felanders/preprocessed huggingface dataset:
The Company's principal operations are those of ATC. ATC is an underwritten title company in the state of California and is engaged in the business of providing title insurance and other related product services in connection with real estate transactions. The Company operates throughout California and in Maricopa County, Arizona. ATC functions as an exclusive agent of Fidelity National Title Insurance Company ("FNTIC"), an affiliate and a wholly-owned subsidiary of FNFI. Title insurance policies are underwritten by FNTIC for an underwriting fee. The underwriting agreement generally provides that ATC is liable under any single policy for only the first $5,000 of losses. As a result of the July 1997 transaction with the Company, FNFI agreed to make no claim on ATC for claims arising from policies written prior to January 1, 1997.
Basic earnings per share is computed by dividing net earnings available to common shareholder by the weighted average number of common shares outstanding during the period. Dilutive earnings per share is calculated by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding plus the assumed conversions of dilutive potential securities. The Company has granted certain options which have been treated as common share equivalents for purposes of calculating diluted earnings per share.
Selected unaudited pro forma combined results of operations for the year ended December 31, 1997, assuming that the acquisition of 60% of ATC occurred on January 1, 1997 is presented as follows (dollars in thousands, except per share data):
Concurrent with the acquisition of ATC, the Chairman of the Board of FNFI was granted fully vested options for 332,904 shares of the Company's common stock at an exercise price of $0.66 per share. The options expire in 10 years. The Company recognized $414,000 in compensation expense to reflect the excess of fair market value over the exercise price of the options in 1997. Subsequent to the initial public offering these options were exercised.
In June 1999, the Company acquired National from a subsidiary of FNFI for $3.25 million. Pursuant to the terms of the Stock Purchase Agreement, effective with the purchase date, National pays FNFI specific fees for certain administrative functions performs on behalf of the Company. The fee related to National at December 31, 1999 was $64,000.
We have audited the accompanying statements of combined operations, statements of shareholders' equity and cash flows of ANFI Predecessor, as defined in Note 1 to the financial statements, for the six months ended June 30, 1997 and the year ended December 31, 1996. These 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.
The Company's One Health Plan subsidiary organization will also play an important role in network contracting and administration medical management, member services and quality assurance for the Company's other managed care products. In addition to day-to-day operations of the HMO, each One Health Plan subsidiary will administer Preferred Provider Organization ("PPO") and Point-of-Service ("POS") plan provider networks for the Company and its joint-venture partner, New England. As well as providing economies of scale, this "pooling" of PPO, POS, and HMO membership benefits the Company in negotiating favorable provider reimbursement arrangements.
BENEFITS AND EXPENSES: Life and other policy benefits (net of reinsurance recoveries totaling $52,675, $43,574, and $18,937) 515,750 557,469 548,950 Increase in reserves 229,198 98,797 64,834 Interest paid or credited to contractholders 561,786 562,263 529,118 Provision for policyholders' share of earnings (losses) on participating business (7) 2,027 (725) Dividends to policyholders 49,237 48,150 42,094
CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994 (Dollars in Thousands)
Certain reclassifications have been made to the 1995 and 1994 financial statements to conform with the basis of presentation used in 1996.
Fixed maturities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the net unrealized gains and losses reported as a separate component of stockholder's equity. The net unrealized gains and losses in derivative financial instruments used to hedge available-for-sale securities are included in the separate component of stockholder's equity.
3. Real estate is carried at the lower of cost or fair value, net of costs of disposal. Effective January 1, 1996, the Company adopted SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". The implementation of this statement had no material effect on the Company's financial statements.
2,907,875 56,551 5,250 2,959,176 2,959,176 Foreign governments 110,013 1,762 5,673 106,102 106,102 State and municipalities 28,353 28,255 28,255
At December 31, 1996 and 1995, pursuant to fully collateralized securities lending arrangements, the Company had loaned $230,419 and $343,351 of fixed maturities, respectively.
Year Ended December 31, 2006 Compared to Year Ended December 31, 2005:
However, these amounts were within our expectations of losses to be incurred in a more normal year and losses from catastrophe related events were down significantly compared to 2005 and 2004.
Mobile Attic sold 5 individual franchise licenses during 2006 and 15 during 2005. Initial fees included in revenues for the years ended December 31, 2006 and 2005 were $300,000 and $625,000, respectively. Deferred revenue at December 31, 2006 and 2005 was $70,000 and $175,000, respectively, and
SFAS No. 157, Fair Value Measurements, changes the requirements for accounting and reporting of a change in accounting principle. The statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The statement is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the potential impact of this statement at the time it is adopted.
because the Company is not the primary beneficiary of the trust. The Subordinated Debentures, disclosed in Note 8 are reported in the accompanying Consolidated Balance Sheet as a component of long-term debt. The Company’s equity investments in the Trust total $279,000 and are included in Other Assets.
