felanders/preprocessed huggingface dataset:
Marine results were profitable in 1993 and 1992 compared with near breakeven results in 1991. Results in several of our smaller specialty classes deteriorated in 1993 compared with the prior two years, due primarily to an increased frequency of large losses.
Pacific Indemnity, Continental Casualty and Fibreboard have entered into a trilateral agreement, subject to court approval, to settle all present and future asbestos-related bodily injury claims resulting from insurance policies that were, or may have been, issued to Fibreboard by the two insurers. The trilateral agreement will be triggered if the global settlement agreement is disapproved. Pacific Indemnity's obligation under the trilateral agreement is therefore similar to, and not duplicative of, that under those agreements described above.
Other than Fibreboard, our remaining asbestos exposures are mostly limited to peripheral regional defendants, principally distributors. We continue to receive new asbestos claims and new exposures on existing claims as more peripheral parties are drawn into litigation to replace the now defunct mines and bankrupt manufacturers. The recent claims are complex in that they include significant and yet unresolved liability issues. Further, we still do not know the universe of potential claims.
We have also increased our emphasis on managed care outside New York by offering preferred provider organizations, which are networks of hospitals, clinics and doctors that offer cost savings compared with traditional indemnity plans. Ancillary coverages, like dental, long-term disability and group life, complete the product offering to this market segment.
Gross investment income increased 7% in 1993 compared with 8% in 1992. Premium receipts in excess of payments for benefits and expenses, together with investment income, continue to provide cash for new investments. New cash available amounted to $225 million in 1993 compared with $120 million in 1992 and $115 million in 1991. The increase in new cash in 1993 was due to the significant increase in group health premiums and to new single premium sales.
Investment gains were realized by the Corporation and its insurance subsidiaries in 1993, 1992 and 1991. Such gains before taxes consisted of the following:
A restructuring of the equity security portfolio begun in 1992 resulted in significant realized investment gains in 1992 and 1993. In addition, approximately $75 million of investment gains were realized in 1992 from the Corporation's partial sale of its investment in Sun Alliance.
health insurance income after taxes included similar benefits of $5 million and $3 million in 1993 and 1992, respectively.
In addition to previous authorizations, on November 1, 2017, November 10, 2016 and September 22, 2015, MetLife, Inc. announced that its Board of Directors authorized $2.0 billion, $3.0 billion and $739 million, respectively, of Common Stock repurchases. During the years ended December 31, 2017, 2016 and 2015, MetLife, Inc. repurchased 56,599,540 shares, 6,948,739 shares and 39,491,991 shares under these repurchase authorizations for $2.9 billion, $372 million and $1.9 billion, respectively. At December 31, 2017, MetLife, Inc. had $1.8 billion remaining under its Common Stock repurchase authorization.
(4)The sum of the GAAP loss and loss adjustment expense ratio and the total underwriting expense ratio.
Total direct premiums written increased to $113.3 million in 1998 from $106.3 million in 1997. Our direct written premiums have increased 6.5% in 1998 due to policyholder growth and a 7.6% homeowner rate increase that went into effect October 1, 1998. With the continued growth in our homeowners business, our product mix in terms of exposures at December 31, 1998 was 16% homeowners and 84% personal automobile. Net premiums written in 1998 decreased to $66.2 million, or 11.7% from 1997. The decrease in net premiums written for 1998 was due to the change in quota share reinsurance contracts whereby we ceded more premiums in 1998 than in 1997. Net premiums earned for 1998 were $64.0 million compared to $67.8 million for 1997. The 5.6% decrease in net premiums earned in 1998 is also as a result of changes in the terms and timing of our reinsurance contracts which resulted in more premiums being ceded in 1998 than in 1997.
Property and equipment are recorded at cost, net of accumulated depreciation. Depreciation is computed either on the straight-line or accelerated methods over periods ranging from three to seven years. Maintenance, repairs and minor renewals are charged to expense as incurred.
As a result of recent favorable development in estimates of prior years' reserves on auto liability business, the provision for losses and loss adjustment expenses in 1999, 1998 and 1997 decreased by $6,964,000, $3,622,000, and $6,752,000, respectively. Management believes 1994 legislative tort reform in the State of Michigan produced better than expected loss experience and resulted in reductions in prior years' loss reserves in 1999 and 1998. The 1994 legislation became effective in 1996 and the effects were uncertain at that time. As time has passed, the data and effects of that reform have stabilized and management has reduced reserves related to prior accident years accordingly.
