felanders/preprocessed huggingface dataset:
For the years ended December 31, 2016 and 2015, our consolidated organic revenue growth rate was 3.0% and 2.6% respectively. Additionally, each of our four segments recorded positive organic revenue growth for the year ended December 31, 2016. In the event that the gradual increases in insurable exposure units that occurred in the past few years continues through 2017 and premium rate changes are similar with 2016, we believe we will continue to see positive quarterly organic revenue growth rates in 2017.
to the same period in 2014. The net decrease of $5.8 million was mainly driven by a decrease in profit-sharing contingent commissions in the National Programs Segment as a result of increased loss ratios.
As of December 31, 2016, the fair values of the estimated acquisition earn-out payables were re-evaluated and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820-Fair Value Measurement. The resulting net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables, for the years ended December 31, 2016, 2015, and 2014 were as follows:
Total debt at December 31, 2015 was $1,153.0 million, which was a decrease of $45.5 million compared to December 31, 2014. This decrease was primarily due to the repayments of $45.6 million in principal payments, and the amortization of discounted debt related to our 4.200% Notes due 2024, of $0.1 million.
Consolidated Statements of Income for the years ended December 31, 2016, 2015 and 2014
The fair value of earn-out obligations is based upon the present value of the expected future payments to be made to the sellers of the acquired businesses in accordance with the provisions contained in the respective purchase agreements. In determining fair value, the acquired business’ future performance is estimated using financial projections developed by management for the acquired business and this estimate reflects market participant assumptions regarding revenue growth and/or profitability. The expected future payments are estimated on the basis of the earn-out formula and performance targets specified in each purchase agreement compared to the associated financial projections. These estimates are then discounted to present value using a risk-adjusted rate that takes into consideration the likelihood that the forecasted earn-out payments will be made.
The total fair value of PSP grants that vested during each of the years ended December 31, 2016, 2015 and 2014 was $18.1 million, $6.8 million and $8.4 million, respectively.
In 2016, 972,099 shares were granted under the SIP. Of the shares granted in 2016, 182,653 shares will vest upon the grantees’ completion of five years of service with the Company, and because grantees have the right to vote the shares and receive dividends immediately after the date of grant these shares are considered awarded and outstanding under the two-class method.
NOTE 12· Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities
Rental expense in 2016, 2015 and 2014 for operating leases totaled $49.3 million, $46.0 million, and $49.0 million, respectively.
Net income under ASC 606 was $19.0 million, compared to net income under ASC 605 of $26.5 million in 2017, a decrease of 28.4%.
GAAP diluted earnings per share was $0.97, compared to $1.50 in 2017, a decrease of 35.3%.
Expected Duration Units. Our expected duration units are an important indicator of our expected revenues. We have included expected duration units in this report because it is a key measure used by our management to understand and evaluate our core revenue performance and trends, to prepare our annual budget and to develop short- and long-term operational plans. In particular, the inclusion of expected duration units can provide a useful measure for period-to-period comparisons of our business. Expected duration units is a non-GAAP financial measure not recognized under GAAP and should not be used as, and is not an alternative to, comparable GAAP results. Other companies may calculate this measure differently than we do. Expected duration units has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
We believe that the amount or estimable range of reasonably possible loss, will not, either individually or in the aggregate, have a material adverse effect on our business or consolidated financial statements with respect to loss contingencies for legal and other contingencies as of December 31, 2018. However, the outcome of litigation is inherently uncertain. Therefore, if one or more of these legal matters were resolved against us for amounts in excess of management’s expectations, our results of operations and financial condition, including in a particular reporting period, could be materially adversely affected.
Financial statements and exhibits filed under this item are listed in the index appearing in Part IV, Item 15 of this report and the supplementary financial information required by this Item 8 is included in Part II, Item 7 under the caption "Quarterly Results of Operations Data," which is incorporated herein by reference.
PXRE Delaware files U.S. income tax returns for itself and all of its direct or indirect subsidiaries that satisfy the stock ownership requirements for consolidation (collectively, the "Subsidiaries"). PXRE Delaware is party to an Agreement Concerning Filing of Consolidated Federal Income Tax Returns (the "Tax Allocation Agreement") pursuant to which each U.S. Subsidiary makes tax payments to PXRE Delaware in an amount equal to the federal income tax payment that would have been payable by such Subsidiary for such year if it had filed a separate income tax return for such year. PXRE Delaware is required to provide for payment of the consolidated federal income tax liability for the entire group. If the aggregate amount of tax payments made in any tax year by a U.S. Subsidiary is less than (or greater than) the annual tax liability for such Subsidiary on a stand-alone basis for such year, such Subsidiary will be required to make up such deficiency to PXRE Delaware (or will be entitled to receive a credit if payments exceed the separate return tax liability) of the Subsidiary.
repurchase program of up to 1,000,000 shares. PXRE had approximately 11,680,000 common shares outstanding as of December 31, 1999.
