felanders/preprocessed huggingface dataset:
In evaluating its results of operations, the Company also considers net changes in deposits received for investment-type contracts, deposits to separate accounts and self-funded equivalents. Self-funded equivalents generally represent paid claims under minimum premium and administrative services only contracts, which amounts approximate the additional premiums that would have been earned under such contracts if they had been written as traditional indemnity or HMO programs.
Deposits for separate accounts increased $5.0 million in 2000 when compared to 1999. Deposits for separate accounts decreased $3.4 million in 1999 when compared to 1998. This fluctuation is expected in the small market in which the Company operates.
Total reinsurance premiums ceded to the Parent Corporation in 2000, 1999, and 1998 were $77, $43, and $61, respectively.
We are organized along a profit center structure by line of business and territory that does not necessarily correspond to corporate legal entities. Profit centers can access various legal entities, subject to licensing and other regulatory rules. Profit centers are expected to generate underwriting income and appropriate risk-adjusted returns. This corporate structure has facilitated the development of management talent by giving each profit center's senior management team the necessary autonomy within underwriting authorities to make operating decisions and create products and coverages needed by its target customer base. We are an underwriting organization and senior management is focused on delivering underwriting profit. We strive to achieve underwriting income by only writing policies which we believe adequately compensate us for the risk we accept.
Given the nature of long-tail casualty business and related reserving considerations, for the major long-tail lines in Insurance - North American, Insurance - Overseas General, and Global Reinsurance, no changes of significance were made to
During 2008, we conducted an internal, ground-up review of our consolidated A&E liabilities as of December 31, 2007. During the same period, a team of external actuaries performed an evaluation as to the adequacy of the reserves of Century. This external review was conducted in accordance with the Brandywine Restructuring Order, which requires that an independent actuarial review of Century’s reserves be completed every two years. Management takes full responsibility for the estimation of its A&E liabilities. As a result of our internal review, we increased our net loss reserves for the Brandywine operations, including A&E, by $65 million, while the gross loss reserves increased by $143 million. The conclusions of the external review provided estimates of ultimate net Brandywine liabilities that are little changed from a comparable study in 2006. We also decreased our net loss reserves for Westchester Specialty’s A&E and other liabilities by $13 million, while the gross loss reserves decreased by $10 million. Our A&E reserves are not discounted and do not reflect any anticipated future changes in the legal, social or economic environment, or any benefit from future legislative reforms.
Because our investment portfolio is the largest component of consolidated assets and a multiple of shareholders’ equity, adverse changes in economic conditions subsequent to the balance sheet date could result in other-than-temporary impairments that are material to our financial condition and operating results. Such economic changes could arise from overall changes in the financial markets and specific changes to industries, companies, or foreign governments in which we maintain relatively large investment holdings. Further, an increase in interest rates could result in an increased number of fixed maturities for which we cannot support the intent to hold to recovery. More information regarding our process for reviewing our portfolio for possible impairments can be found in the section entitled “Net Realized Gains (Losses)”.
Insurance services revenues increased $196,645 from 1995 to 1996 following an increase of $126,152 in 1995 from 1994. The table below presents the components.
The effective tax rate of the Company was 24% in 1996 and 26% in 1995 and 1994. The lower rate in 1996 is largely the result of tax-exempt net investment income representing a larger portion of income in 1996 than in previous years. For the Company, the fresh start adjustment (tax benefit) was immaterial for all years presented. A reconciliation between income taxes computed at the Federal statutory rates and the provision for income taxes is included in Note 5 of Notes to Consolidated Financial Statements.
All other office facilities, including those occupied by Tempest in Bermuda, ACE USA in Atlanta, Georgia; New York, New York; Los Angeles and San Francisco, California; ACE Global Markets in London, England and ACE Europe in Dublin, Ireland are leased. During 1998, ACE Global Markets consolidated the operations of Methuen and ACE London into its current office space and disposed of the two existing leases.
Interest credited on investment contracts and universal life-type insurance decreased $114.1 million or 9 percent, primarily due to lower interest crediting rates and the effect on equity indexed annuities of lower appreciation in the S&P 500 during 2004 versus 2003, partially offset by higher average accumulation values of annuities and inforce levels of life insurance products.
Deferred policy acquisition costs (DAC) represent the costs of acquiring new insurance and annuity business, principally direct sales commissions and other distribution and underwriting costs that have been deferred on the sale of annuity, life and health insurance products. These costs are deferred to the extent they are recoverable from future
The negative effect on IDS Life's pretax earnings of a 10 percent decline in equity markets would be approximately $36.3 million and $39.3 million based on annuity and insurance business inforce and equity index options as of December 31, 2004 and 2003, respectively.
