felanders/preprocessed huggingface dataset:
ALLIED Life's universal life insurance products provide life insurance coverages with flexible premium payments determined by policyholders and accumulate cash value over the policy term. Premiums received less policy assessments for administration expenses and mortality costs are credited to policyholder account balances, to which tax-deferred interest is credited at rates adjusted periodically by ALLIED Life. Surrender charges may be deducted from the account balances if policies are surrendered within a specified period after their effective dates.
Operating income before taxes (which exclude realized investment gains and losses net of related amortization of deferred policy acquisition costs) for the year includes an additional charge to deferred policy acquisition costs of $2.8 million reflecting changes in assumptions used to estimate future gross profits on certain blocks of annuity business (see Additional Charge to DPAC on page 26). Including the additional charge of $2.8 million, operating income before taxes was $11.8 million for 1996 compared with $14.9 million reported in 1995. Operating earnings per share including the additional charge of $0.42 per share were $1.37 in 1996 compared with $1.88 in 1995. Net income totaled $8.1 million ($1.41 per share) in 1996 and was $9.7 million ($1.78 per share) in 1995.
First-year annuity premiums decreased 11.5% to $75.9 million for 1995 from $85.8 million for 1994. The decrease was due to a flat interest yield curve, which made short-term certificates of deposit available at more competitive interest rates. The total annuity account balance increased 20% to $412.2 million at year-end 1995 from $343.4 million at year-end 1994.
The management of ALLIED Life Financial Corporation and its subsidiaries is responsible for the accompanying financial information appearing in this annual report. The consolidated financial statements have been prepared in conformity with generally accepted accounting principles and include amounts based on the best estimates and judgments of management.
A summary of net realized investment gains (losses) and net changes in unrealized (depreciation) appreciation of investments is as follows:
The income tax effects of temporary differences that gave rise to significant portions of the deferred income tax assets and deferred income tax liabilities at December 31, 1996 and 1995 are presented below:
The valuation allowance for deferred income tax assets at the beginning of the years ended December 31, 1996 and December 31, 1995 was $0 and $2,701,193, respectively. During 1995, the valuation allowance of $2,701,193 which was established for the net unrealized depreciation on investments as of December 31, 1994 was eliminated.
PROFIT AND LOSS ACCOUNT for the year ending 31st December, 1935.
Premium Reserve from 1934 . Reserve for Unsettled Claims from 1934 . Reserve for Extraordinary Losses Premiums, less cancellations Prs. 147,124,114.36 Premiums for which no reserve is necessary „ 32,769,283.36
On August 6, 1994, the Company entered into a revolving credit agreement with Union Bank for $12,500,000 which refinanced a previous loan. The debt agreement was amended on April 24, 1996, July 10, 1996 and again on September 30, 1997 to increase the amount available under the revolving line of credit from $12,500,000 to $15,000,000 and to change certain covenants and payment requirements. The bank loan has a variable rate of interest based upon fluctuations in the London Interbank Offered Rate (LIBOR) and has amortizing principal payments. The interest rate at December 31, 1997 was 7.52 %. The credit agreement contains certain financial covenants with respect to capital expenditures, business acquisitions, liquidity ratio, leverage ratio, tangible net worth, net profit and dividend payments. See Note 10 of Notes to Consolidated Financial Statements.
The Company is a party to a lease with ACD2 regarding its corporate headquarters. The lease term is for a period of 15 years and contains provisions for scheduled lease charges. The Company's minimum commitment with respect to this lease in 1998 is approximately $932,000. The Company has the option to purchase this home office building and land three years into the lease period at a predetermined rate for the building, with the value of land based on then existing market rates. See Note 12 of Notes to Consolidated Financial Statements.
General and administrative ("G&A") expenses increased $7.7 million, or 27%, to $36.3 million in 1998 from $28.6 million in 1997. The increase in G&A costs was due primarily to increased compensation, benefit
As a result of the foregoing, net premiums written increased $51.5 million, or 25%, to $261.9 million in 1997 from $210.4 million in 1996. Over the same periods, net premiums earned increased to $211.2 million from $155.8 million.
the Company’s ability to maintain its A- (“excellent”) rating by A.M. Best
Underwriting expenses, including amortization of deferred policy acquisition costs, increased $11.0 million for the year ended December 31, 2005 compared to the prior year. Severance charges of $3.5 million and $2.1 million were incurred in 2005 and 2004, respectively, related to ongoing expense-reduction initiatives. The remaining increase in underwriting expenses was primarily due to higher incentive costs for agents and employees.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements. The statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. The impact of adopting this statement is currently being evaluated.