On November 25, 2014, the registrant purchased certain assets of EFH Wyoming. The assets consisted of various trademarks and license rights, rights to computer programming code and other intellectual property. The registrant issued a total of 52,173,000 restricted common shares and 5,797,000 restricted Class B common shares as consideration for the EFH Wyoming asset purchase.
Statement of Cash Flows for the period November 25, 2014 through December 31, 2014
Consolidated Statement of Changes in Stockholders’ Equity for the year ended December 31, 2013
The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding.
Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses and other items. Loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur. The Company accounts for income taxes pursuant to ASC 740.
During 1999, approximately 92% of the Company's direct premiums written, including AMI, were derived from California.
In March 1994, the Company's Employee Stock Ownership Plan ("the Plan") purchased 322,000 shares of Mercury General's common stock in the open market at a price of $14.875 per share, adjusted for the two-for-one stock split effective September 16, 1997. The purchases were funded by a five year term bank loan of $5.0 million to the Plan which is guaranteed by the Company. The shares have been allocated to employees over the amortization period of the loan, with the initial allocation made in December 1994. The remaining balance of the loan of $2.0 million was retired in March 1998 with the proceeds of contributions to the Plan by the Company for the year 1997, and the remaining unallocated shares were credited to employees' ESOP balances at December 31, 1997. In August 1998, the Plan purchased 115,000 shares of Mercury General's common stock in the open market at a price of $43.05 per share. The purchases were funded by a five year term bank loan of $5 million to the Plan which is guaranteed by the Company. The shares are being allocated to the employees over a five-year period, with the initial allocation made in December 1998. Since dividends on unallocated shares held by the Plan are tax deductible if they are used for debt service, as are Company contributions to the Plan, the net, after-tax interest cost to the Company for the borrowed funds used for the Plan stock purchase is less than the effective rate of interest on the loan, which, in 1999 was 6.47%.
December 31, (Amounts in thousands) ---------------------- 1999 1998 ---- ---- Land............................. $ 6,084 $ 6,084 Buildings........................ 22,932 22,461 Furniture and equipment.......... 40,413 33,120 Leasehold improvements........... 565 410 ------- ------- 69,994 62,075 Less accumulated depreciation.... (35,773) (30,174) ------- ------- Net fixed assets................. $34,221 $31,901 ======= =======
Majestic leases 5,495 square feet of office space in Troy, Michigan as its corporate headquarters and 1,895 square feet in Hinsdale, Illinois.
Income tax expense decreased $2.2 million to $6.4 million for 2006 from $8.6 million in 2005 primarily due to the decrease in pre-tax income in 2006. The effective tax rates were 31.4% for 2006 and 33.1% for 2005.
the 2004 treaty year business; and (iii) $1.2 million primarily generated from the Medical Stop-Loss business.
The Company had net receivables from reinsurers of $73.4 million at December 31, 2006. Substantially all of the business ceded to such reinsurers is of short duration. All of such receivables are either due from the Company's affiliate, Independence American, highly rated companies or are adequately secured. No allowance for doubtful accounts was necessary at December 31, 2006.
In September 2006, the staff of the Securities and Exchange Commission (the "SEC") issued Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" (“SAB 108”). SAB 108 requires quantification of prior year immaterial uncorrected misstatements under both the "rollover approach" and the "iron curtain approach." The "rollover approach" quantifies a misstatement based on the amount of the error originating in the current year income statement, but ignores the effects of correcting the portion of the current year balance sheet misstatement that originated in prior years. The "iron curtain approach" quantifies a misstatement based on the effects of correcting the misstatement existing in the balance sheet at the end of the current year, irrespective of the misstatement's year(s) of origination. Prior to SAB 108, the Company utilized the rollover approach when quantifying misstatements. The provisions of SAB 108 must be applied to financial statements for fiscal years ending after November 15, 2006.
Due to its strong capital ratios, broad licensing and excellent asset quality and credit-worthiness, the Insurance Group remains well positioned to increase or diversify its current activities. It is anticipated that future acquisitions or other expansion of operations will be funded internally from existing capital and surplus and parent company liquidity. In the event additional funds are required, it is expected that they would be borrowed or raised in the public or private capital markets to the extent determined to be necessary or desirable. In November 2004, December 2003 and March 2003, the Company borrowed $15.0 million, $12.0 million and $10.0 million, respectively, through pooled trust preferred issuances by subsidiary trusts. In September 2003, the Company entered into a $12.5 million line of credit, which was increased to $15.0 million in 2006, all of which was drawn down. See Note 11 of the Notes to Consolidated Financial Statements in Item 8.