Interest credited to policyholders’ account balances decreased by $10.2 million primarily due to the decreased interest credited on the MVA option. As a result of improved market conditions, there were significant transfers of customer account values from the market value adjustment options to the separate account mutual fund options.
Federal Income Tax Expense Federal income tax expense increased $6.1 million to $9.9 million in 1997 from $3.8 million in 1996. Federal income tax expense was 34.0% of income before federal income taxes in 1997 compared to 30.4% in 1996. The increase in income tax expense was primarily the result of the Company's increased premium volume and favorable operating results during 1997.
Total premiums earned for the year ended December 31, 1997 increased 37.9% to $4.2 billion from $3.0 billion in 1996. This overall increase was primarily attributable to a 38.4% increase in member months for commercial and government programs. The substantial growth in membership reflected continued consumer acceptance of health care plans in the Company's markets in general, and the popularity of the products offered by the Company in particular.
The Company is taking a number of steps to address the deterioration of operating results in Medicare, Medicaid and the New York Mandated Plans. The Company is pursuing certain provider contracts for its Medicare programs pursuant to which a significant portion of the medical cost risk of some of the Company's Medicare enrollment may be transferred to network providers. Despite these efforts, no assurances can be given that such contracts will be consummated or, if consummated, will successfully control the Company's ultimate costs. In its Pennsylvania Medicaid program, the Company has entered into an agreement to transfer a substantial portion of the medical risk in that program to a third party. The Company is also attempting to implement new medical management policies aimed at reducing costs in various lines of business. The Company has also withdrawn from the Medicaid programs in New Jersey and Connecticut, effective July 1, 1998 and April 1, 1998, respectively. Finally, the Company has filed for significant rate increases in the New York Mandated Plans to reflect rising medical costs in those plans.
The Company's objectives with respect to its investment portfolio include maximizing total return within investment guidelines while protecting policyholders' surplus and maintaining flexibility. Like other property and casualty insurers, the Company relies on premiums as a major source of cash, and therefore liquidity. Cash flows from the Company's investment portfolio, either in the form of interest or principal payments, are an additional source of liquidity. Because the duration of the Company's investment portfolio is shorter than the duration of its liabilities, increases or decreases in market interest rates are not expected to have a material effect on the Company's liquidity, or its results of operations.
- SFAS No. 150 "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.
The Insurance Company is subject to Regulation 130 adopted and promulgated by the NYSID. Under this Regulation, the Insurance Company's ownership of below investment grade debt securities is limited to 20.0% of total admitted assets, as calculated under statutory accounting practices. As of December 31, 2002 and 2001, approximately 7.9% and 7.04%, respectively, of the Insurance Company's total admitted assets were invested in below investment grade debt securities.
The Company seeks to manage its investment portfolio in part to reduce its exposure to interest rate fluctuations. In general, the market value of the Company's fixed maturity portfolio increases or decreases in an inverse relationship with fluctuations in interest rates, and the Company's net investment income increases or decreases in direct relationship with interest rate changes. For example, if interest rates decline, the Company's fixed maturity investments generally will increase in market value, while net investment income will decrease as fixed income investments mature or are sold and proceeds are reinvested at the declining rates, and vice versa. Management is aware that prevailing market interest rates frequently shift and, accordingly, the Company has adopted strategies that are designed to address either an increase or decrease in prevailing rates. In a rising interest rate environment, the Company's average cost of funds would be expected to increase over time as it prices its new and renewing annuities to maintain a generally competitive market rate. In addition, the market value of the Company's fixed maturity portfolio decreases resulting in a decline in shareholders' equity. Concurrently, the Company would attempt to place new funds in investments that were matched in duration to, and higher yielding than, the liabilities associated with such annuities. Management believes that liquidity necessary in such an interest rate environment to fund withdrawals, including surrenders, would be available through income, cash flow, the Company's cash
Cash flow used by operations for the year ended December 31, 2001 was $11.2 million. Operating activities did not provide sufficient cash to fund short term obligations, so the Company relied on cash provided by investing activities. The decrease in operating cash flow is attributable to the decrease in collected premiums, which was caused by both a decrease in written premium and an increase in premiums receivable. The Company believes that as claim payments run off on non-renewed lines of business and the receivables are collected, there will be adequate operating cash flow to fund future obligations.
Office space is provided by Prudential Insurance, as described under “Expense Charges and Allocations” in Note 12 to the Consolidated Financial Statements.