Our businesses are increasingly dependent on technology. Our inability to anticipate or manage problems with technology, or fully realize the expected benefits from investments in technology, could adversely affect our ability to write business, and could adversely impact our financial results.
The total fair market value of shares which vested during 2006 was $92,000.
The weighted-average fair value of options granted under the employee stock purchase plan was $6.11, $4.90 and $4.30 for 2006, 2005 and 2004, respectively. The total intrinsic value of options exercised under the plan was $581,000, $471,000 and $348,000 for 2006, 2005 and 2004, respectively. Compensation expense of $336,000 related to grants under the plan was recognized in 2006. As of December 31, 2006, there was $14,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plan. The cost is expected to be recognized over a period of one month.
Harleysville Group’s pension plan asset allocations at December 31, 2006 and 2005 are as follows:
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Harleysville Group Inc.'s internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 9, 2007 expressed an unqualified opinion on management's assessment of, and the effective operation of, internal control over financial reporting.
Gross premiums earned in the standard property and casualty program decreased 12% and less than 1% in 2003 and 2004, respectively. The decrease in 2003 was due primarily to discontinuing certain accounts where rates were not believed to be adequate. Increases in premium rates partially offset the decrease in premium production. Gross premiums earned in Texas decreased $9.9 million and $685,000 in 2003 and 2004, respectively, and gross premiums earned in Oklahoma decreased $6.0 million in 2003 and increased $1.7 million in 2004. Net premiums earned decreased 8% in 2003 and increased 19% in 2004. The increase in 2004 is due primarily to reinsurance changes described above.
During March 2001, Chandler USA entered into a $3.8 million sale and leaseback transaction for certain owned equipment for a three year term. During March 2004, the lease was extended for an additional three years with monthly rental installments equal to the sum of (i) $17,512 plus (ii) interest on the unpaid lease balance at a floating interest rate of 1% over JP Morgan Chase Bank prime, which was 5.25% at December 31, 2004. Chandler USA has the option to repurchase the equipment at the end of the lease for approximately $2.4 million (the "Balloon Payment"), or may elect to have the lessor sell the equipment. If the election to sell the equipment is made, Chandler USA would retain any proceeds exceeding the Balloon Payment. If the proceeds were less than the Balloon Payment, Chandler USA would be required to pay the difference between the proceeds and the Balloon Payment, not to exceed approximately $1.9 million. See Note 12 to Consolidated Financial Statements.
Losses and loss adjustment expenses were $4,337,252 in 1997 compared to $5,969,980 in 1996. The decreases in the losses and loss adjustment expenses are attributable to the decline in earned premiums from 1996 to 1997. Losses and loss adjustment expense reserves represent management's estimate of the ultimate cost of unpaid losses incurred for these periods relative to premiums earned.
The Company's principal source of cash for repayment of long-term debt is dividends from its two insurance companies. During 1998, ACMAT received $18,850,000 as dividends from its subsidiaries. Under applicable insurance regulations, ACMAT's insurance subsidiaries are restricted as to the amount of dividends they may pay to their respective holding companies, without the prior approval of their domestic state insurance department. For 1999, the amount of dividends ACMAT's insurance subsidiaries may pay, without prior approval of their domestic state insurance departments, is limited to approximately $10,730,000.
Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996
Consolidated Schedules included in Part II of this Report - Years ended December 31, 1998, 1997 and 1996:
A summary of net investment income for the years ended December 31, 1998, 1997 and 1996 follows:
On December 23, 1998, the Company obtained a permanent mortgage loan from a financial institution. The $7,800,000 mortgage note, with interest fixed at 6.95% is payable in monthly installments of principal and interest over 10 years. The loan agreements contain certain limitations on borrowings, minimum statutory capital levels and require maintenance of specified ratios. The proceeds were used to repay the existing mortgage note.
The Company's insurance subsidiaries, United Coastal Insurance and ACSTAR, are domiciled in Arizona and Illinois, respectively. The statutory financial statements of United Coastal Insurance and ACSTAR are prepared in accordance with accounting practices prescribed by the Arizona Department of Insurance and the Illinois Department of Insurance, respectively. Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners (NAIC), as well as the state laws, regulations, and general administrative rules. As of December 31, 1998, the Company does not utilize any statutory accounting practices which are not prescribed by insurance regulators that individually or in the aggregate materially affect statutory shareholders' equity.