Products”). These products are now approved in the majority of states, although the Company does not anticipate writing
The Company's corporate headquarters is located in a two story office building in Lake Mary, Florida which is owned by the Company. The Company occupies the entire second floor of the building. Of the remaining rentable space, 8,467 square feet were leased at year end and the remaining balance of 1,200 square feet was available for lease. Since year end, the Company has contracted to lease the remaining leasable space.
suggests that earlier estimates be revised. Thus, variations in the amortization of the deferred policy acquisition costs, from one period to the next, are a normal aspect of universal life insurance business and are generally attributed to the recognition of current and emerging experience in accordance with the principles of FAS 97.
Product profitability is affected by several different factors, such as mortality experience ( actual versus expected), interest rate spreads (excess interest earned over interest credited to policyholders) and controlling policy acquisition costs and other costs of operation. The results of any one reporting period may be significantly affected by the level of death claims or other policyholder benefits incurred due to the Company's relatively small size.
(j) Certain proceeds from a note payable (note 9) that are treated as shareholders' equity for statutory purposes are treated as a liability under generally accepted accounting principles.
A reconciliation of net income (loss) for the years ended December 31, 1995, 1994 and 1993 and shareholders' equity as of December 31, 1995 and 1994 between the amounts reported on a statutory basis and the related amounts presented on the basis of generally accepted accounting principles is as follows:
The mortality table used in calculating benefit reserves is the 1965-1970 Basic Select and Ultimate for males.
The Company’s investments in fixed maturity and equity securities are classified as available-for-sale and reported at estimated fair value. The fair values of fixed maturity and equity securities are determined by management after taking into consideration several sources of data. The Company’s valuation policy dictates that publicly available prices are initially sought from several third party pricing services. In the event that pricing is not available from these services, those securities are submitted to brokers to obtain quotes. Lastly, securities are priced using internal cash flow modeling techniques. These valuation methodologies commonly use reported trades, bids, offers, issuer spreads, benchmark yields, estimated prepayment speeds, and/or estimated cash flows.
Total direct deposits decreased $152.3 million during 2009 as compared to 2008. Total direct deposits (including internal exchanges) were as follows:
Government and government agencies exposure relates to government issued securities including Canadian government bonds and US Treasury bonds. The issuer identified as having the largest unrealized loss in the available-for-sale portfolio was US Treasuries. US Treasury interest rates rose significantly during 2009. Government fiscal and monetary policy has stabilized credit conditions across much of the world, and, as a result, the quality premium for US Treasury bonds has diminished. In addition, generally more optimistic economic sentiment and some concerns about potential future inflationary pressures have put pressure on US Treasuries. As a result, prices for US Treasury and Agency securities fell during 2009. The Company evaluated the near-term prospects of the issuer in relation to the severity and duration of the unrealized loss and does not consider the position to be impaired as of December 31, 2009.
The Company’s impairment losses were $9.9 million and $8.3 million for the years ended December 31, 2009 and 2008, respectively, net of VOBA amortization. The Company did not have any impairment losses for the year ended December 31, 2007. During 2009, the Company impaired its holdings of CIT Group, Inc. and Lear Corporation for $1.6 million and $1.1 million, respectively, due to bankruptcy filings of the issuers. Additionally, the Company recorded a $2.0 million gross impairment on an upper tier 2 capital security of Lloyds Banking Group due to the intent to sell the security during the year.
The change in equity related gains (losses) principally relates to increases in net losses on futures contracts during 2009 as compared to net gains on futures contracts in 2008.
A shock in mortality rates will generally not lead to a change in the assumptions underlying the measurement of the insurance liabilities as management will recognize that the shock is temporary. Life insurers are also exposed to longevity risk.
Prudential Financial and the Company employ a Capital Protection Framework ("Framework”) to ensure that sufficient capital resources are available to maintain adequate capitalization and competitive RBC ratio and solvency margins under various stress scenarios. The Framework incorporates the potential impacts from market related stresses, including equity markets, real estate, interest rates, and credit losses.
Cash and cash equivalents include cash on hand, amounts due from banks, certain money market investments, funds managed similar to regulated money market funds, other debt instruments with maturities of three months or less when purchased, other than cash equivalents that are included in "Fixed maturities, available-for-sale, at fair value,” and receivables related to securities purchased under agreements to resell (see also "Securities sold under agreements to purchase" below.) The Company also engages in overnight borrowing and lending of funds with Prudential Financial and affiliates which are considered cash and cash equivalents.
The carrying value of non-income producing assets included less than $1 million in available-for-sale fixed maturities, as of December 31, 2018. Non-income producing assets represent investments that had not produced income for the twelve months preceding December 31, 2018.
