Cash 1,849,786 1,381,888 Premiums receivable 9,283,881 13,113,315 Accrued investment income 3,803,515 3,314,756 Deferred policy acquisition costs 19,716,433 19,974,450 Goodwill 13,365,992 14,070,480 Reinsurance receivables 33,592,907 34,057,786 Prepaid reinsurance premiums 3,589,669 3,592,121 Due from Meridian Mutual Insurance Company 6,928,351 4,620,574 Current and deferred federal income taxes 10,147,373 2,456,781 Other assets 708,768 2,062,919 Total assets $ 398,890,860 $ 398,223,125
The Company has approximately 1,400 independent agents who market the Company's core personal lines, commercial lines and farm products throughout 18 states. Additionally, the Company markets products to members of various associations through approximately 600 independent agents specializing in this market.
In June 1998 the Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." In July 1999, the FASB released SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133, An Amendment of FASB Statement No. 133." SFAS No. 137 defers the effective date of this pronouncement to fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting standards for derivative instruments (including derivative instruments that are embedded in other contracts) and hedging activities. All items that are required to be recognized must be displayed, according to accounting standards, in the statement of financial position at fair value. The Company does not hold any derivative instruments and does not currently participate in hedging activities. The Company does not anticipate a material impact upon adoption of this statement.
5. Bank Loan Payable The 1996 acquisition of Citizens Security Group was funded in part through a $12,000,000 bank loan. The debt has a variable interest rate of LIBOR plus 50 basis points, which was 7.2600 percent and 6.6613 percent at December 31, 2000 and 1999, respectively. The bank loan will mature on August 1, 2003. The Company is required to make principal payments in accordance with the following schedule:
2001 $ 2,125,000 2002 2,500,000 2003 1,875,000 Total payments outstanding $ 6,500,000
The Company has paid income taxes during the past three years of $1,205,000 in 2000, $725,000 in 1999, and $3,215,000 in 1998.
In 1987, the Company's Board of Directors and shareholders approved an Incentive Stock Plan ("1987 Plan") for the purpose of attracting and retaining key employees. The maximum number of common shares to be authorized for issuance was limited to 750,000 shares over a 10 year term. Awards under the 1987 Plan may include non-qualified and incentive stock options, stock appreciation rights, and restricted stock. Options to purchase common shares granted under the 1987 Plan are to have an exercise price of not less than the fair market value of the Company's common shares on the date of grant. Options are to be exercisable beginning one year from the date of grant and are to expire over various periods not to exceed ten years from the date of grant. Restricted stock awards may be granted subject to terms and conditions as prescribed by the committee which administers the Plan. Under the 1987 Plan, which expired on January 21, 1997, total options with respect to 477,144 shares were granted and 272,856 options had expired. In early 1996, the Board of Directors and Shareholders approved the 1996 Employee Incentive Stock Plan ("1996 Plan"), which would eventually replace the 1987 Plan. Under the 1996 Plan, which became effective on May 8, 1996, the maximum number of shares authorized for issuance is 750,000 shares over the next ten years. As of December 31, 2000, options with respect to 299,195 shares have been granted under the 1996 Plan.