An analysis of the net increase in unrealized appreciation on available-for-sale securities follows:
NSFC is similarly restricted in the amount of dividends payable to the Company; dividends may not exceed the greater of 10% of statutory surplus as of the end of the preceding year, or net income for the preceding year. At December 31, 2006, NSFC’s retained earnings unrestricted for the payment of dividends in 2007 amounted to $4,222,000.
Under applicable Alabama insurance laws and regulations, NSIC is required to maintain a minimum total surplus (to include both paid-in and contributed and unassigned surplus) of $200,000.
Pursuant to the rules and regulations of the Securities and Exchange Commission, the Condensed
Our investment portfolio is highly liquid and consists substantially of readily marketable, investment-grade debt securities. Net investment income is primarily comprised of interest and dividends earned on these securities and related investment expenses. Net investment income and gains were $0.4 million for the year ended December 31, 2011 and $0.7 million for the same period last year. The lower investment performance was mainly due to interest income received on the trust preferred debt in the prior year, which was extinguished in December of 2010, offset by higher realized gains on equity securities sold in 2011.
We have historically used reinsurance to manage our exposure to losses and loss adjustment expenses by ceding a portion of our gross losses and loss adjustment expenses to reinsurers. We remain obligated for amounts covered by reinsurance in the event that the reinsurers do not meet their obligations under the reinsurance agreements due to, for example, disputes with the reinsurer or the reinsurer’s insolvency.
After making deductions for the effect of reinsurance, losses and loss adjustment expenses were $31.0 million for the year ended December 31, 2011, compared to $25.0 million for the same period in 2010. The amount represents actual payments made and changes in estimated future payments to be made to or on behalf of AAIC’s policyholders, including the expenses associated with settling claims. As a percentage of earned premiums, the loss ratio for the year ended December 31, 2011 was 92.9% and 75.0% for the same period in 2010. The year-over-year increase in loss cost includes $4.1 million of adverse loss development on claims from accident years 2009 and 2010 and $1.5 million of reserves established for the loss corridor provision in the 2011 reinsurance treaty.
Our best estimates of the appropriate amounts for our reserves as of December 31, 2011 and 2010 are included in our financial statements for those years. Our goal is to establish the total reserves and determine the adequacy of reserves to cover all loss costs, while sustaining minimal variation from the time reserves are initially established until losses are fully developed. At the point in time when the reserves are established, we have no way of knowing whether our reserve estimates will prove to be high or low and, thus, whether future reserve development will be favorable or unfavorable.
Index to Financial Statements Ceded reinsurance for all programs reduced the Company’s incurred losses and LAE for the year ended December 31, 2011 and 2010 by $63.1 million and $61.6 million, respectively.
All information required to be disclosed in Item 8 is incorporated by reference from the consolidated financial statements and schedules thereto in Item 15 of this Annual Report.
Gross premiums written in 1995 of $108,071,871 were 10% above the $98,163,684 recorded in 1994. In 1994, gross premiums written increased 15% over the 1993 level. The following table compares the product line mix between the years for gross premiums written:
1994 to pay several large claims, there were no exceptionally large claim settlements made late in 1995. The note payable decreased as a result of principal repayment during the second quarter (see Note 3 of Notes to Consolidated Financial Statements). The Company's liquidity position remains strong as a result of cash flows from underwriting and investment activities.
ALCO’s current total monthly rental payment for the facilities mentioned as above is approximately US$26,461. We intend to renew these leases upon their expiration.
For enhancement of our credit control, we are continuing our effort to closely monitor the aging of client premium receivables and trying to increase the receivable turnover further. Since 2009, we established a marketing function, the main responsibilities of which are maintaining our existing client base and promoting the company’s business to potential new clients. Additional headcounts are added to this new function in 2010. The company will allocate more resources to the marketing function in 2011.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
such difference will impact the carrying value of commissions and other receivables and doubtful debts expenses in the periods in which such estimate is changed or the receivable are collected.
Selected financial data of the Company for each of its last five fiscal years is set forth under "Selected Financial Data" in the Company's 2000 Annual Report to Stockholders. Such information is incorporated herein by reference.
Consolidated Statements of Operations for the Years Ended December 31, 1998, 1999 and 2000 36
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998, 1999 and 2000 38-39
Net earnings and diluted earnings per share for the year ended December 31, 2013 were $32.6 million and $2.80, respectively, compared to $24.3 million and $2.04, respectively, for 2012. The increase in diluted earnings per share for the year ended December 31, 2013 was primarily due to an increase in underwriting income with an improvement in the accident year combined ratio from 99.3% at December 31, 2012 to 97.7% at December 31, 2013.
