Some of the statements contained herein are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Whenever used in this report, the words “estimate”, “expect”, “believe” or similar expressions are intended to identify such forward-looking statements. Forward-looking statements are derived from information that the Company (also referred to herein as “we,” “us” and “our”) currently has and assumptions that we make. We cannot assure that anticipated results will be achieved, since results may differ materially because of both known and unknown risks and uncertainties which we face. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that could cause actual results to differ materially from our forward-looking statements include, but are not limited to:
Net income from continuing operations for the years ended December 31, 2007, 2006 and 2005 was $4.6 million, $125,000, and $3.8 million, respectively, resulting in diluted earnings per share from continuing operations of $0.51, $0.01 and $0.63, respectively. Net income from discontinued operations for the years ended December 31, 2007, 2006 and 2005 was $5.7 million, $4.6 million and $58,000, respectively, resulting in diluted earnings per share of $0.63, $0.50 and $0.01, respectively.
In August 2006, our Board of Directors authorized the repurchase of up to $5.0 million of the Company’s outstanding common stock. The repurchase program has a twenty-four month time limit, and the timing and actual number of shares to be repurchased will depend on a variety of factors, including corporate and regulatory requirements, price, and other market conditions. During the year ended December 31, 2006, we did not repurchase any shares under the program.
Gross premiums written is the sum of direct premiums written and assumed premiums written. Direct premiums written is total policy premiums, net of cancellations, associated with policies issued and underwritten by our insurance company subsidiaries. Assumed premiums written is total premiums associated with the insurance risk transferred to us by other insurance companies pursuant to reinsurance contracts.
Year Ended December 31, 2006 as Compared to Year Ended December 31, 2005. Policy acquisition costs for 2006 were $19.0 million as compared to $21.8 million for 2005, a decrease of $2.8 million or 12.8%. The decrease was primarily attributable to a decrease in gross premiums earned.
Borrowings under the Credit Agreement bear interest at a floating rate equal to either (1) a Eurodollar rate equal to a stated margin of 1.25% plus the interest rate certain of Comerica’s lending offices offer on deposits to prime banks in the Eurodollar market or (2) a rate based upon Comerica’s prime rate of interest less 1.00%. Interest on Eurodollar-based rate advances is payable on the last day of the interest period applicable thereto. Interest on prime-based rate advances is payable quarterly in arrears.
The junior subordinated debt agreements require principal payments of $2.0 million in 2032, $6.0 million in 2033, $2.0 million in 2034 and $20.6 million in 2036. The Company is also contractually obligated to make $609,000 quarterly interest payments. The senior credit facility provides for a revolving credit line in the aggregate amount of $35.0 million maturing on July 1, 2010. At December 31, 2007, there was an outstanding balance of $21.3 million on the revolving credit line. The table reflects the interest and facility fee obligations which are due during the term of the revolving credit line and payment of the principal balance at maturity. The gross unpaid loss and loss adjustment expense payments were estimated based on historical payment patterns. However, future payments may be different than historical payment patterns. The commitment to purchase other investments is attributable to a limited partnership interest which may request further funding of up to $759,000 any time through June 2010.