felanders/preprocessed huggingface dataset:
The executive and administrative offices of the Company and its subsidiaries are located at 321 East Main Street, Ada, Oklahoma. These offices, containing approximately 40,000 square feet of office space, are owned by the Company. While the Company currently fully utilizes these existing facilities, management believes that it will have no difficulty in securing additional facilities in close proximity to its office building if necessary for future expansion.
Commissions Beginning with new membership Contracts written after March 1, 1995, the Company implemented a level commission schedule which results in the Company incurring commission expense related to the sale of its legal expense plans on a basis more consistent with the collection of the premiums generated by the sale of such contracts. Historically, the Company had incurred much higher commissions (approximately 70%) during the first year of the membership with substantially lower commissions (approximately 16%) in all subsequent years. The level commission structure results in the Company incurring commissions at the rate of approximately 25% per year for all membership years. The Company currently advances commissions at the time of sale of a new membership contract.
Associate services revenue increased from $912,000 for 1994 to $3.2 million during 1995 as a result of higher new associate enrollments. New associates enrolled during 1995 were 50,464 compared to 14,129 for 1994, an increase of 257%. Associate services revenue also increased as a result of increases in sales of marketing materials used by the associates in sales presentations of the Company's Contracts. Associate services revenue for 1995 was comprised of $2.5 million in enrollment fees and $677,000 in sales of marketing materials. Future revenues from associate services will depend primarily on the number of new associates enrolled, but the Company expects that such revenues will continue to be largely offset by the direct and indirect cost to the Company of providing associate services.
Nature of Operations Pre-Paid Legal Services, Inc. (the "Company") underwrites and markets legal service plans (referred to as "Contracts") which provide for or reimburse a portion of legal fees incurred by members in connection with specified matters. Contracts are guaranteed renewable, are principally collected on a monthly basis and are marketed primarily in 12 states by a sales force referred to as "Associates".
Each share of the Special Preferred Stock is entitled to a non-cumulative annual dividend of $1.00 per share, is convertible into 3.5 shares of Common Stock and is redeemable at the option of the Company at $13.34 per share, plus all accumulated and unpaid dividends. The Special Preferred Stock had a liquidation value of $605,000 at December 31, 1995. During 1995, 1994 and 1993, Special Preferred Stock consisting of approximately 15,000, 2,000 and 19,000 shares, respectively, were converted into 126,000 shares of Common Stock.
(1) C & CAE is an abbreviation for Claims and claim adjustment expenses, stated as a percentage of net premiums earned.
Claims for “extra-contractual” liability arise when a claim is originally denied or the claimant asserts that a claim has been handled inappropriately, and the claimant further asserts that such denial or allegedly inappropriate response was improper or in “bad faith.” In such cases, which tend to arise in cases involving serious injury or death, it is not unusual for the amount of the claim to exceed by a substantial amount the policy limits that would otherwise be applicable. When the Company becomes aware of such a potential claim, it typically consults with outside counsel and, if appropriate, seeks to settle the claim on terms as favorable as possible in light of all the relevant circumstances. The amounts required for settlement of such claims, and the potential award if a case cannot be settled on acceptable terms, vary widely depending on the specific facts of the claim, the applicable law and other factors.
The decrease in interest expense of $1,102,000 (35%) is primarily due to the decline in the 3-month London Interbank Offered Rate for U.S. dollar deposits (“LIBOR”) during 2009 and its related impact on the interest expense of the subordinated debentures.
Accumulated deficit decreased due to the net income recorded in 2009.
All broker-dealer quotations obtained are non-binding. For short-term investments classified as Level 1 and Level 2, the Company uses prices provided by independent pricing services. The preferred stocks classified as Level 3 are all auction rate preferred shares, and the Company utilizes an internal model incorporating observable market inputs.
While the Company has seen significant positive results on its equity investments in the last two years, a pull back or downward market adjustment could slow these gains or even result in losses in future periods. Management believes its current equity investments continue to be solid investments for the Company and have further growth potential; however, changes in market conditions could cause volatility in market prices.
The Company expects to have readily available funds for the foreseeable future to conduct its operations and to maintain target capital ratios in the insurance subsidiary through internally generated cash flow and the credit facilities. In the unlikely event that more liquidity is needed, the Company could generate additional funds through such sources as a short-term credit facility and inter company borrowing.