A summary of the unaudited quarterly results of operations for 1998 and 1997 follows:
ACMAT CORPORATION AND SUBSIDIARIES Condensed Financial Information Notes to Condensed Financial Statements
These consolidated financial statements include the accounts of the Company and all of its subsidiaries and have been prepared in accordance with United States of America generally accepted accounting principles ("GAAP"). They include the merger with NAC Re Corp. ("NAC Re"), which occurred in June 1999, and which has been accounted for as a "pooling-of-interests" under U.S. GAAP. They are also based upon the Company's new fiscal year end of December 31. Results of operations, statements of position and cash flows include NAC Re as though it had always been a part of the Company. All material intercompany accounts and transactions have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(1) After giving effect to the exchange of 0.915 Company share for each NAC Re share.
The Company recorded reinsurance recoveries on loss and loss expenses incurred of $294.0 million, $166.3 million and $184.5 million for the years ended December 31, 1998, 1997 and 1996, respectively.
The Company has had several stock repurchase plans in the past as part of its capital management. In June 1999, the Board of Directors rescinded the Company's share repurchase plans.
In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income," which requires that a company classify items that meet the definition of components of other comprehensive income in a financial statement and display the accumulated balance of other comprehensive income in the equity section of the statement of financial position. Comprehensive income includes all changes in equity during a period resulting from transactions and other events from non-owner sources. Reclassification of prior period financial statements is required for comparative purposes.
future or that the Company will be able to successfully defend against such challenges or that legislation will not be enacted that will affect the Company's ability to conduct its business.
The following is a summary of the unaudited quarterly financial data for 1998 and 1997 based upon the Company's amended year end of December 31 and the pooling adjustment with NAC Re:
SELECTED FINANCIAL DATA. - ------- -------------------------- The "Selected Consolidated Financial Data" section from the Company's annual report to stockholders for the year ended December 31, 2002, which is included as Exhibit (13)(A) to this Form 10-K Report, is incorporated herein by reference.
• The accrual of a litigation-related liability of $880,000 in connection with the previously noted Services Agreement for Back Office Administration; and
Effective January 1, 2001, we entered into a Pharmacy Benefits Management Agreement (the “PBM Agreement”) with Medimpact Healthcare Systems, Inc. (“Medimpact”). The PBM Agreement called for Medimpact to process and fill within its network of contracting pharmacies prescriptions for members of Maxicare Life and Health Insurance Company, Inc., the California HMO and the Indiana HMO. The PBM agreement called for the Company to reimburse Medimpact for the cost of drugs dispensed and to pay per transaction administrative fees on a bi-weekly basis. As a result of the Indiana HMO being placed in rehabilitation and the California HMO’s bankruptcy, Medimpact allegedly has not received reimbursement for certain prescriptions filled on behalf of the members of those subsidiaries. Although it has yet to do so, Medimpact may seek reimbursement from us for such costs in an amount not presently known. We, in turn, believe that we have claims against Medimpact for rebates due to us.
By order dated March 9, 2001, the Missouri Department of Insurance approved the transfer of all of the outstanding shares of Maxicare Life and Health Insurance Company, Inc. (MLH) from the Company to Maxicare Indiana, Inc., on the condition that control of MLH remain with the Company. We believe that this condition has not been complied with and that, accordingly, the transfer of the MLH shares by us to Maxicare Indiana, Inc. is null and void. We intend to present our position to the Missouri Department of Insurance at the appropriate time.
Home Service Insurance. We provide final expense ordinary life insurance to middle and lower income individuals in Louisiana, Mississippi and Arkansas. Our policies in this segment are sold and serviced through a home service marketing distribution system utilizing employee-agents who work on a route system to collect premiums and service policyholders, and through networks of funeral homes who collect premiums and provide personal policyholder service.
Decrease (Increase) in Fair Value of Warrants. Because the market value of our Class A common stock decreased during 2010 and 2009, we recognized a gain on the decrease in fair value of warrants of $0.2 million and $3.2 million, compared to a loss of $2.7 million in 2008. The gains in 2010 and 2009 were directly related to the decrease in the price of our Class A common stock. The warrant liability is calculated using the Black-Scholes option pricing model, which projects the future value of the warrants when they expire in July 2011 and 2012. Current accounting standards require the change in the value of the warrant liability be recorded as a component of revenues. When the liability increases we incur a loss, and when the liability decreases we recognize income. The warrant liability is not anticipated to have an effect on the Company’s cash flows, as the Company expects the warrants will either be exercised and converted into our Class A common stock in July 2012, or sooner, at the election of the warrant holders, or expire.
