felanders/preprocessed huggingface dataset:
1997 $ 53,694 $ 2,740 1996 48,704 2,493 1995 42,708 2,287 1994 32,129 1,761 1993 30,848 1,427
Through our extensive use of adjustable commission arrangements based on claims experience, we have been able to generate business with stable underwriting results. The overall loss ratio for the Company was 36.6% in 1997 compared with 37.9% and 37.3% in 1996 and 1995, respectively. The commission expense ratios for the same periods were 42.2% in 1997, 41.5% in 1996 and 42.4% in 1995.
1997 1996 1995 ------ ------ ------ Property & Casualty Segment 96 97 94 Industry 102* 107 106.5
Deferred acquisition costs are reviewed quarterly to assure their recoverability. The recoverability of the deferral is calculated without considering investment income.
The Company's loss reserve development includes losses assumed from excess casualty reinsurance pools in which the Company discontinued participation effective on or prior to 1981. The business is long-tail in nature and losses continue to exceed both Company and industry expectations. Most of these losses result from asbestos-related and environmental pollution claims. The Company's exposure is primarily through participation in excess casualty pools. These pools typically involve high-layer coverages that are applicable only after primary insurance coverage and, in many cases, reinsurance coverages have been exhausted. The Company's experience can differ significantly from that of other insurers which wrote the primary coverages directly. The Company establishes loss reserves on known claims as recommended by the various pool managers, plus additional reserves to compensate for those claims that have not yet been reported.
The Company and members of its board of directors deny all allegations of unlawful conduct asserted in any of these actions and have been advised by counsel that they have meritorious defenses to each of them. The Company intends to continue to defend itself vigorously against these actions and believes, based on currently available information, that any liabilities that could result are not expected to have a material effect on the Company's financial position.
Information otherwise required in the Schedule is provided in Schedule III.
Life DeptPremium Reserve Annuity Fund Reserve for unsettled Claims . . .
StafF Life Insurance and Pension Fund . . Dividend Directors and Management ...... Carried forward
Year Gross Premium Income Net Premium Income Net Reserve for unexpired liabiiity and unsettled claims
As prescribed by “GAAP”, we present our fixed maturity investments classified as available for sale at fair value in the statements of financial position. The fair values for our public fixed maturity securities are based on quoted market prices or estimates from independent pricing services. However, for our investments in private securities such as private placement fixed maturity securities, which comprised 12% of our investments as of December 31, 2006, this information is not available. For these private fixed maturities, fair value is determined typically by using a discounted cash flow model, which relies upon the average of spread surveys collected from private market intermediaries who are active in both primary and secondary transactions and takes into account, among other things, the credit quality of the issuer and the reduced liquidity associated with private placements.
The future policy benefit reserves at December 31, 2006 represented 6% of our total liabilities and relate primarily to term life, variable, and universal products and are determined in accordance with GAAP as the present value of expected future benefits to or on behalf of policyholders plus the present value of future expenses less the present value of future net premiums. The expected future benefits are based on mortality, lapse, maintenance expense and interest rate assumptions. Reserves for new business are based on best estimate assumptions as of the date the policy is issued with provisions for the
From December 31, 2005 to December 31, 2006, total assets increased by $317 million from $3.965 billion to $4.282 billion. Separate account assets increased by $332 million from $2.288 billion at December 31, 2005 to $2.620 billion at December 31, 2006 due to market performance and sales net of surrenders, benefits and policy charges in 2006. Fixed maturities decreased by $71 million, from $992 million at December 31, 2005 to $921 million at December 31, 2006, this decrease was primarily driven by sales of fixed maturities to fund the acquisition of commercial loans and to pay down investment-related borrowings. Cash and cash equivalents are lower by $56 million as cash used in financing activities exceeded cash provided from operating and investing activities in 2006. Deferred policy acquisition costs increased by $30 million from $226 million at December 31, 2005, to $256 million at December 31, 2006, primarily driven by capitalization of acquisition costs from the continued growth of sales in life products, partially offset by net amortization. Reinsurance recoverables increased by $43 million, as a result of continued growth in term in force under the PARCC coinsurance agreement
(4) Interest on the subordinated debentures was calculated using an interest rate equal to the three-month LIBOR rate at December 31, 2012 of 0.3105% plus 4.20%, or 4.5105%.