We present at fair value in the statements of financial position our investments classified as available-for-sale, including fixed maturity and equity securities, investments classified as trading, derivatives, and embedded derivatives. For additional information regarding the key estimates and assumptions surrounding the determination of fair value of fixed maturity and equity securities, as well as derivative instruments, embedded derivatives and other investments, see Notes 9 and 10 to the Consolidated Financial Statements.
An increase or decrease in our effective tax rate by one percent of income (loss) from continuing operations before income taxes would have resulted in a decrease or increase in our consolidated income from continuing operations in 2014 of $9 million.
As discussed under “Business-Regulation,” in December 2014, the NAIC adopted a new actuarial guideline, known as “AG 48”, that governs the reinsurance of term and universal life insurance business to captives by prescribing requirements for the types of assets that may be held by captives to support the reserves. The requirements in AG 48 became effective on January 1, 2015 and apply in respect of term and universal life insurance policies written from and after January 1, 2015, or written prior to January 1, 2015 but not included in a captive reserve financing arrangement as of December 31, 2014. We are currently evaluating the affect of AG 48 on any future financing of statutory reserves for our term and universal life business.
The following is a discussion and analysis of our results of operations for the years ended December 31, 2017 and 2016 and our financial condition as of December 31, 2017 and 2016. The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. References to “we,” “us,” “our,” “our company,” or “the Company” refer to Oxbridge Re Holdings Limited and its wholly-owned subsidiaries, Oxbridge Reinsurance Limited and Oxbridge Re NS Ltd., unless the context dictates otherwise.
The increase in capitated contract revenue is primarily attributable to the addition of our Indiana contract, which accounted for approximately $15.0 million in revenue for the year ended December 31, 2007. Additional business from existing clients in Pennsylvania and Michigan also contributed an additional $3.1 million. The increase in non-capitated revenue is primarily attributable to the additional business from an existing customer in Texas.
We generally separate our option awards into two groups: employee and non-employee awards. The historical data of each group are analyzed independently to estimate the forfeiture rate of options at the time of grant. These estimates are revised in subsequent periods if actual forfeitures differ from estimated forfeitures.
interests in subsidiaries be reported in the equity section of the company’s balance sheet, rather than in a mezzanine section of the balance sheet between liabilities and equity. SFAS 160 also changes the manner in which the net income of the subsidiary is reported and disclosed in the controlling company’s income statement. SFAS 160 also establishes guidelines for accounting for changes in ownership percentages and for deconsolidation. SFAS 160 is effective for financial statements for fiscal years beginning on or after December 1, 2008 and interim periods within those years. The adoption of SFAS 160 is not expected to have a material impact on our financial statements.
As of December 31, 2007, there were 4,340 remaining shares of preferred stock authorized and available to issue, and 14,400 outstanding shares of Series A Preferred Stock. All outstanding shares were issued in June 2005 as a result of the sale of Series A Preferred Stock to Woodcliff for approximately $3.4 million in net cash proceeds. The Series A Preferred Stock, acquired by Hythiam in January 2007, is convertible into 4,235,328 shares of common stock at a conversion rate of 294.12 common shares for each preferred share. Hythiam has the right to designate the majority of our Board of Directors, has dividend and liquidation preferences, and anti-dilution protection. In addition, we need Hythiam’s consent for a sale or merger involving a material portion of our assets or business, any single or series of related transactions exceeding $500,000, and prior to incurring any debt in excess of $200,000.
Options to purchase our common stock have been issued to employees and non-employee Board of Director members with exercise prices ranging from $.25 to $4.00.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of The National Security Group, Inc. and subsidiaries at December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles.
(Dollars in Thousands) NSIC NSFC Written Earned Written Earned Direct........$ 5,005 $ 4,961 $ 33,616 $ 32,702 Assumed....... - - - 1 Ceded......... 58 58 13,497 13,234 ------ ------- ------- ------- Net...........$ 4,947 $ 4,903 $ 20,119 $ 19,469 ====== ======= ======= =======
The Company’s annuity policies are simple deferred annuities. The Company does not explicitly establish a claim liability for its annuities since the liability is already held in the annuity deposit liability.
One of the Company's subsidiaries, Fortune Life Insurance Company, owns land and a building which it purchased for $88,000 in 1982. In November 1999, Fortune Life Insurance Company entered into an agreement to sell that property for $207,000. One of the purchasers, Holly McCorkle, is on the Company's board of directors. An independent appraisal in October 1998 placed the value of the property at $230,000.