Accounting Standards Update (ASU 2016-13), Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments - The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was originally effective for public companies for fiscal years beginning after December 15, 2019. In November of 2019, the FASB issued Accounting Standards Update No. 2019-10, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December 15, 2022 for smaller reporting companies. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.
Level 1 - Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.
The following table presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis, and the realized and unrealized gains (losses) related to the Level 3 assets and liabilities.
The computation of diluted earnings per share is the same as basic earnings per share for the years ending December 31, 2020 and 2019, as there were no outstanding securities, options or other offers that give the right to receive or acquire common shares of UTG.
We believe that the implementation of higher premiums caused employer groups, many of which had high health care cost trends, to leave our health plans and obtain coverage elsewhere, which resulted in an overall 8% decrease in commercial health plan enrollment from December 31, 2003 to December 31, 2004. The losses were greatest in our California and Northeast health plans.
Health Plan Services costs decreased by $400.6 million, or 4.8%, for the year ended December 31, 2005 as compared to the same period in 2004, and increased by $896.8 million, or 12.0%, for the year ended December 31, 2004 as compared to the same period in 2003 as shown in the following table:
Other income decreased by $40.3 million for the year ended December 31, 2004 as a result of the sale of our employer services group division effective October 31, 2003. Revenues from our employer services group division were $45.6 million for the year ended December 31, 2003. We deferred approximately $15.9 million of the gains on the October 2003 sales of our employer services group division and dental and vision plans related to non-compete and network access agreements. The deferred amounts are recognized as other income over the terms of the agreements. We recognized other income of $2.8 million during 2004 related to the amortization of these agreements.
The financial position of the Company as of December 31, 1999 is affected by the acquisition of business from MBL Life (See Note 5 of the accompanying financial statements).
The Company also seeks to provide liquidity from time to time by using reverse repurchase agreements ("Reverse Repos"), and by investing in MBSs. It also seeks to enhance its spread income by using Reverse Repos. Reverse Repos involve a sale of securities and an agreement to repurchase the same securities at a later date at an agreed upon price and are generally over-collateralized. MBSs are generally investment-grade securities collateralized by large pools of mortgage loans. MBSs generally pay principal and interest monthly. The amount of principal and interest payments may fluctuate as a result of prepayments of the underlying mortgage loans.
The reasons for the increases and decreases in the major items of operating expense in 2014, as compared to 2013, are as follows:
The Company has bank and cash equivalents of approximately $4,048,846 as at December 31, 2014. The Company has sufficient funds to satisfy its financial commitments and working capital requirements for the next twelve months. As of December 31, 2014, the Company had $0 of commitments for capital expenditures and off-balance sheet arrangements. The company has lease commitments of $556,135.
Rent expense for operating leases, which may include free rent or fixed escalation amounts in addition to minimum lease payments, is recognized on a straight-line basis over the duration of each lease term.
We have audited the accompanying statements of assets and liabilities of the MetLife Policyholder Trust (the “Trust”) as of December 31, 2020 and 2019, the related statements of operations and changes in net assets, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Trust as of December 31, 2020 and 2019, and the results of its operations and changes in net assets for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
(v)Escheatment of unclaimed Trust Shares is recorded as a reduction in Trust Interests at cost and classified as Trust Interests escheated.
Securities available for sale totaled $601 million at December 31, 1995, or 22.9% of total invested assets. Equity securities, which are included in securities available for sale, continue to be a small component of the Company's total investment portfolio totaling only $26 million. Securities available for sale are reported in the accompanying financial statements at fair value, with changes in values reported as a separate component of stockholders' equity. Net unrealized gains, net of adjustments for deferred policy acquisition costs and Federal income taxes, on securities in the available for sale category at December 31, 1995, totaled $12 million and are reflected as a component of stockholders' equity.
Universal Life and Investment Annuity Contract Revenues: These revenues are from the Company's non-traditional products, which are universal life and investment annuities. Revenues from these types of products consist of policy charges for the cost of insurance, policy administration fees, and surrender charges assessed during the period. These revenues decreased from $67.8 million in 1993 to $64.7 million in 1994 and then increased to $69.8 million in 1995. More specifically, cost of insurance, policy administration fees, and other related revenues have steadily increased each year due to continued sales of non-traditional products which continue to increase the Company's policies in force. However, surrender charge revenues were significantly higher in 1993 due to increased policy surrenders. This accounts for the majority of the decrease in universal life and investment annuity contract revenues in 1994. Overall revenues were up in 1995 due to increases in cost of insurance and other related revenues as previously described, even though surrender charge revenues were not up significantly from 1994 and remained substantially below 1993 levels.
