felanders/preprocessed huggingface dataset:
Interest expense and debt amortization for the year ended December 31, 1996 compared with the same period for 1995 increased as a result of net interest expense ($5.6 million), amortization of debt discount ($.8 million) and debt acquisition costs ($.5 million) related to the Debentures.
Losses and Loss Adjustment Expenses Incurred. Losses and loss adjustment expenses incurred for the years ended December 31, 1996, 1995 and 1994 amounted to $139.5 million, $196.9 million and $168.6 million, respectively. The decrease in 1996 of $57.4 million or 29% less than 1995 and the 1995 increase of $28.3 million over 1994 can be primarily attributed to net reserve re-estimates in 1996, 1995 and 1994 of $10 million, $46.7 million and $21.4 million, respectively. See "--Loss and Loss Adjustment Expense Reserves".
During the last several years, the Company has experienced significant adverse development on prior year net ultimate loss estimates. The following table sets forth the amount of the adverse development split between lines other than Discontinued Lines and Discontinued Lines for the periods indicated.
Primary General Liability. The bulk of the Company's general liability policies as primary insurer are written for companies headquartered in the geographic region in which the Company's activities are focused (currently, principally Texas and Louisiana). As a result of its regional focus and typical customer profile (which has included relatively few large national companies), the Company's primary general liability coverage has not included many companies identified as principal "targets" of major environmental litigation at this time. Certain
Final approval of the agreement settlement was granted by the court in the fourth quarter of 1996 and the distribution of the settlement fund is now expected to occur in the first quarter of 1997. The time to appeal the approval of the Settlement Agreement has now expired. The Company's liability, pursuant to the terms of the Settlement Agreement, is not in excess of current legal reserves and is not expected to have a material adverse effect on the financial position of the Company.
Insurance Operations. The principal sources of funds for the Insurance Subsidiaries are premiums and amounts earned from the investment of such premiums. The principal uses of funds by these subsidiaries are the payment of claims and related expenses, underwriting expenses, other operating expenses and dividends and tax sharing payments to the Company.
To support its geographic expansion and growth, the Company has periodically completed various insignificant business acquisitions to secure local operating assets, new pharmacy network contracts and local market executive offices. None of these transactions has had any significant impact on the Company’s reported revenues, assets or results of operations.
Based on our cash and cash equivalents balance of $55.0 million, our available $50.0 million revolving credit facility, and our positive operating cash flows, we do not anticipate a lack of liquidity associated with our ARS to have a material impact on our liquidity, financial condition, results of operations or cash flows. We believe we have the ability to hold the securities until liquidity returns to the market, other secondary markets develop, or the securities mature. Nonetheless, where appropriate, we are actively exploring and pursuing alternatives for obtaining relief from the unanticipated illiquidity of the ARS holdings, including seeking relief from entities involved in
The Company has two statutory trusts which exist for the exclusive purpose of issuing trust preferred securities representing undivided beneficial interests in the assets of the trusts and investing the gross proceeds of the trust preferred securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”). The outstanding $18.0 million and $23.2 million of Junior Subordinated Debentures mature on December 4, 2032 and May 15, 2033, respectively, are callable quarterly, in whole or in part, only at the option of the Company, and have an interest rate of three-month LIBOR plus an applicable margin. The margin ranges from 4.00% to 4.10%. At December 31, 2011, the effective interest rate was 4.54%. The obligations of the Company with respect to the issuances of the trust preferred securities represent a full and unconditional guarantee by the Parent of each trust’s obligations with respect to the trust preferred securities. Subject to certain exceptions and limitations, the Company may elect from time to time to defer Junior Subordinated Debenture interest payments, which would result in a deferral of distribution payments on the related trust preferred securities. The Company has not made such an election.
The Company believes that the dividends, fees, and tax-sharing payments it receives from its subsidiaries and, if needed, additional borrowings from financial institutions, will enable the Company to meet its liquidity requirements for the foreseeable future. Management is not aware of any current recommendations by regulatory authorities, which, if implemented, would have a material adverse effect on the Company’s liquidity, capital resources or operations.
