felanders/preprocessed huggingface dataset:
Realized Investment Gains (Losses). Realized investment gains were approximately $1,230,000 for the year ended December 31, 2001 compared with realized losses of $(4,817,000) for the year ended December 31, 2000. These gains and losses result from normal active management of our investment portfolio intended to improve performance and increase operating income. We do not consider realized gains and losses to be recurring components of earnings. We make decisions concerning the sale of invested assets based on a variety of market, business and other factors.
In the event of a liquidation, dissolution or winding up of the Company, the holders of the common shares are able to share equally in the assets of the Company, if any remain after payment of all liabilities and the liquidation preference of any outstanding preference shares. Certain restrictions exist with respect to the transfer of shares, should such a transfer cause the number of shares held by one United States person to be 10% or more, or a non-United States person to be 17% or more, of the Company's outstanding common shares.
During 1998, certain of the Company's officers purchased 163,121 shares in the Company and the Company made loans to the officers to partially finance such purchases. The loans bear interest at 7% per annum and must be repaid within five years.
The Company also plans to pursue arbitration or other legal action to terminate a second life reinsurance agreement underwritten in 1998. The claim is based upon our contention that the cedent is unable to provide support for their underwriting assumptions used to secure the reinsurance and has ceded business that is excluded from the agreement. Further, the cedent is unable to segregate from their records business that is properly covered under the agreement.
On June 1, 2000 the Company, through Annuity and Life Re America, completed the acquisition of Annuity and Life Reassurance America, Inc., formerly Capitol Bankers Life Insurance Company. Annuity and Life Reassurance America is a life insurance company domiciled in the United States, which is authorized to conduct its life insurance business in 43 states of the United States, and will focus its operations on the United States life reinsurance markets. The Company contributed additional capital to Annuity and Life Reassurance America during the fiscal year of $19,550,000 to bring the total capital and surplus of Annuity and Life Reassurance America to $25,000,000. The acquisition price and capital contribution was funded from available cash balances and proceeds from the sales of fixed interest securities held by the Company.
ML of New York maintains a conservative general account investment portfolio comprised primarily of investment grade fixed maturity securities, policy loans, and cash and cash equivalents. ML of New York has no mortgage or real estate investments and its investment in below investment grade fixed maturity securities are below the industry average. The following schedule identifies ML of New York’s general account invested assets by type for the years ended December 31:
ML of New York receives claims paying ability ratings from Standard and Poor’s and A.M. Best. During 2006, Standard and Poor’s upgraded the Company’s rating to “AA-” from “A+” while the Company’s A.M. Best rating of “A” was affirmed during 2006.
ML of New York and Merrill Lynch & Co. are parties to a “keepwell” agreement. This agreement obligates Merrill Lynch & Co. to maintain a level of capital in ML of New York in excess of minimum regulatory requirements.
In order to continue to issue annuity products, ML of New York must meet or exceed the statutory capital and surplus requirements of the insurance departments of the states in which it conducts business. Statutory accounting practices differ from generally accepted accounting principles (“GAAP”) in two major respects. First, under statutory accounting practices, the acquisition costs of new business are charged to expense, while under GAAP they are amortized over a period of time. Second, under statutory accounting practices, the required additions to statutory reserves are calculated under different rules than GAAP.
Management's discussion and analysis (MD&A) reviews our consolidated and segment financial condition as of December 31, 2003 and 2002, our consolidated results of operations for the periods ended December 31, 2003, 2002 and 2001 and where appropriate, factors that may affect our future financial performance. The MD&A should be read in conjunction with the consolidated financial statements of the Company and related notes included elsewhere in this Form 10K.
- Stockholders' Equity of $42.1 million, up $1.2 million from the prior year.
Amortization of policy acquisition costs increased $593,349 or 34% in 2003 primarily due to the increase in earned premiums offset in part by a decrease in commissions rate. Amortization of policy acquisition costs decreased $296,393 or 14% in 2002 primarily due to the decrease in commission rates for agents and a slight decrease in earned premiums.
Operating earnings for the United Coastal Liability Insurance segment increased $737,067 or 109% in 2003. The operating earnings in 2003 benefited from a 59% increase in earned premiums and a 33.6 point improvement in the GAAP combined ratio in 2003. Operating earnings decreased $2,132,651 or 76% in 2002. The decrease in 2002 operating earnings is attributable to a large loss of approximately $1,700,000 reported in 2002, decreased premiums and investment income.
Other income consists primarily of rental income and varies depending on the timing of tenants and their leases. Other income increased $117,827 or 14% in 2003 and decreased $91,111 or 10% in 2002.