"Policyholders' benefits (including change in reserves) ceded" includes $(4) million, $(0.2) million and $(0.8) million of unaffiliated activity for the years ended December 31, 2018, 2017 and 2016, respectively.
AOCI represents the cumulative OCI items that are reported separate from net income and detailed on the Statements of Comprehensive Income. Each of the components that comprise OCI are described in further detail in Note 2 (Foreign Currency Translation Adjustment and Net Unrealized Investment Gains (Losses)). The balance of and changes in each component of AOCI as of and for the years ended December 31, are as follows:
The Company has not conducted any active operations since the divesture of the ATM machine sales operations as of October 31, 2008. No revenue has been generated by the Company for the fiscal years ended April 30, 2017 and 2016. It is unlikely the Company will have any revenues unless it is able to affect an acquisition or merger with an operating company, of which there can be no assurance. It is management’s assertion that these circumstances may hinder the Company’s ability to continue as a going concern. The Company’s plan of operation for the next twelve months shall be to continue its efforts to locate suitable acquisition candidates.
On September 19, 2016, three of our shareholders, owning 15,638,084 shares of common stock, or approximately 70% of the total outstanding shares, approved an amendment to our articles of incorporation to change our corporate name from Prevention Insurance.com to AIM BIG Resources, Ltd. (the “Charter Amendment”). On November 18, 2016, we filed a Definitive Information Statement with the Securities and Exchange Commission. We mailed the Definitive Information Statement to our shareholders on November 21, 2016. In connection with the Charter Amendment, we filed an Issuer Company-Related Action Notification Form with FINRA to receive approval of the name change. FINRA denied the corporate action request due to the prior regulatory history of two of the principal shareholders which occurred in Malaysia. Management of the Company is actively seeking a change of control transaction pursuant to which the current controlling shareholders would assign to a third party or surrender their equity interest in the Company.
The Company recognizes compensation cost based upon the fair value of stock options at the grant date using the Black-Scholes pricing model. During the years ended April 30, 2017 and 2016, the Company did not issue any shares for services nor did the Company issue any options as stock based compensation to any officers, directors, or non-employees.
As of April 30, 2017, the Company was authorized to issue 10,000,000 shares of preferred stock with a par value of $0.0001.
Policy Acquisition Costs. Policy acquisition costs, such as commissions, premium taxes and certain other underwriting and agency expenses that vary with and are primarily related to the production of business, are deferred and amortized over the effective period of the related insurance policies and in proportion to the premiums earned. The method followed in computing deferred policy acquisition costs limits the amount of such deferred costs to their estimated realizable value. The estimation of net realizable value takes into account the premium to be earned, related investment income over the claim
The fixed maturity investments with continuous unrealized losses for less than twelve months were primarily due to the impact of higher market interest rates rather than a decline in credit quality. There are $55.9 million in fixed maturity securities, at fair value, that at December 31, 2004, had been below amortized cost for over twelve months. Of the $2.3 million of unrealized losses on such securities, $0.7 million relates to securities which carry A or higher debt ratings and have declined in fair value roughly in line with market interest rate changes. The remaining $1.6 million of unrealized losses are comprised of airline enhanced equipment trust certificates (EETC) as follows:
Harleysville Group’s statutory combined ratio increased to 123.2% for the year ended December 31, 2003, from 101.9% for the year ended December 31, 2002. Such increase was due to a higher underwriting loss in both commercial lines and personal lines, primarily resulting from the adverse loss development and catastrophe losses.
The Company also owns a 6,324 square foot funeral home in Baker, Louisiana with a total cost of $527,000. This facility, acquired as a result of a 1995 acquisition, is owned and operated by a subsidiary, FHA.
Because CICA owns its principal offices and FHA owns its facilities, neither CICA nor FHA makes any lease payments on these properties.
Combined had revenues of $15.7 million for the year ended December 31, 2000, the last full year such data was available, and assets and stockholders' equity as of December 31, 2000 were $24.9 million and $6.3 million, respectively.
Endowment benefits increased 10.1% from $4,895,492 in 2000 to $5,389,082 in 2001. In 1999, such expenses were $5,048,973. Beginning in late 1990, CICA introduced a new series of international policies that carried an immediate endowment benefit of an amount elected by the policyowner. This endowment is factored into the premium of the policy and is paid annually.