At December 31, 2010, investments in fixed maturity and equity securities were 87.6% of our total cash, and cash equivalents and investments. All of our fixed maturities were classified as either available-for-sale or held-to-maturity securities at December 31, 2010. We had no fixed maturity or equity securities that were classified as trading securities at December 31, 2010 or 2009.
We believe we have established appropriate reinsurance coverage based upon our net retained insured liabilities compared to our surplus.
A deferred tax asset or deferred tax liability is recorded only if a determination is made that is more-likely-than-not that the tax treatment on which the deferred tax item depends will be sustained in the event of an audit. These determinations inherently involve management’s judgment. In addition, the Company must record a tax valuation allowance with respect to deferred tax assets if it is more-likely-than-not that the tax benefit will not be realized. This valuation allowance is in essence a contra account to the deferred tax asset. Management must determine the portion of the deferred tax asset and resulting tax benefit that may not be realized based upon judgment of expected outcomes. Due to significant estimates utilized in establishing the valuation allowance and the potential for changes in facts and circumstances, it is reasonably possible that we will be required to record a valuation allowance in future reporting periods. Such a charge could have a material adverse effect on our results of operations, financial condition and capital position.
Generally, policyholders who purchase the Company's products have the option of investing in the separate accounts, segregated funds for which investment risks are borne by the customer, or the Company's portfolio, referred to as the General Account. The Company earns its profits through policy fees charged to separate account annuity and life policyholders and through the interest spread for the GIC and General Account annuity and life products. Policy charges and fee income consist mainly of three types, sales charges or loading fees on new sales, mortality and expense charges ("M&E") assessed on fund balances, and mortality and related charges based on total life insurance in-force business. Policyholder fund values are affected by net sales (sales less withdrawals), changes in interest rates and investment returns. The interest spread represents the difference between the investment income earned by the Company on its investment portfolio and the amount of interest credited to the policyholders' accounts. Products that generate spread income primarily include the GIC product, general account life insurance products, fixed annuities and the fixed-rate option of variable annuities.
Policyholder liabilities The liability for "Future policy benefits and other policyholder liabilities" represents 4.6% of total liabilities as of December 31, 2003. Changes in this liability are generally reflected in the "Policyholders' benefits" caption in our statements of operations. This liability is primarily comprised of the present value of estimated future payments to holders of life insurance and annuity products where the timing and amount of payment depends on policyholder mortality or surrender experience. For life insurance and annuity products, expected mortality is generally based on the Company's historical experience or standard industry tables. Interest rate assumptions are based on factors such as market conditions and expected investment returns. Although mortality and interest rate assumptions are "locked-in" upon the issuance of new insurance or annuity business with fixed and guaranteed terms, significant changes in experience or assumptions may require us to provide for expected future losses on a product by establishing loss recognition reserves.
The change in reserves increased $29.0 million from the prior year primarily as a result of an increase of $34.1 million in the change in the unearned revenue reserve compared to the prior year. The increase is primarily due to higher deferrals of upfront policy charges partially offset by increased amortization. Deferrals are higher than last year due to continued sales of newer variable life insurance products, which defer substantial charges during the first five years of the policy. The growth in term insurance sales contributed $17.1 million to the increase in reserves, whereas the decrease in extended term premiums provided a decrease of $20.1 million.
In June 2011, the FASB updated requirements relating to the presentation of comprehensive income. In December 2011, the FASB issued a subsequent update to defer those changes in the June 2011 update that relate to the presentation of reclassification adjustments. All other requirements of the June 2011 update are not affected by the December 2011 update. The amendments are being made to allow the FASB time to re-deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. On February 5, 2013, the FASB did add new disclosure requirements for items reclassified out of accumulated other comprehensive income. This update will become effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. The guidance is not expected to have an impact on the Company’s financial condition or results of operations.
The following tables summarize information about fixed stock options outstanding at December 31, 2012:
The Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America which differ in some respects from statutory accounting practices prescribed or permitted in the preparation of financial statements for submission to insurance regulatory authorities.