The primary differences between the effective tax rate and the federal statutory income tax rate resulted from the dividends-received deduction (“DRD”), the small life insurance company deduction (“SLD”) and the change in deferred tax asset valuation allowance. The current year estimated DRD is adjusted as underlying factors change and can vary from estimates based on, but not limited to, actual distributions from these investments as well as appropriate levels of taxable income. The SLD varies in amount and is determined at a rate of 60 percent of the tentative life insurance company taxable income (“LICTI”). The amount of the SLD for any taxable year is reduced (but not below zero) by 15 percent of the tentative LICTI for such taxable year as it exceeds $3,000 and is ultimately phased out at $15,000. The change in deferred tax asset valuation allowance was primarily due to the unanticipated utilization of certain capital loss carryforward benefits that had been previously reserved.
RightCHOICE offers a comprehensive array of managed health care products and services that it segregates into two distinct segments: underwritten and self- funded. RightCHOICE's underwritten segment includes preferred provider organization (PPO), point of service (POS), health maintenance organization (HMO), Medicare supplement, specialty managed care, and managed indemnity benefit plans. RightCHOICE's self-funded segment includes third-party administrator services, administrative services only for self-insured organizations, network rental services for self-insured organizations, insurance companies and other organizations, and life insurance agency services.
Horizons Medicare HMO product, in which medical benefits are at least as comprehensive as Medicare benefits for persons eligible to receive Medicare (parts A and B) at no additional cost to the member.
Approximately 79% of RightCHOICE's members with a drug benefit under a product underwritten by a subsidiary of RightCHOICE were enrolled in the three-tiered pharmacy benefit programs as of December 31, 1999. In 1999, RightCHOICE recognized a 26% savings on the three-tier program as compared to the two-tier drug program. Physician education, utilization and prescribing pattern analysis will be increased through the assistance of an on-site pharmacist whose services were negotiated through RightCHOICE's pharmacy benefit contract, which runs through 2002. RightCHOICE will also continue its hospital, physician and service recontracting strategy, using the more detailed data and analysis available through RightCHOICE's information and operations strategy. RightCHOICE cannot assure investors that its initiatives to manage future increases in medical and pharmacy cost trends to improve the medical loss ratio will be effective.
Effective March 1, 1998, RightCHOICE discontinued its Medicaid product in an 18-county central Missouri region. The decision to discontinue was made due to what RightCHOICE believes were unacceptable contract terms proposed by the State of Missouri. As of December 31, 1997, RightCHOICE had approximately 5,100 members enrolled in its Medicaid product.
RightCHOICE's effective income tax provision (benefit) rate was 40.4% and (28.4)% for 1998 and 1997, respectively. RightCHOICE's effective tax provision (benefit) rates for 1998 and 1997 were affected by non-deductible goodwill amortization. RightCHOICE's 1998 state income tax provision was favorably impacted by a change in the filing status of Missouri during 1998. RightCHOICE's effective income tax benefit rate for 1997 was also affected by gains from the liquidation of company-owned life insurance policies.
RightCHOICE substantially completed its Year 2000 program in December 1999. This included necessary remediation, implementation of new packages, testing of critical components, testing of critical external interfaces and completion of contingency plans for critical processes.
Group annuity account balances and benefits reserves reached $21.0 billion at year-end 2001, up 20% from $17.5 billion at year-end 2000. This volume growth reflects strong sales momentum in all products, particularly guaranteed investment contracts (GIC) and long-term liability contracts. Net premiums and deposits (excluding Citigroup's employee pension plan deposits) were $7.1 billion in 2001 compared to $5.5 billion in 2000, which reflected particularly strong fixed GIC growth through structured finance transactions and long term liability growth through the extension of structured settlement broker relationships and large case employer pension sales.
TLA should benefit from growth in the aging population which is becoming more focused on the need to accumulate adequate savings for retirement, to protect these savings and to plan for the transfer of wealth to the next generation. TLA is well positioned to take advantage of the favorable long-term demographic trends through its strong financial position, widespread brand name recognition and broad array of competitive life, annuity and retirement and estate planning products sold through established distribution channels.
Hartford, Connecticut January 17, 2002, except as to Note 16, which is as of February 27, 2002
Significant accounting policies used in the preparation of the accompanying financial statements follow.
sources section of shareholder's equity. During the twelve months ending December 31, 2001, the Company reclassified from accumulated other changes in equity from nonowner sources into net investment income $35 million of losses related to derivatives that were designated as cash flow hedges at transition.
Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets
Upon adoption of FAS 141 and FAS 142, the Company will stop amortizing goodwill and intangible assets deemed to have an infinite useful life. Instead, these assets will be subject to an annual review for impairment. Other intangible assets that are not deemed to have an indefinite useful life will continue to be amortized over their useful lives. See Note 1, Summary of Significant Accounting Policies, Accounting Standards Not Yet Adopted.
Other revenues include surrender, penalties and other charges related to annuity and universal life contracts. Also included are revenues of non-insurance subsidiaries and amortization of deferred income.
Primerica Financial Services, Inc. (Primerica), an affiliate, is a distributor of products for TLA. Primerica sold $901 million, $1.03 billion and $903 million of individual annuities in 2001, 2000 and 1999, respectively.
Unearned compensation expense associated with the Citigroup restricted common stock grants, which represents the market value of Citigroup's common stock at the date of grant, is included with other assets in the Consolidated Balance Sheet and is recognized as a charge to income ratably over the vesting period. The Company's charge to income was insignificant during 2001, 2000 and 1999.
Construction: In addition to evaluating the loss reserves on all exposures on a combined basis the actuarial staff evaluated reserves for each of the following exclusive categories: (1) construction defect claims in California; (2) construction defect in all other states; (3) commercial and residential contractors claims other than construction defects; (4) claims in New York state; (5) claims from product liability exposures; (6) claims from habitational risks; and (7) claims from miscellaneous risks.
Policy Acquisition Costs. We defer commissions, premium taxes and other expenses that are related to the acquisition of insurance contracts. These costs are capitalized and charged to expense in proportion to premium revenue recognized. The method followed in computing deferred policy acquisition costs limits the amount of such deferred costs to their estimated realizable value. This would also give effect to the premiums to be earned and anticipated losses and settlement expenses as well as certain other costs expected to be incurred as the premiums are earned. Judgments as to the ultimate recoverability of such deferred costs are highly dependent upon estimated future loss costs associated with the written premiums as well as investment income.
Medical claims incurred increased by $54.2 million, or 2.4%, to $2.3 billion. The MLR of the segment decreased 110 basis points during the 2018 period, to 84.5%. These fluctuations are primarily attributed to the net effect of the following:
The premiums ceded to reinsurers decreased by $1.9 million, or 3.0%. Prior year premiums ceded include approximately $9.2 million of catastrophe reinsurance reinstatetement costs. The 2018 includes an increase in cessions in the Commercial quota share agreement from 30% in 2017 to 35% effective April 2018, as well as higher reinsurance costs for facultative and nonproportional property reinsurance.
During the year 2017, the Company repurchased and retired 861,415 shares of our Class B Common Stock shares under the 2017 Repurchase Program. Repurchases were made at an average per share price of $23.38, for an aggregate cost of $20.2 million.
The Company repurchases shares through open market transactions, in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, under repurchase programs authorized by the Board of Directors. Shares purchased under share repurchase programs are retired and returned to authorized and unissued status. See Note 19, Stock Repurchase Program, of the Notes to Consolidated Financial Statements, included in “Item 8, Financial Statements and Supplementary Data”, of this Annual Report on Form 10-K.
This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings.
☐ increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
On January 26, 2006, the Service officially closed the audit of our federal income tax returns for the 1997 to 2001 periods. As a result of certain favorable resolutions, our consolidated statement of operations for the year ended December 31, 2005 included an income tax benefit of $3 million, reflecting a reduction in our liability for income taxes. The statute of limitations has closed for these tax years; however, there were tax attributes in the closed years which were utilized in subsequent tax years for which the statute of limitations remains open.
Adjusted EBITDA. To calculate adjusted EBITDA, we calculate EBITDA, which is then further adjusted for items that are not part of regular operating activities, including transaction costs, tax receivable agreement liability adjustment, severance, restructuring costs, and other non-cash items such as non-cash stock-based compensation. Adjusted EBITDA does not represent, and should not be considered as, an alternative to net income or cash flows from operations, each as determined in accordance with GAAP. We have presented adjusted EBITDA because we consider it an important supplemental measure of our performance and believe that it is frequently used by analysts, investors and other interested parties in the evaluation of companies. Other companies may calculate adjusted EBITDA differently than we do. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
The following table presents a reconciliation of SG&A to Core SG&A for the years ended December 31, 2017 and 2016 ($ in thousands):
We establish our assumptions and arrive at the estimates used in these calculations based upon our historical experience, knowledge of our industry and by incorporating third-party data, which we believe results in a reasonably accurate approximation of fair value. Nevertheless, changes in the assumptions used could have an impact on our assessment of recoverability. We believe our projected sales are reasonable based on, among other things, available information regarding our industry. We also believe the discount rate is appropriate. The weighted average discount rate is impacted by current financial market trends and will remain dependent on such trends in the future.