A primary liquidity concern for the Company's life insurance operations is the risk of early policyholder withdrawals. Consequently, the Company closely evaluates and manages the risk of early surrenders or withdrawals. The Company includes provisions within annuity and universal life insurance policies, such as surrender charges, that help limit early withdrawals. The Company also prepares cash flow projections and performs cash flow tests under various market interest rate scenarios to assist in evaluating liquidity needs and adequacy. The Company currently expects available liquidity sources and future cash flows to be adequate to meet the demand for funds.
The Company relies on stockholders' equity for its capital resources, as there has been no long-term debt outstanding in 1995 or recent years. The Company does not anticipate the need for any long-term debt in the near future. There are also no current or anticipated material commitments for capital expenditures in 1996.
(5) The earnings per share amounts prior to 1997 have been restated as required to comply with Statement of Financial Accounting Standards No. 128, Earnings Per Share. For further discussion of earnings per share and the impact of Statement No. 128, see the notes to the audited consolidated financial statements.
Insurance premiums and other considerations increased by $474,000, from $5,666,000 in 1996 to $6,141,000 in 1997. This increase was primarily attributed to an increase in new business from marketing the Company's funeral plans.
of $1,063,000. Interest on the promissory note accrues at 7% per annum. Principal payments are to be made in seven equal annual installments of $151,857, beginning on December 29, 1996. Accrued interest will be payable annually beginning on December 29, 1996.
Equity securities available for sale - at fair value, which is based upon quoted trading prices. Changes in fair values net of income taxes are reported as unrealized appreciation or depreciation and recorded as an adjustment directly to stockholders' equity and, accordingly, have no effect on net income.
The Company's insurance related investments in fixed maturity securities held to maturity and equity securities available for sale are summarized as follows:
Investment Contracts: The fair values for the Company's liabilities under investment-type insurance contracts presented are estimated based on the contracts' cash surrender values and are summarized as follows:
Fiscal year 1999 was another year of growth for the Company. Net premiums earned by the Company's insurance subsidiaries grew 31.9%, from $89.6 million in 1998 to $118.2 million in 1999. Total revenues increased 42.0%, from $120.3 million in 1998 to $170.8 million in 1999. Net income increased 5.8%, from $20.7 million in 1998 to $21.9 million in 1999. Fully diluted earnings per share increased $.08 per share from $2.11 per share in 1998 to $2.19 per share in 1999. During 1999, the portion of the Company's revenues attributable to areas other than its core physicians MPL market continued to increase. The 1999 net losses and loss adjustment expenses for the Company's insurance subsidiaries rose 20.2%, from $67.4 million in 1998 to $81.0 million in 1999.
With respect to the Company's core MPL business, total insureds increased 2,793 from 8,525 in 1998 to 11,318 in 1999. Of this increase, 2.9% is attributable to growth at APAC and the acquisition of Intermed and Interlex, which accounted for 51.5% and 43.1% of the increase, respectively. FPIC accounted for the balance of the increase. Physician insureds grew 23.8%, from 6,383 in 1998 to 7,905 in 1999. Dental insureds grew 18.0%, from 1,843 in 1998 to 2,174 in 1999. Net premiums earned on the Company's MPL business grew 30.6%, from $74.8 million in 1998 to $97.7 million in 1999.
Claims administration fees are revenues generated by McCreary's core business, which is the administration of self-insured programs for large employers, primarily in the health and
Income taxes increased $1.4 million, or 21%, from $6.8 million in 1997 to $8.2 million in 1998. This increase was due to additional income before taxes.
The loss and loss expense ratio is calculated by dividing Losses and loss expenses, excluding the Life segment, by Net premiums earned - excluding Life segment. Losses and loss expenses for the Life segment were $601 million, $589 million, $582 million, $611 million, and $593 million for the years ended December 31, 2015, 2014, 2013, 2012, and 2011, respectively.
the cost of building materials and labor to reconstruct properties or to perform environmental remediation following a catastrophic event; and
The process of establishing loss reserves for property and casualty claims can be complex and is subject to considerable uncertainty as it requires the use of informed estimates and judgments based on circumstances underlying the insured loss known at the date of accrual. For example, the reserves established for high excess casualty claims, asbestos and environmental claims, claims from major catastrophic events or for our various product lines each require different assumptions and judgments to be made. Necessary judgments are based on numerous factors and may be revised as additional experience and other data become available and are reviewed, as new or improved methods are developed, or as laws change. Hence, ultimate loss payments may differ from the estimate of the ultimate liabilities made at the balance sheet date. Changes to our previous estimates of prior period loss reserves impact the reported calendar year underwriting results, adversely if our estimates increase and favorably if our estimates decrease. The potential for variation in loss reserve estimates is impacted by numerous factors, which we discuss below (see also the section on reserving for long-tail business). Reserve estimates for casualty lines are particularly uncertain given the lengthy reporting patterns and corresponding need for IBNR.