Investments are classified as "available for sale" and are reported at fair value, with unrealized gains or losses, net of tax, charged or credited directly to stockholders' equity.
The provision for taxes comprises two components, current income taxes and deferred income taxes. Deferred income taxes arise from changes during the year in cumulative temporary differences between the tax basis and book basis of assets and liabilities.
The gross unrealized investment losses and related fair value for fixed maturities and equity securities at December 31, 2003 were as follows:
The decrease in net loss and loss adjustment expense reserves was primarily due to payments on surety and general liability policies for prior years net of subrogation and ceded recoveries partially offset by unfavorable development in prior accident years. Loss and loss adjustment expenses incurred primarily reflects two large losses of approximately $2.2 million in 2002. Also, the favorable development observed previously in prior years reduced significantly as the actual loss experience came in closer to the estimates. The increase in reinsurance recoverable in 2002 from 2001 is primarily due to one liability claim, which exceeded the limits retained by the Company and was partially paid in 2003.
The Company sells interest-sensitive individual life insurance and variable life insurance, term life insurance and individual fixed and variable annuities. These markets are subject to regulatory oversight with particular emphasis placed on company solvency and sales practices. These markets are also subject to increasing competitive pressures as the legal barriers which have historically segregated the markets of the financial services industry have been changed through both legislative and judicial processes. Regulatory changes have opened the insurance industry to competition from other financial institutions, particularly banks and mutual funds that are positioned to deliver competing investment products through large, stable distribution channels.
Commercial loans increased $21 million, from $147 million at December 31, 2008, to $168 billion at December 31, 2009, during the current period due to continued investment in commercial loans.
You should read the following discussion in conjunction with the consolidated financial statements and accompanying notes and the information contained in other sections of this Transition Report on Form 10-KT, particularly under the headings "Risk Factors," "Selected Financial Data" and "Business." This discussion and analysis is based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. The statements in this discussion and analysis concerning expectations regarding our future performance, liquidity and capital resources, as well as other non-historical statements in this discussion and analysis, are forward-looking statements. See "Cautionary Statement Regarding Forward-Looking Statements." These forward-looking statements are subject to numerous risks and uncertainties, including those described under "Risk Factors." Our actual results could differ materially from those suggested or implied by any forward-looking statements.
Additionally, as a result of our subsidiaries Chapter 11 Cases, Lamington's and its subsidiaries (White Eagle, WEGP and Lamington Road Bermuda Limited), financial results are included in the Company’s consolidated results through November 13, 2018, the day prior to the Petition Date. However, ASC 810, Consolidation require that an entity whose financial statements were previously consolidated with those of its parent that files for protection under the U.S. Bankruptcy Code, whether solvent or insolvent, generally must be prospectively deconsolidated from the parent and presented as an equity investment. Therefore, our 2018 results are not comparable with 2017, and the post-petition results are not included in our consolidated results for the eleven months ended November 30, 2018. The results of White Eagle represents the Company's core business, and although the results are deconsolidated, the Company will analyze significant activities for the post-petition.
provider by 9%. On October 29, 2018, AVS Underwriting LLC ("AVS"), also announced revisions to its underwriting methodology without an estimated impact, which resulted in an average lengthening of the life expectancies by approximately 13%.
On October 18, 2018, 21st Services, LLC ("21st Services") announced revisions to its underwriting methodology, these revisions have generally been understood to lengthen the average reported life expectancy furnished by this life expectancy provider by 9%. On October 29, 2018, AVS Underwriting LLC ("AVS"), also announced revisions to its underwriting methodology without an estimated impact, which resulted in an average lengthening of the life expectancies by approximately 13%.
Our income for the year ended December 31, 2016 was also significantly impacted by the adoption of the 2015 VBT, which resulted in a reduction in fair value of life settlements of $17.6 million.
Net cash used in investing activities for the year ended December 31, 2017 was $37.6 million and included proceeds of $42.1 million from maturity of 13 life settlements and $5.0 million for certificates of deposit. This was offset by $84.7 million for premiums paid on life settlements.
(1) Portugal, Ireland, Italy, Greece and Spain continue to cause credit risk as economic conditions in these countries continue to be volatile, especially within the financial and banking sectors. None of our foreign government obligations were held in any of these countries.