We evaluate quarterly the positive and negative evidence regarding the expected realization of net deferred tax assets. The carrying value of our net deferred tax assets is based on our assessment as to whether it is more likely than not that we will generate sufficient future taxable income to realize these deferred tax assets. We maintained a full valuation allowance on all of deferred tax assets of HIIQ until December 31, 2016 when there was sufficient evidence to support the reversal of the eligible allowance.
We believe that the amount or estimable range of reasonably possible loss, will not, either individually or in the aggregate, have a material adverse effect on our business or consolidated financial statements with respect to loss contingencies for legal and other contingencies as of December 31, 2017. However, the outcome of litigation is inherently uncertain. Therefore, if one or more of these legal matters were resolved against us for amounts in excess of management’s expectations, our results of operations and financial condition, including in a particular reporting period, could be materially adversely affected.
the compliance of our insurance company subsidiaries with minimum capital and surplus requirements;
In December 2006, A.M. Best upgraded North Pointe Insurance’s financial strength rating from “B++” to “A-.” Simultaneously, A.M. Best reaffirmed North Pointe Casualty’s financial strength rating of “B+,” initiated a financial strength rating of “B+” for Home Pointe Insurance, and upgraded the issuer credit rating of North Pointe Holdings to “bb+” from “bb”.
offset by a decrease in non-catastrophic losses arising from the change in the mix of business as well as an increase in favorable reserve development. We experienced lower non-catastrophic losses in our Florida homeowners line, which we began writing in December 2004, as compared to our personal automobile line which we ceased writing in October 2004. For the year ended December 31, 2005, we incurred $7.0 million of net losses and loss adjustment expenses related to hurricane losses, as well as $1.3 million of accelerated reinsurance reinstatement charges which we recorded as a reduction of net premiums earned. Hurricane losses increased our personal lines loss ratio from 30.9% to 62.5% in 2005. Our personal lines did not incur any hurricane losses in 2004.
period following the filing of this Annual Report on Form 10-K. We currently anticipate meeting our long-term capital and liquidity needs through a combination of cash flows from operations and possible future debt or equity financings. No assurances can be given, however, that we will generate cash flows from operations sufficient to meet our ongoing financial requirements or that debt or equity financing will be available to us upon acceptable terms, if at all, in the future.
the ratio of net premiums written to statutory capital and surplus will not exceed more than 4.0 to 1.0 in the case of North Pointe Casualty Insurance Company and Home Pointe Insurance Company and 2.5 to 1.0 in the case of North Pointe Insurance Company; and
The following table sets forth the revenues and results from operations for specialty risk management operations (in thousands):
The continuing programs contributed net favorable development of $515,000 on reserves of $79.9 million related to accident years 2001 and prior. This favorable development reflects better than expected claims activity on both workers’ compensation programs and liability occurrence programs that contributed $2.8 million, and $780,000, respectively to the net favorable development. As a result of reducing the number of outside third party administrators and by bringing the claims handling in-house, the Company was able to reduce reserves for claims handling by $1.5 million. These favorable results were partially offset by $2.3 million of adverse development in automobile liability, $908,000 in general liability, $1.1 million in claims made coverage for medical malpractice, and $344,000 in property exposures. The adverse development in these lines of business was the result of a higher level of actual claims activity than had been previously anticipated.
Also in 2002, the Company issued 825,000 stock options at an exercise price of $3.507 to certain members of the executive management team.
The reduction in Star’s net written premium reflects the termination of unprofitable business, specifically in the commercial automobile line of business. As part of the plan to reduce both gross and net leverage ratios, the Company cancelled two large commercial automobile programs effective December 31, 2001. Excluding these items, Star’s Change in Net Writings ratio would have been within the usual range at -7.7%.
The overall operating ratio in 2002 was 99%. While this was an improvement from the overall operating ratio for 2001 of 103%, the Two-year Overall Operating Ratio was slightly above the usual range. The improvement in the 2002 ratio was a result of rate increases obtained and the run-off of unprofitable discontinued programs.