As compared with loss and LAE reserves held at December 31, 2013, our best estimate of reserve ranges using indicated results from utilized estimates of loss and LAE could range from a deficiency of 10% or $62.4 million to a redundancy of 9% or $54.7 million. These ranges do not present a forecast of future redundancy or deficiency since actual development of future losses on current loss reserves may vary materially from those estimated in the year-end 2013 reserve tests. Reserves recorded are our best estimate of the ultimate amounts that will be paid.
issuance were used to redeem the 5.5% Senior Notes. On October 17, 2012, we fully redeemed the $195.0 million outstanding principal of 5.5% Senior Notes due 2014 at a price of 106.729%, or $208.1 million plus accrued interest of $1.8 million. Refer to Note 4 to the Consolidated Financial Statements for more information on our long-term debt.
execute the program to December 31, 2012. On November 6, 2012, our Board of Directors again increased the authority under this share and debt repurchase plan by $25.0 million and extended the date to execute the program to December 31, 2014. During 2013, we repurchased 181,900 shares at an average cost, excluding commissions, of $58.84. As of December 31, 2013, we had $43.8 million of authority remaining under this program.
Summarized information for our investment portfolio at December 31, 2013 follows (in thousands):
The following table presents the credit rating and fair value of our residential mortgage-backed securities at December 31, 2013
The combined ratio in the Other States increased by 1.7 points for the twelve months ended December 31, 2013, primarily due to increases in the loss and LAE ratios in Alabama and Illinois. We have raised rates and tightened underwriting restrictions in these states in order to improve their profitability.
The combined ratio for the Commercial Vehicle product increased by 3.7 points during the twelve months ended December 31, 2013, due to an increase in the loss and LAE ratio.
been established for the deferred tax asset relating to the capital loss carryforward.
The following table sets forth certain information with respect to the principal facilities used in INSpire's operations:
In April 1998, $500,000 was assigned to in-process research and development in the purchase price allocation of the acquisition of the Paragon Acquisition. This amount was charged to operations.
Revenues. INSpire's total revenues were $87.2 million for the year ended December 31, 1998 compared to $56.6 million for the year ended December 31, 1997, an increase of $30.6 million or 54%. Outsourcing revenues were $50.9 million for 1998 compared to $32.5 million for 1997, an increase of $18.4 million or 57%. This increase is attributable primarily to revenues from 13 new outsourcing contracts entered into during 1998, including the agreement with Arrowhead effective as of December 1, 1998. Software and software services revenues were $34.0 million for 1998 compared to $21.1 million for 1997, an increase of $12.9 million or 61%. This increase is attributable primarily to increased license fees from software systems and increased installations, customization and other software services performed for customers.
As of December 31, 2011, we had deferred tax assets of $4,466 thousand related to alternative minimum tax credit carryovers which do not expire.
Employee benefit expense allocated to us for these benefits totaled $2,870 thousand, $5,614 thousand and $12,817 thousand for 2011, 2010 and 2009, respectively. Over the next 12 months, Phoenix Life expects to make contributions to the pension plans of which approximately $4,979 thousand will be allocated to us.
Non-deferred operating expenses decreased by $8,917 thousand to $90,177 thousand in 2011, compared to $99,094 thousand in 2010. The decrease in operating expenses was a result of lower professional fees and outside services as well as lower compensation related expenses.
We invest in a variety of debt securities. We classify these investments into various sectors using industry conventions; however, our classifications may differ from similarly titled classifications of other companies. We classify debt securities into investment grade and below-investment-grade securities based on ratings prescribed by the National Association of Insurance Commissioners (“NAIC”). In a majority of cases, these classifications will coincide with ratings assigned by one or more Nationally Recognized Standard Ratings Organizations (“NRSROs”); however, for certain structured securities, the NAIC designations may differ from NRSRO designations based on the amortized cost of the securities in our portfolio.
We invest directly in RMBS. To the extent these assets deteriorate in credit quality and decline in value for an extended period, we may realize impairment losses. When making investment decisions, we have been focused on identifying those securities that could withstand significant increases in delinquencies and foreclosures in the underlying mortgage pools before incurring a loss of principal.
One means of assessing exposure to interest rate changes is a duration-based analysis that measures the potential loss in net earnings resulting from a hypothetical decrease in interest rates of 100 basis points across all maturities (sometimes referred to as a "parallel shift in the yield curve"). Under this model, with all else constant, we estimate that such a decrease, including repricing in the securities portfolio, would reduce our 2003 net earnings based on year-end 2002 positions by an insignificant amount. Based on positions at year-end 2001, the pro forma effect on 2002 net earnings of such a decrease in interest rates was also estimated to be an insignificant amount.