With respect to IBNR reserves, and those claims that have been incurred but not reported prior to the balance sheet date, there is, by definition, limited actual information to form the case reserve estimate and reliance is placed upon historical loss
Kaye Group Inc. (the "Company"), a Delaware corporation, is a holding company which, through its subsidiaries, is engaged in a broad range of insurance brokerage, underwriting and related activities. The Company operates in two insurance business segments - the Insurance Brokerage Companies Operations comprised of the Retail Brokerage Business and the Program Brokerage Business, and the Property and Casualty Companies Operations ("Property and Casualty Companies" or "Insurance Companies"), comprised of the Insurance Companies and Claims Administration Corporation ("CAC") (see Note 1 to the consolidated financial statements of the Company).
Amortization of intangibles increased $416,000 (61%) to $1,095,000 in 1999 compared with $679,000 in 1998 due to amortization of acquisition related intangibles on 1998 and 1999 acquisitions.
The Company has investment guidelines that define the overall framework for managing market and other investment risks, including the accountabilities and controls over these activities. In addition, the Company has a specific Board of Directors-approved investment policy delineating the investment limits and strategies that are appropriate for the Company's liquidity, surplus, product and regulatory requirements.
One of the measures used to quantify this exposure is duration. Duration measures the sensitivity of the fair value of assets to changes in interest rates. For example, if interest rates increase by 1%, the fair value of an asset with a duration of 5 is expected to decrease in value by approximately 5%. At December 31, 2001, the Company's asset duration was approximately 3.8 versus 3.9 at December 31, 2000.
In the years ending May 31, 2012 and May 31, 2011, the Company, upon advice of legal counsel, removed certain dormant accounts payable in the aggregate amount of $150,604 and $54,358. For the year ended May 31, 2012, removal was based upon the vendor no longer requiring payment on a portion of the balance owed to them. For the year ended May 31, 2011, the amount was removed based upon the conclusion that the accounts represented an obligation that is not legally enforceable against the Company. Such removals were recorded as gains on debt extinguishment.
Premiums earned $ 956,615 $ 910,940 Commissions earned 33,422 18,415 No Claims Bonus from Reinsurers 213,281 - Net investment income 279,410 229,777 Net realized investment gains 93,379 116,187 ------------------ -----------------
During the fiscal year ended June 30, 2005, NMHC used $2.1 million from financing activities as compared to receiving $13.6 million in the fiscal year ended June 30, 2004. This decrease of $15.7 million is the result of $75.3 million from the issuance of NMHC's series A preferred stock net of $51.1 million for the purchase of NMHC's shares in the tender offer in the fiscal year ended June 30, 2004. Further, in the fiscal year ended June 30, 2004, cash was reduced by a $15.6 net repayment under the revolving credit facility compared to no net activity in the fiscal year ended June 30, 2005. Finally, an additional $4.0 million was paid for dividends on the convertible preferred stock during the fiscal year ended June 30, 2005 as compared to the fiscal year ended June 30, 2004 offset by $2.8 million less in proceeds from the exercise of stock options as compared to the prior year.
The preferred stock provides for an initial annual cash dividend equal to 7% of the investment amount, which decreases to 3.5% after the fifth anniversary of issuance. The preferred stock is convertible into common stock at a price of $11.50 per share of common stock, or an aggregate of approximately 7 million shares of our common stock.
We maintain allowances for doubtful accounts for estimated losses resulting from the liability of our sponsors to make required payments. If the financial condition of our sponsors were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
CFC-I owns a fully leased 85,000 square feet office building in downtown Cincinnati that is currently leased to Procter and Gamble Company, an unaffiliated company, on a net, net, net lease basis. This property is carried in the financial statements at $535,000 as of December 31, 1998.
(5) Policy liabilities include future policy benefits and expenses, unearned premiums and claims and benefits payable.