The Company seeks to manage the risk exposure of its insurance subsidiaries and its clients through the purchase of excess-of-loss and quota share reinsurance. The Company’s reinsurance requirements are analyzed on a specific program basis to determine the appropriate retention levels and reinsurance coverage limits. The Company secures this reinsurance based on the availability, cost, and benefits of various reinsurance alternatives.
See list of Financial Statement Schedules on page 35. The financial statements listed on page 35 including footnote 18 on page 62 of the notes to the consolidated financial statements.
At December 31, 2007, the Company owned 360 securities with a net unrealized loss position.
A reconciliation of the Insurance Company’s net income (loss) as filed with regulatory authorities to net income reported in the accompanying financial statements for the years ended December 31, 2007, 2006 and 2005, is set forth in the following table:
SLNY's net income from operations reflects the operations of its four business segments: Wealth Management, Individual Protection, Group Protection and Corporate. As a result of the merger at December 31, 2002, KBL's results are included with the Wealth Management Segment.
The increases in investment income and realized gains on the sale of bonds were partially offset by an increase in interest credited to policyholders of $15.6 million. Interest credited to policyholders is a function of policyholder balances held by SLNY. These balances increased by $288.3 million at December 31, 2003, compared to December 31, 2002. Additionally, during 2003, SLNY increased DAC amortization by $9.1 million, primarily due to an unlocking adjustment due to revised gross profit assumptions used in the calculation of DAC. Current year expenditures includes a reserve adjustment of approximately $2.5 million (pre-tax) which was recorded as a component of interest credited to policyholders (interest credited to policyholders was accurately recorded at the policy level at all times).
Total revenues in 2003 increased by $6.4 million in comparison to 2002. The increase in revenue was due primarily to higher premiums in the stop loss, group life insurance and long-term disability lines of business of $2.8 million, $2.5 million and $1.4 million, respectively. Additionally, during the third quarter of 2002, a one-time adjustment of $1.8 million was made to decrease group life premiums.
Reinsurance receivables from reinsurance ceded are also included in other assets.
SLNY monitors the condition of the mortgage loans in its portfolio. In those cases where mortgages have been restructured, appropriate allowances for losses have been made. In those cases where, in management's judgment, the mortgage loan's value has been impaired, appropriate losses are recorded. SLNY had no restructured or impaired mortgage loans at December 31, 2003 and 2002, respectively.
At December 31, 2003, scheduled mortgage loan maturities were as follows (in 000's):
The following table presents the carrying amounts and estimated fair values of SLNY's financial instruments at December 31 (in 000's):
SLNY has an agreement with SLOC whereby SLOC reinsures the mortality risks of SLNY's group life insurance contracts.
SLNY has an agreement with an unrelated company whereby the unrelated company reinsures the morbidity risks of SLNY's group stop loss contracts. Under this agreement, certain stop loss benefits are reinsured on a yearly renewable term basis. The agreement provides that the unrelated company will reinsure specific claims for amounts above $1,000,000 per claim for medical stop loss contracts ceded by SLNY.
The changes in DAC for the years ended December 31, were as follow (in 000's):
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
The MetLife Policyholder Trust (the "Trust") was established under the Metropolitan Life Insurance Company ("Metropolitan Life") plan of reorganization (the "Plan") and pursuant to the MetLife Policyholder Trust Agreement, dated as of November 3, 1999, by and among Metropolitan Life, MetLife, Inc. (the "Holding Company"), Wilmington Trust Company (not in its individual capacity, but solely as trustee for the Trust, the "Trustee") and ChaseMellon Shareholder Services LLC, as custodian (now known as Mellon Investor Services LLC, the "Custodian"), as amended on November 8, 2001 (the "Trust Agreement"), in connection with the conversion of Metropolitan Life from a mutual life insurance company to a stock life insurance company. The Trust is a single-purpose trust that does not engage in any business or activity other than voting and holding the Trust Shares (as defined below) and certain closely related activities, such as distributing cash dividends. The Trust has no employees.