Earnings per share amounts are presented in conformity with Statement of Financial Accounting Standards No. 128.
material adverse effect on the business and operations of the Company.
The Company's UMClaimPros interim staffing service, which was introduced to the marketplace in late December, 1994, generated $116,489 in fees during 1995.
The following table sets forth for each period indicated the volume and gross dollar amount of insurance claims received and fees recognized for each of the Company's two principal accounts receivable management services . In general, collections on most healthcare providers' new claims ("Ongoing") tend to average about 27 to 51 percent of the gross claim amount. Backlog collection ratios range from 0 to about 40 percent of the aggregate gross claim amount because many backlog claims have already been paid or denied by the insurance carriers prior to submission of the claims to UMC:
INTEREST EXPENSE decreased 7% due to reduced principal owed on the IBM AS/400 computer system currently leased by the Company.
MLOA issues certain variable annuity products with a Guaranteed Minimum Death Benefit ("GMDB") feature. MLOA also issues certain variable annuity products that contain a Guaranteed Minimum Income Benefit ("GMIB") feature which, if elected by the policyholder after a stipulated waiting period from contract issuance, guarantees a minimum lifetime annuity based on predetermined annuity purchase rates that may be in excess of what the contract account value can purchase at then-current annuity purchase rates. This minimum lifetime annuity is based on predetermined annuity purchase rates applied to a guaranteed minimum income benefit base. The risk associated with the GMDB and GMIB features is that a protracted under-performance of the financial markets could result in GMDB and GMIB benefits being higher than what accumulated policyholder account balances would support. Reserves for GMDB and GMIB obligations are calculated on the basis of actuarial assumptions related to projected benefits and related contract charges generally over the lives of the contracts using assumptions consistent with those used in estimating gross profits for purposes of amortizing DAC and VOBA. The determination of this estimated liability is based on models which involve numerous estimates and subjective judgments, including those regarding expected market rates of return and volatility, contract surrender rates, mortality experience, and, for GMIB, GMIB election rates. Assumptions regarding Separate Account performance used for purposes of this calculation are set using a long-term view of expected average market returns by applying a reversion to the mean approach, consistent with that used for DAC and VOBA amortization. There can be no assurance that ultimate actual experience will not differ from management's estimates.
The investment results of Separate Accounts on which MLOA does not bear the investment risk are reflected directly in Separate Accounts' liabilities and are not reported in revenues in the statements of operations. For the year ended December 31, 2005, 2004 and 2003, investment results of such Separate Accounts were gains of $197.5 million, $371.2 million and $628.1 million, respectively.
Interest income recognized on impaired mortgage loans totaled $0.3 million, $0.1 million, $0.0 million and $0.2 million for the full year 2005, six months ended December 31, 2004, six months ended June 30, 2004 and full year 2003, respectively.
The net unrealized investment gains (losses) included in the balance sheets as a component of accumulated other comprehensive income and the changes for the corresponding years, on a line by line basis, follow:
On March 5, 1999, MLOA borrowed $50.5 million from MONY Benefit Management Corp. ("MBMC"), an affiliate, in exchange for a note payable in the same amount. The note bears interest at 6.8% per annum and matures on March 5, 2014. Principal and interest are payable quarterly to MBMC. The carrying value of the note as of December 31, 2005 is $33.8 million.
The Rosemont Re reinsurance treaty entered into in December 2002 effectively cedes all of the unearned premium and future reported premium after June 30, 2002, for the assumed business written for underwriting years 2001 and 2002 by the Company ($129.3 million in 2002, $38.0 million in 2003 and $(0.1) million in 2004). This treaty relieves the Company of significant underwriting risk and written premium leverage and significantly improves the Company’s risk-based capital adequacy ratios under both the A.M. Best and NAIC models. The treaty has no limitations on loss recoveries and includes a profit-sharing provision should the combined ratios calculated on the base premium ceded be below 100%. The treaty requires Rosemont Re to reimburse the Company for its acquisition and administrative expenses. In addition, the Company is required to pay Rosemont Re additional premium in excess of the base premium ceded of 14.3% or an estimated $24.0 million. The additional premium reduced 2004, 2003 and 2002 earned premium by $(0.01), $5.5 and $18.5 million, respectively.
It is not possible to predict whether the Budget Proposal discussed above will be enacted, what form such legislation might take when enacted, or the potential effects of such legislation on the Company and its competitors. The Company does not expect the Budget Proposal to have a material impact on its financial condition or liquidity. See Note 10 of Notes to Consolidated Financial Statements.
The Company's statutory capital and surplus was $5.03 billion and $4.95 billion at December 31, 1999 and 1998, respectively.