Our commercial mortgage loan portfolio consists of mortgage loans collateralized by the related properties and diversified as to property type, location and loan size. Our mortgage lending policies establish limits on the amount that can be loaned to one borrower and other criteria to attempt to reduce the risk of default. Our commercial mortgage loans on real estate are reported at cost, adjusted for amortization of premiums and accrual of discounts net of allowances for loan loss. At December 31, 2011 and 2010, the largest principal amount outstanding for any single mortgage loan was $10.2 million and $10.7 million, respectively, and the average loan size was $2.4 million for both 2011 and 2010. We have the contractual ability to pursue full personal recourse on 13.6% of the loans and partial personal recourse on 31.7% of the loans, and master leases provide us recourse against the principals of the borrowing entity on 4.7% of the loans. In addition, the average loan to value ratio for the overall portfolio was 54.5% and 54.7% at December 31, 2011 and 2010, respectively, based upon the underwriting and appraisal at the time the loan was made. This loan to value is indicative of our conservative underwriting policies and practices for making commercial mortgage loans and may not be indicative of collateral values at the current reporting date. Our current practice is to only obtain market value appraisals of the underlying collateral at the inception of the loan unless we identify indicators of impairment in our ongoing analysis of the portfolio, in which case, we may obtain a current appraisal of the underlying collateral. The commercial mortgage loan portfolio is summarized by geographic region and property type in Note 4 of our audited consolidated financial statements of this Form 10-K, which is incorporated by reference in this Item 7.
Statutory accounting practices prescribed or permitted for our life subsidiaries differ in many respects from those governing the preparation of financial statements under GAAP. Accordingly, statutory operating results and statutory capital and surplus may differ substantially from amounts reported in the GAAP basis financial statements for comparable items. Information as to statutory capital and surplus and statutory net income for our life subsidiaries as of December 31, 2011 and 2010 and for the years ended December 31, 2011, 2010 and 2009 is included in note 12 to our audited consolidated financial statements.
We are a leading provider of private passenger automobile insurance in Massachusetts. In addition to private passenger automobile insurance (which represented 81.0% of our direct written premiums in 2003), we offer a portfolio of insurance products, including commercial automobile (10.2% of 2003 direct written premiums), homeowners (7.4% of 2003 direct written premiums), dwelling fire, umbrella and business owner policies. Operating exclusively in Massachusetts through our insurance company subsidiaries, Safety Insurance Company and Safety Indemnity Insurance Company (together referred to as the "Insurance Subsidiaries"), we have established strong relationships with 548 independent insurance agents in 758 locations throughout Massachusetts. We have used these relationships and our extensive knowledge of the Massachusetts market to become the second largest private passenger automobile insurance carrier in Massachusetts, capturing an approximately 10.6% share of the Massachusetts private passenger automobile market in 2003, according to the CAR Cession Volume Analysis Report of March 1, 2004 based on automobile exposures. These statistics total, for each vehicle insured, the number of months during the year insurance for that vehicle is in effect, to arrive at an aggregate number of car-months for each insurer; this aggregate number, divided by 12, equals the insurer's number of car-years, a measure we refer to in this discussion as automobile exposures.
(1)Source: Commissioner rate decisions for 1992 - 2003. (2)Source: Safety Insurance as of December 31, 2003.
•Forecasts of future economic performance, liquidity, need for funding and income; and
Investments in fixed maturities, which include taxable and non-taxable bonds and redeemable preferred stocks, available-for-sale are reported at fair value. Fair values are derived from external market quotations. Unrealized gains or losses on fixed maturity and equity securities, reported at fair value, are excluded from earnings and reported in a separate component of shareholders' equity, known as "Accumulated other comprehensive income (loss), net of federal income taxes", until realized. Realized gains or losses on the sale or maturity of investments are determined on the basis of the specific cost identification method. Fixed maturity and equity securities that experience declines in value that are other-than-temporary are written down to fair value with a corresponding charge to net realized losses on investments. As part of purchase accounting, the cost of all securities held on the date of the Acquisition was increased by $12,687 to reset the cost to fair value.
extraordinary item. EPS for the successor period has been retroactively restated for the stock split. See Note 2.
The Company has been notified that certain federal income tax returns will be audited by the Internal Revenue Service. In the Company's opinion, adequate tax liabilities have been established for all years. However, the amount of these tax liabilities could be revised in the near term if estimates of the Company's ultimate liability are revised. Tax years prior to 2000 are closed.