Premiums written through the Company's sales agency approximated 90% of direct written premiums in each of the years 1999, 1998 and 1997. Additionally, in each of these years, the top ten agents produced, in aggregate, approximately 35% of direct written premiums.
FIC's net income is affected by its equity interest in InterContinental Life Corporation ("ILCO") and ILCO's insurance subsidiaries. Net income for the year ended December 31, 1997 includes $3.8 million ($0.68 per common share on a diluted basis) resulting from ILCO's sale of its interest in Bridgepoint Square Offices.
The statutory earnings of Family Life as required to be reported to insurance regulatory authorities before interest expense, capital gains and losses, and federal income taxes were $8,829,000 at December 31, 1999, as compared to $12,930,000 at December 31, 1998 and $13,625,000 at December 31, 1997. These statutory earnings are the source to provide for the repayment of the indebtedness incurred in connection with the acquisition of Family Life.
The guaranty commitments of FIC under the loans incurred in connection with the acquisition of Family Life (after taking into account the repayments and new loans which occurred in July, 1993) relate to: (i) the $22.5 million note issued by Family Life Corporation to Investors Life Insurance Company of North America and (ii) the $34.5 million loaned by Investors-NA to two subsidiaries of FIC.
The level of short-term investments at the end of 1999 was $24.8 million, as compared to $27.6 million as of December 31, 1998. The fixed maturities available for sale portion represents $77.5 million of investment assets as of December 31, 1999, as compared to $79.4 million at the end of 1998.
The amortized cost of fixed maturities available for sale as of December 31, 1999 was $78.3 million representing a net unrealized loss of $0.8 million. This unrealized loss principally reflects changes in interest rates from the date the respective investments were purchased. To reduce the exposure to interest rate changes, portfolio investments are selected so that diversity, maturity and liquidity factors approximate the duration of associated policyholder liabilities.
In June, 1998, the FASB issued FAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, (collectively referred to as derivatives) and for hedging activities. FAS No. 133 is applicable to financial statements for all fiscal quarters of fiscal years beginning after June 15, 1999. As the Company does not have significant investments in derivative financial instruments, the adoption of FAS 133 is not expected to have a material impact on the Company's results of operations, liquidity or financial position.
During 2003, the Company expanded the breadth of services that it provides to its customers. As a result, the Company is providing information regarding the Company’s two major business segments, Title Insurance and Lender Services. Other non-reportable business segments are reported in a category called Corporate and Other. These groupings of business units are used by Company management to manage the Company’s operations. The Company’s dominant segment is Title Insurance, which in 2003 accounted for 97.4% of the Company’s operating revenues.
Net Income. The Company reported net income of $192.1 million or $10.31 per share on a diluted basis for 2003, compared to a net income of $149.4 million or $8.04 per share on a diluted basis for 2002 and a net income of $60.3 million or $3.24 per share on a diluted basis in 2001. All three years were affected by one-time write-offs of intangibles and capitalized software and exit and termination costs. Exclusive of these items, net income was $195.5 million or $10.49 per diluted share in 2003, $158.0 million or $8.51 per diluted share in 2002 and $94.2 million or $5.06 per diluted share in 2001.
In each of the preceding three years, the Board of Directors has approved stock repurchase programs. In February 2002 and 2003, the Board approved one year authorization programs allocating $40.0 million in each year to repurchase up to 1.25 million shares or 7% of the Company’s existing stock over the following twelve months. In December 2001, the Board of Directors approved a program allocating $25.0 million to repurchase up to 1.25 million shares or 7% of the Company’s outstanding stock over the following twelve months. In February 2004, the Board approved a one-year program allocating $50.0 million to repurchase up to 1.25 million shares or 7% of the Company’s existing common stock over the following twelve months. As a result of these programs, the Company has repurchased approximately 572,000 shares for an aggregate purchase price of $19.1 million.
For 2016, property and casualty business accounted for approximately 91.5 percent of our net premiums earned, with the majority of which, 92.5 percent, was generated from commercial insurance. Life insurance business made up approximately 8.5 percent of our net premiums earned, of which over 73.0 percent was generated from traditional life insurance products.
Net cash outflow related to the Company's annuity business was $83.7 million in 2016 compared to a net cash outflow of $129.7 million and $77.7 million, respectively, in 2015 and 2014. This result is attributed to the activity described previously.
