On a consolidated basis, net cash flows provided by operating activities for the year ended December 31, 1996 and 1995 were $75.6 and $54.0 million, respectively. Based on the Company's current financial plans, management believes that its subsidiaries will continue to realize positive cash flows from their operating activities and that the operating liquidity needs of such subsidiaries can be funded exclusively from such cash flow.
Increases in common stock and additional paid-in capital of $522, $146 and $731 in 1996, 1995 and 1994, respectively, were due to grants of common stock to non-employee directors.
DEFERRED POLICY ACQUISITION COSTS: Commissions and other costs of acquiring insurance that are primarily related to and vary with the production of business are deferred. Deferred policy acquisition costs are amortized over the effective period of the related insurance policies in proportion to premiums earned. The average amortization period is less than one year. Also included in deferred policy acquisition costs was the value assigned to the insurance contracts in force at the acquisition date of Bankers and Shippers Insurance Company ("Bankers and Shippers"). The Company does not consider anticipated investment income in determining the recoverability of these costs. The deferral and amortization are summarized as follows:
CASH OVERDRAFT: The Company operates a cash management program, which at times results in book cash overdrafts supported by its cash equivalents and short-term investments. Included in other liabilities at December 31, 1996 and 1995 are cash overdrafts of $18.3 million and $26.6 million, respectively.
The amortized cost and estimated market value of fixed maturities at December 31, 1996, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components comprising the Company's net deferred tax assets were as follows:
Under the NCRF's operating guidelines, all business ceded to it by member companies is then assigned back to the member companies. Under North Carolina law, member companies do not participate in any gain or loss resulting from the NCRF's operations. Accordingly, the Company has not reflected approximately $123,063, $112,691 and $110,746, for the periods ended December 31, 1996, 1995 and 1994, respectively, of assigned premiums earned and related incurred losses and other expenses from the NCRF in the financial statements.
RETIREE BENEFITS: Prior to December 31, 1994, the Company provided postretirement life and health benefits for employees who retired at age 55 or later with 10 or more years of service. Spouses, surviving spouses and dependent children are eligible for life and health benefits.
Postretirement benefits are accrued (but not funded) for eligible retirees. The accrued postretirement benefit cost was as follows:
The non-qualified performance stock options become exercisable based on the attainment of specific performance goals for performance cycles established by the Compensation Committee. Options granted under this plan become fully exercisable no later than 9 1/2 years after the effective date and expire 10 years after such effective date. The exercise price of options granted equals the closing market price of the Company's common stock on the date of grant.