We will file new rates for Bodily Injury, Medical Payments, and Uninsured Motorists Coverage in Florida, in conjunction with the change in Florida coverage resulting from the October 1, 2007 expiration of Florida’s Motor Vehicle No-Fault Law (Personal Injury Protection, or PIP). We also expect to file for new rates for our other Florida coverages (i.e., Property Damage, Comprehensive and Collision, etc.) within 60 days, which should be approved and made effective prior to December 31, 2007. While the scheduled elimination of the PIP coverage will result in a decline in premiums earned in Florida, it may improve our overall loss ratio for Florida. Our loss ratio (exclusive of loss adjustment expenses) for Florida PIP coverage was 133.1% and 107.6% for the three months and year ended June 30, 2007, respectively, on premiums earned of $4.5 million and $15.5 million for the respective periods.
We have audited the accompanying consolidated statements of operations, stockholders’ equity, and cash flows of First Acceptance Corporation and subsidiaries (the “Company”) for the year ended June 30, 2005. These consolidated 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 audit.
Foreclosed real estate held for sale is recorded at the lower of cost or fair value less estimated costs to sell. The Company periodically reviews its portfolio of foreclosed real estate held for sale using current information including (i) independent appraisals, (ii) general economic factors affecting the area where the property is located, (iii) recent sales activity and asking prices for comparable properties and (iv) costs to sell and/or develop that would serve to lower the expected proceeds from the disposal of the real estate. Gains (losses) realized on liquidation are recorded directly to operations and included within other revenues. Foreclosed real estate held for sale assets at June 30, 2007 and 2006 of $341 and $87, respectively, are included within other assets.
As of June 30, 2007, there were 68 securities with gross unrealized losses for more than 12 months and 142 securities with gross unrealized losses for less than 12 months. As of June 30, 2007 and 2006, the Company has determined that all of the unrealized losses in the tables above were temporary and were the result of changes in interest rates. There were no fundamental issues with any of these securities and the Company has the ability and intent to hold the securities until there is a recovery in fair value. There were no securities with unrealized losses of greater than 10% of book value.
ASU 2009-05, Measuring Liabilities at Fair Value - guidance which clarified that when a quoted price in an active market for an identical liability is not available, an entity should measure fair value using one of the prescribed approaches that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs - adopted December 31, 2009.
Negative amortization mortgages (also known as option adjustable rate mortgages (“ARMs”)) are loans whereby the payment made by the borrower may be less than the accrued interest due and the difference is added to the loan balance. When the accrued balance of the loan reaches the negative amortization limit (typically 110% to 125% of the original loan amount), the loan recalibrates to a fully amortizing level and a new minimum payment amount is determined. The homeowner’s new minimum payment amount can be significantly higher than the original minimum payment amount. The timing of when these loans reach their negative amortization cap will vary, and is a function of the accrual rate on each loan, the minimum payment rate on each loan and the negative amortization limit itself. Typically, these loans are estimated to reach their negative amortization limit between 3 and 5 years from the date of origination. The Company’s exposure to negative amortization mortgages ($2.9 million) is rated below investment grade, with all of these positions being super-senior securities.
The Company’s impairment losses were $8.3 million for the year ended December 31, 2008, net of VOBA amortization. During 2008, the Company impaired its holdings of FBG Finance and State Street Capital for $1.9 million and $1.0 million, respectively, due to a lack of intent to hold these issuers. Additionally, the Company recorded a $2.2 million gross impairment on Lehman Brothers Holdings due to a bankruptcy filing of the issuer. Forty-seven unique issuers accounted for the remaining gross impairment losses of $9.1 million with no single issuer accounting for more than $1.0 million.
Changes in the U.S. equity market directly affect the values of the underlying U.S. equity-based mutual funds supporting Separate Accounts assets and, accordingly, the values of variable contract owner account balances. Approximately 76% of Separate Accounts assets were invested in equity-based mutual funds at December 31, 2009. Since asset-based fees collected on in force variable contracts represent a significant source of revenue, the Company’s financial condition will be impacted by fluctuations in investment performance of equity-based Separate Accounts assets.
Net realized investment losses decreased $33.9 million to $24.4 million during 2010 as compared to $58.3 million in 2009. The following table provides the changes in net realized investment gains (losses) by type:
The information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as set forth on pages 24-35 of the Company’s 2002 Annual Report to Shareholders is incorporated by reference.
The consolidated financial statements of the Company, the notes to the financial statements, the Report of Independent Accountants thereon by PricewaterhouseCoopers LLP and the unaudited “Quarterly Financial Information” are set forth on pages
The reinsurance of Atomic risks suffered no major losses. With the commissioning of a number of new reactors — in Switzerland alone, five nuclear power-stations are under construction — this business too is entering a phase of expansion.
The last General Meeting re-elected to the Board of Direc­ tors Mr. Karl Brunner for a further period of one year and Mr. Max H. Schneebeti for four years. At the same time Mr. Felix W. Schulthess was newly elected to the Board.