We have the exclusive right to use the Blue Cross and Blue Shield name and mark throughout Puerto Rico and U.S. Virgin Islands, and serve approximately 789,000 members across all regions of Puerto Rico and hold a leading market position covering approximately 21.2% of the population. For the years ended December 31, 2010 and 2009 respectively, our managed care segment represented approximately 89.4% and 89.8% of our total consolidated premiums earned, net, and approximately 72.4% and 67.6% of our operating income. We also have significant positions in the life insurance and property and casualty insurance markets. Our life insurance segment had a market share of approximately 8% (in terms of premiums written) for the nine-month period ended September 30, 2010. Our property and casualty segment had a market share of approximately 8% (in terms of direct premiums) during the nine-month period ended September 30, 2010.
Underwriting and other operating expenses for the year ended December 31, 2010 increased by $4.7 million, or 9.1%, to $56.5 million. This increase is primarily due to a higher amortization of deferred acquisition costs as a result of lower premiums. The operating expense ratio increased by 3.2 percentage points during the same period, to 57.0% in 2010 due to the lower volume of business of the segment.
Net premiums earned decreased 43% in 2003 and 12% in 2002 primarily as a result of the continued earning out of the discontinued commercial lines premiums written. Because virtually no direct commercial premiums were written in 2003, the decrease was even greater than in 2002.
Interest expense from the note payable decreased in 2003 and in 2002 primarily as a result of principal payments on the note. The Company paid principal amounts of $3,700,000, $7,100,000 and $5,200,000 in 2003, 2002 and 2001, respectively. The note payable was paid in full in the fourth quarter of 2003.
The primary sources of the insurance subsidiaries’ liquidity are funds generated from insurance premiums, net investment income and maturing investments. The short-term investments and cash are intended to provide adequate funds to pay claims without selling fixed maturity investments. At December 31, 2003, the insurance subsidiaries held short-term investments and cash that the insurance subsidiaries believe are adequate liquidity for the payment of claims and other short-term commitments.
The increase in Retained deficit of $388,634 is attributable to the net income of $3,375,772, offset by the accretion of discount on the Series A and Series B Preferred Stock of $3,024,000 and the accrual of dividends on the Series B and Series C Preferred Stock of $740,406.
The following consolidated Financial Statements are on pages 50 through 91
The gross unrealized loss on investments at December 31, 2006 and 2005 are categorized as follows:
Periods of inflation have varying effects on Chandler USA and its subsidiaries as well as other companies in the insurance industry. Inflation contributes to higher claims and related costs and operating costs as well as higher interest rates which generally provide for potentially higher interest rates on investable cash flow and decreases in the market value of existing fixed-income securities. During 2000, the market value of NAICO's available for sale investments increased by $3.2 million due primarily to lower interest rates experienced during this time. Premium rates and commissions, however, are not significantly affected by inflation since competitive forces generally control such rates. NAICO's underwriting philosophy is to forego underwriting risks from which it is unable to obtain what it believes to be adequate premium rates.
Income tax expense recognized by the Company in any one year is impacted by the extent to which the Company qualifies for the small life company deduction. The small life company deduction is 60% of life insurance company taxable income up to a maximum taxable income of $3 million. This deduction is phased out on taxable income above $3 million up to and including a maximum of $15 million. To the extent, if any, that the Company’s taxable income exceeds $3 million, its effective Federal income tax rate will increase.
In November of 1989, the Company acquired 60% of the outstanding common stock of Cotton States Marketing Resources, Inc. (“CSMR”). During 1992, the Company acquired the remaining 40% of CSMR’s stock. CSMR brokers through the Company’s exclusive agents other insurance companies’ life and accident and health products not underwritten by the Company.
The costs of acquiring most new life business are deferred and amortized with interest over the premium-paying period of the related policies. For individual life policies, such amounts are amortized in proportion to the ratio of the annual premium income to the total anticipated premium income. Such anticipated premium income is estimated using the same assumptions used for computing future policy benefits. For universal life policies, deferrable costs are amortized in proportion to the ratio of the contract’s annual gross profits to total anticipated gross profits. First-year excess expense charges are also deferred and accreted to income in the same manner as deferrable costs are amortized. Total anticipated gross profits are based on assumptions for investment margins, surrender charges, mortality charges, and level expense loads. The principal expenses deferred are commissions and certain expenses of the product development, policy issue, underwriting, and agency departments, all of which vary with and are primarily related to the production of new business. Policy acquisition costs deferred were approximately $10,215,000 in 2002, $9,831,000 in 2001, and $9,313,000 in 2000.
accumulated in another special memorandum tax account entitled “shareholders’ surplus.” The balance in the “policyholders’ surplus” account at December 31, 2002 was $59,088,000. The balance in the “shareholders’ surplus” account at December 31, 2002 was $4,203,000. The Company does not anticipate any of the “policyholders’ surplus” account becoming taxable in the foreseeable future.