In connection with the Plan, the Company's Board of Directors declared a dividend distribution of one right (a "Right") for each outstanding share of the Company's common stock paid on December 16, 2002, to shareholders of record at the close of business on December 2, 2002. Each Right entitles the registered holder to purchase from the Company a unit (a "Unit") consisting of one one-hundredth of a share of Class A Preferred Stock. Under the Plan, the Rights detach and become exercisable upon the earlier of (a) ten (10) days following public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of the Company's common stock, or (b) ten (10) business days following the commencement of, or first public announcement of the intent of a person or group to commence, a tender offer or exchange offer that would result in a person or group beneficially owning 15% or more of such outstanding shares of the Company's common stock. The exercise price, the kind and the number of shares covered by each right are subject to adjustment upon the occurrence of certain events described in the Plan.
The acquisition date fair value of the total consideration to be transferred is $1,041,250. This fair value total is equal to $350,000 ITIC has already paid toward the purchase price, as well as $691,250 in estimated contingent payments. The amount previously paid will be used to offset contingent payment amounts calculated for final consideration, and is eligible for refunding in part or in its entirety if greater than the final settlement amount.
Commission, brokerage, taxes and fees decreased by 8.3% to $310.7 million in 2012 compared to $338.7 million in 2011. The 2012 decrease is due primarily to an increase in excess of loss business which carries a lower commission than pro rata business, and growth in crop insurance on a direct distribution basis, which has lower acquisition costs, partially offset by the one-time effect of the non-renewal of the Florida quota share and the adoption of new accounting standards concerning the accounting for acquisition costs.
Our net income was $520.3 million and our net loss was $202.8 million in 2012 and 2011, respectively. The increase was primarily driven by the decline in catastrophe losses in 2012 compared to 2011.
equity securities and other invested assets and $33.9 million of net realized capital gains from sales of fixed maturity and equity securities, partially offset by $6.6 million of other-than-temporary impairments on fixed maturity securities. The fixed maturity sales in 2012 related primarily to maintaining a balanced foreign currency exposure and the equity sales related primarily to reducing our equity exposure. In 2011, we recorded $16.7 million of losses due to fair value re-measurements on fixed maturity and equity securities and other invested assets, $14.5 million of other-than-temporary impairments on fixed maturity securities and $9.9 million of net realized capital losses from sales of fixed maturity and equity securities.
Incurred losses and LAE increased by 20.8% to $315.9 million in 2013 compared to $261.5 million in 2012, representing 7.7 loss ratio points, due to increases in current year attritional losses and current year catastrophe losses. Current year catastrophe losses were $33.6 million in 2013, due to the Canadian floods ($19.0 million) and Typhoon Fitow ($14.6 million). The current year catastrophe losses of $6.0 million in 2012 related primarily to Superstorm Sandy ($5.9 million). The current year attritional losses increased by $36.9 million primarily due to the impact of the increase in premiums earned.
Incurred losses and LAE decreased 69.5% to $261.5 million in 2012 compared to $856.1 million in 2011, representing 88.8 loss ratio points. The decrease was principally due to a $604.5 million (94.9 points) decrease in current year catastrophes for 2012 (outlined above) compared to 2011. The $610.5 million of 2011 current year catastrophes related primarily to the Japanese earthquake and tsunami ($295.8 million), the 2011 New Zealand earthquake ($124.4 million), the Thailand floods ($119.8 million) and the 2011 Australian flood ($33.2 million). Attritional losses increased by $16.0 million (7.2 points) primarily due to less favorable reserve development in 2012 than in 2011.
Balance Sheet Data (at end of period) Total investments $ 51,048 $ 59,648 $ 91,247 $ 83,578 $ 104,417 Total assets 86,147 104,107 207,298 297,261 365,407 Unpaid losses and loss adjustment expenses 14,700 20,413 50,509 121,423 160,629 Total liabilities 26,878 42,978 149,495 237,281 302,955 Total shareholders' equity 59,269 61,039 57,803 59,980 62,452
Total Earnings. Net earnings after tax decreased 40.2% to $2.5 million in 2002 from $4.2 million in 2001. The decrease in net earnings is primarily due to the impairment of notes receivable, reinsurance recoverable write-offs relating to the Berkley dispute, and increased rescission expense.
Gross gains of $788,000, and $137,000 and gross losses of $135,000, and $1,742,000 were realized on the voluntary sale of fixed maturities for the years ended December 31, 2001 and 2000, respectively.
As of December 31, 2001, 95% of the Company's fixed maturities were investment grade and there were no significant concentrations by issuer or by industry, other than U.S. Treasury securities. Investment grade securities are those that are rated "BBB" or better by nationally recognized rating agencies. During 2001 and 2000, the Company incurred realized losses totaling $550,000 and $1,468,000, respectively, for other-than-temporary impairment of value of some of its fixed maturities after determining that not all of the unrealized losses were temporary in nature. During 2001, $617,000 of the 2000 losses were recovered and are included in realized gains.