The Company recorded favorable development related to prior years loss and loss expense reserves in 2012, 2011 and 2010 of $16.9 million, $33.3 million and $64.6 million, respectively. Favorable development of unallocated loss adjustment expenses contributed approximately $6.3 million of the 2012 development, while $10.4 million was attributable to favorable development on catastrophe reserves from accident year 2011. The personal and business insurance segments non-catastrophe loss and ALAE reserves accounted for $28.0 million of favorable development related to the latest three accident years, primarily in the personal auto liability, other & product liability, and fire & allied lines with $10.5 million, $9.4 million and $5.1 million of favorable development, respectively. The favorable development in these lines was driven by emergence of lower than anticipated claim severity. The specialty insurance segment non-catastrophe loss and ALAE reserves accounted for $27.8 million of adverse development related to the latest two accident years, which was driven by RED reserve strengthening.
The following table sets forth the reinsurance transactions on the Company’s income statements for the Pooling Arrangement between the STFC Pooled Companies and State Auto Mutual for the years ended December 31, 2012, 2011 and 2010:
The actuarially prepared funding amount to the pension plan ranges from the minimum amount the Company would be required to contribute to the maximum amount that would be deductible for tax purposes. Contributed amounts in excess of the minimum amounts are deemed voluntary. Amounts in excess of the maximum amount would be subject to an excise tax and may not be deductible for tax purposes. The Company’s share of expected contributions during 2013 is approximately $13.0 million.
The following tables set forth reconciliations of statutory capital and surplus and net income, as determined using SAP, to the amounts included in the accompanying consolidated financial statements:
The following table sets forth financial information regarding the Company’s reportable segments at December 31, 2012 and 2011:
Net income, excluding special charges of $80.9 million for Employee Benefits after tax, increased 7% in 2001 and increased 15% in 2000. The improvement in earnings in 2001 reflected favorable experience in realized investment gains, expense gains associated with higher fee income partially offset by a deterioration in morbidity (which negatively impacted stop-loss coverages), decreases in premiums due to membership declines, and increased bad debts due to the impact of the economic slowdown. During 2001, the Employee Benefits segment experienced increased medical costs and utilization trends which contributed to the deterioration in morbidity experience. The improvement in earnings in 2000 reflected favorable morbidity experience in large case business, and the acquisition of General American's group life and health business, which more than offset poor mortality experience.
As of December 31, 2001, the PFC options outstanding have an exercise price of $2.16 and a weighted-average remaining contractual life of 1.36 years.
Management's Discussion and Analysis of Financial Condition and Results of Operations is set forth under the same caption on pages 25 through 33 of the Company's 2000 Annual Report to Stockholders. Such information is incorporated herein by reference and should be read in conjunction with the Consolidated Financial Statements and the Notes thereto contained on pages 35 through 54 of such Annual Report.
During 2005, our loss ratio was significantly affected by hurricane losses (primarily Hurricane Katrina) where we incurred $10.1 million of loss and loss adjustment expenses, net of reinsurance. The hurricanes also affected our loss ratio by reducing our 2005 net earned premiums by $12.9 million (including the $6.1 million of reinstatement reinsurance premiums noted above). In addition to the losses for the aforementioned hurricanes, the loss ratio was also affected by favorable reserve development on prior accident years of $3.1 million from the Excess and Surplus Insurance segment’s casualty business and $2.3 million of favorable reserve development from the Excess and Surplus Insurance segment’s property business.
The expense ratio for the Excess and Surplus Insurance segment increased to 22.7% for 2006 from 20.1% for 2005. Our expense ratio for both 2006 and 2005 reflected strong expense management of commissions and other operating expenses as well as our use of technology to process and administer our insurance business in a cost efficient manner. The increase in the expense ratio for 2006 is primarily due to the fact that the 2005 expense ratio benefited from the ceding commission that James River Insurance received on the quota share reinsurance contract, which totaled $9.7 million. The quota share treaty also affected the expense ratio by reducing net earned premiums by $40.0 million for 2005. Our expense ratio for 2005 was also affected by the hurricanes, the net impact of which was to reduce other operating expenses by $1.8 million in commissions as well as the previously noted reduction of net earned premiums of $12.9 million.
We have sold trust preferred securities through three Delaware statutory trusts sponsored and wholly-owned by us. Each trust used the net proceeds from the sale of its trust preferred securities to purchase our floating rate junior subordinated debt.
The total operating expenses of the Corporate and Other segment were $1.2 million and $879,000 for the years ended December 31, 2005 and 2004, respectively. The significant increase in other operating expenses of the Corporate and Other segment over the prior year was attributable to planned increases in legal and consulting expenses, most notably those associated with being a public registrant.
results may differ materially from the estimates and assumptions used in preparing the consolidated financial statements. During 2006, we experienced $1.3 million of adverse development on our net losses and loss adjustment expenses on Hurricanes Katrina and Wilma.