In 2013, 99% of PHL Variable product sales, as defined by total annuity deposits and total life premium, were annuities, and 89% of those sales were fixed indexed annuities.
Operating expenses. Operating expenses increased by $13.2 million for the twelve months ended December 31, 2013 compared with the twelve months ended December 31, 2012. The increase in operating expenses was a result of higher professional fees and outside consulting services primarily as a result of the restatement.
See Note 9 to our financial statements under Item 8 “Financial Statements and Supplementary Data” in this Form 10-K for additional disclosures of our fair value methodologies.
Income taxes provided a benefit of $21.7 million for the twelve months ended December 31, 2013 compared with an expense of $16.2 million for the twelve months ended December 31, 2012. The primary driver of the income tax benefit is a decrease in the valuation allowance of $31.7.
Certain variable annuity products sold by us contain guaranteed minimum living benefits. These include guaranteed minimum accumulation, withdrawal, income and payout annuity floor benefits. The GMAB guarantees a return of deposit to a policyholder after 10 years regardless of market performance. The GMWB guarantees that a policyholder can withdraw a certain percentage for life regardless of market performance. The GMIB guarantees that a policyholder can convert his or her account value into a guaranteed payout annuity at a guaranteed minimum interest rate and a guaranteed mortality basis, while also assuming a certain level of growth in the initial deposit. We also offer a combination rider that offers both GMAB and GMDB benefits. We have established a hedging program for managing the risk associated with our guaranteed minimum accumulation and withdrawal benefit features. We continue to analyze and refine our strategies for managing risk exposures associated with all our separate account guarantees.
On January 14, 2014, Moody’s Investor Services withdrew all ratings of The Phoenix Companies, Inc. including the Ba2 financial strength rating of the Company’s life insurance subsidiaries and the B1 debt rating of Phoenix Life’s surplus notes. On September 25, 2013, Moody’s Investor Services maintained the review for downgrade for our Ba2 financial strength rating. On June 21, 2013, Moody’s Investor Services maintained the review for downgrade for our Ba2 financial strength rating. On March 20, 2013, Moody’s Investor Services maintained the review for downgrade for our financial strength rating of Ba2. On
The increases in deferred policy acquisition costs overall are primarily driven by increases in the shadow component that offsets unrealized losses on investments within AOCI. The deferrals of commissions on new sales of fixed indexed annuities were relatively stable and were more than offset by continued amortization of previously deferred costs.
Loss ratio. The loss ratio is defined as benefits, claims and settlement expenses as a percentage of earned premiums (excludes Life Insurance Division).
Our Other Insurance Division consisted of ZON-Re USA, LLC (“ZON-Re”), an 82.5%-owned subsidiary. Effective June 30, 2009, we sold our 82.5% membership interest in ZON-Re to Venue Re, LLC. The sale of our membership interest in ZON-Re resulted in a total pre-tax loss of $489,000 in 2009. See our discussion in the Disposed Operations below for additional information regarding our exit from the Other Insurance Division.
As a result of the review, in the fourth quarter ended December 31, 2009, the Company refined its claim liability estimate related to state mandated benefits and recorded a claim liability estimate of $23.9 million. The impact to the loss ratio in 2009 was approximately 2.6% as a percentage of earned premium.
Set forth below is certain summary financial and operating data for the Other Insurance Division for each of the three most recent fiscal years:
Cash flows from investing activities primarily consist of net investment purchases or sales and net purchases of property and equipment, which includes capitalized software. During 2009, we had cash flows used in investing activities of $49.6 million compared to cash flows provided by investing activities of $364.4 million in 2008 and $323.0 million in 2007. In 2009 and 2008, we had net purchases of short-term and other investments of $161.3 million and $76.0 million, respectively, which were partially offset by net sales of available for sale securities of $111.8 million and $439.4 million, respectively. During 2007, we had net sales of short-term and other investments of $261.0 million and net sales of available for sale securities of $74.7 million.
During 2009, 2008 and 2007, the holding company received an aggregate of $74.3 million, $283.2 million and $176.2 million, respectively, in cash dividends from our subsidiaries.
Upon our adoption of FSP SFAS No. 115-2 in the second quarter of 2009, which was codified into FASB ASC Topic 320, Investments - Debt and Equity Securities (“ASC 320”), we recorded a cumulative-effect adjustment for debt securities held at adoption for which an OTTI had been previously recognized. We recognized such tax-effected cumulative effect of initially applying this guidance as an adjustment to “Retained earnings” for $1.0 million, net of tax, with a corresponding adjustment to “Accumulated other comprehensive income.”
