Net statutory premiums include premiums collected from annuities and universal life-type products. These premiums are not reported as revenues in accordance with accounting principles generally accepted in the United States. Amounts include premiums assumed from American Equity Investment Life Insurance Company totaling $837.9 million in 2002 and $280.0 million in 2001. The reinsurance agreement with American Equity continues through 2003 with respect to the assumption of new business. Amounts also include internal rollover premiums to variable universal life or variable annuity contracts totaling $7.0 million in 2002, $10.2 million in 2001, $25.0 million in 2000, $17.1 million in 1999 and $29.5 million in 1998.
The development of reserves for future policy benefits for equity-indexed products requires the valuation of the embedded derivatives relating to the contract holder’s right to participate in one or more market indexes. This valuation requires assumptions as to future option costs that are dependent upon the volatility of the market indexes, risk free interest rates, market returns and the expected lives of the contracts.
We have agreed that we will not declare or pay dividends on any class or series of stock except for regular cash dividends (defined as regular, fixed, quarterly or other periodic cash dividends as declared by our Board of Directors as part of the stated cash dividend policy and do not include any other dividends or distributions, such as
the securities were marked to market and the corresponding increase in carrying value totaling $2.8 million, net of offsetting adjustments to deferred acquisition costs, value of insurance in force acquired, unearned revenue reserve and income taxes, was credited to stockholders’ equity. Prior year financial statements were not restated.
Goodwill totaled $17.0 million at December 31, 2002 and 2001, consisting of $11.2 million separately identified on the consolidated balance sheets and $5.8 million in equity method goodwill included in the securities and indebtedness of related parties line on the consolidated balance sheets. On a pro forma basis without goodwill amortization, net income applicable to common stock for 2001 would have been $37.7 million ($1.38 per share-basic and $1.35-assuming dilution) and for 2000 would have been $40.2 million ($1.32 per share-basic and $1.31-assuming dilution).
The carrying value of investments which have been non-income producing for the twelve months preceding December 31, 2002 include real estate, fixed maturities, equity securities, mortgage loans and other long-term investments totaling $5.0 million.
Acquisition costs totaling $0.7 million have been deferred and included as a component of goodwill. Goodwill was being amortized during 2001 using the straight-line method and a 20-year amortization schedule. As discussed in Note 1 under “Goodwill,” goodwill is no longer amortized beginning in 2002.
We have a note payable to the Federal Home Loan Bank (FHLB) totaling $40.0 million at December 31, 2002 and 2001. This note is due September 17, 2003, therefore it is classified as short-term debt at December 31, 2002 and long-term debt at December 31, 2001 on our consolidated balance sheets. Interest on the note is charged at a variable rate equal to the London Interbank Offered Rate less 0.0475% (1.37% at December 31, 2002 and 1.85% at December 31, 2001). At December 31, 2002, fixed maturity securities with a carrying value of $46.8 million are on deposit with the FHLB as collateral for the note. As an investor in the FHLB, we have the ability to borrow an additional $44.6 million from the FHLB at December 31, 2002 with an appropriate increase in collateral deposits.
We have administrative services agreements with American Equity under which we provide underwriting, claims processing, accounting, compliance and other administrative services primarily relating to certain variable insurance products underwritten by them. Fee income from performing these services totaled $0.3 million in 2002, 2001 and 2000.
Our investment in equity method investees and the related equity income are attributable to the corporate and other segment. Interest expense and expenditures for long-lived assets were not significant during the periods presented above.