The Company invests in commercial first mortgage loans throughout the United States. Investments are diversified by property type and geographic area. Mortgage loans are collateralized by the related properties and generally are no more than 70% of the properties' value at the time that the original loan is made.
The following tables present the relevant operating results for the operating segments for the three years ended December 31, 2005, 2004 and 2003:
The following table shows the loss ratios for each of the Company’s operating segments for the years ended December 31, 2004 and 2003. The loss ratios for all operations were impacted by the factors noted above.
The following table shows the expense ratios for each of the Company’s operating segments for the years ended December 31, 2004 and 2003.
Net Income. Net income was $175.5 million in 2004 compared to net income of $206.5 million in 2003, reflecting a decrease in underwriting results due to 2004 catastrophe losses, partially offset by an improvement in investment income, realized capital gains and decreased income taxes.
In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) 141 which eliminates the pooling-of-interests method of accounting for business combinations except for qualifying business combinations that were initiated prior to July 1, 2001. Gallagher initiated five business combinations prior to July 1, 2001 that were completed in the third quarter of 2001 and were accounted for as poolings of interests because they met the qualifying criteria of SFAS 141. In June 2001, the FASB also issued SFAS 142 which no longer permits the amortization of goodwill and indefinite lived intangible assets. Instead, these assets will be subject to periodic review for impairment (at least annually or more frequently if impairment indicators arise). Gallagher will apply the new rules on accounting for pre-existing goodwill and other intangible assets beginning in the first quarter of 2002. Application of the nonamortization provisions of SFAS 142 is expected to result in an increase in pretax earnings of $1.3 million per year. During 2002, Gallagher will perform the first of the required tests of goodwill and indefinite lived intangible assets as of January 1, 2002. Exclusive of the nonamortization provisions of goodwill and indefinite lived intangible assets, management does not expect the adoption of SFAS 142 will have a material effect on Gallagher's consolidated operating results or financial position. See Note 1 to the Consolidated Financial Statements.
Investment income and other increased by $6.9 million or 16% in 2001 due primarily to results generated by Gallagher's unconsolidated equity investment portfolio, realized gains generated from Gallagher's
Since commitments may expire unused, the amounts presented in the table above do not necessarily reflect the actual future cash funding requirements of Gallagher.
In 2001, Gallagher acquired substantially all of the net assets of the following insurance brokerage firms in exchange for shares of its common stock: The Galtney Group, Inc. dba Healthcare Insurance Services, 3,330,000 shares; MDM Insurance Associates, Inc., 752,000 shares; The InWest Group, Inc., 407,000 shares; SKANCO International, Ltd., 263,000 shares; Nelson/Monarch Insurance Services, Ltd., 109,000 shares; E.S. Susanin, Inc., 109,000 shares; Burgess & Associates, Inc., 73,000 shares; Madison Scott & Associates, Inc., 34,000 shares; Midwest Surety Services, Inc., 32,000 shares; and Central Surety Agency, Inc., 26,000 shares.
Options to purchase 231,000, 313,000 and 40,000 shares of common stock were outstanding at December 31, 2001, 2000 and 1999, respectively, but were not included in the computation of the dilutive effect of stock options. These options were excluded from the computation because the options' exercise prices were greater than the average market price of the common shares during the respective year and, therefore, would be antidilutive to earnings per share under the treasury stock method.
The Company neither owns nor maintains any office space or facilities. Rather, the business office for the Company is provided by the Manager and is located at Financial Services Centre, Bishops Court Hill, St. Michael, Barbados. The Company believes that these facilities are adequate for its current and anticipated future needs. In addition, the Manager supplies all equipment for the Company.
Premiums are written on the basis of quarterly cessions and earned relative to anticipated loss exposures. Acquisition costs, consisting of ceding commissions and excise taxes, are expensed on the same basis as premiums are earned.
Debt securities issued by supra-nationals 2,003,100 75,775 - 2,078,875 ----------- ---------- ----------- -----------
Ending balance in reserves for losses $ 4,284,304 $ 3,480,334 $ 2,660,270 ============ ============ ============
Although material capital expenditures may also be funded through borrowings, the Company believes that its cash and short-term investments at year end, net of trust restriction of $2,867,099, statutory deposits of $2,725,000, and dividend restriction between Crusader and Unico (See Item 1 - Business - Insurance Company Operation - Holding Company Act) plus the cash to be generated from operations, should be sufficient to meet its operating requirements during the next twelve months without the necessity of borrowing funds.