The business of insurance is primarily regulated by the states and is affected by a range of legislative developments at both the state and federal levels. Recently-adopted legislation and regulations governing the use and security of individuals’ nonpublic personal data by financial institutions, including insurance companies, may have a significant impact on the financial condition and results of operations. See Item 1. Business - Regulatory and Legislative Matters.
Adjustments to the living benefit liability and its reinsurance in our annuity products included the impact from changes in the profitability of the business due to the annual review and update of assumptions and other refinements. These adjustments resulted in a net charge of $1 million in 2015 compared to a net charge of $11 million in 2014.
Benefits and expenses increased $26 million. This increase was primarily driven by an unfavorable variance of $22 million in DAC amortization and $4 million increase in interest credited to policyholders’ account balances which includes DSI amortization. Higher DAC and DSI amortization is mainly related to the impact of the mark-to-market of the living benefit embedded derivative liability and related hedge positions and the impact of changes in the estimated profitability of the business, as discussed above.
As of December 31, 2015, our affiliated captives companies had outstanding an aggregate of $3.1 billion of debt issued for the purpose of financing Regulation XXX and Guideline AXXX non-economic reserves, of which approximately $1.5 billion relates to Regulation XXX reserves and approximately $1.6 billion relates to Guideline AXXX reserves, and all of which was issued directly by or guaranteed by Prudential Financial. Under certain of the financing arrangements pursuant to which this debt was issued, Prudential Financial has agreed to make capital contributions to the applicable captive reinsurance subsidiary to reimburse it for investment losses or to maintain its capital above prescribed minimum levels. In addition, as of December 31, 2015, for purposes of financing Guideline AXXX reserves, our affiliated captives had outstanding approximately $4.0 billion of surplus notes that were issued to Prudential Financial in exchange for promissory notes of affiliates guaranteed by Prudential Financial.
Our Contract Binding operating unit is presently located at 7550 IH-10 West, San Antonio, Texas. These leased premises consist of a 16,599 square foot office suite and 800 square feet of storage space. The rent is currently $34,798 per month pursuant to a lease that expires November 30, 2020.
The following is additional business segment information for the years ended December 31, 2018 and 2017 (in thousands):
On August 23, 2007, we entered into a trust preferred securities transaction pursuant to which we issued $25.8 million aggregate principal amount of subordinated debt securities due in 2037. To effect the transaction, we formed Hallmark Statutory Trust II (“Trust II”) as a Delaware statutory trust. Trust II issued $25.0 million of preferred securities to investors and $0.8 million of common securities to us. Trust II used the proceeds from these issuances to purchase the subordinated debt securities. Our Trust II subordinated debt securities bore an initial interest rate of 8.28% until September 15, 2017, after which interest adjusts quarterly to the three-month LIBOR rate plus 2.90 percentage points. Trust II pays dividends on its preferred securities at the same rate. Under the terms of our Trust II subordinated debt securities, we pay interest only each quarter and the principal of the note at maturity. The subordinated debt securities are uncollateralized and do not require maintenance of minimum financial covenants. As of December 31, 2018, the principal balance of our Trust II subordinated debt was $25.8 million and the interest rate was 5.69% per annum.
Costs in excess of the net assets of subsidiaries acquired are being amortized on a straight-line basis over 25 to 40 years. The Company continually evaluates the amortization period of its intangible assets. Estimates of useful lives are revised when circumstances or events indicate that the original estimate is no longer appropriate.
Notes payable to banks represents debt outstanding pursuant to a revolving credit facility entered into by Signet Star. The face value of the debt at December 31, 1995 was $28,400,000 and the carrying value was $28,306,000. The interest rate was based on the London Interbank offered rate plus .75% to 1.50% and was 5.75% at December 31, 1995. The debt was retired in January 1996.
2. The Company recorded an increase of $1,171,000 in the Iowa Development Experience Liability account in 1997. A similar increase of $2,901,000 was recorded in 1996. While these increased liabilities both reduce premium, the difference in the amounts between years causes an INCREASE in net premium from 1996 to 1997 of $1,730,000.
Effective June 5, 1996, MMIC merged with Medical Liability Mutual Insurance Company of Nebraska (MLM), a physician-owned professional liability insurance company providing insurance coverage to Nebraska physicians. As provided for in the agreement and plan of merger, MLM was merged into MMIC. The merger was accounted for as a pooling-of-interests and, accordingly, the consolidated financial statements include the combined financial position and results of operations of MMIHC and MLM for all periods presented.