Invested assets increased to $206,695,811 in 2001 from $194,203,327 in 2000, an increase of 6.4%. An 8.2% increase in fixed maturities available-for-sale more than offset a 4.3% decrease in policy loans. At December 31, 2001 and 2000, fixed maturities have been categorized into two classifications: fixed maturities held-to-maturity, which are valued at amortized cost, and fixed maturities available-for-sale which are valued at fair value. Fixed maturities held to maturity, amounting to $5,569,899 at December 31, 2001 consist of U.S. Treasury securities. Management has the intent and believes the Company has the ability to hold the securities to maturity.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supersedes and amends SFAS No. 121 and relevant portions of SFAS No. 30. SFAS No. 144 is required to be adopted on January 1, 2002. Because of the extensive effort needed to comply with adopting SFAS No. 144, and its close relationship to SFAS No. 141 and 142, it is not practicable to reasonably estimate the impact of adopting the Statement on the Company's financial statements at the date of this report.
The Company believes that its leased and owned properties are adequate for its current needs.
As an inducement to the initial preferred stock shareholders, warrants to purchase 45,402,996 shares of common stock at an exercise price of one-tenth of one cent ($.001) per share were issued with a five-year expiration period. Such warrants were valued at approximately $533,000 using the Black-Scholes pricing model. Additionally, the Series B preferred shares were issued at a twenty-five
The Company has experienced operating losses (after accretion of mandatorily redeemable convertible preferred stock, and accrued dividends on mandatorily redeemable preferred stock and equity preferred stock) of approximately $2,713,000 and $3,058,000 for the fiscal years ended May 31, 2010 and 2009, respectively. Despite increased revenue and the continued decline of operating
Interest expense for fiscal 2010 was $956,973 as compared with $605,045 in fiscal 2009. The increase in interest expense is primarily attributable to the bridge-financing arrangement forbearance agreement and increased debt and stock issued as incentive for debt in 2010. Components of interest expense are comprised of the following:
The net loss ratio for the year ended December 31, 2013 was 71.8% as compared to the 76.4% reported for 2012. The gross loss ratio before reinsurance was 67.8% for the year ended December 31, 2013 as compared to 74.8% for the prior year. The lower gross and net loss ratios for the year ended December 31, 2013 were aided by lower catastrophe losses coupled with increased favorable prior year loss reserve development. The net loss ratios for the years ended December 31, 2013 and 2012 included catastrophe losses of $6.0 million and $9.5 million, respectively. During the years ended December 31, 2013 and 2012, the Standard Commercial Segment reported favorable loss reserve development of $5.2 million and $3.7 million, respectively. The Standard Commercial Segment reported a net expense ratio of 32.2% for the year ended December 31, 2013 as compared to 33.2% reported for the same period the prior year. The decrease in net expense ratio was due primarily to the increased premium volume.
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 bear an initial interest rate of 8.28% until September 15, 2017, at which time interest will adjust 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, 2013, the balance of our Trust II subordinated debt was $25.8 million.
AAG and GALIC rent office space in Cincinnati totaling approximately 146,000 square feet under leases expiring primarily in 2006. Several of the Company's non-insurance subsidiaries lease marketing and administrative offices in locations throughout the United States.
American Memorial's home office building in Rapid City, South Dakota, contains approximately 44,000 square feet, of which approximately four- fifths is utilized for Company purposes. The remainder of the building is leased to unaffiliated tenants. American Memorial also leases marketing and administrative space in several locations throughout the United States.
Annuity Benefits Annuity benefits reflect interest credited to annuity policyholders' funds accumulated. The majority of GALIC's fixed rate annuity products permit GALIC to change the crediting rate at any time (subject to minimum interest rate guarantees of 3% to 4% per annum). As a result, management has been able to react to changes in market interest rates and maintain a desired interest rate spread without a substantial effect on persistency. Annuity benefits increased 7% in 1996 and 5% in 1995 due primarily to an increase in average annuity benefits accumulated.
Extraordinary items, net of tax (6.0) (0.2) (1.7) Cumulative effect of accounting change, net of tax - - (0.5)
Certain securities classified as "held to maturity" were sold for losses of $0.2 million in both 1996 and 1995 and $0.6 million in 1994, due to significant deterioration in the issuers' creditworthiness.
In connection with the anticipated establishment of a new unsecured line of credit, the Company transferred all the outstanding stock of GALIC to AAG Holding Company, Inc., a wholly-owned subsidiary of the Company, on November 1, 1996. In connection with that transaction, AAG Holding assumed all of the Company's obligations under the 9-1/2% Senior Notes, 11-1/8% Senior Subordinated Notes and the bank lines of credit. The Company has guaranteed the obligations of AAG Holding under this indebtedness.
During 1996, a pretax extraordinary loss of $8.2 million was realized on the repurchase of $78.0 million principal amount of Notes.
If AAG had expensed the fair value of these options, the effect on net earnings and earnings per share in 1996 would not have been material.