The Company’s consolidated financial statements for the year ended December 31, 2002 have been audited by independent auditors, Ernst & Young LLP. The Company’s consolidated financial statements for the years ended December 31, 2001 and 2000 have been audited by independent auditors, KPMG LLP. Their roles are to audit the consolidated financial statements in accordance with auditing standards generally accepted in the United States of America and render an independent and professional opinion on management’s consolidated financial statements. The auditors’ reports on the Company’s consolidated financial statements appear on the previous two pages.
The following table presents comparative details with respect to our GAAP and statutory combined ratios for the years ended December 31, 2019, 2018 and 2017:
Our stockholders’ equity increased by $52.1 million in 2019 as a result of our net income and net unrealized gains within our available-for-sale fixed maturity investments. Our book value per share increased to $15.67 at December 31, 2019, compared to $14.05 a year earlier.
Our income tax benefit was $15.5 million in 2018, compared to income tax expense of $5.0 million in 2017. Our 2018 income tax benefit reflected our anticipation of an estimated carryback of our taxable loss in 2018 to prior tax years. Our 2017 income tax expense reflected additional tax expense of $4.8 million in 2017 related to the revaluation of our net deferred tax assets pursuant to the Tax Cuts and Jobs Act (the “TCJA”).
We set forth below the amortized cost and estimated fair value of fixed maturities at December 31, 2019 by contractual maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
We present our cash and short-term investments at estimated fair value. The carrying values in our balance sheet for premium receivables and reinsurance receivables and payables for premiums and paid losses and loss expenses approximate their fair values. The carrying amounts reported in the balance sheet for our subordinated debentures and borrowings under lines of credit approximate their fair values. We classify these items as Level 3.
Depreciation expense for 2019, 2018 and 2017 amounted to $282,235, $479,550 and $478,800, respectively.
The following table reflects net income taxes we (recovered) paid and interest we paid during 2019, 2018 and 2017:
We have audited the accompanying consolidated balance sheets of Donegal Group, Inc. and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of income (loss) and comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, based on our audits and the report of the other auditors, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.
Direct expense for the year ended December 31, 2002 of $209.5 million consisted of $168.0 million in direct costs associated with the pharmacy benefit management services segment and $41.5 million attributable to benefit costs and compensation to our distributors for supplemental benefits products. Direct expenses for the year ended 2001 were $87.5 million, consisting of approximately $43.6 million and $43.9 million attributable to the pharmacy benefit management services and supplemental benefits segments, respectively. The PBM increase is principally due to the Catalyst acquisition, which increased direct expenses by $106.6 million from 2001 to 2002. Of the $106.6 million, $45.6 million is attributed to new business for Catalyst in 2002. The direct expenses of $209.5 million and $87.5 million for the years ended 2002 and 2001, represent 85.5% and 69.5% of operating expenses for the respective periods.
customer base. Substantially all supplemental benefits revenues are collected in advance via credit card and as such generate no accounts receivable exposure.
If we lose key clients, our business, profitability and growth prospects could suffer.
Over the next few years, as patents expire covering many brand name drugs that currently have substantial market share, generic products will be introduced that may substantially reduce the market share of the brand name drugs. Historically, manufacturers of generic drugs have not offered formulary rebates on their drugs. Our profitability could be adversely affected if the use of newly approved, brand name drugs added to formularies, does not offset any decline in use of brand name drugs whose patents expire.
Disruption of our point of sale information system and transaction processing system, which relies on third-parties, could have a material adverse effect on our business, results of operations and financial condition.
• The structure of the endorsed drug card program, which includes a minimal annual enrollment fee and many administrative requirements, may make it difficult to be profitable.
Realized net investment losses during 2014 and 2013 of $19 thousand and $0.3 million were recognized due to losses of $0.4 million which were recorded on equity mutual fund issuers in both 2014 and 2013, offset by gains from bond securities. 2012 gains resulted primarily from sales of securities that had been previously impaired due to declines in market values. Other-than-temporary impairments on investment securities and other long-term assets were recorded in 2014 and 2012 of $427,000 and $1,319,000, respectively, and are reported as realized losses.
