Based upon the 1999 statutory financial statements, the insurance subsidiaries are able to pay the Parent, in 2000, ordinary dividends in the aggregate amount of $51 million. There can be no assurance that the insurance subsidiaries will be able to pay dividends to the Parent in the future in an amount sufficient to enable the Parent to meet its liquidity requirements. For additional information regarding regulatory
Dividends to stockholders are declared and paid at the discretion of the Parent's Board of Directors (the "Board") based upon the Company's operating results, financial condition, capital requirements, contractual restrictions and other relevant factors. The Parent has paid regular quarterly cash dividends to its stockholders for 71 consecutive years and plans to continue to pay quarterly cash dividends. For information regarding restrictions on the Parent's ability to pay dividends to its stockholders, see Note 5(b) to the consolidated financial statements.
In accordance with industry practice, the Company maintains reserves for losses and loss expenses. These reserves are made up of both case reserves and reserves for claims incurred but not yet reported ("IBNR"). Case reserves result from a claim that has been reported to an insurance subsidiary and is estimated at the amount of ultimate payment. Additional IBNR reserves are established based on generally accepted actuarial techniques. Such techniques assume that past experience, adjusted for the effects of current developments and anticipated trends, are an appropriate basis for predicting future events.
(a) The components of net investment income earned are as follows:
The number of shares of the Company's common stock available to be purchased under the plan was 908,875 at December 31, 1999. Employees can contribute up to a maximum of 12% of their defined compensation and these contributions, up to a maximum of 6%, are matched 50% by the Company. The Company's contributions to the plan amounted to $1,840,000, $1,597,000 and $1,190,000 in 1999, 1998 and 1997, respectively.
If Selective is acquired in a merger, or 50% or more of its assets are sold, each right other than the rights of an Acquiring Person, will be exercisable to purchase shares of the acquiring company having twice the market value of the $80 exercise price.
In computing the results of each segment, no adjustment is made for interest expense, net general corporate expenses or federal income taxes. The Company does not maintain separate investment portfolios for the segments and, therefore, does not allocate assets to the segments.
(b) The Company purchases annuities from life insurance companies to fulfill obligations under claim settlements which provide for periodic future payments to claimants. As of December 31, 1999, the Company had purchased such annuities in the amount of $10,765,000 for settlement of claims on a structured basis for which the Company is contingently liable. To the Company's knowledge, none of the issuers of such annuities have defaulted in its obligations thereunder.
RISK -- has two distinct and frequently used meanings in insurance. First, it can describe the chance that a claim loss will occur (similar to the commonly understood meaning of the work "risk"). Second, it can refer to the person or thing insured and is sometimes used as a synonym for "policyholder."
TREATY REINSURANCE -- a contract between two insurance companies for sharing the insurance coverage for a group of risks.