Net earned premiums and fees increased 19.2% primarily reflecting continued growth in mobile subscribers and mobile client marketing programs. In addition, net earned premiums grew due to contributions from a large service contract client, as well as from increased sales of vehicle service contracts. These items were partially offset by the unfavorable impact of changes in foreign exchange rates in Latin America and Canada.
The Twelve Months 2014 expense ratio increased 400 basis points compared with Twelve Months 2013. The increase was primarily due to growth in fee-based businesses, which have higher expense ratios than our insurance products, and lower lender placed premiums.
Most of our credit property and credit unemployment insurance business is either reinsured or written on a retrospective commission basis. Business written on a retrospective commission basis permits management to
Total expenses in 1996 were $104.7 million, an increase of $48.2 (85%) over expenses of $56.5 million in 1995.
The $.6 million (126%) increase in interest expense from $.5 million in 1995 to $1.1 million in 1996, was due primarily to interest cost on the term loan agreements and increased borrowings against the line of credit.
As a result of the foregoing, the Company recognized losses before income taxes of $1.7 million in 1996 compared to earnings before income taxes of $12.0 million in 1995, a $13.7 million decrease. The effective tax rate increased from approximately 45% to 162% for the respective twelve months ended June 30, primarily because losses in affiliates and goodwill amortization related to equity investments were not fully tax deductible, and state and local income taxes.
Total revenues in 1994 were $45.3 million, an increase of $16.2 million (56%) over
In November 1995, the Company entered into an agreement amending an earlier loan agreement that increased the line of credit and converted prior borrowings under a line of credit to a term loan. Based on the revised agreement, the Company has a $20 million unsecured line-of-credit commitment that expires in November 1997 and bears interest at prime or 1% over the one, two, three or nine month LIBOR rate. The Company's outstanding borrowings at June 30, 1996
The following tables recast the accompanying Consolidated Statements of Income for continuing operations for the years ended December 31, 1997, 1996 and 1995 as a percent of net insurance premiums and contract charges earned ("net premiums") and provide other relevant information:
Asset management fees increased by $40.6 million from $127.4 million in 2005 to $168.0 million in 2006 as a result of higher average assets under management compared to 2005 due to increased net flows and market appreciation. Asset management fees are asset-based fees, which are dependent on the amount of assets under management.
A number of workers’ compensation insurers’ financial ratings have decreased due to reserve adjustments recorded in 2000 and 1999.
Funds provided by our operating cash flows and investment cash flows have historically provided growth in our investment portfolio. Operating cash flows consist of the excess of premiums collected over claim and claim settlement expenses, offset by payments for reinsurance premiums as well as other operating expenses paid. Investment cash flows consist of income on existing investments and proceeds from sales and maturities of investments. We have historically generated positive net cash flows from operations due, in part, to timing differences between the receipt of premiums and the payment of claim and claim settlement expenses. These net cash flows decreased significantly in 2000 and 1999 as we focused on closing old claims, paying earlier to close those claims. Additionally, as we lowered our reinsurance retention levels to $25,000 in mid-1998, we decreased our current period cash flows as a result of “pre-funding” quarterly premiums ceded under that agreement. We expect this reduction in cash flow will reverse itself in 2001 as we run-off the $25,000 to $300,000 excess of loss reinsurance policy and reimbursements for loss payments to claimants under this contract offset disbursements for premium payments;
Claim and Claim Settlement Expenses: Claim expenses refer to medical and indemnity amounts that we paid or expect to pay to claimants for events that have occurred. The costs of investigating, resolving and processing these claims are referred to as claim settlement expenses. We record these expenses, net of amounts recoverable under reinsurance contracts, to claim and claim settlement expenses in the Consolidated Statements of Operations.
2001 Outlook: We expect that claim and claim settlement expenses will be affected by the following factors:
The following table is derived from the loss reserve development table and summarizes the effect of reserve re-estimates, net of reinsurance, on calendar year operations for the same eight-year period ended December 31, 2000. The total of each column details the amount of reserve re-estimates made in the indicated calendar year and shows the accident years to which the re-estimates are applicable. The amounts in the total accident year column represent the cumulative reserve re-estimates for the indicated accident year (000’s):
Each of the qualified stock options expires ten years from the date of grant and substantially all are subject to continued employment with us. Each of the non-qualified options expires ten years from the date of grant. Certain of the options are subject to vesting provisions that restrict exercise of the option.