Losses on uncollectible premium receivables and reinsurance recoverables are recognized when they are incurred. Measurement of such losses requires consideration of historical loss experience, including the need to adjust for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of specific customers, collateral value (such as letters of credit and funds held balances) and legal right-of-offset of related claim liabilities. Exposure to losses on uncollectible premium receivables and reinsurance recoverables at year-end 2002 was approximately $15.3 billion, against which an allowance for losses of $181 million was provided. Further information is provided in notes 2, 6 and 10 to the consolidated financial statements. While losses depend to a large degree on future economic conditions (including the impact of future claims experience), we do not anticipate significant receivable write-offs in 2003.
The cumulative effect of accounting change in 2001 related to the adoption, as of January 1, 2001, of SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as amended. Adoption of this standard resulted in a one-time, non-cash charge that reduced 2001 earnings by $11 million.
Our level of profitability is primarily determined by how adequately our premiums assumed and investment income cover our costs and expenses, which consist primarily of acquisition costs and other underwriting expenses, claim payments and general and administrative expenses. One factor leading to variation in our operational results is the timing and magnitude of any follow-on offerings we undertake (if any), and issuance of participating notes to third-party investors, as we are able to deploy new capital to collateralize new reinsurance treaties and consequently, earn additional premium revenue. In addition, our results of operations may be seasonal in that hurricanes and other tropical storms typically occur during the period from June 1 through November 30. Further, our results of operations may be subject to significant variations due to factors affecting the property and casualty insurance industry in general, which include competition, legislation, regulation, general economic conditions, judicial trends, and fluctuations in interest rates and other changes in the investment environment.
Restricted Cash and Cash Equivalents. As of December 31, 2019, our restricted cash and cash equivalents decreased by $1.2 million, or 36%, to $2 million, from $3.2 million as of December 31, 2018. The decrease is the net result of withdrawals by the counterparty of our ILW Swap for settlement of losses as well as collateral deposits made during the year ended December 31, 2019.
The financial statements and supplementary data have been filed as a part of this Annual Report on Form 10-K as indicated in the Index to Consolidated Financial Statements and Financial Statement Schedules appearing on page 51 of this Annual Report on Form 10-K.
Income taxes increased by $36.5 million, to 7.1 million for the year ended December 31, 1999. The effective rate on pre-tax income increased to 30.3% for the year ended December 31, 1999 versus 28.9% for the year ended December 31, 1998 due to lower tax exempt investment income.
We restated our previously issued financial statements for 1995, 1996 and 1997 and its first quarter 1998 Form 10-Q for the above items by issuance of a current report on Form 8-K dated August 19, 1998. These restatements resulted in a cumulative decrease to stockholder's equity of $75.2 million through March 31, 1998.
In the fourth quarter of 2000, Vesta redeemed preferred stock of a subsidiary with a stated value of $21 million and a carrying value of $18 million for $7.0 million. In addition, we redeemed $8 million of Deferrable Capital Securities in exchange for 1.2 million shares of common stock. The resulting after-tax gains from these transactions of $9.2 million was recorded directly to equity in accordance with EITF 86-32 "Early Extinguishment of a Subsidiary's Mandatorily Redeemable Preferred Stock."
for equity exchanges, the acquisitions of Aegis Financial Corporation and Instant Auto Insurance Holdings, and the establishment of the Agent Stock Incentive Plan Trust.
The following table shows expiration dates and weighted average exercise price for all outstanding options and options currently exercisable at December 31, 2000.
quarter of 2000, the last active reinsurance contract was commuted. Such commutation represented the measurement date for treatment of the reinsurance assumed business as a discontinued operation under Accounting Principles Board Opinion 30. Therefore, the reinsurance assumed operations have been segregated from continuing operations herein for all periods presented. Vesta will continue to pay losses on policies with coverage periods prior to the measurement date as those losses become due.
Operating results of reinsurance assumed and commercial lines were as follows (in thousands):
. continued commitment to the high credit quality of our general account investment portfolio.
The following table sets forth the components of our net income:
Total assets increased $312 million, or 14.1%, to $2,531 million at December 31, 1998, from $2,219 million at December 31, 1997. We attribute this increase primarily to continued growth in our separate accounts, which increased by $223 million, or 20.3%, to $1,319 million at December 31, 1998, from $1,096 million at December 31, 1997. We attribute this increase primarily to significant market appreciation and continued deposits of variable products, partially offset by withdrawals.