December 31, 1996 1995 Deferred tax assets: Net operating loss carryforwards $47.6 $47.9 Accrued expenses 13.8 13.9 Investment securities, including affiliate 31.9 36.7 Valuation allowance for deferred tax assets (38.6) (50.5)
There have been no material changes to any of our valuation techniques from what was used as of December 31, 2014. Since the fair value of a financial instrument is an estimate of what a willing buyer would pay for our asset if we sold it, we will not know the ultimate value of our financial instruments until they are sold. We believe the valuation techniques utilized provide us with the best estimate of the price that would be received to sell our assets or transfer our liabilities in an orderly transaction between participants at the measurement date.
Deferred policy acquisition costs, which represent the deferral of ceding commission expense related to premiums not yet earned, increased from $768,259 at December 31, 2014 to $1,066,789 at December 31, 2015. The increase in deferred policy acquisition costs in 2015 was due to the increase in both net premiums written and unearned premiums assumed under the Reinsurance Agreement compared to the prior year. The ceding commission rate under the Reinsurance Agreement is 37%.
AmerInst paid two semi-annual dividends of $0.25 per share during 2015 and 2014. During 2015, the total dividend amount was reduced by $12,056 which represents a write back of uncashed dividends issued prior to 2010 to shareholders that we have been unable to locate. During 2014, the total dividend amount was reduced by $10,054, which represents a write back of uncashed dividends issued prior to 2009 to shareholders that we were unable to locate. Since AmerInst began paying consecutive dividends in 1995, our original shareholders have received approximately $20.87 in cumulative dividends per share, which when measured by a total rate of return calculation has resulted in an effective annual rate of return of approximately 8.75% from the inception of the Company, based on a per share purchase price of $8.33 paid by the original shareholders, and using a book value of $26.97 per share as of December 31, 2015.
The consolidated financial statements include our estimated liability for unpaid losses and loss adjustment expenses (“LAE”) for our insurance operations. LAE is determined utilizing both case-basis evaluations and
The cost or amortized cost, gross unrealized holding gains and losses, and estimated fair value of fixed maturity investments, by major security type, and equity securities at December 31, 2015 and 2014 are as follows:
The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion in conjunction with Part II, Item 6. “Selected Financial Data”, and our consolidated financial statements and the related notes contained elsewhere in this Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (“Annual Report”).
Increases in premium estimates relating to prior years’ contracts were $39.3 million for the year ended December 31, 2015 compared to decreases of $12.1 million for the year ended December 31, 2014. The increases in premium estimates for the year ended December 31, 2015 were primarily due to two contracts where the client reported writing significantly more business than initially estimated.
$4.0 million of net adverse underwriting loss development relating to non-standard auto contracts, primarily due to the inability of cedents to promptly react to increasing frequency and severity trends, resulting in underpriced business and adverse selection;
The following table sets forth net income (loss) and the year over year changes for the Corporate Function for the years ended December 31, 2016, 2015 and 2014:
In addition, each of Third Point Re and Third Point Re USA, as Class 4 insurers, is prohibited from declaring or paying in any financial year dividends of more than 25% of its respective total statutory capital and surplus (as shown on its previous financial year’s statutory balance sheet) unless it files (at least seven days before payment of such dividend) with the BMA an affidavit signed by at least two directors (one of whom must be a Bermuda resident director if any of the insurer’s directors are resident in Bermuda) and the principal representative stating that it will continue to meet its solvency margin and minimum liquidity ratio.
The increase in cash flows from operating activities in the year ended December 31, 2015 compared to the year ended December 31, 2014 is primarily due to higher float generated from our reinsurance operations in the year ended December 31, 2015 compared to the year ended December 31, 2014. Excess cash generated from our operating activities is then invested by Third Point LLC, which is reflected in the cash used in investing activities.
We evaluate our operations by monitoring key measures of growth and profitability, including net combined ratio (non-GAAP) and operating leverage. We target a net combined ratio (non-GAAP) in the low-to-mid 90s while seeking to maintain optimal operating leverage in our insurance subsidiaries commensurate with our A.M. Best rating objectives.
Net combined ratio before amortization and impairment (non-GAAP). The net combined ratio before amortization and impairment (non-GAAP) is a measure of an insurance company’s overall underwriting profit. This is the sum of the net loss ratio and net operating expense ratio before amortization and impairment (non-GAAP). If the net combined ratio before amortization and impairment (non-GAAP) is at or above 100 percent, an insurance company cannot be profitable without investment income, and may not be profitable if investment income is insufficient. Management believes that this measure of underwriting profitability provides a more useful comparison to the combined ratio of other insurance companies involved in less acquisitions. Our definition of net operating expense ratio before amortization and impairment is as follows:
Acquisition costs and other underwriting expenses. Acquisition costs and other underwriting expenses increased by $33.0 million, from $517.6 million for the year ended December 31, 2017 to $550.5 million for the year ended December 31, 2018. The increase was primarily due to premium growth.