In the ordinary course of administering our workers’ compensation management program, we are routinely involved in the adjudication of claims resulting from workplace injuries. We are not involved in any legal or administrative claims that we believe are likely to have a material adverse effect our financial condition or results of operations.
Although the Company reported record net earnings in 1996, it is looking to the future and exploring not only the core businesses of brokering insurance and risk management services, but also expanding within the fields of insurance captives and financial and related investment services. These are areas which may hold opportunities for future profit growth.
The Company believes that internally generated funds will continue to be sufficient to meet the Company's foreseeable cash needs, including non- operating cash disbursements such as anticipated dividends, capital expenditures and repayment of borrowings if the Company so determines.
The net unrealized gains (losses) on investment strategies included in income amounted to $3,928,000 in 1996, ($171,000) in 1995, and $83,000 in 1994.
While the Company's investment policies have not been designed to maximize realized investment gains, such gains were higher in 1995 than those realized in 1996 and 1994. Dispositions of securities have been caused principally by calls prior to maturity by issuers of bonds and notes and by sales of equity securities. In 1996, approximately 72.5% of total fixed maturity securities dispositions represented contractual maturities and early calls of existing holdings; for the year 1995 and 1994 these amounted to approximately 58.5% and 63.5%, respectively.
The data in the table above, incorporates Old Republic's estimates for various asbestosis and environmental impairment ("A&E") claims or related costs that have been filed in the normal course of business against a number of its insurance subsidiaries. Many such claims relate to policies issued prior to 1985, and during a short period between 1981 and 1982 pursuant to an agency agreement canceled in 1982. During all years and through the current date, the Corporation's insurance subsidiaries have typically issued general liability insurance policies with face amounts ranging between $1 million and $2 million and rarely exceeding $10 million. Such policies have, in turn, been subject to reinsurance cessions which have typically reduced the Corporation's retentions to $500,000 or less as to each claim.
Old Republic disagrees with the allegations of liability on virtually all A&E related claims of which it has knowledge on the grounds that exclusions in the policies preclude coverage for nearly all such claims, and that the Corporation never intended to assume such risks. Old Republic's exposure on such claims cannot therefore be calculated by conventional insurance reserving methods for this and a variety of reasons, including: a) the absence of statistically valid data inasmuch as such claims typically involve long reporting delays and very often uncertainty as to the number and identity of insureds against whom such claims have arisen or will arise; and b) the litigation history of such or similar claims for other insurance industry members that has produced court decisions that have been inconsistent with regard to such issues as when the alleged loss occurred, which policies provide coverage, how a loss is to be allocated among potentially responsible insureds and/or their insurance carriers, how policy coverage exclusions are to be interpreted, what types of environmental impairment or toxic tort claims are covered, when the insurer's duty to defend is triggered, how policy limits are to be calculated, and whether clean-up costs constitute property damage.
Note 4-Shareholders' Equity - All common and preferred share data herein has been retroactively adjusted as applicable for stock dividends or splits declared through December 31, 1996.
Premium writings from reinsurance assumed decreased by $4.8 million (40.7%) to $6.9 million during 1998. $3.9 million of this decrease is due to the Company not renewing it's participation in an excess facultative program due to unfavorable experience. Premiums assumed from voluntary property catastrophe retrocession pools were also lower during 1998 as the result of reductions in the Company's shares in these pools during 1998, as well as decreases in gross pool revenues.
In prior years, the Company discussed the nature and progress of its preparedness plans for the year 2000. In late 1999, the Company completed its remediation and testing of systems. As a result of those planning and implementation efforts, the Company experienced no significant disruptions in mission critical information technology and non-information technology systems and believes those systems successfully responded to the Year 2000 date change. Costs associated with the Year 2000 effort were not significant to the Company's operations during 1999. The Company is not aware of any material problems resulting from Year 2000 issues, either with its products, its internal systems, or the products and services of third parties. The Company will continue to monitor its mission critical computer applications and those of its suppliers and vendors throughout the year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly.
Summarized in the table below are the Company's lease commitments for office space as of December 31, 1998.
(3) In July 1995, the Company completed a merger with OakTree Health Plan, Inc. ("OakTree") whereby OakTree was merged into a subsidiary of the Company. The merger was accounted for as a pooling of interests and, accordingly, all prior period consolidated financial statements have been restated as if the merger took place at the beginning of such periods.