The Company is also a defendant or co-defendant in various other litigation matters in the normal course of business. Although there can be no assurances, as of December 31, 1999, the Company believes, based on information currently available, that the ultimate resolution of these legal proceedings would not be likely to have a material adverse effect on its results of operations, financial condition or liquidity.
Total benefits, claims and expenses 11,510,195 10,992,459 10,515,152 ------------ ------------ ------------
Legal/regulatory risk is the risk that changes in the legal or regulatory environment in which the Company operates will create additional expenses not anticipated by the Company in pricing its products. That is, regulatory initiatives designed to reduce insurer profits, new legal theories, or insurance company insolvencies through guaranty fund assessments, may create costs for the Company beyond those recorded in the financial statements. The Company seeks to mitigate this risk through geographic marketing of these insurance products.
In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 requires certain guarantees to be recorded at fair value and also requires a guarantor to make new disclosures, even when the likelihood of making payments under the guarantee is remote. In general, the Interpretation applies to contracts or indemnification agreements that contingently require the guarantor to make payments to the guaranteed party based on changes in an underlying that is related to an asset, liability, or an equity security of the guaranteed party. The recognition provisions of FIN 45 are effective on a prospective basis for guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim and annual periods ending after December 15, 2002. The adoption of FIN 45 did not have a material impact on the Company's financial condition or results of operations.
Fixed maturity securities held-to-maturity: Estimatd Amortized Cost Fair Value Due in 2004 $ -- $ -- Due in 2005 through 2008 1,101,703 1,240,126 Due in 2009 through 2013 2,043,405 2,241,130 Due after 2013 545,956 548,232
Specialty Commercial Segment. Gross premiums written for the Specialty Commercial Segment were $235.7 million for the year ended December 31, 2012, which was $50.7 million, or 27%, more than the $185.0 million reported for the same period in 2011. Net premiums written were $186.1 million for the year ended December 31, 2012 as compared to $144.3 million reported for the same period in 2011. The increase in premium volume was primarily due to increased premium production in our E&S Commercial business unit, Excess & Umbrella business unit and our space risk program partially offset by reduced premium volume in our General Aviation business unit.
Separate account assets and liabilities are funds maintained in accounts to meet specific investment objectives of contractholders who bear the investment risk. Investment income and investment gains and losses accrue directly to such contractholders. The assets of each account are legally segregated and are not subject to claims that arise out of any other business of PHL Variable. The assets and liabilities are carried at market value. Deposits, net investment income and realized investment gains and losses for these accounts are excluded from revenues, and the related liability increases are excluded from benefits and expenses. Amounts assessed to the contractholders for management services are included in revenues.
On March 4, 1998, the Company entered into a Stock Purchase Agreement pursuant to which in May 1998, it sold to certain individuals (the "Initial Purchasers") an aggregate of 765,000 shares of a newly created Series B Convertible Redeemable Preferred Stock, par value for 0.01 per share for $76,500. Thereafter the Initial Purchasers endeavored to establish for the Company new business operations in the property and casualty insurance and extended warranty/service contracts markets. On September 30, 1998, the Company acquired Stamford Insurance Company Ltd., which was then an inactive foreign corporation licensed in the Cayman Islands as a casualty and property insurer. In the fourth quarter of 1999, Stamford commenced underwriting as a re-insurer and the Company commenced sales of its automotive and consumer product service contracts through its website at www.warrantysuperstore.com.
Preferred stock dividend accrual in fiscal 1999 was $57,000 as compared to $60,000 for the twelve months ended December 31, 1998. The year-on-rear decrease is due to a reduction in the average Series A Preferred Shares outstanding during fiscal 1999.
Net losses and loss adjustment expenses also include the change in reserves for losses and loss adjustment expenses. The following table provides further information about our loss reserves at December 31, 2005, 2004 and 2003 broken out by Primary and Modified Pool insurance (in thousands):
Our strategy for managing our investment portfolio is to optimize investment returns while preserving capital and liquidity and adhering to regulatory and rating agency requirements. We invest for the long term, and most of our investments are held until they mature. Our investment portfolio includes primarily fixed income securities, and the majority of these are tax-preferred state and municipal bonds. We have established a formal investment policy that describes our overall quality and diversification objectives and limits. Our investment policies and strategies are subject to change depending upon regulatory, economic, and market conditions as well as our existing financial condition and operating requirements, including our tax position. While we invest for the long term and most of our investments are held until they mature, we classify our entire investment portfolio as available for sale. This classification allows us the flexibility to dispose of securities in order to meet our investment strategies and operating requirements. All investments are carried on our balance sheet at fair value.