Service Fee Income - - ------------------ Unifax sells and services insurance policies for Crusader. The service fee charged to the policyholder by Unifax is recognized as income in the consolidated financial statements. The commissions paid by Crusader to Unifax are eliminated as intercompany transactions and are not reflected in commission income or commission expense.
The amortized cost and estimated market value of fixed maturity investments at December 31, 1998, by contractual maturity are as follows. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.
NOTE 13 - PROFIT SHARING PLAN - - ----------------------------- During the fiscal year ended March 31, 1986, the Company adopted the Unico American Corporation Profit Sharing Plan. Employees who are at least 21 years of age and have been employed by the Company for at least two years are participants in the Plan. Pursuant to the terms of the Plan, the Company annually contributes to the account of each participant an amount equal to a percentage of the participant's eligible compensation as determined by the Board of Directors. Participants are entitled to receive benefits under the plan upon the later of the following: the date 60 days after the end of the plan year in which the participant's retirement occurs or one year and 60 days after the end of the plan year following the participant's termination with the Company. However, the participant's interest must be distributed in its entirety no later than April 1 of the calendar year following the calendar year in which the participant attains age 70 1/2 or otherwise in accordance with the Treasury Regulations promulgated under the Internal Revenue Code of 1954 as amended.
Realized investment losses in 1999 were $11.9 million, compared with realized losses of $3.9 million in 1998. Included in realized losses for 1999 is a $6.0 million write-down of a preferred stock investment that became other than temporarily impaired during the third quarter of 1999.
In December 1993, the NAIC adopted a risk-based capital formula for casualty insurance companies which establishes recommended minimum capital requirements for casualty companies. The formula has been designed to capture the widely varying elements of risks undertaken by writers of different lines of insurance having differing risk characteristics, as well as writers of similar lines where differences in risk may be related to corporate structure, investment policies, reinsurance arrangements and a number of other factors. The Company has estimated the Risk-Based Capital Requirements of each of its insurance subsidiaries as of December 31, 2000. Each of the Companies' policyholders' surplus exceeded the highest level of minimum required capital.
As part of the Elm County Mutual transaction, the Company agreed to make annual $1 million payments to Employers Reinsurance Corporation over 7 years beginning September 30, 2001. At December 31, 2000, the Company is carrying a note payable for $5.4 million, which represents the discounted value of the seven annual payments using a 7% rate. An additional $500,000 note payable to Employers Reinsurance Corporation is due during the first quarter of 2001 and represents the remainder of the initial purchase price.
The financial statements and notes appear on pages 20-35 in the Annual Report to Stockholders for the year ended December 31, 2000 and are incorporated herein by reference. See Part IV, Item 14.
During 2016, the Company impaired its bonds in an energy corporation with a total par value of $650,000 as a result of continuing unrealized losses. This impairment was considered fully credit-related, resulting in a charge to the statement of operations before tax of $207,450 for the year ended December 31, 2016. This charge represents the credit-related portion of the difference between the amortized cost basis of the security and its fair value. The Company has experienced no additional other-than-temporary impairments on fixed maturity available-for-sale securities during 2016.
In April 2014, the Financial Accounting Standards Board (“FASB”) issued revised guidance to reduce diversity in practice for reporting discontinued operations. Under the previous guidance, any component of an entity that was a reportable segment, an operating segment, a reporting unit, a subsidiary or an asset group was eligible for discontinued operations presentation.
FTFC has net operating loss carryforwards of $5,320,326 expiring in 2024 through 2033. FTFC has capital loss carryforwards of $42,500 expiring in 2018 that are subject to a full valuation allowance as of December 31, 2016 and 2015 since it is not probable that the capital loss carryforwards will be utilized. During 2016, FTFC utilized $299,347 of the net operating loss carryforward existing as of January 1, 2016 to offset 2016 federal taxable income. During 2015, FTFC utilized $53,529 of the net operating loss carryforward existing as of January 1, 2015 to offset 2015 federal taxable income.
Reinsurance assumed and ceded amounts for TLIC and FBLIC for 2016 and 2015 are summarized as follows:
Mr. Pettigrew has thirty days to appeal this decision by the jury that will require him to post a bond in the amount of the total judgment of $4,300,000. Should Mr. Pettigrew fail to post such a bond, the Company and Mr. Zahn will be permitted to execute on Mr. Pettigrew's assets.