In compliance with regulatory requirements, the Company maintains an Asset Valuation Reserve ("AVR") and an Interest Maintenance Reserve ("IMR"). The AVR and other investment reserves stabilize surplus against fluctuations in the value of stocks, as well as declines in the value of bonds and mortgage loans. The IMR captures after-tax realized capital gains and losses which result from changes in the overall level of interest rates for all types of fixed income investments and interest related hedging activities. These interest related gains and losses are amortized into income using the grouped method over the remaining life of the investment sold or over the remaining life of the underlying asset. Net realized after-tax capital gains of $2.6 million in 1998, $2.0 million in 1997 and $0.4 million in 1996 were transferred to the IMR. Amortization of the IMR into net investment income amounted to $0.3 million in 1998 and $0.1 million in 1997 and 1996. At December 31, 1997, the IMR consisted of a net loss deferral, which, in accordance with the regulations, was recorded as a reduction of surplus.
The Internal Revenue Service has completed its examination of the Company's income tax returns through the year 1995.
The Company had restructured loans with book values of $10.4 million and $17.3 million at December 31, 1998 and 1997, respectively. The loans typically have been modified to defer a portion of the contractual interest payments to future periods. Interest deferred to future periods totaled $0.2 million in 1998, 1997 and 1996. At December 31, 1998, scheduled commercial mortgage loan maturities were as follows: 1999 - $8.6 million; 2000 - $1.5 million; 2001 - $10.3 million; 2002 - $15.0 million; 2003 - $8.6 million; and $37.0 million thereafter.
The notional amounts described do not represent amounts exchanged by the parties and, thus, are not a measure of the exposure of the Company. The amounts exchanged are calculated on the basis of the notional amounts and the other terms of the instruments, which relate to interest rates, exchange rates, security prices or financial or other indexes.
Notes receivable from FNF, due from FNF and notes payable to FNF as of December 31, 2005 and December 31, 2004 were as follows:
Net realized gains and losses for 2005, 2004, and 2003 were $44.7 million, $22.9 million, and $101.8 million, respectively. Net realized gains in 2003 included a $51.7 million realized gain resulting from IAC InterActive Corp.’s acquisition of Lending Tree Inc. and the subsequent sale of our IAC Interactive Corp. common stock and a realized gain of $21.8 million on the sale of New Century Financial Corporation common stock.
Income tax expense as a percentage of earnings before income taxes for 2005, 2004, and 2003 was 37.7%, 36.6%, and 37.3%, respectively. The fluctuation in income tax expense as a percentage of earnings before income taxes is attributable to our estimate of ultimate income tax liability, and changes in the characteristics of net earnings year to year, such as underwriting income versus investment income.
Our cash flows from operations were $697.5 million, $645.8 million, and $852.6 million in 2005, 2004, and 2003, respectively.
The Company also has certain license and cost sharing agreements with FIS. The Company recorded expense of $11.9 million, $12.8 million, and $17.9 million relating to these agreements in 2005, 2004, and 2003, respectively
The carrying values reported in the Consolidated and Combined Balance Sheets for trade and notes receivables approximate their fair value.
The change in unrealized gains (losses) on equity securities for the years ended December 31, 2005, 2004, and 2003 was $(15.2) million, $(4.5) million, and $(0.8) million, respectively.
The Company recently negotiated a settlement with the California Department of Insurance with respect to that department’s inquiry into these arrangements, which the Company refers to as captive reinsurance arrangements. Under the terms of the settlement, the Company will refund approximately $7.7 million to those consumers whose California property was subject to a captive reinsurance arrangement and paid a penalty of $5.6 million. The Company also recently entered into similar settlements with 26 other states, in which the Company agreed to refund a total of approximately $1.2 million to policyholders. Other state insurance departments and attorneys general and the U.S. Department of Housing and Urban Development (“HUD”) also have made formal or informal inquiries of the Company regarding these matters.
The net pension liability included in accounts payable and accrued liabilities as of December 31, 2005 and 2004 is $50.2 million and $63.0 million, respectively. The net pension liability at December 31, 2005 and 2004 includes the additional minimum pension liability adjustment of $3.2 million and $18.7 million, respectively, which was recorded as a net of tax charge of $2.0 million and $11.8 million, respectively, to accumulated other comprehensive earnings (loss) in 2005 and 2004 in accordance with SFAS No. 87.
Weighted-average assumptions used to determine benefit obligations at December 31, are as follows:
The growth in administrative fees is attributable to a significant increase in premiums on individual variable life policies and certain corporate-owned life policies where the company collects a premium load. Nearly all of the increase in surrender charges over the past two years is attributable to policyholder withdrawals in the Variable Annuities segment, and is driven by an overall increase in variable annuity policy reserves and a heightened competitive environment in the individual annuity marketplace.
Total core premiums and deposits represent amounts that are recurring and are the sales figures management uses to set and evaluate the Company's sales goals. Sales of institutional products represent sales of funding agreements that secure notes issued to foreign investors through a third party trust under the Company's $2 billion medium-term note program. The program was launched in July 1999 as a means to expand spread based product offerings. The Company excludes institutional products and BOLI sales as well as deposits into Nationwide employee and agent benefit plans from its targeted sales comparisons. Although funding agreements and BOLI contribute to asset and earnings growth they do not produce steady production flow that lends itself to meaningful comparisons. The Company achieved annual core sales growth of 13%, 21%, and 19% in 1999, 1998 and 1997, respectively.