MMIHC provides management and administrative services to MMIC for a fee generally equal to the cost of services provided plus ten percent. The insurance company provides professional liability insurance to physicians in Minnesota, Iowa, Nebraska, North Dakota and South Dakota.
December 31, 1997. Reinsurance recoverables on paid and unpaid losses of $16,141,000 and $17,485,000 are associated with a single reinsurer at December 31, 1997 and 1996, respectively.
We have recently entered into two transactions, the Commercial Lines Transaction referenced above and the Personal Lines Transaction discussed below, that will transform us into a specialty lines insurance company. The transactions will free up significant capital, increase our financial flexibility and also substantially reduce our catastrophe exposure.
(2) Run-off includes non-specialty commercial lines business subject to the renewal rights agreement with The Hanover and other run-off business. Prior periods have been reclassified to conform to the current presentation.
During the years ended December 31, 2009, 2008 and 2007, our regulated operating subsidiaries paid $80.0 million, $197.0 million and $393.9 million, respectively, of dividends to OneBeacon LLC. During the years ended December 31, 2009, 2008 and 2007, our unregulated insurance operating subsidiaries paid $11.9 million, $6.0 million, and $3.6 million, respectively, of dividends to their immediate parent.
During 2007, we declared and paid $28.3 million in cash dividends to holders of the Berkshire Preferred Stock.
At December 31, 2007, management had estimated that future payments from PIP litigation from our NYAIP business would be approximately $14.0 million. During 2008, the legal expenses related to this litigation were higher than expected as the 2002 accident year neared conclusion. As a result, management increased estimates of all accident years for NYAIP and other similar business in New York. The total increase in estimate was $10.8 million.
When we acquire another company, our management must estimate the fair values of the assets and liabilities acquired, in accordance with GAAP at the time of the acquisition. See Note 1-“Nature of Operations and Summary of Significant Accounting Policies-Recent Accounting Pronouncements” of the accompanying consolidated financial statements. Certain assets and liabilities require little judgment to estimate their fair values, particularly those that are quoted on a market exchange, such as publicly-traded investment securities. Other assets and liabilities, however, require a substantial amount of judgment to estimate their fair values. The most significant of these is the estimation required to fair value loss and LAE reserves. We estimate the fair value of loss and LAE reserves obtained in an acquisition following the principles contained within FASB Statement of Financial Accounting Concepts No. 7: “Using Cash Flow Information and Present Value in Accounting Measurements” (CON 7). Under CON 7, the fair value of a particular asset or liability essentially contains five elements: (1) an estimate of the future cash flows; (2) expectations about possible variations in the amount or timing of those cash flows; (3) the time value of money, represented by the risk-free rate of interest; (4) the price for bearing the uncertainty inherent in the asset or liability; and (5) other, sometimes unidentifiable, factors including illiquidity and market imperfections.
To increase profits in the Company's small group market, management will continue to actively evaluate specific geographic markets and limit its marketing and new sales to the top-tier markets. The underwriting process is being redesigned to be more effective and agent friendly and to better evaluate risks and the rapidly changing cost of medical treatments. Management is focused on establishing a pricing discipline to remain on top of rising claims cost trends and will continue to develop new products that meet the evolving consumer demand.
During the third quarter of 1999, the Company ceased marketing and terminated small group business in Florida and all remaining business in Maryland and Minnesota over a period of 18 months. This decision was made after it became clear to management that certain regulatory challenges existed that made it impossible to return these markets to profitability. The Company recorded a $13.7 million after-tax charge in 1999 for a premium deficiency reserve to recognize expected losses related to highly regulated markets.
- - Factors related to the Company's efforts to deal with adverse medical loss ratio in its small group health business (which include implementing significant rate increases, terminating business in unprofitable markets, and introducing redesigned products), including the willingness of employers and individuals to accept rate increases, premium repricing and redesigned products.
The consolidated financial statements include the accounts of the Company and all of its majority-owned subsidiaries. Significant intercompany accounts and transactions have been eliminated. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Goodwill represents the excess of cost over the fair market value of net assets acquired. Goodwill and other intangible assets are being amortized on a straight-line basis over a period of 40 years or less. Accumulated amortization was $16,461,000 and $12,676,000 at December 31, 2000 and 1999, respectively.
The Company evaluates segment performance based on profit or loss from continuing operations before income taxes, excluding gains and losses on the Company's investment portfolio. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Intercompany transactions have been eliminated prior to reporting reportable segment information.