We carry securities classified as “available-for-sale” at fair value, and unrealized gains and losses on such securities, net of deferred taxes, are reported as a separate component of accumulated other comprehensive income. We do not have any securities classified as “held-to-maturity” or “trading.” We evaluate our investments regularly to determine whether there are declines in value that are other-than-temporary. When we determine that a security has experienced an other-than-temporary impairment, the impairment is recognized as a realized investment loss.
As of December 31, 2007, we expect these investments to continue to perform with their original contractual terms and we have the ability and intent to hold these investment securities until the recovery of the fair value up to the cost of the investment, which may be maturity. Accordingly, we do not consider these
Our policyholder-related liabilities decreased $720.6 million. The transfer of AML was the primary driver of the decrease. Also contributing to the decrease was the runoff of deferred annuities, structured settlements and the general account portion of a reinsured block of variable annuities. Partially offsetting these decreases was an increase in FABNs driven by increased sales, as well as growth in term and universal life insurance.
We have audited the accompanying consolidated balance sheets of Genworth Life and Annuity Insurance Company and subsidiaries (the Company) as of December 31, 2007 and 2006, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2007. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Genworth Life and Annuity Insurance Company and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.
We regularly review all of these assumptions and periodically test PVFP for recoverability. For deposit products, if the current present value of estimated future gross profits is less than the unamortized PVFP for a line of business, a charge to income is recorded for additional PVFP amortization. For other products, if the benefit reserve plus anticipated future premiums and interest income for a line of business are less than the current estimate of future benefits and expenses (including any unamortized PVFP), a charge to income is recorded for additional PVFP amortization or for increased benefit reserves. For the years ended December 31, 2007, 2006 and 2005, no charges to income were recorded as a result of our PVFP recoverability testing.
As of December 31, 2007 and 2006, $8.2 million and $18.0 million, respectively, of securities were on deposit with various state government insurance departments in order to comply with relevant insurance regulations.
The adjustments were the result of a reclassification from future policy benefits.
We believe it is reasonably possible that in 2008, as a result of our open audits and appeals, up to approximately $2.4 million of unrecognized tax benefits related to certain life insurance deductions will be recognized.
To accommodate the Company's rapid growth, the Company has purchased six office buildings since 1988. These buildings are all located in Rockville, Maryland and total approximately 244,000 square feet of office and warehouse space. The Company's headquarters is located at 4 Taft Court, Rockville, Maryland 20850.
Medical expenses as a percentage of premium revenue ("medical loss ratio") increased to 81.9 percent in 1995 as compared to 80.8 percent in 1994, principally due to a decrease in average premiums per enrollee and also higher than anticipated medical expenses in the Company's Medicare risk product. On a per member per month basis, medical expenses declined approximately .6 percent over the same period due to a reduction in the return of physician withhold and offset by higher member utilization, particularly in the Medicare product. Management does not believe that this necessarily represents a sustainable trend. Total medical costs may increase in future periods due to inflationary pressures, governmentally mandated benefit increases and/or the Company may experience increased utilization by its membership.
Administrative expenses as a percentage of revenue ("administrative expense ratio") increased to 10.6 percent in 1995 as compared to 9.4 percent in 1994. Administrative expenses increased 43 percent, from $70.5 million in 1994 to $100.8 million in 1995. The increase in the administrative expense ratio is primarily attributable to expenses of the Company's home health care subsidiaries, which were purchased in late 1994, the Company's territorial expansion into additional service areas within currently served states as well as into the new states of North Carolina (approved), South Carolina (pending), and Pennsylvania (pending), the continued implementation of its plan to significantly increase its employee sales force and the higher costs of administering the Medicaid product, which became a more significant line of business for the Company in 1995.
The administrative expense ratio increased from 8.3 percent in 1993 to 9.4 percent in 1994. The increase in the administrative expense ratio is primarily attributable to increased sales, marketing and advertising expenses and the development of new products and territories.
Effective December 31, 1994, the Company discontinued its non- contributory defined benefit pension plan (the "Plan"). Benefits earned to date under the Plan, which covered substantially all employees, were fully vested at that date. The obligation to provide these benefits was satisfied as of December 31, 1995 through a combination of annuity contracts, transfers of vested funds into the 401(k) plan and cash withdrawals. The Company recognized a gain on the curtailment of the defined benefit pension plan of approximately $345,000.
to lower loss ratios. The majority of American Southern’s business is structured in a way that agents are rewarded or penalized based upon the loss ratio of the business they submit to the company. In periods where the loss ratio decreases, commissions and underwriting expenses will increase and conversely in periods where the loss ratio increases, commissions and underwriting expenses should decrease. In addition, the bad debt reserve was increased by $0.3 million due to uncertainty as to the collectibility of certain agent and customer receivables. Also contributing to the increase in other expenses was an overall increase in operating expenses, primarily compensation which increased $1.2 million as compared to 2002. On a consolidated basis, as a percentage of earned premiums, other expenses increased to 38.5% from 35.9% in 2002.