Health care services expense stated as a percentage of premiums earned (the "medical-loss ratio") was 94.0% for the year ended December 31, 1997 compared with 80.1% for the year ended December 31, 1996. Overall per member per month revenue in 1997 was substantially unchanged from 1996, however, overall per member per month health care services expenses increased 17.0% to $181.46 in 1997 from $155.16 in 1996. Software and hardware problems experienced in the conversion of a portion of the Company's computer system in September 1996 resulted in significant delays in the Company's payment of provider claims and adversely affected payment accuracy. Medical costs for 1997 reflect additions to the Company's reserves for IBNR in the third and fourth quarters aggregating $327 million. These additions represent revisions to estimates of the Company's incurred medical costs based on information gained in the process of reviewing and reconciling previously delayed claims and claims paid or denied in error. A portion of the reserve additions represent revisions to estimates for claims incurred in prior years.
The Company incurred interest expense of approximately $11.1 million during 1997 for payment of interest on delayed claims.
Cash used for capital expenditures totaled $40.0 million during 1998. This amount was used primarily for computer equipment and software and leasehold improvements. The Company acquired an additional $40.3 million of computer and other equipment under capital leases. The Company also sold and leased back computer equipment with a value of $10.0 million. The Company currently anticipates that capital expenditures and payments under capital leases for 1999 will be approximately $19 million, a significant portion of which will be devoted to management information systems. Except for anticipated capital expenditures and requirements to provide the required levels of capital to its operating subsidiaries, including any requirement arising from nonadmissibility of provider advances (as discussed below) or other assets or from operating losses, the Company currently has no definitive commitments for use of material cash.
Premium revenues decreased $.1 million to $90.3 million in 2000 from $90.4 million in 1999; premium revenues decreased $1.5 million at Madison Life and increased $1.4 million at Standard Life. The decrease at Madison Life is comprised of: a $3.3 million decrease in the credit line of business, primarily due to the runoff of acquisitions of two single premium blocks of business effective in 1997; a $1.7 million decrease in dental premiums due to the runoff of this block; and a $.5 million decrease in other life and health lines of business; such decreases were offset by: a $2.3 million increase in long-term disability ("LTD") and $.3 million in group life, both as a result of an increase in premiums written in 2000; and a $1.4 million increase in ordinary life and individual accident and health premiums due to the 1999 acquisitions. The increase at Standard Life is comprised of: a $.8 million increase in its provider excess line due to increased retention and a new distribution channel in 2000; a $2.2 million increase in the stop-loss line due to an increase in premium volume and rates; a $.4 million increase in the point of service line and a $.4 million increase in the behavioral health line both due to an increase in production; such increases are offset by: a $.4 million decrease in short-term statutory disability ("DBL") due to a rate reduction, a $1.5 million decrease in the HMO reinsurance line due to the loss of a distribution channel and a $.5 million decrease in other runoff lines.
Policyholder benefits 823 793 872 Operating expenses 168 143 141 ------------ ----------- ---------- Total benefits and expenses 991 936 1,013 ------------ ----------- ---------- Income from operations 187 121 138 Income tax expense 64 32 48 ------------ ----------- ---------- Net Income $ 123 $ 89 $ 90 ============ =========== ==========
Stock Options - The Company applies the intrinsic value measurement approach under APB Opinion No. 25, "Accounting for Stock Issued to Employees", to stock-based compensation awards to employees, as interpreted by AIN-APB 25 as it relates to accounting for stock options granted by the Parent to Company employees (See Note 13).
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities - The Financial Accounting Standards Board (FASB) has issued Statement No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities - A replacement of FASB Statement No. 125", which revises the standards for accounting for securitizations and other transfers of financial assets and collateral, and requires certain disclosures. Statement No. 140 will be effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. However, certain disclosure requirements under statement No. 140 were effective December 15, 2000, and these requirements have been incorporated in the Company's financial statements (see Note 6). Management does not anticipate that the adoption of the new Statement will have a significant effect on the financial position or results of operations of the Company.
1-Percentage 1-Percentage Point Point Increase Decrease ------------ --------------- Increase (decrease) on total of service and interest cost on components $ 1,189 $ (812) Increase (decrease) on post-retirement benefit 7,220 (5,517) obligation
Everest Re maintains reserves to cover its estimated ultimate liability for losses and LAE with respect to reported and unreported claims. Because reserves are estimates of ultimate losses and LAE, management monitors reserve adequacy over time, evaluating new information as it becomes known and adjusting reserves, as necessary. Management considers many factors when setting reserves, including: (i) current legal interpretations of coverage and liability; (ii) economic conditions; (iii) internal methodologies which analyze Everest Re's experience with similar cases, information from ceding companies and historical trends, such as reserving patterns, loss payments, pending levels of unpaid claims and product mix; and (iv) the uncertainties discussed below regarding reserve requirements for asbestos and environmental claims. Based on these considerations, management believes that adequate provision has been made for Everest Re's loss and LAE reserves. Actual losses and LAE ultimately paid may deviate, perhaps substantially, from such reserves.
