrocession , . . . Claims paid Frs. 129,003,823.44 less Retrocession „ 33,151,022.54 Premium Reserve, less Retrocession Reserve for Unsettled Claims, less Retrocession . . Reserve for Extraordinary Losses . . . ... . . . . .
We are a specialty personal lines insurance holding company. Through our subsidiaries, we provide a variety of insurance products, including personal and commercial automobile, supplemental health, homeowners and umbrella, and other niche insurance products. We sell insurance products with a focus on underwriting profitability through a combination of our customized and predictive analytics and our technology driven low cost infrastructure.
On April 1, 2014, we purchased Personal Express Insurance Company (“Personal Express”), a California domiciled personal auto and home insurer from Sequoia Insurance Company, an affiliate of AmTrust. The purchase price was approximately $21.5 million, subject to certain adjustments.
Repurchase and reverse repurchase agreements are used to earn spread income, borrow funds, or to facilitate trading activities. Securities repurchase and resale agreements are generally short-term, and therefore, the carrying amounts of these instruments approximate fair value.
Non-controlling Interest. The ownership interest in consolidated subsidiaries of non-controlling interests is reflected as non-controlling interest. Our consolidation principles also consolidate entities in which the Company is deemed a primary beneficiary. Non-controlling interest income or loss represents such non-controlling interests in the earnings of that entity. We consolidate the Reciprocal Exchanges as we have determined that these are variable interest entities and that we are the primary beneficiary.
General and administrative expenses. General and administrative expenses increased by $68.2 million, or 24.3%, from $280.6 million for the year ended December 31, 2013 to $348.8 million for the year ended December 31, 2014 primarily as a result of the Tower Reinsurance Agreements, P&C segment organic growth, A&H Expansion expenses and the EHC Business.
The cost or amortized cost, fair value, and gross unrealized gains and losses on available-for-sale securities were as follows:
The tables below summarize the credit quality of our fixed maturities, securities pledged and preferred securities as of December 31, 2014 and 2013, as rated by Standard & Poor’s.
During 2000, Waterford provided a $1.2 million net loss which principally reflects goodwill amortization related to its purchase in 1996. For the 1999 period through the date of VGI Sale, the operations of VGI (which included Waterford) provided $3.6 million of net income which primarily represented realized investment gains during the period. For the year ended December 31, 1998 the operations of VGI (which included Waterford) contributed $5.0 million to net income.
During 1993 the Company issued $150.0 million in principal amount of medium-term notes. The Company has repurchased certain of its medium-term notes from time to time and during 2000 and 1999 repurchased $.1 million and $15.9 million in principal amount of the notes due in February 2003, respectively. At December 31, 2000 the Company had $96.3 million in principal amount of medium-term notes outstanding which had an average maturity of 2.6 years and an average yield to maturity of 7.87%.
During 1999 White Mountains concluded the VGI Sale and received net proceeds of $139.0 million in cash after receiving a special dividend of assets and cash prior to the closing of $76.6 million. In connection with the VGI Sale, White Mountains repaid $15.0 million of indebtedness at VGI during 1999.
Although the Company attempts to be competitive on price, it believes that maintaining adequate rates on the insurance policies it sells is a better business strategy than increasing total written premium by selling more policies at inadequate rates. This business philosophy has resulted in decreased written premium in 1999 and virtually no premium growth in 2000.
Health and Life Insurance Program --------------------------------- Commission income from the health and life insurance sales of NIB and AIB is as follows: Year ended December 31 ---------------------- 2000 1999 1998 ---- ---- ----
Year ended December 31 ---------------------- 2000 1999 1998 ---- ---- ---- Premium finance charges and late fees earned $837,902 $915,940 $1,033,479 New loans 7,166 7,597 8,092
Statement of Position 97-3 (SOP 97-3), "Accounting by Insurance and Other Enterprises for Insurance Related Assessments," is effective for financial statements beginning after December 15, 1998. SOP 97-3 requires that a liability for insurance related assessments be recognized when an assessment is probable, the event obligating the assessment has occurred, and the assessment can be reasonably estimated. The adoption of SOP 97-3 has no material effect on the financial statements.
The NAIC's project to codify accounting practices was approved by the NAIC in March 1998. The approval included a provision for commissioners' discretion in determining appropriate statutory accounting for insurers in their states. Consequently, prescribed and permitted accounting practices may continue to differ from state to state. Codification became effective on January 1, 2001. The implementation of codification resulted in an increase in statutory surplus of $1,720,694. The Company is unable to predict how insurance rating agencies will interpret or react to any such changes. No assurance can be given that future legislative or regulatory changes resulting from such activities will no adversely affect the Company and its subsidiaries.
Computed tax expense $65,828 $2,422,462 $4,336,665 Tax effect of: Tax exempt income (344,428) (425,963) (490,783) Dividend exclusion - (279) (1,638) Other (5,910) (23,334) 23,525 State income tax expense 38,326 20,637 178,460 ------- --------- --------- Tax per financial statements $(246,184) $1,993,523 $4,046,229 ======= ========= =========