In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. SFAS No. 150 establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. Adoption of this statement did not have a material impact on the Company’s financial condition or results of operations.
The Company’s bond portfolio included 99% investment grade securities at December 31, 2003 as defined by the NAIC.
The weighted-average assumptions used to determine the net periodic benefit cost at December 31, were as follows:
Overview The Company continues to strive for profitable growth and has made several advances in that area during the past year. Through a reinsurance pooling agreement between Meridian Mutual and Meridian Security, the Company currently receives 74 percent of all the property and casualty business of the combined insurance operations. During the fourth quarter of 1995, Meridian Mutual and Meridian Security gained admittance to the states of Iowa and Minnesota. Meridian Mutual was also granted a license to write property and casualty business in the state of Pennsylvania, with Meridian Security expecting to receive regulatory approval for admission during the first quarter of 1996. Meridian Security charted new territory in 1995 by beginning to write personal and farm lines policies in the states of Kentucky, Ohio, Tennessee, and Wisconsin.
We have audited the accompanying consolidated balance sheet of Meridian Insurance Group, Inc., and Subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
MERIDIAN INSURANCE GROUP, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME for the Years Ended December 31, 1995, 1994 and 1993
Cash 935,098 603,566 Premium receivable, net of allowance for bad debts 2,642,425 2,491,976 Accrued investment income 2,942,194 3,063,515 Deferred policy acquisition costs 13,354,600 11,977,429 Goodwill 2,152,339 2,280,788 Reinsurance receivables 32,469,285 32,703,457 Prepaid reinsurance premiums 2,617,138 2,619,792 Due from Meridian Mutual Insurance Company 9,358,803 6,810,483 Other assets 1,422,444 9,394,448 Total assets $322,588,216 $291,406,031
Effective January 1, 1994, the Company adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities". Under this statement the Company classified all investment securities into three categories:
Premiums earned increased $10.6 million for the year ended December 31, 2014 when compared to 2013. The increase in premiums earned is primarily due to increased volume of business produced by IHC Risk Solutions.
The Company believes that its liability for policy benefits and claims is reasonable and adequate to satisfy its ultimate liability. The Company primarily uses its own loss development experience, but will also supplement that with data from its outside actuaries, reinsurers and industry loss experience as warranted. To illustrate the impact that Loss Ratios have on the Company’s loss reserves and related expenses, each hypothetical 1% change in the Loss Ratio for the health business (i.e., the ratio of insurance benefits, claims and settlement expenses to earned health premiums) for the year ended December 31, 2014, would increase reserves (in the case of a higher ratio) or decrease reserves (in the case of a lower ratio) by approximately $4.5 million with a corresponding increase or decrease in the pre-
Total net investment income decreased $5.8 million. The overall annualized investment yields were 3.3% and 3.8% in 2014 and 2013, respectively. The overall decrease was primarily a result of a decrease in investment income on bonds, equities and short-term investments due to the transfer of $215.1 million of invested assets in the second quarter of 2013 related to a coinsurance treaty and lower income from partnerships. The annualized investment yields on bonds, equities and short-term investments were 3.2% and 3.5% in 2014 and 2013, respectively. IHC has approximately $149.4 million in highly rated shorter duration securities earning on average 1.4%. A portfolio that is shorter in duration enables us, if we deem prudent, the flexibility to reinvest in much higher yielding longer-term securities, which would significantly increase investment income.
Corporate derives its funds principally from: (i) dividends from the Insurance Group; (ii) management fees from its subsidiaries; and (iii) investment income from Corporate liquidity. Regulatory constraints historically have not affected the Company's consolidated liquidity, although state insurance laws have provisions relating to the ability of the parent company to use cash generated by the Insurance Group. The Insurance Group declared and paid $10.0 million, $12.0 million and $11.4 million of cash dividends to Corporate in 2014, 2013 and 2012, respectively.
In 2005, we began performing under our behavioral health contracts with the States of Arizona and Kansas. At December 31, 2005, our behavioral health company, Cenpatico, provided behavioral health services to 94,700 members in Arizona, 38,800 members in Kansas and 702,100 members through contracts with our health plans compared to 584,500 members through contracts with our health plans at December 31, 2004. Additionally, in July 2005 we began offering disease management services through our acquisition of AirLogix.