Approximately $75,000 was a write-down on preferred stock of a U.S. car manufacturer for which the fair value had fluctuated below 80% of amortized cost and was in an unrealized loss position for a continuous six-month period. The issuer had posted weak operating results throughout 2005, lowered earnings projections, and had been downgraded by rating agencies. We sold this security following the write-down in 2005 and realized a small loss on the sale.
The decline in statutory policyholders’ surplus reflects an increase in the statutory contingency reserve and a change in the deferred tax liability greater than statutory net income in 2005. The primary difference between statutory policyholders’ surplus and equity computed under generally accepted accounting principles is the statutory contingency reserve. Mortgage insurance companies are required to add to the contingency reserve an amount equal to 50% of calendar year earned premiums and retain the reserve for 10 years, even if the insurance is no longer in force. Therefore, a growing company such as Triad normally has an increase its contingency reserve rather than in statutory surplus.
The Company was informed by the Pennsylvania Insurance Commissioner that in response to the significant improvement in the invested assets of Fidelity, she has reopened the process to select an equity investor for the recapitalization and rehabilitation of Fidelity.
In December 2007, the FASB issued SFAS No.160, Noncontrolling Interests in Consolidated Financial Statements (“SFAS 160”). SFAS 160 requires the Company to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 and earlier adoption is prohibited. Adoption of this statement, when SFAS 160 becomes effective, is not expected to have a material impact on the Company’s consolidated financial statements.
Activity in the liability for unpaid losses and LAE is summarized as follows (dollars in thousands):
The Florida Insurance Code (the “Code”) requires HCPC to maintain capital and surplus equal to the greater of 10% of its liabilities or a statutory minimum as defined in the Code. At December 31, 2008 and 2007, HCPC is required to maintain a minimum capital and surplus of $4.0 million. At December 31, 2008 and 2007, HCPC’s statutory capital and surplus was $24.8 million and $10.4 million, respectively. HCPC’s statutory net profit was $3.4 million for the year ended December 31, 2008 compared to the statutory net loss of $1.4 million for the period from June 18, 2007 (commencement of insurance operations) to December 31, 2007. Statutory surplus differs from stockholders’ equity reported in accordance with generally accepted accounting principles primarily because policy acquisition costs are expensed when incurred. In addition, the recognition of deferred tax assets is based on different recoverability assumptions.
2000 1999 ---- ---- Home office building......................... $ 41,184 $ 40,524 Other, principally furniture and equipment... 66,484 54,412 ------- ------ 107,668 94,936 Accumulated depreciation..................... 56,502 45,934 ------- ------ $ 51,166 $ 49,002 ======= ======
Net Income Share-Owner’s Equity ----------------------------------- ----------------------------------- 2000 1999 1998 2000 1999 1998 ---- ---- ---- ---- ---- ----
The Acquisitions Division focuses on acquiring, converting, and servicing policies acquired from other companies. The Division's primary focus is on life insurance policies sold to individuals.
Prior to July 1, 1999, upon retirement, the amount of pension plan assets vested in the retiree were used to purchase a single premium annuity from Protective in the retiree’s name. Therefore, amounts presented above as plan assets exclude assets relating to such retirees. Beginning July 1, 1999, retiree obligations are being fulfilled from pension plan assets.
We recognize revenues on title insurance policies written by independent agencies (agencies) when the policies are reported to us. In addition, where reasonable estimates can be made, we also accrue for revenues on policies issued but not reported until after period end. We believe that reasonable estimates can be made when recent and consistent policy issuance information is available. Our estimates are based on historical reporting patterns and other information about our agencies. We also consider current trends in our direct operations and in the title industry. In this accrual, we are not estimating future transactions. We are estimating revenues on policies that have already been issued by agencies but not yet reported to or received by us. We have consistently followed the same basic method of estimating unreported policy revenues for more than 10 years.
In our REI segment, employee costs for 2006 were comparable to 2005. In 2005, employee costs in our REI segment increased 10.7% compared with 2004. These employee costs did not increase proportionately with the 19.7% increase in segment revenues due to an increase in revenues from Section 1031 property exchange services, which are less labor intensive than other REI services.
We also regularly evaluate and adjust the related DAC and DSI balances with a corresponding charge or credit to current period earnings for the impact of actual gross profits and changes in our projections of estimated future gross profits on our DAC and DSI amortization rates. Adjustments to the DAC and DSI balances include the impact to our estimate of total gross profits of the annual review of assumptions, our quarterly adjustments for current period experience, and our quarterly adjustments for market performance. Each of these adjustments is further discussed below in “-Annual assumptions review and quarterly adjustments.”