The following table displays a summary of cash sources and uses in 2016, 2015 and 2014:
At December 31, 2016 and 2015, we had a number of securities with fair value less than the cost basis. The total unrealized loss on these securities was $34.8 million at December 31, 2016, compared with $28.1 million at December 31, 2015. At December 31, 2016, the largest pre-tax unrealized loss on an individual equity security was $0.2 million. Our rationale for not recording OTTI charges on these securities is discussed in Part II, Item 8, Note 2 "Summary of Investments."
We are unable to reasonably quantify the impact of changes in our key assumptions utilized to establish individual case-basis reserves on our total reported reserves because the impact of these changes would be unique to each specific case-basis reserve established. However, based on historical experience, we believe that aggregate case-basis reserve volatility levels of 5.0 percent and 10.0 percent can be attributed to the ultimate development of our net case-basis reserves. The impact to pre-tax earnings would be a decrease if the reserves were to be adjusted upwards and an increase if the reserves were to be adjusted downwards. The table below details the impact of this development volatility on our reported net case-basis reserves at December 31, 2016:
The table that follows is a reconciliation of the amortized cost (cost for equity securities) to fair value of investments in held-to-maturity and available-for-sale fixed maturity and available-for-sale equity securities as of December 31, 2016 and 2015.
The following table summarizes information regarding the stock options outstanding and exercisable at December 31, 2016:
The Company provides comprehensive management and consulting services to managed care organizations, including health maintenance organizations ("HMOs") in Tennessee and (until
REVIEW OF CONSOLIDATED RESULTS OF OPERATIONS - 2005 COMPARED TO 2004
Beginning July 1, 2002, TennCare implemented an 18-month stabilization program, which entailed changes to TennCare's contracts with MCOs, including UAHC-TN. During that period, MCOs are generally compensated for administrative services only (commonly called "ASO"), earned fixed administrative fees, were not at risk for medical costs in excess of targets established based on various factors, were subject to increased oversight, and could incur financial penalties for not achieving certain performance requirements. Through successive contractual amendments, TennCare extended the ASO reimbursement system applicable to UAHC-TN, first through June 30, 2004, then through December 31, 2004, and then through June 30, 2005. Through an amendment with an effective date of July 1, 2005, TennCare has implemented a modified risk arrangement with all its contracted MCOs, including UAHC-TN, which are at risk for losing up to 10% of administrative fee revenue and may receive up to 15% incentive bonus revenue based on performance relative to benchmarks. TennCare has also announced plans to disenroll non-medically needy adults who are not eligible for Medicaid from TennCare coverage statewide, and to impose benefit limits on the 396,000 adults left in the program who are eligible for Medicaid. The announced plans would preserve full coverage for the 612,000 children on the program. As a result, UAHC-TN expects to lose only approximately 12,000 of its present 132,258 members over a 12-month period beginning in the first quarter of fiscal year 2006, being its only working uninsured and uninsurable adult members.
Reinsurance profit sharing decreased from income of $6.0 million in 1995 to an expense of $2.4 million in 1996, primarily as a result of the reassessment of loss reserve assumptions during the year as previously discussed.
For the year ended December 31, 1996, the Company reported a $20.5 million net loss and a combined ratio of 138% as a result of the factors noted above as compared to net income of $6.1 million and a combined ratio of 93% for the year ended December 31, 1995.
In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 (the "Act"), the Company sets forth below cautionary statements identifying important factors that could cause the Company's actual results to differ materially from those which might be projected, forecasted, or estimated in the Company's forward-looking statements, as defined in the Act, made by or on behalf of the Company in press releases, written statements or documents filed with the Securities and Exchange Commission, or in its communications and discussions with investors and analysts in the normal course of business through meetings, phone calls and conference calls. Such statements may include, but are not limited to, projections of premiums, investment income, other revenue,
Future policy benefits are actuarially determined liabilities, which are calculated to meet future obligations and are generally payable over an extended period of time. Principal assumptions used in the establishment of liabilities for future policy benefits are mortality, surrender rates, policy expenses, equity returns, interest rates, and inflation. These estimates and assumptions are influenced by historical experience, current developments and anticipated market trends. At December 31, 2008 and 2007, future policy benefits were $19.9 million and $22.8 million, respectively.