Our effective tax rate in 2005 was 35.2%, compared to 37.0% in 2004. The decrease was primarily due to a lower state income tax expense resulting from the resolution of state income tax examinations and the recognition of deferred tax benefits related to a change in law during the third quarter of 2005. This change was recorded in our operating results in the period known.
Actuarial Standards of Practice generally require that medical claims liabilities estimates be adequate to cover obligations under moderately adverse conditions. Moderately adverse conditions are situations in which the actual claims are expected to be higher than the otherwise estimated value of such claims at the time of estimate. In many situations, the claims amounts ultimately settled will be less than the estimate that satisfies the Actuarial Standards of Practice.
Actual results may differ from projections or estimates due to a variety of important factors, including the factors set forth in Item 1A. “Risk Factors.” Our results of operations and projections of future earnings depend in large part on accurately predicting and effectively managing health benefits and other operating expenses. A variety of factors, including competition, changes in healthcare practices, changes in federal or state laws and regulations or their interpretations, inflation, provider contract changes, new technologies, government-imposed surcharges, taxes or assessments, reduction in provider payments by governmental payers, major epidemics, disasters and numerous other factors affecting the delivery and cost of healthcare, such as major healthcare providers’ inability to maintain their operations, may in the future affect our ability to control our medical costs and other operating expenses. Governmental action or business conditions could result in premium revenues not increasing to offset any increase in medical costs and other operating expenses. Once set, premiums are generally fixed for one-year periods and, accordingly, unanticipated costs during such periods cannot be recovered through higher premiums. The expiration, cancellation or suspension of our Medicaid managed care contracts by the state governments would also negatively affect us. Due to these factors and risks, we cannot give assurances with respect to our future premium levels or our ability to control our future medical costs.
As discussed earlier, during 1997 the Company also introduced a Non-Qualified Deferred Compensation supplement to its 401(k) product, which allows highly compensated employees to defer compensation on a pre-tax basis beyond 401(k) limits until retirement.
The following table provides estimated fair value for all assets and liabilities and hedge contracts considered to be financial instruments:
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 87, "Employers Accounting for Pensions" effective January 1, 1997, immediately following the transfer. The following table sets forth the pension plan's funded status and amounts at December 31, 1997, in accordance with SFAS No. 87:
loss contracts. All premiums on quota share contracts are earned over the coverage period. Unearned premiums consist of the unexpired portion of reinsurance provided.
contract. The timing of the reporting requirements is designed so that we receive premium and loss information as soon as practicable once the client has closed its books. Accordingly, there should be a short lag in such reporting. Additionally, most of our contracts that have the potential for large single event losses have provisions that such loss notification needs to be received immediately upon the occurrence of an event. Once we receive this updated information we use a variety of standard actuarial methods in our analysis each quarter. Such methods may include:
2011. Our workers' compensation and general liability lines decreased by $11.8 million and $10.9 million, respectively, because during the fourth quarter of 2012 we canceled our multi-line contracts which included coverages for commercial motor, workers' compensation and general liability whereby we did not assume any further new business written by the ceding insurer. In addition, the financial line premiums decreased $12.8 million due to the commutation of a surety and trade credit contract, while the health line premiums decreased by $4.8 million primarily due to a contract we did not renew in 2012, and the professional liability line premiums decreased $3.5 million due to lower volume of underlying business written by our clients.
For the year ended December 31, 2011, our net loss reserves on prior period contracts increased by $26.0 million, which primarily related to the following:
For the year ended December 31, 2012, the decrease in severity acquisition cost ratio was primarily related to lower brokerage fees on a catastrophe contract renewed during 2012, combined with the fact that the reinstatement premium earned during 2012 did not incur any brokerage or commission expenses.
On April 28, 2010, our shareholders approved an amendment to our stock incentive plan to increase the number of Class A ordinary shares available for issuance from 2.0 million to 3.5 million. As of December 31, 2012, there were 1,136,504 Class A ordinary shares available for future issuance.
This process assumes that past experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for predicting future events. In particular, the development factor based methods all have as a key assumption that the development of losses in the future will follow a pattern similar to those measured by past experience and as adjusted either explicitly or by actuarial judgment. There is no precise method for subsequently evaluating the impact of any specific factor on the adequacy of reserves, because the eventual deficiency or redundancy is affected by multiple and varied factors. With respect to the ultimate estimates for losses and LAE, the key methods remained consistent for the years ended December 31, 2014 and 2013. We reviewed the key assumptions that underlie the actuarial standard methods and made the appropriate adjustments to reflect the emergence of claim activity.