Asset fees were $596.6 million in 1999 up 25% from $479.1 million in 1998 and totaled $370.2 million in 1997. Asset fees are charged as a percentage of policy reserves which have increased substantially in the past three years as a result of strong net cash flows and through market appreciation on investments underlying reserves. Variable annuity policy reserves grew $14.78 billion during 1999 reaching $61.20 billion as of year end 1999 compared to growth in 1998 of $11.93 billion and year end 1998 reserves of $46.42 billion. During 1997, policy reserves increased $10.21 billion.
Pre-tax earnings from investment life products reached $53.4 million 1999 compared to $29.6 million a year ago and $14.7 million in 1997. The strong revenue growth discussed previously more than offset increased operating expenses and slightly elevated mortality experience, which continues to remain within pricing assumptions.
This discussion should be read in conjunction with the consolidated financial statements, notes and tables included elsewhere in this report. Management's discussion and analysis may contain forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. However, such performance involves risks and uncertainties which may cause actual results to differ materially from those expressed in the forward-looking statements. See "Forward-Looking Statements."
- entered into a $40.0 million credit facility to finance the Continental General acquisition; and
Interest expense and financing costs increased to $3.9 million in 1999 compared to $1.8 million in 1998 as a result of the interest expense on the $40.0 million loan under our credit facility, which began to accrue on February 17, 1999, the closing date of the purchase of Continental General.
Net investment income increased to $7.5 million, or 14.2%, in 1998 from $6.5 million in 1997. The primary reason for the increase was the interest earned on funds received in July 1998 from the equity transaction.
The amortized cost and estimated fair value of securities available-for-sale as of December 31, 1999, are as follows:
Except for bonds and notes of the U.S. Government or of a U.S. Government agency or authority, the only investment the Company has that exceeds 10% of total shareholders' equity is a bond of Petroliam Nasional Berhad with an estimated fair value of $4.8 million at December 31, 1999.
At December 31, 1999, the Company held no unrated or less-than-investment grade bonds. The Company performs periodic evaluations of the relative credit standings of the issuers of the bonds held in the Company's portfolio. These evaluations are considered by the Company in its overall investment strategy.
During the fourth quarter of 1999, management committed to a plan to consolidate the operations of United Benefit into the home office and to sell United Benefit's home office property. The Company has recorded the property at its estimated fair value less the estimated incremental direct costs to transact a sale. This resulted in a charge to operations of approximately $0.2 million.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 1999 and 1998 are presented below:
Effective January 1, 1999, Provident entered into a reinsurance agreement with Provident Indemnity, whereby Provident reinsured 100% of Provident Indemnity's business written after December 31, 1998. In a separate reinsurance agreement, Provident ceded to Hannover 50% of its direct business written after December 31, 1998 and 50% of the business reinsured from Provident Indemnity.
CASH, CASH EQUIVALENTS, PREMIUMS RECEIVABLE, NOTE RECEIVABLE, REINSURANCE RECEIVABLE, SURPLUS NOTES, MORTGAGE LOANS AND POLICY LOANS--The carrying amounts reported in the consolidated balance sheets for these instruments approximate their fair value.
The following is a discussion and analysis of the Company's results of operations and financial condition. This discussion and analysis should be read in conjunction with the Company's audited consolidated financial statements and related notes.
The reduction in gross premiums written was partly offset by an increase of $3.3 million in the aggregate level of fronted premiums, reinstatements, adjustments and no claims bonuses written in the year ended September 30, 1999 compared to the year ended September 30, 1998. This increase was principally due to fronting arrangements, entered into in the fiscal year ended September 30, 1999, which produced $3.1 million of gross premiums written. These fronting arrangements were primarily provided for three companies: two of these companies have claims paying ratings from S&P of "A-"; the other company is rated "A" by A.M. Best.
In addition, for the year ended September 30, 1997, $10.3 million relating to adjustment premiums, reinstatement premiums and no claims bonuses produced a reduction in gross premiums written. In the year
Losses and loss expenses incurred increased 206.2% from $31.2 million for the year ended September 30, 1997 to $95.5 million for the year ended September 30, 1998. This increase was due to an increase in the number of worldwide catastrophic events that affected the Company during the year ended September 30, 1998. The largest loss event to affect the Company was Hurricane Georges, which occurred in September 1998. The Company established a $25 million loss provision for this event that represented 26% of the losses incurred for the year ended September 30, 1998. In addition, throughout the year ended September 30, 1998, the Company incurred losses in respect of various weather-related events, notably U.K. Midland floods ($7.0 million), Canadian winter freeze ($4.3 million) and various U.S. storms ($2.4 million). The Company sustained a number of claims relating to aggregate stop loss and excess of loss contracts, which accounted for approximately $16.8 million, or 18%, of losses incurred. A large percentage of these aggregate losses incurred in the year ended September 30, 1998 related to losses that had occurred in prior years. This was due to the extended loss reporting
Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies.
