We had debt to total capitalization ratios of 15.2% and 16.2% at December 31, 2006 and 2005, respectively. Our ratio of earnings to fixed charges for 2006 and 2005 was 3.5x and 4.0x, respectively. Our current ratings allow for up to approximately 25% debt to total capitalization ratio.
From time to time, the board of directors has authorized share repurchase programs. Share repurchases are to be effected in the open market or in negotiated transactions in compliance with the safe harbor provisions of Rule 10b-18 under regulations of the Securities Exchange Act of 1934 (the “Exchange Act”). Execution of the share repurchase program is based upon management’s assessment of market conditions for its common stock and other potential growth opportunities. On November 14, 2005, the board of directors authorized a new share repurchase program of up to 3.0 million shares of StanCorp common stock. The new share repurchase program is to be effected in the open market or in negotiated transactions through December 31, 2007, and replaced the Company’s previous share repurchase program.
imately 87% of total reserves held. We also hold reserves that lack a prescribed methodology but instead are determined by a formula that we have developed based on our own experience. Because this type of reserve requires a higher level of subjective judgment, we closely monitor its adequacy. These reserves, which are primarily incurred but not reported reserves associated with our disability products represented approximately 12% of total reserves held at December 31, 2006. Finally, a small amount of reserves is held based entirely upon subjective judgment. These reserves are generally set up as a result of unique circumstances that are not expected to continue far into the future and are released according to pre-established conditions and timelines. Currently, these reserves represent less than 1% of total reserves held.
Certain costs related to obtaining new business and acquiring business through reinsurance agreements have been deferred and will be amortized to accomplish matching
The investment goal of the employee pension plan is to produce long run portfolio returns that are consistent with reasonable contribution rates and a well-funded plan. To manage the overall risk of the portfolio, the portfolio is rebalanced as necessary to keep the allocation within tolerance levels of the target allocation. The portfolio is
The Company’s ESPP allows eligible employees to purchase StanCorp common stock at a discount. The ESPP is described later in this section.
Options are granted to directors, officers and certain non-officer employees. Directors and officers receive annual grants in amounts determined by the compensation committee of the board of directors. Officers also receive options when hired or promoted. In addition, the chief executive officer has authority to award a limited number of options at his discretion to non-executive officers and other employees. Options are granted with an exercise price equal to the market closing price of the stock on the date of grant. Directors’ options vest in one year with all others vesting in four equal installments on the first four anniversaries of the grant date. Option awards to certain officers vest immediately upon a change of control of the Company as defined in the
The expense of stock options is amortized over the vesting period, which is also the period over which the grantee must provide services to the Company. At December 31, 2006, the total compensation cost related to unvested option awards that has not yet been recognized in the financial statements was $6.2 million. This cost will be recognized over the next four years.
Recoveries recognized under reinsurance agreements were $56.4 million, $52.8 million and $50.6 million for 2006, 2005 and 2004, respectively. Amounts recoverable from reinsurers were $913.6 million and $897.7 million at December 31, 2006 and 2005, respectively. Of these amounts, $789.2 million and
Standard and The Standard Life Insurance Company of New York are subject to statutory restrictions that limit the maximum amount of dividends and distributions that they could declare and pay to StanCorp without prior approval of the states in which the subsidiaries are domiciled.
The purchase obligations in the table are related to non-cancelable telecommunication obligations, software maintenance agreements and other contractual obligations, all expiring in various years through 2012.
The insurance obligations in the table are actuarial estimates of the cash required to meet our obligations for future policy benefits and claims. These estimates do not
Other long-term liabilities reflected in the Company’s balance sheet at December 31, 2006, consisted of a $14.2 million tax reimbursement liability related to the block of life insurance business sold to Protective Life in 2001, $11.8 million in capital commitments related to our low-income housing investments, $25.3 million in unfunded liabilities for non-qualified deferred compensation and supplemental retirement plans, an accrued liability of $4.0 million for postretirement benefits, $0.7 million of accrued guarantee association payments and $0.8 million of remaining payments for StanCorp Investment Advisers acquisitions.