Underwriting income; net combined ratio (non-GAAP). Underwriting income increased from $44.1 million for the year ended December 31, 2017 to $101.5 million for the year ended December 31, 2018. The increase was primarily due to domestic organic growth. Our A&H net combined ratio decreased from 91.7% for the year ended December 31, 2017 to 83.5% for the year ended December 31, 2018. The net combined ratio decrease was primarily as a result of a lower net loss ratio.
For more information on our reinsurance agreements, see Note 10 “Reinsurance” in the notes to our Consolidated Financial Statements.
On November 19, 2018, we issued 5,750,000 shares of common stock in a public offering. The common stock offering was priced at $24 per share, resulting in net proceeds of approximately $132.2 million, after deducting underwriting discount and issuance expenses. Underwriting discount and issuance expenses of approximately $5.8 million were charged to additional paid-in capital.
Pro forma for the repayment of our Credit Agreement and 2019 Credit Agreement entered on February 25, 2019.
- -------- No cash dividends were paid during 1992. Cash dividends of $456,465 and $969,798 were paid during 1994 and 1993, respectively. No cash dividends were paid during 1996 or 1995.
As previously stated, the Company transitioned its Tennessee operations from a sales program to a services program for which it generates service fees. Due to the restructuring of the Company's operations, the Company is able to provide such services in a more cost efficient manner. Thus, although service revenue is less than what was generated by sales revenue, management expects pre-tax operating profit from such services will equal or even exceed what was generated by sales production due to significantly reduced costs.
Excluding the above-mentioned items and amortization of goodwill in 1994, the Company would have reported an after-tax loss of $1,393,000 (or $0.22 per share after an estimated tax benefit of $833,000) in 1995 compared to net income of $407,000 (or $0.06 per share after providing for income taxes of $304,000) in 1994.
The Company entered into an agreement with USBA Holdings, Ltd. ("USBA") in January 1996. In connection with this transaction, the Company paid USBA $1.25 million to assist in the preparation and implementation of a five-year marketing plan. The Company had the right to recover $1 million under certain circumstances. In addition, USBA was given warrants to purchase up to 1 million shares of the Company's common stock at $2.50 per share which may have been adjusted to approximately $1.44 per shares under certain circumstances. The warrants, which were exercisable after January 29, 1997, had an estimated value of $315,000. Both the payment and the value of the warrants were capitalized and were being amortized over an expected benefit period of five years.
A summary of changes in outstanding common stock options during 1996, 1995, and 1994 follows:
For earnings per share purposes, the weighted average number of shares of common stock and common stock equivalents outstanding for the periods presented is as follows: 6,218,898 in 1996; 6,201,318 in 1995; and 6,494,388 in 1994.
Unrealized Gain (Loss) Common Paid-In On Retained Stock Capital Investments Earnings Total ----- --------- ----------- -------- ---------- Bal., December 31, 1993 3,587 $ 1,971,328 $ 0 $ 564,904 $ 2,539,819 - -----------------------
Unrealized gain on investments available for sale 0 0 111,183 0 111,183 ----- --------- -------- ------- ----------
Due to Dentcare Delivery Systems, 14,089 (88,084) Inc. Federal income tax payable (16,543) 52,291 Deferred federal income tax payable (4,462) (5,797) -------- -------- Net cash provided by operating activities 259,541 382,826 -------- --------
The Company capitalized its equipment leases and depreciates them over the useful life of the assets. The corresponding lease obligations reflect the present value of the future rental payments, discounted at the interest rate implicit in the lease:
The provision for income taxes consisted of the following at December 31:
On October 3, 1984, the Company entered into employment agreements with Drs. Stephen J. Cuchel, Martin Kane, and Bruce H. Safran, each a founder, principal stockholder, executive officer and director of the Company. These agreements may be terminated by either party upon thirty days written notice. Pursuant to these agreements, Drs. Cuchel, Kane and Safran each devote substantially all of their time and efforts to the business of the Company.
In February 1994, the New York State Insurance Department and Dentcare entered into an agreement which required Dentcare to seek reimbursement of certain expenses from the Company for expenses paid by Dentcare during 1985 and 1986, which were originally incorporated as part of the loan between the Company and Dentcare. The Insurance Department agreed that this reimbursement would be met by a reduction of the loan by the Company to Dentcare. On February 23, 1994, the Company and Dentcare agreed to this reimbursement.
Service fee income from this affiliate amounts to $2,253,903 and $2,284,035 in 1995 and 1994, respectively.
(2) The category "Noncatastrophe reinsurance" includes coverages related to noncatastrophe reinsurance risks assumed by us. These coverages primarily include exposure to claims from accident and health, finite, satellite and aviation risks assumed by us.