The reserves for certain optional living benefit features, including GMAB, GMWB and GMIWB are accounted for as embedded derivatives at fair value, as described above. This methodology could result in either a liability or contra-liability balance, given changing capital market conditions and various actuarial assumptions. Since there is no observable active market for the transfer of these obligations, the valuations are calculated using internally-developed models with option pricing techniques. The models are based on a risk neutral valuation framework and incorporate premiums for risks inherent in valuation techniques, inputs, and the general uncertainty around the timing and amount of future cash flows. The significant inputs to the valuation models for these embedded derivatives include capital market assumptions, such as interest rate levels and volatility assumptions, the Company’s market-perceived risk of its own non-performance (“NPR”), as well as actuarially determined assumptions, including mortality rates and contractholder behavior, such as lapse rates, benefit utilization rates and withdrawal rates. Capital market inputs and actual contractholders’ account values are updated each quarter based on capital market conditions as of the end of the quarter, including interest rates, equity markets and volatility. In the risk neutral valuation, the initial swap curve drives the total returns used to grow the contractholders’ account values. The Company’s discount rate assumption is based on the London Inter-Bank Offered Rate (“LIBOR”) swap curve adjusted for an additional spread, which includes an estimate of NPR. Actuarial assumptions, including contractholder behavior and mortality, are reviewed at least annually and updated based upon emerging experience, future expectations and other data, including any observable market data, such as available industry studies or market transactions such as acquisitions and reinsurance transactions. For additional information regarding the valuation of these optional living benefit features, see Note 10 to the Financial Statements.
Information required with respect to this Item 8 regarding Financial Statements and Supplementary Data is set forth within the Financial Statements Index elsewhere in this Annual Report on Form 10-K.
The Company derives its revenues principally from: (a) asset management fees on separate accounts and mortality and expense fees; (b) fully insured premiums; (c) net investment income on general account assets; and (d) certain other fees earned by the Company. Asset management fees and mortality and expense fees are primarily generated from separate account assets which are deposited with the Company through the sale of variable annuity and variable life products. Premium revenues are derived primarily from the sale of group life and group disability insurance products. Hartford Life's operating expenses primarily consist of interest credited to policyholders on general account liabilities, insurance benefits provided, dividends to policyholders, costs of selling and servicing the various products offered by the Company, and other general business expenses. Hartford Life's profitability depends largely on the amount of assets under management, the adequacy of product pricing and underwriting discipline, and its ability to earn target spreads between earned investment rates on general account assets and credited rates to customers.
Act of 1996. The premium growth in Group Insurance, along with favorable mortality and morbidity experience, resulted in an increase in net income in this segment of $11, or 16%, to $78 in 1996 from $67 in 1995.
(1) As of December 31, 1997, the fair value of the Company's investment contracts including guaranteed separate accounts was $21.9 billion.
The insurance holding company laws of the other jurisdictions in which Hartford Life's insurance subsidiaries are incorporated (or deemed commercially domiciled) generally contain similar (although in certain instances somewhat more restrictive) limitations on the payment of dividends.
The National Association of Insurance Commissioners ("NAIC") adopted regulations establishing minimum capitalization requirements based on Risk-Based Capital ("RBC") formulas for life insurance companies (effective December 31, 1993). The requirements consist of formulas which identify companies that are undercapitalized and require specific regulatory actions. The RBC formula for life insurance companies establishes capital requirements relating to insurance, business, asset and interest rate risks. The RBC ratios for each of the major life insurance subsidiaries are in excess of 200% as of December 31, 1997.
The Company sold or redeemed invested assets, principally bonds and notes, aggregating $427.5 million in 2001, $389.1 million in 2000 and $478.7 million in 1999. Sales of investments result from the active management of the Company's investment portfolio. Because redemptions of investments are generally involuntary and sales of investments are made in both rising and falling interest rate environments, net gains and losses from sales and redemptions of investments fluctuate from period to period, and represent 0.14%, 0.00% and 0.20% of average invested assets in 2001, 2000 and 1999, respectively. Active portfolio management involves the ongoing evaluation of asset sectors, individual securities within the investment portfolio and the reallocation of investments from sectors that are perceived to be relatively overvalued to sectors that are perceived to be relatively undervalued. The intent of the Company's active portfolio management is to maximize total returns on the investment portfolio, taking into account credit, option, liquidity and interest-rate risk.