Net Operating Income (Loss) and Net Operating Income (Loss) Per Share
The net loss for the year ended December 31, 2013 was ($112.3 million), or ($2.25) per dilutive share, compared to net income of $11.7 million, or $0.23 per dilutive share, for the comparable period of 2012. Net operating loss, a non-GAAP measure, for the year ended December 31, 2013 was ($117.9 million), or ($2.36) per diluted share, compared to net operating loss of ($28.4 million), or ($0.57) per diluted share for the year ended December 31, 2012. The 2013 net operating loss, excluding the goodwill impairment, was ($16.3 million), or ($0.21) per diluted share. Total diluted weighted average shares outstanding for the year ended December 31, 2013, were 49,871,587, compared to 50,177,484 the comparable period in 2012. The decrease reflects the impact of share repurchases made pursuant to our Share Repurchase Plan in 2012.
Refer to Note 6 ~ Debt of the Notes to the Consolidated Financial Statements, for additional information specific to our credit facilities and debentures.
We provide medical insurance for cats and dogs throughout the United States, Canada and Puerto Rico. Our data-driven, vertically-integrated approach enables us to provide pet owners with what we believe is the highest value medical insurance for their pets, priced specifically for each pet’s unique characteristics. Our growing and loyal member base provides us with highly predictable and recurring revenue. We operate our business similar to other subscription-based businesses, with a focus on maximizing the estimated internal rate of return of an average pet.
Geographic mix of sales. The relative mix of our business between the United States and Canada impacts the monthly average revenue per pet we receive. Prices for our plan in Canada are generally higher than in the United States (in local currencies), which is consistent with the relative cost of veterinary care in each country. As our mix of business between the United States and Canada changes, our metrics, such as our monthly average revenue per pet, and our exposure to foreign exchange fluctuations will be impacted. Any expansion into other international markets could have similar effects.
Year ended December 31, 2019 compared to year ended December 31, 2018. Sales and marketing expense increased by $10.5 million, or 42%, to $35.5 million, for the year ended December 31, 2019. The change was primarily due to a 34% increase in headcount mainly within the account management, conversion and content teams, as well as an approximate $3.5 million increase in other sales and marketing initiatives primarily related to conversion. Sales and marketing expenses were 9% as a percentage of revenue for the year ended December 31, 2019, compared to 8% in the prior year.
Our obligations under the PWB credit facility are secured by substantially all of our assets and a pledge of certain of our subsidiaries’ stock. As of December 31, 2019, we had $26.2 million in aggregate borrowings outstanding under the PWB credit facility.
In July 2018, the Company purchased $3.0 million in preferred stock of a privately held corporation with a complementary business line. The Company does not have power over the activities that most significantly impact the economic performance of this variable interest entity and is, therefore, not the primary beneficiary. In October 2019, the Company purchased an additional $4.0 million in preferred stock upon the exercise of an option by the variable interest entity. The Company has an option to purchase all the outstanding common shares issued by the variable interest entity on the fifth anniversary of the initial preferred stock purchase.
For the year ended December 31, 2019, the Company recognized a net increase of $4.9 million in valuation allowance against its net deferred tax assets associated with U.S. federal and certain state jurisdictions, primarily attributable to current year activity.
Equity securities are carried at quoted market values. Fair values of fixed maturities and equity securities are determined on the basis of dealer or market quotations or comparable securities on which quotations are available. Mortgage loans are carried at the unpaid principal balance which approximates the fair market value as they bear current market interest rates. Real estate is carried at historical cost, less accumulated depreciation. We periodically review the investment portfolio for any potential credit quality or collection issues and for any securities with respect to which we consider any decline in market value to be other than temporary. Investments which are considered impaired are written down to their estimated net realizable value. Realized gains or losses on sales or maturities of investments are determined on a specific identification basis and are credited or charged to income.
combined ratio compares the sum of our underwriting expense ratio and our loss ratio. The lower the percentage, the more profitable our insurance business is. This ratio excludes the effects of investment income.
Our general and administrative expenses increased $1.4 million to $2.2 million during the year ended December 31, 2001 compared to the prior year. The increase was primarily due to new costs incurred by the holding company becoming publicly traded in December 2000. These costs include stock market listing fees, investor relations fees, shareholder meeting costs and securities reporting expenses. We expect the general and administrative expenses for 2001 to be more representative of continuing operations.