At December 31, 2008 and 2007, MLLICNY had 1,232 and 1,340 life insurance and annuity contracts inforce with interest rate guarantees, respectively. The estimated average rate of interest credited on behalf of contract owners was 4.11% and 4.64% during 2008 and 2007, respectively. Total invested assets supporting these liabilities with interest rate guarantees had an estimated average effective yield of 5.34% and 5.08% during 2008 and 2007, respectively. In 2008, the number of life insurance and annuity contracts inforce with interest rate guarantees decreased 108 (or 8%) as compared to 2007.
The following table summarizes the Company’s policyholders’ obligations as of December 31, 2008:
Credit bond pre-tax losses and expenses amounted to $11.5 million in 1995 and $6.6 million in 1994, including reserves and partial litigation settlements of $5.8 million and $4.5 million in 1995 and 1994 respectively. In 1996, the Company did not incur any significant expenses or losses associated with the remaining credit bond policies in force.
The Company's investment portfolio has been structured to match cash requirements. Liabilities representing current cash requirements including claim liabilities, accrued commissions and other liabilities totaled $906.3, $748.0 and $646.1 million, at December 31, 1996, 1995 and 1994 respectively. Other significant cash commitments in 1997 include shareholder dividends of approximately $24.5 million under the current capital structure.
v Acquisition costs relating to ordinary life contracts are amortized over the estimated term of the contracts in proportion to the ratio of the annual premium revenue to total premium revenue expected. Acquisition costs for universal life and annuities are amortized over the lives of the policies in relation to the present value of estimated gross profits from surrender charges and investment, mortality, and expense margins. The assumptions used for the estimates are consistent with those used in computing the policy liabilities.
The Company periodically purchases securities for trading purposes generally not to exceed $20,000,000. At December 31, 1996, the Company held trading securities with a fair value of $9,038,000 (amortized cost $8,867,000) resulting in an unrealized gain of $171,000 which was included in operating results. There were no securities in the trading portfolio at December 31, 1995.
At December 31, 1996 and 1995, the fair value, amortized cost, and gross unrealized gains and losses of investments in held-to-maturity and available-for-sale securities consisted of the following:
Total rental expense for the years ended December 31, 1996, 1995 and 1994 was $9,258,000, $7,661,000 and $5,716,000 respectively.
Our revenues are principally derived from three sources: (1) net premiums earned from the reinsurance and insurance policies we sell; (2) net investment income and realized and unrealized gains from the investment of our capital funds and the investment of the cash we receive on the policies which we sell; and (3) fees and other income received from our joint ventures and managed funds, advisory services and various other items.
techniques, assumptions and processes we follow to estimate our claims and claim expense reserves, prior year development of the reserve for claims and claim expenses, analysis of our incurred and paid claims development and claims duration information for each of our Property and Casualty and Specialty segments.
Earthquake, the wildfires in California during the fourth quarter of 2017 and certain losses associated with aggregate loss contracts (collectively, the “2017 Large Loss Events”). In comparison, net claims and claim expenses associated with 2018 accident year have experienced adverse development. The adverse development was driven by a deterioration in expected net claims and claim expenses as new and additional claims information was received associated with Typhoons Jebi, Mangkhut and Trami, Hurricane Florence, the wildfires in California during the third and fourth quarters of 2018, Hurricane Michael and certain losses associated with aggregate loss contracts (the ”2018 Large Loss Events”).
The financial data below provides additional details regarding the net negative impact of certain events on our consolidated results of operations in 2019.
Net investment income increased 39.3%, or $16.7 million, to $59.2 million in 1999 from $42.5 million in 1998, due to growth in invested assets from December 31, 1998, increasing interest rates, and a relative increase in below investment grade investments.
MORTGAGE LOANS ON REAL ESTATE: Mortgage loans on real estate represent 9.5% of the Companies' investment portfolio. Mortgages outstanding at amortized cost were $100.1 million at December 31, 1999 with an estimated fair value of $95.5 million. The Companies' mortgage loan portfolio includes 58 loans with an average size of $1.7 million and average seasoning of 0.7 years if weighted by the number of loans. The Companies' mortgage loans on real estate are typically secured by occupied buildings in major metropolitan locations and not speculative developments and are diversified by type of property and geographic location. Mortgage loans on real estate have been analyzed by geographical location with concentrations by state identified as California (12% in 1999 and 1998), Utah (10% in 1999, 11% in 1998), and Georgia (9% in 1999, 10% in 1998). There are no other concentrations of mortgage loans on real estate in any state exceeding ten percent at December 31, 1999 and 1998. Mortgage loans on real estate have also been analyzed by collateral type with significant concentrations identified in office buildings (34% in 1999, 36% in 1998), industrial buildings (33% in 1999, 32% in 1998), retail facilities (19% in 1999, 20% in 1998), and multi-family apartments (10% in 1999 and 8% in 1998). At December 31, 1999, the yield on the Companies' mortgage loan portfolio was 7.3%.