There are risks associated with some of the techniques the Company uses to provide liquidity, enhance its spread income and match its assets and liabilities. The primary risk associated with MBSs is that a changing interest rate environment might cause prepayment of the underlying obligations at speeds slower or faster than anticipated at the time of their purchase. As part of its decision to purchase an MBS, the Company assesses the risk of prepayment by analyzing the security's projected performance over an array of interest-rate scenarios. Once an MBS is purchased, the Company monitors its actual prepayment experience monthly to reassess the relative attractiveness of the security with the intent to maximize total return.
Short-term investments, composed of money market accounts and fixed income securities are available for the Company's short-term cash needs. In addition, a six-million dollar line of credit is maintained with a local bank. During 1997, the Company borrowed $1,000,000 against the line of credit for 4 days. No funds were borrowed during 1996.
Gross incurred on all catastrophe losses for the years ending 1997, 1996 and 1995 were $8,926,000, $13,350,000 and $13,936,000, respectively. Ceded incurred on all catastrophes for the years ending 1997, 1996 and 1995 were $1,313,000, $2,839,000 and $3,119,000, respectively.
The Company's earnings decreased $2,071,000 or 26% in 1997 compared to 1996. Much of this can be attributed to an adjustment to deferred acquisition costs which resulted in additional amortization of approximately $2,057,000 which was a result of an acceleration of amortization of prior years' amounts deferred.
In June, Kevin Kubik joined us as Vice President of Investments. For over 50 years, the investment of your Company's funds has been the province of the McIntyres, first my father who started his career in the investment business and then yours truly. We have always believed in making our own mistakes rather than paying someone else to make them for us. However, when our invested assets surpassed three-quarters of a billion dollars it became apparent that managing them could no longer be handled on a part-time basis. It would be nice to say we found Kevin, but in fact he found us and his timing couldn't have been better. After a career which included experience with the investment departments of two life insurance companies and as a fixed-income manager with a large money manager in Chicago, he wanted to return to Cedar Rapids to raise his family. We're glad he did.
IHC has entered into a renewable short-term arrangement with Geneve Corporation for the use of 6,500 square feet of office space as its corporate headquarters in Stamford, Connecticut.
indebtedness; as a consequence, interest expense decreased $.4 million. Selling, general and administrative expenses increased $.5 million.
We sell insurance policies predominately in Texas. As such, the health of the Texas economy and housing market has a direct impact on our business activity. The following selected statistics published monthly by the Real Estate Center at Texas A&M University are key indicators that we monitor when evaluating our current financial condition and operating results:
These favorable employment and housing economic trends, along with competitive pricing in our target markets and the creation of a new Texas coastal program in June 2015 (within the Houston metropolitan area, which includes dedicated reinsurance to allow us to write business in wind exposed areas), resulted in improved premium production during 2015. The resulting increase in earned premiums, along with improved reinsurance terms for the 2015 - 2016 treaty year, are all factors which aided in our positive results for the year ended December 31, 2015.
As of December 31, 2015 and 2014, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.
As of December 31, 2015 and December 31, 2014, the Company's investments also include certificates of deposit that mature more than one year after the balance sheet date and are reflected on the consolidated balance sheets as Long-term investments. Based on management's intent to hold to maturity, these investments are carried at cost. Cost approximates fair value based on the rates currently offered for deposits of similar remaining maturities.
● nonpayment by the issuer of its contractually obligated interest and principal payments; and
The Group has entered into a twenty year lease agreement in an office building, in which Leucadia has an equity interest, and will relocate its executive and administrative offices in the summer of 1998. The Group received certain incentives from both the City and State of New York in connection with this lease which will be recognized over the term of the lease.
Investment income has increased by approximately $1 million, or 6.5%, and $2.2 million, or 16.5%, in 1996 and 1995, respectively, primarily as a result of growth in invested assets resulting from positive cash flows. In 1996, the Company realized gains on the sale of fixed maturities, primarily U.S. Treasury Notes. During 1995 and 1994, the Company realized losses on the sale of certain investments in order to shorten the average duration of its investment portfolio.
Loss adjustment expenses for 1996 were approximately $0.7 million, or 5.4%, less than 1995. Although, lower than 1995, loss adjustment expenses were high due largely to increased payments for claims audits and outside counsel for litigated claims and increased operating costs (primarily pension and severance benefits for certain employees), a portion of which is allocated to loss adjustment expense. Loss adjustment expenses in 1995 were approximately $2.5 million, or 24.7%, higher than 1994, primarily attributable to increased claims activity and higher operating costs.