Health underwriting expenses were $3.7 million for the year ended December 31, 2000, an increase of $2.6 million, or 236.4%. The underwriting expense ratio increased to 33.2% for the year ended December 31, 2000 from 23.1% for 1999. The increase was the result of the expansion of our health insurance premiums and coverage.
(238.3%) in 1999. In 1999, we received a significant settlement with the IRS regarding the tax treatment of reserves.
In accordance with APB Opinion No. 25, the Company records compensation expense for stock options only if the market price of the Company's stock, on the date of grant, exceeds the amount an individual must pay to acquire the stock.
During 2001, the Company recorded a $5.92 million loss on a security whose decline in market value was considered other than temporary.
- The settlement refund with the IRS was credited directly to surplus for statutory purposes.
In Fire insurance we are able to record a gratifying expansion in business. The result, though satisfactory, is less good than in previous years. In particular the experience in respect of the United States and Canadian portfolios was less favourable. In U. S. A. Fire insurance a distinct deterioration may be observed, which also affects us as reinsurers. In various other
Contribution to Staff Life Insurance and Pension Fund Dividend Social Welfare contributions Directors Carried forward
The Board of Directois last year appointed Mr. W. Bruppacher as Assistant Manager.
GROWTH IN AVERAGE INVESTED ASSETS since 1992 primarily reflects $424.1 million of aggregate net proceeds from the issuances of long-term notes and debentures and the Company's Preferred Stock. In addition, the growth reflects sales of the Company's fixed-rate products, consisting of fixed annuities (including fixed accounts of variable annuity products) and guaranteed investment contracts ("GICs"). Fixed annuity premiums aggregated $230.0 million in 1994, $223.8 million in 1993 and $243.7 million in 1992. These premiums include premiums for the fixed accounts of variable annuities totaling $140.6 million, $63.9 million, and $86.0 million, respectively. Total fixed annuity premiums increased during 1994 primarily due to rising demand for fixed-rate investment options as prevailing interest rates increased during the latter half of fiscal 1994. These premiums declined during 1993 principally due to the Company's de-emphasis of fixed-rate products given the then prevailing low interest rate environment. GIC premiums totaled $1.04 billion in 1994, $691.6 million in 1993 and $930.0 million in 1992. Changes in GIC sales reflect the variable demand for such products from state and local governmental authorities, pension plans and asset management firms. In addition, the increase in GIC sales in 1994 reflects the success of the Company's efforts to increase its GIC client base, particularly among asset management firms.
Approximately 44% of the mortgage loans in the portfolio at September 30, 1994 were seasoned loans underwritten to the Company's standards and purchased at or near par from the Resolution Trust Corporation and other financial institutions, many of which were downsizing their portfolios. Such loans generally have higher average interest rates than loans that could be originated today. The balance of the mortgage loan portfolio has been originated by the Company under strict underwriting standards. Commercial mortgage loans on properties such as offices, hotels and shopping centers generally represent a higher level of risk for the industry than have mortgage loans secured by multifamily residences. This greater risk is due to several factors, including the larger size of such loans, and the effects of general economic conditions on these commercial properties. However, due to the seasoned nature of the Company's mortgage loans, its emphasis on multifamily loans and its strict underwriting standards, the Company believes that it has reduced the risk attributable to its mortgage loan portfolio while maintaining attractive yields.
The carrying values of bonds that are determined to have declines in value that are other than temporary are reduced to net realizable value and no further accruals of interest are made. The valuation allowances on mortgage loans are based on losses expected by management to be realized on
The illustrations In this Annual Report show major and special risks confronting reinsurers throughout the world.
Summary of Important Figures in millions of francs Swiss Re, Zurich 1978/79 1977/78
In view of this situation in the reinsurance markets, it is of utmost importance to clearly orientate business poiicy to quality and profit. Volume considerations have to take a back seat. The Swiss Re's premium volume in recent years has grown at a noticeably slower pace than that of many competitors. It has been increasingly necessary to take the not always easy decision to reduce temporarily or even give up entirely a strong position held for many years in a given market and not to put up with losses over an excessively long period of time by trusting to one's own reserve strength. It goes without saying that the Swiss Re continues to support those markets and clients whose results may be negative for some time, but who have recognized their problems and have undertaken serious attempts at improvement.
Consolidated net premiums of the Group increased in the reporting year by 5.9 % to Sw. frs. 5,827 mil­ lion (previous year, decrease by 4.6%), of which Sw. frs. 2,158 million, or 37%, was contributed by direct insurance.