As of September 30, 1999, the Company had 1,029,514 options outstanding (1998: 1,873,782; 1997: 2,550,537) and had granted 340,872 (1998 and 1997: 340,872) stock appreciation rights.
The following table sets forth the Company's gross premiums written and the percentage thereof allocated to the zone of exposure for the years ended September 30, 1999, 1998 and 1997:
Includes Medicare supplement premiums of $6.0 million related to the Savers Life acquisition. This business was sold effective July 1, 1998.
Accounting for Deferred Annuities and Universal and Interest-Sensitive Life Products. We primarily account for our annuity, universal and interest-sensitive life policy deposits in accordance with Statement of Financial Accounting Standards No. 97 (“SFAS No. 97”), “Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses on the Sale of Investments”. Under SFAS No. 97, a benefit reserve is established at the time of policy issuance in an amount equal to the deposits received. Thereafter, the benefit reserve is adjusted for any additional deposits, interest credited and partial or complete withdrawals. Revenues for annuities and universal and interest-sensitive life policies, other than certain non-interest sensitive annuities, consist of policy charges for surrenders and partial withdrawals, mortality and administration, and investment income earned. These revenues do not include the annuity, universal and interest-sensitive life policy deposits. Expenses related to these products include interest credited to policyowner account balances, operating costs for policy administration, amortization of DAC and mortality costs in excess of account balances.
Also occurring in 2002, a gain on discontinued operations of $6.9 million related to the sale of our International Operations was recorded. In addition, a charge of $1.2 million resulting from the impairment of goodwill from the adoption of SFAS No. 142 was recorded. No extraordinary losses occurred in 2002.
During 2001, call option losses decreased by $1.7 million or 22%, to $5.9 million.
During 2001, net deposits decreased $96.2 million or 56%, to $74.4 million. The decrease in deposits is primarily due to the volatile global equity environment, which has caused a shift in sales to fixed-income based investments.
We sold our International Operations which consisted of 100% of the shares in Premier Life (Luxembourg) and the portfolio of Premier Life (Bermuda) to Winterthur Life, a division of Credit Suisse Group, resulting in a gain on the sale of discontinued operations of $6.9 million.
Our invested assets, approximately $1.4 billion, represented approximately 82% of our total assets at December 31, 2002. These investments are subject to customary risks of credit defaults and changes in market values. In addition, the value of our investment portfolio depends in part on the financial condition of the companies in which we have made investments. Factors beyond our control, including interest rate levels, financial market performance, and general economic conditions may have a significant negative impact on our investment income and the value of our investment assets, which would have a material adverse affect on our financial condition.
We market our insurance products primarily through insurance brokers. A large percentage of our gross premiums written are sourced through a limited number of brokers. These brokers provided a total of 31.8% of our gross premiums written for the year ended December 31, 2014. The nature of our dependency on these brokers relates to the high volume of business they consistently refer to us. Our relationship with these brokers is based on the quality of the underwriting and claims services we provide to our clients and on our financial strength ratings. Any deterioration in these factors could result in these brokers advising clients to place their risks with other insurers rather than with us. A loss of all or a substantial portion of the business provided by one or more of these brokers could have a material adverse effect on our financial condition and results of operations.
Our business is highly dependent upon the successful and uninterrupted functioning of our information technology and telecommunications systems. We rely on these systems to support our operations. The failure of these systems could interrupt our operations and result in a material adverse effect on our business.
Legislation concerning tort reform is from time to time considered in the United States Congress. Among the provisions considered for inclusion in such legislation are limitations on damage awards, including punitive damages. Enactment of these or similar provisions by Congress or by the states in which we operate could result in a reduction in the demand for liability insurance policies or a decrease in the limits of such policies, thereby reducing our revenues. We cannot predict whether any such legislation will be enacted or, if enacted, the form such legislation will take, nor can we predict the effect, if any, such legislation would have on our business or results of operations.
The pandemic has caused significant volatility in the global financial markets. Interest rates plummeted, credit spreads widened and the equity markets lost value. We saw our fixed maturity and equity portfolios decline in value resulting in unrealized investment losses in our March 31, 2020 financial statements. However, the financial markets rebounded during the remaining quarters of 2020 and we recognized after-tax unrealized gains of $338.2 million in our financial statements for these three quarters. Nevertheless, the lack of business activity may lead to an increase in bankruptcies and corresponding credit losses.
Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were $16.0 million, $13.1 million and $11.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. The variances were mainly due to changes in variable compensation.
Incurred losses decreased by 29.4% to $2,692.7 million in 2019 compared to $3,811.7 million in 2018. The decrease was primarily due to a decline of $608.2 million in current year catastrophe losses and a $499.7 million decrease in development on prior year catastrophe losses in 2019 compared to 2018, primarily related to development on Hurricane Harvey, Irma and Maria and the 2017 California wildfires in 2018. The increases
Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations, included in Zenith's 1998 Annual Report to Stockholders on pages 30-43 is hereby incorporated by reference.
(D) Net Income for the year ended December 31, 2002 was increased by $1.7 million due to the adoption of SFAS 141 and 142. See Note 10 to our consolidated financial statements. In accordance with SFAS 142, we wrote off the unamortized balance of deferred credits that related to business combinations completed prior to July 1, 2001. The cumulative effect increased net income per share (basic and diluted) by $0.07 per share.
Interest expense increased during 2002 as compared to 2001 because there was no outstanding loan balance for the first six months of 2001. The increase was limited to approximately $284,000 because interest rates were lower throughout 2002 as compared to 2001 and we repaid principal during 2002 as required under the loan agreement.
(1) All losses incurred in 2001 related to the book of business acquired from Professionals Group are considered to be current accident year losses because there was no liability for these losses prior to the consolidation transaction.
Current accident year net losses related to Other Coverages decreased by $21.9 million year ended December 31, 2002 as compared to the same periods of 2001. The decrease resulted from the termination of the programs that generated these losses, as previously discussed with respect to Other Coverages premiums.
Approximately $18.2 million of the impairments recognized during 2002 were related to our equity securities; approximately $3.1 million of the impairments were related to fixed maturity securities.
Guaranty fund assessments total $331,000 in 2002; there were no guaranty fund assessments in 2001.
During 2001, we recognized $13.8 million of additional net losses related to prior accident years. This represented approximately 1.4% of our December 31, 2001 professional liability segment net reserves of $1.0 billion. In 2001, the $18.6 million decrease in our reserve for death, disability and retirement is principally the result of an increase in premium rate loads and a decrease in the number of insureds primarily related to the ProNational book of business.
Guaranty fund assessments for the year ended December 31, 2001 were $1.3 million. There were no significant guaranty fund charges in 2000. We are required by most states to be a member of the state's insolvency or guaranty fund association and, as such, we must make payments to the association when so assessed by the state.
Management continually evaluates the expected prepayments of the mortgage-backed securities portfolio to more accurately reflect expected paydowns on the securities as market interest rates change. In 1996, interest rates increased, reducing the expected prepayment rate. In 1995, expected prepayments of the portfolio were accelerated as interest rates had declined. As a result of the changes in expected prepayments, amortization of premiums and accretion of discounts were accelerated in 1995, causing an increase in net investment income of $1.3 million in 1995. The decrease in investment income in 1996 from the reduced expected prepayment rate was offset by discounts recognized upon the early repayment on certain of the Company's mortgage loans.
Amortization expense. Amortization expense increased $3.0 million in 1996 to $29.7 million, including an increase of $2.3 million related to the Acquisitions. Included in amortization expense is an adjustment to deferred policy acquisition costs and the cost of business acquired assets of $3.2 million in 1996 and $4.0 million in 1995. These adjustments result from revisions made to the Company's estimate of future gross profits of its interest sensitive life and annuity policies. Under GAAP, deferred policy acquisitions costs and the cost of business acquired assets on interest-sensitive life products are amortized based on the estimated future gross profits of the related policies.
Other income. Other income in 1995 includes a $1.2 million gain on the sale of a block of accident and health business owned by the Company.
(2) Carrying amount is amortized cost. The market value of "Held to Maturity" securities at December 31, 1996 was $847.8 million.
The primary risk associated with MBSs is that a changing interest rate environment might cause prepayment of the underlying mortgages at speeds slower or faster than anticipated at the time of their purchase. The degree to which a security is at risk to either increases or reductions in yield is influenced by the difference between its carrying value and par value, the relative sensitivity of the underlying mortgages to prepayment in a changing interest rate environment and the repayment priority of the securities in the overall securitization structure.
Real estate investments were only 1.1% of the carrying value of the Company's cash and invested assets at December 31, 1996.
The Company is in negotiations with an unrelated party to sell Loyalty Life. In December 1996, the insurance business of Loyalty Life was reinsured to National Farmers Union, leaving approximately $7.0 million of net assets in Loyalty Life. The sale of Loyalty Life will have no adverse affect on ongoing operations of the Company.