The following selected financial data, except for non-GAAP financial measures, have been derived from our audited consolidated financial statements. The consolidated income statement data for the years ended December 31, 2009, 2008 and 2007 and the consolidated balance sheet data as of December 31, 2009 and 2008, except for the non-GAAP financial measures, have been derived from our audited consolidated financial statements included elsewhere herein. The consolidated income statement data for the years ended December 31, 2006 and 2005 and the consolidated balance sheet data as of December 31, 2007, 2006 and 2005, except for the non-GAAP financial measures, have been derived from the our audited consolidated financial statements not included herein. The selected financial data presented below should be read in conjunction with
partnerships was recorded in net investment income. See Note 7 for discussion of fair value and impact from the adoption of the fair value accounting guidance.
The Company defers as assets certain costs, principally commissions, distribution costs and other underwriting costs, that vary with and are primarily related to the production of business. The Company limits
The Company amortizes acquisition costs for traditional individual life insurance policies over the premium paying period of the related policies, using assumptions consistent with those used in computing policy benefit liabilities. The Company amortizes acquisition costs for group medical policies over the policy period of one year.
Property, equipment and leasehold improvements are stated at cost, less accumulated depreciation and amortization. Depreciation is determined using the straight-line method over the estimated useful lives of the assets. Estimated useful lives generally range from one to ten years for leasehold improvements and three to ten years for all other property and equipment. Leasehold improvements are amortized over the shorter of their economic useful lives or the term of the lease.
Fundamentals of the issuer to determine what the Company would recover if the issuer were to file bankruptcy versus the price at which the market is trading;
The notional amount of the options purchased to hedge the Company’s 2009 exposure to changes in the S&P 500 Index was $20.0. These options had a fair value of $2.3 as of December 31, 2008, and were settled on December 31, 2009. The notional amount of the options purchased in 2009 to hedge the Company’s 2010 exposure to changes in the S&P 500 Index was $30.0. These options had a fair value of $1.8 as of December 31, 2009.
The Company participated in a securities lending program whereby securities were loaned to third parties, primarily major brokerage firms. Under this program, the Company maintained full ownership rights to the securities on loan, and accordingly the loaned securities were classified as investments in the consolidated balance sheets.
standard models that consider various inputs, such as interest rate, credit spread and foreign exchange rates for the underlying financial instruments. All significant inputs are observable, derived from observable information in the marketplace, or are supported by observable levels at which transactions are executed in the market place. Financial instruments in this category primarily include certain public and private corporate fixed maturities, government or agency securities, and certain mortgage-backed securities.
The following table presents the financial instruments carried at fair value under the valuation hierarchy, as described above, for assets accounted for at fair value on a recurring basis. The Company has no financial liabilities accounted for at fair value on a recurring basis:
of its reinsurers. Of the total amount due from reinsurers at December 31, 2009 and 2008, 99.6% and 99.7% was with reinsurers rated A- or higher by A.M. Best, respectively. The Company had no reserve for uncollectible reinsurance in 2009 or 2008. None of the Company’s reinsurance contracts exclude certified terrorist acts.
Subject to certain conditions, the Company has the right, on one or more occasions, to defer the payment of interest on the CENts during any period up to ten years without giving rise to an event of default. The Company will not be required to settle deferred interest subject to certain conditions until it has deferred interest for five consecutive years or, if earlier, made a payment of current interest during a deferral period. Deferred interest will accumulate additional interest at an annual rate equal to the annual interest rate then applicable to the CENts.
The total balance of the unrecognized tax benefits above would affect the effective tax rate if recognized. The Company does not expect the total amount of unrecognized tax benefits for any tax position to change significantly within the next twelve months.
Group. Group offers medical stop-loss insurance, limited benefit medical plans, group life insurance, accidental death and dismemberment insurance, and disability income insurance mainly to employer groups of 50 to 5,000 individuals. Group also offers managing general underwriting services.
The unaudited quarterly results of operations for years ended December 31, 2009 and 2008 are summarized in the table below.