The Company's net income was $5.4 million and $13.6 million for the years ended December 31, 2005 and 2004, respectively. Income before income taxes and cumulative effect of change in accounting principle was $7.7 million and $21.8 million for the years ended December 31, 2005 and 2004, respectively. This $14.1 million decrease was caused primarily from the Wealth Management Segment having net realized investment (losses) gains of $(4.2) million and $9.1 million for the years ended December 31, 2005 and 2004, respectively (a decrease of $13.3 million). Income tax expense was $2.3 million and $7.3 million for the years ended December 31, 2005 and 2004, respectively. The results of operations by segment are discussed more fully below.
Realized investment (losses) gains - were $(4.1) million and $9.3 million for the years ended December 31, 2005 and 2004, respectively. Sales of investments generally are made to maximize total return and take advantage of prevailing market conditions. The Company incurred write-downs of fixed maturities for other-than-temporary impairments of $5.5 million and $0.7 million for the years ended December 31, 2005 and 2004, respectively.
Cumulative effect of change in accounting principle - On January 1, 2004, the Company adopted the American Institute of Certified Public Accountants' (the "AICPA") Statement of Position 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" ("SOP 03-1"). The cumulative effect of adoption of SOP 03-1 at January 1, 2004, reported after tax and net of related effects on DAC, decreased net income and stockholder's equity by $0.9 million. The reduction in net income was comprised of an increase in benefit reserves (primarily for variable annuity contracts) of $0.9 million (pre-tax) and a decrease in DAC of $0.5 million (pre-tax).
Premiums - remained consistent at $1.3 million for the years ended December 31, 2005 and 2004, respectively.
Surrender charges are also included in fee and other income. Surrender charges represent revenues earned on the early withdrawal of fixed and variable annuity policyholder balances. Surrender charges on fixed and variable annuity surrenders generally are assessed at declining rates applied to policyholder surrenders during the first five to seven years of the contract. Total surrender charges were $2.3 million and $2.7 million for the years ended December 31, 2005 and 2004, respectively.
The following summarizes the reserve for the GMDB at December 31 (in 000's):
We capitalize costs that vary with and are related primarily to the acquisition of new and renewal insurance and annuity contracts. These costs include primarily commissions, costs of policy issuance and underwriting, and variable field office expenses. We amortize
Tax regulations require items to be included in the tax return at different times than the items are reflected in the financial statements. As a result, the effective tax rate reflected in the financial statements is different than the actual rate applied on the tax return. Some of these differences are permanent such as expenses that are not deductible in our tax return, and some differences are temporary,
DAC for variable annuities is amortized with interest over the anticipated lives of the insurance contracts in relation to the present values of estimated future gross profits from asset-based fees, guaranteed benefit rider fees, contract fees, and surrender charges, less a provision for guaranteed death and living benefit expenses, policy maintenance expenses, and non-capitalized commissions. Future gross profit estimates are subject to periodic evaluation with necessary revisions applied against amortization to date. The impact of revisions and assumptions to estimates on cumulative amortization is recorded as a charge or benefit to current operations, commonly referred to as “unlocking”. Changes in assumptions can have a significant impact on the amount of DAC reported and the related amortization patterns. In general, increases in the estimated Separate Accounts return and decreases in surrender or mortality assumptions increase the expected future profitability of the underlying business and may lower the rate of DAC amortization. Conversely, decreases in the estimated Separate Accounts returns and increases in surrender or mortality assumptions reduce the expected future profitability of the underlying business and may increase the rate of DAC amortization. For the years ended December 31, 2012 and 2011, the favorable (unfavorable) impact to pre-tax net income related to DAC unlocking was $0.1 million and less than ($0.1) million, respectively. For the year ended December 31, 2010, there was relatively no impact to pre-tax income related to DAC unlocking. See Note 4 to the Financial Statements for a further discussion.
(b) The change in equity related losses principally relates to the increase in net losses on futures contracts during 2012 as compared to 2011. Short futures contracts fluctuate relative to the volatility in the S&P.
for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2018, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
increased our authorized shares of common stock, $0.0001 par value, from 100,000,000 to 200,000,000.
The actual provision for income tax differs from the amount using the statutory U.S. Federal income tax rate (21% and 30.3%, respectively) for the years ended April 30, 2019 and 2018 as follows:
The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of April 30, 2019, the Company had no accrued interest or penalties related to uncertain tax positions.
For the Year ended October 31, 1998 compared to the Year ended October 31, 1997
OTHER ASSETS 3,116,233 1,463,732 --------- --------- $ 68,661,087 $ 53,406,741 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------