Our business is comprised of three operating business segments, as detailed below.
(1)	Represents the fair value of Platinum's reserve for claims and claim expenses and reinsurance recoverable acquired at March 2, 2015.
The table below shows the impact on our gross reserve for claims and claim expenses, net income and shareholders’ equity as of and for the year ended December 31, 2016 of a reasonable range of possible outcomes associated with our estimates of gross ultimate losses for claims and claim expenses incurred within our Property segment. The reasonable range of possible outcomes is based on a distribution of outcomes of our ultimate incurred claims and claim expenses from catastrophic events. In addition, we flex the loss ratios and development curves in our other property lines of business in a similar fashion to the sensitivity analysis performed for our Casualty and Specialty segment, discussed in greater detail below. In general, our reserve for claims and claim expenses for more recent events are subject to greater uncertainty and, therefore, greater variability and are likely to experience material changes from one period to the next. This is due to the uncertainty as to the size of the industry losses from the event, which contracts have been exposed to the catastrophic event and the magnitude of claims incurred by our clients. As our claims age, more information becomes available and we believe our estimates become more certain, although there is no assurance this trend will continue in the future. As a result, the sensitivity analysis below is based on the age of each accident year, our current estimated incurred claims and claim expenses for the catastrophic events occurring in each accident year, and a reasonable range of possible outcomes of our current estimates of claims and claim expenses by accident year. The impact on net income and shareholders’ equity assumes no increase or decrease in reinsurance recoveries, loss related premium or redeemable noncontrolling interest - DaVinciRe.
We estimate claim reserves for these losses after the event giving rise to these losses occurs, following a process that is similar to that used in our Property segment.
is determined based on the lowest level input that is significant to the fair value measurement of the asset or liability.
We have unrecognized tax benefits of $Nil as of December 31, 2016 (2015 - $Nil). Interest and penalties related to unrecognized tax benefits, would be recognized in income tax expense. At December 31, 2016, interest and penalties accrued on unrecognized tax benefits were $Nil (2015 - $Nil). Income tax returns filed for tax years 2013 through 2015, 2012 through 2015, 2015, and 2012 through 2015, are open for examination by the IRS, Irish tax authorities, U.K. tax authorities, and Singapore tax authorities, respectively. We do not expect the resolution of these open years to have a significant impact on our consolidated statements of operations and financial condition.
UL and investment-type product fees were $122.0 million for 1998, an increase of $21.2 million, or 21.0%, from $100.8 million reported for 1997. The principal reasons for the change from period to period are as follows:
Amortization of deferred policy acquisition costs ("DAC") was $35.5 million for 1998, a decrease of $10.8 million, or 23.3%, from $46.3 million reported for 1997. The decrease primarily consisted of lower amortization on UL products due to revised estimate of mortality; VUL decreased reflecting higher claims during 1998 as compared to 1997. Amortization of DAC on the SPDA product line decreased due to lower profit margins as a result of the declining fund balances and narrowing of interest spreads.
The Company does not believe that inflation has had a material effect on its results of operations except insofar as inflation affects interest rates.
The Company utilizes its investments in privately placed fixed maturities to increase diversification and obtain higher yields than are possible with comparable quality public market securities. These privately placed securities are also used to enhance cash flow as a result of sinking fund payments. Generally, private placements provide the Company with broader access to management information, strengthened negotiated protective covenants, call protection features and, where applicable, a higher level of collateral. They are, however, generally not freely tradable because of restrictions imposed by federal and state securities laws and illiquid trading markets.
The Company defines problem securities in the fixed maturity category as securities which, (i) are in default as to principal or interest payments (ii) are to be restructured pursuant to commenced negotiations (iii) went into bankruptcy subsequent to acquisition or (iv) are deemed to have other than temporary impairments to value. The fair value of problem fixed maturities was $4.8 million and $4.4 million at December 31, 1999 and 1998, respectively. For the years ended December 31, 1999, 1998 and 1997 $0.0 million, $0.0 million and $0.1 million of interest income was not accrued on problem fixed maturities.
At December 31, 1999, the carrying value of restructured loans was $11.0 million, net of valuation allowances of $0.5 million. There were no problem or potential problem loans at December 31, 1999.