On May 13, 2015, FBLIC filed a Counterclaim against Doyle Nimmo seeking indemnity and seeking damages for breach of fiduciary duty in the event FBLIC is liable under Plaintiffs’ underlying claims. In addition, on April 29, 2015, TLIC filed a lawsuit against Doyle Nimmo and Michael Teel alleging that they were liable for violations of federal and state securities laws for failing to disclose information relating to the Decreasing Term to 95 policies. This lawsuit is currently pending in the District Court for the Western District of Missouri (hereinafter the “Federal Lawsuit”). No claims have been made against TLIC in the Federal Lawsuit. The Federal Lawsuit has been stayed pending resolution of the lawsuit against FBLIC in the Circuit Court of Greene County, Missouri.
Pages 70 through 73 of the 1995 Annual Report to Stockholders are incorporated herein by reference.
2010 compared to 2009. For the year ended December 31, 2010, the expense on amounts withheld was relatively flat, decreasing $0.1 million, or 2.4%, compared to the same period in 2009.
Summary information for securities with unrealized gains or losses at December 31, 2011 is shown in the following table. Approximately $0.3 million of fixed maturities and $0.2 million of equity securities had no unrealized gains or losses at December 31, 2011.
(a) Dollar amounts and time periods are estimates based on historical net payment patterns applied to the gross reserves and do not represent actual contractual obligations. Actual payments and their timing could differ significantly from these estimates, and the estimates provided do not reflect potential recoveries under reinsurance treaties.
The Company uses the end of the reporting period as its policy for determining transfers into and out of each level. There were no significant transfers between Level 1 and Level 2 during the years ended December 31, 2011 or 2010. The following table presents a reconciliation of the beginning and ending balances for all investments measured at fair value on a recurring basis using Level 3 inputs for the year ended December 31, 2011:
Employees of the Company may participate in the National Interstate Savings and Profit Sharing Plan (the “Savings Plan”). Contributions to the profit sharing portion of the Savings Plan are made at the discretion of the Company and are based on a percentage of employees’ earnings after their eligibility date. Company contributions made prior to December 31, 2006 vest after five years of service and contributions made subsequent to December 31, 2006 vest after three years of service. Profit sharing expense was $0.6 million for both the years ended December 31, 2011 and 2010 and $0.4 million for the year ended December 31, 2009.
References in these financial statements to "Predecessor" refer to MLOA prior to July 1, 2004. References to "Successor" refer to MLOA on and after July 1, 2004, after giving effect to the implementation of the Purchase Adjustments. For accounting purposes (due to convenience and immateriality of the results of MONY and its subsidiaries from July 1 through July 8), the Holding Company has consolidated MONY and its subsidiaries and reflected its results from July 1, 2004 in its consolidated Statements of Earnings and consolidated Cash Flows. MLOA's activity for the period from July 1, 2004 through July 8, 2004 is therefore included in the Successor's statement of earnings and excluded from the Predecessor's statement of operations. The Predecessor's statement of operations is presented using MLOA's historical basis of accounting.
The preparation of the accompanying financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions (including normal, recurring accruals) that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The accompanying financial statements reflect all adjustments necessary in the opinion of management to present fairly the financial position of MLOA and its results of operations and cash flows for the periods presented.
The following table discloses fixed maturities (59 fixed maturities) that have been in a continuous unrealized loss position for less than a twelve month period as of December 31, 2004:
DECEMBER 31, December 31, 2004 2003 ---------------- ------------------ (SUCCESSOR) (PREDECESSOR) (IN MILLIONS) GMDB: Equity........................ $ 2,209 $ 2,003 Fixed income.................. 452 413 Balanced...................... 67 67 Other......................... 108 155 ---------------- ------------------ Total......................... $ 2,836 $ 2,638 ================ ==================
MLOA recognized income (losses) of $7.1 million, $(4.6) million and $5.5 million for the six months ended December 31, 2004, six months ended June 30, 2004 and full year 2003, respectively, on the embedded derivative within the MODCO agreement with USFL as prescribed by the accounting provisions of DIG B36, effective for the first fiscal quarter beginning after September 15, 2003. In addition, MLOA had a swap asset of $3.3 million and $5.5 million at December 31, 2004 and 2003, respectively, related to this embedded derivative. MLOA accounts for the embedded derivative as a total return swap.
(2) Results for the three months ended December 31, 2004 include the net gain of $5.0 million recorded from the recapture by USFL of all of the term policies that had previously been assumed by MLOA under its MODCO agreement with USFL (see Note 11).