We have a revolving credit and term loan agreement with a syndicate of commercial banks. During 1999 we increased our borrowings under the facility to $200.0 million from $50.0 million at December 31, 1998. The additional funds drawn during 1999 increased the liquidity at the holding company, RenaissanceRe, and were available, if necessary, to be contributed to the operating subsidiaries following a large catastrophic event. During 2000, we renegotiated our revolving credit facility and repaid $200.0 million of the then outstanding balance. Interest rates on the facility are based on a spread above LIBOR and averaged 7.03% during 2000, compared to 5.76% in 1999. Our revolving credit agreement contains certain financial covenants including requirements that consolidated debt to capital does not exceed a ratio of 0.35:1; consolidated net worth must exceed the greater of $100.0 million or 125% of consolidated debt; and 80% of invested assets must be rated BBB-- or better. Under the terms of the agreement, and if we are in compliance with the covenants thereunder, we have access to the $302.0 million. We were in compliance with all the covenants of this revolving credit and term loan agreement at December 31, 2000.
At December 31, 2000, we held cash and investments totaling $1,082.0 million, compared to $1,059.8 million in 1999, with net unrealized appreciation of $6.8 million, compared to unrealized loss of $18.5 million in 1999.
average rate paid on all interest-bearing liabilities would have been 4.99% in 1999, 5.28% in 1998 and 5.34% in 1997 and interest-bearing liabilities would have averaged $2.51 billion, $2.34 billion and $2.38 billion in 1999, 1998 and 1997, respectively. The decreases in the overall rates paid in 1999 result primarily from a generally lower interest rate environment and the continued reduction of crediting rates on certain closed blocks of business.
VARIABLE ANNUITY FEES are based on the market value of assets in separate accounts supporting variable annuity contracts. Such fees totaled $6.6 million in 1999, $3.6 million in 1998 and $1.7 million in 1997. These increased fees reflect growth in average variable annuity assets, due to increased market values, the receipt of variable annuity premiums and net exchanges into the separate accounts from the fixed accounts of variable annuity contracts, partially offset by surrenders. Variable annuity fees represent 1.5% of average variable annuity assets for each of 1999, 1998 and 1997. Variable annuity assets averaged $417.8 million during 1999, $234.1 million during 1998 and $111.8 million during 1997. Variable annuity premiums, which exclude premiums allocated to the fixed accounts of variable annuity products, aggregated $66.7 million in 1999, $80.2 million in 1998 and $56.3 million in 1997. These amounts represent 19%, 47% and 82% of variable annuity reserves at the beginning of the respective periods. Transfers from the fixed accounts of the Company's variable annuity products to the separate accounts (see "Growth in Average Invested Assets") are not classified in variable annuity premiums (in accordance with generally accepted accounting principles). Accordingly, changes in variable annuity premiums are not necessarily indicative of the ultimate allocation by customers among fixed and variable account options of the Company's variable annuity products.
Footnotes to the table of Rated Bonds by Rating Classification -----------------------------------------------------------------------
Cash provided by operating activities was $668.7 million in 2004, an increase of $140.6 million compared to 2003 and $493.6 compared to 2002. Our cash provided by operating activities has increased in
The average duration of our claims in many of our lines of business is relatively short and, accordingly, our investment portfolio has a relatively short duration. As we expand the directors’ and officers’ liability and errors and omissions liability components of our diversified financial products lines of business, which have a longer claims duration, the average duration of our claims is expected to increase. We are taking these changes into consideration in determining the duration of our investment portfolio. We have also kept the duration of our portfolio relatively short during the recent period of very low interest rates in expectation of higher interest rates. We have started to extend the duration and maturities of our investments to take advantage of higher long-term market interest rates.
Our actuaries utilize standard actuarial techniques in making their reserve determinations. These techniques may require a high degree of judgment. Reserves are estimates, and changed conditions can cause changes in the estimates. However, we believe that our review process is effective, such that any required changes are recognized in the period of change as soon as the need for the change is evident. Reinsurance recoverables offset our gross reserves based on the contractual terms of our reinsurance agreements.
The table below shows our recorded net reserves at December 31, 2004 by line of business, the actuarial reserve point estimate, and the high and low ends of the actuarial reserve range as determined by our reserving actuaries. The point estimates represent our actuaries’ estimate of the most likely amount that will ultimately be paid to settle the net reserves we have recorded at a particular point in time. While, from an actuarial standpoint, a point estimate is considered the most likely amount to be paid, there is
Total net reserves for our discontinued lines, which primarily include accident and health business, increased $31.4 million in 2004. The percentage of net incurred but not reported reserves to total reserves for discontinued lines decreased to 36% as claims continued to be reported. As a result of adverse development in our discontinued line of business, we strengthened our reserves on this line to bring them above our actuarial point estimate.