The Company depends, in varying degrees, on many computerized information systems, both within the Company and at others with whom it does business, which may be affected by the year 2000 issue. In the absence of a response to the year 2000 issue, the Company could have difficulty efficiently processing transactions, and the costs of doing its business could increase, perhaps materially. To address the issue, the Company has initiated a year 2000 initiative to address potential concerns relating to both the Company's own processing environment and companies with which it does business.
be no material disruption to the Company's business if such products are not compliant. The Company believes that the actual expenses involved in making its internal processing environment and software licensed from third parties year 2000 compliant will not be material.
Such statements may include, but are not limited to, projections of premium revenue, investment income, other revenue, losses, expenses, earnings (including earnings per share), cash flows, plans for future operations, common stockholders' equity (including book value per share), investments, financing needs, capital plans, dividends, plans relating to products or services of the Company, and estimates concerning the effects of litigation or other disputes, as well as assumptions for any of the foregoing and are generally expressed with words such as "believes," "estimates," "expects," "anticipates," "plans," "projects," "forecasts," "goals," "could have," "may have" and similar expressions. Undue reliance on any forward-looking statements should be avoided. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
20) The impact of current and future regulatory environments on the ability of the Company's subsidiaries to enter and exit reinsurance or insurance markets; and
Comparison of Fiscal Year 2005 to Fiscal Year 2004 and Fiscal Year 2004 to Fiscal Year 2003.
The spread between the Insurance Company’s average credited rate for reserves and account balances and the Insurance Company’s ratio of net investment income to mean assets, as determined under SAP, (the “Spread”) for the 12 months ended December 31, 2005, 2004 and 2003 was 2.30%, 2.53% and 1.64%, respectively. The increases from 2003 to 2004 and 2005 were largely due to the recognition in 2004 and 2005 of the income from the U.S. treasury strips underlying the principal protected notes (see “Principal Protected Notes”) and increased returns from the Company’s limited partnership investments. The spread was also affected by a reduction in the crediting rate to policyholders. There can be no assurance that such positive spreads will continue in the future.
The 1998 Consolidated Financial Statements and the report of the registrant's independent auditors and the unaudited information set forth under the caption "Quarterly Data" are incorporated herein by reference to the Annual Report.
Great American Financial Resources, Inc. ("GAFRI" or "the Company"), through its subsidiaries, markets fixed and variable annuities, and various forms of supplemental and life insurance through independent agents, payroll deduction plans, financial institutions and in-home sales.
Prior to the adoption of the SOP, reserves for two-tier annuities were generally recorded at the lower-tier value plus an EDAR reserve.
As permitted under SFAS No. 123, "Accounting for Stock-Based Compensation," GAFRI accounts for stock options and other stock-based compensation plans using the intrinsic value based method prescribed by Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees." Under GAFRI's employee, agents and director stock option plans, options are granted at exercise prices equal to the fair value of the shares at the date of grant. No compensation expense is recognized for stock option grants.
Basic earnings per share is calculated using the weighted-average number of shares of common stock outstanding during the period. The calculation of diluted earnings per share includes the following dilutive effect of common stock options (in millions): 2004 - 0.2 million shares, 2003 - 0.1 million shares and 2002 - 0.3 million shares.
The results of operations and any gain or loss upon sale are included in GAFRI's operating earnings. From time-to-time, GAFRI may decide to sell or market for sale selected real estate investments. These decisions are based on factors impacting the operations and value of specific properties or real estate investments in general. No assurance can be given as to the outcome of any marketing of these investments, including the sales price. GAFRI may decide to purchase and/or sell additional real estate investments in the future.
No compensation cost has been recognized for stock option grants. For information about the SFAS #123 "fair value" of options granted, see Note B - "Accounting Policies - Stock-based Compensation."
For statutory purposes, the acquisition of the fixed annuity block of business of NHIC was recorded on April 1, 2004 as a reinsurance transaction under which NHIC paid GAFRI a negative ceding commission of $38 million to assume the block of business.