Despite the influence of foreign currencies, invest­ ment income increased strongly In the reporting year because of the rapid growth of invested funds and certain rising interest rates. On the other hand, the high interest rates led to greater write-offs on capital investments. Management expenses rose in keeping with the growth of personnel. Tax expenditure was also higher once more because of the increase in profit.
The outgo of the Profit and Loss Account comprises mainly the interest of Sw.frs. 11.5 million (previous year,Sw.frs. 10.5 million) on the current-account cred­ it granted by the Swiss Re, Zurich, taxes of Sw. frs. 3.2 million (previous year, Sw.frs. 4.2 million), depre­ ciation and fluctuations in stock exchange and foreign currency rates in the amount of Sw.frs. 5.6 million (previous year, Sw. frs. 7.8 million). Although the fur­ ther pronounced rise in the exchange rate of the Swiss franc in the year under report would have justi­ fied the book value adjustments for foreign currency reasons which have been usual so far, these were not carried out, unless the market values in Swiss francs were less than the balance-sheet values on the clos­ ing date.
Current-account balances 987 207 1,194 977 Cash deposits 1,435 156 1,591 1,569
The items "Capital", "Statutory reserve fund", "Spe­ cial reserve fund" and "Reserve fund for catastrophe losses" correspond to the capital funds at book value of the Swiss Re, Zurich, as parent company.
Group Profit and Loss Account in millions of francs 1978/79 1977/78 1976/77 1975/76 1974/75 Results All classes excl. Life Life business
In 2003, certain fully depreciated assets with a cost basis of $2,752 were written off against accumulated depreciation. No gain or loss was associated with this activity.
Prior to the adoption of SFAS 142, excess of cost over net assets acquired was amortized on a straight-line basis over twenty five years and assessed for recoverability by an analysis of the undiscounted future cash flows generated by the underlying assets.
Had compensation cost for the Company’s stock-based compensation plan been reflected in the accompanying consolidated financial statements based on the fair value at the grant dates for option awards consistent with the method of SFAS 123, the Company’s net income would have been reduced to the pro forma amounts indicated below:
There were no changes in the status of options granted under the 1994 plan for 2003 and 2002. Changes in the status of options granted under the 1994 plan for 2001 are summarized as follows:
In the ordinary course of business, the Company’s subsidiaries are defendants in various lawsuits. Pan American Underwriters Insurance Agents and Brokers, Inc. (the “Arizona Company”) is a defendant in an action filed in Arizona Superior Court, Maricopa County, by two hospitals and two individuals seeking damages for the Arizona Company’s sale of SGP Benefit Plan, Inc. (“SGP”), a Multi-Employer Welfare Arrangement (“MEWA”) licensed by the State of California. SGP operated in California and Arizona and has filed for Chapter 7 bankruptcy protection in the United States Bankruptcy Court for the Eastern Division of California.
(l)In accordance with its adoption of Statement of Financial Accounting Standard ("SFAS") No. 141, the Company recognized all of its outstanding deferred credits on January 1, 2002.
"Summary of Operations by Segment, OneBeacon, Underwriting Results" section below) improved to 98% for 2002, versus 116% for the year ended December 31, 2001 (which included approximately five points as a result of the terrorist attacks of September 11, 2001, "the Attacks"). OneBeacon's overall trade ratio (which includes business subject to the Renewal Rights Agreement and certain other insurance products) improved to 109% for 2002, versus 120% for the year ended December 31, 2001 (which included approximately three points as a result of the Attacks). White Mountains expects OneBeacon's operations, particularly its core operations, will continue to improve in 2003 as the effects of better pricing, underwriting and claims management continue to emerge and as business subject to the Renewal Rights Agreement continues to be reduced. In 2003, OneBeacon expects to generate an underwriting profit by taking advantage of its strong balance sheet and the hard market which exists in many sectors.
White Mountains recorded $156.0 million of realized investment gains during 2002, compared to $173.1 million during 2001, principally from sales of fixed maturity investments during both periods. During 2002, the Company recognized a $58.0 million gain on its Montpelier warrants in its GAAP financial statements. It recognized a $47.4 million loss related to its interest rate swap agreements due to the decrease in market interest rates during the year. During 2001, White Mountains sold a large portion of its fixed maturity investment portfolio, including its portfolio of mortgage-backed securities, and subsequently reinvested the proceeds in fixed maturity and short-term investments.
Management believes that White Mountains' financial strength provides the flexibility and capacity to obtain funds externally as needed through debt or equity financing on both a short-term and long-term basis. White Mountains has primarily accessed the debt and equity markets in connection with
•changes in domestic or foreign laws or regulations applicable to White Mountains, its competitors or its clients;