Goodwill totaling $151.1 million, representing the excess of the acquisition cost over the fair value of net assets acquired, was established at the merger date. Accumulated amortization of goodwill as of December 31, 1999 was $8.2 million.
2. Changes in the federal income tax laws and regulations, which may affect the tax status of the Companies' products.
We have audited the accompanying consolidated balance sheets of Golden American Life Insurance Company as of December 31, 1999 and 1998, and the related consolidated statements of operations, changes in stockholder's equity, and cash flows for the years ended December 31, 1999 and 1998 and for the periods from October 25, 1997 through December 31, 1997, and January 1, 1997 through October 24, 1997. Our audits also included the financial statement schedules listed in the Index at Item 14(a). These financial statements and schedules are the responsibility of the Companies' management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
INVESTMENTS ON DEPOSIT: At December 31, 1999 and 1998, affidavits of deposits covering bonds with a par value of $6,470,000 were on deposit with regulatory authorities pursuant to certain statutory requirements.
No expense was recognized in 1999 related to the above options. As of December 31, 1999, 58,250 options remain outstanding.
Included in consolidated gross written premiums were $100.9 million, $73.5 million and $51.4 million for the years ended December 31, 2007, 2006 and 2005, respectively, from premiums written and assumed under various reinsurance agreements. Net consolidated gross written premiums from endorsement, cancellations and other adjustments were $0.4 million for the year ended December 31, 2007, compared to net return premiums of $2.1 million and $7.3 million for the same periods ended 2006 and 2005, respectively.
International Specialty. International Specialty includes the results of operations of Peleus Re (from the closing date of the Merger through December 31, 2007), in addition to various international reinsurance programs for which the Company began assuming premiums during the year ended December 31, 2006. Peleus Re focuses on underwriting property catastrophe reinsurance on a controlled basis to a relatively small number of reinsureds whose accounts are known and understood by Peleus Re underwriters. Peleus Re will also underwrite property per risk and pro rata reinsurance on a select basis.
Cash dividends paid to common shareholders totaled $57.1 million in 2007. Dividends to common shareholders were not paid in 2006 or 2005. On June 6, 2007, the Board of Directors of Argonaut Group declared a special dividend of $1.65 per common share to its shareholders of record on June 26, 2007. The special dividend was paid to Argonaut Group’s shareholders on July 10, 2007.
The following table sets forth our operating (loss) income for the years ended December 31, 2008 and 2007, the seven months ended December 31, 2006 and 2005 and the fiscal years ended May 31, 2006 and 2005 (amounts in thousands):
Our unpaid claims liability is estimated using an actuarial paid completion factor methodology and other statistical analyses. These estimates are subject to the effects of trends in utilization and other factors. Any significant increase in member utilization that falls outside of our estimations would increase healthcare operating expenses and may impact our ability to achieve and sustain profitability and positive cash flow. Although considerable variability is inherent in such estimates, we believe that our unpaid claims liability is adequate, however, actual results could differ from the estimates.
(f) Cancels 1,739,130 shares of CompCare common stock reacquired during the acquisition, as if the cancellation had been done on January 1, 2008.
Mortgage loan servicing rights represent the cost of purchasing or originating the right to receive cash flows from servicing mortgage loans. Servicing rights are recorded at the time of sale of the underlying mortgage loans where the servicing is retained. The total cost of the mortgage loans, which includes the cost to acquire the servicing rights, is allocated to the mortgage loans and the servicing rights based on their relative fair values at the date of sale. Cost basis also includes adjustments resulting from the application of hedge accounting. Capitalized servicing rights are carried at the lower of cost or market value. The capitalized value is amortized in proportion to, and over the period of, estimated net servicing income.
COVENTRY HEALTH CARE. On February 1, 2002, we sold our remaining stake of 15.1 million shares of Coventry Health Care, Inc. ("Coventry") common stock and a warrant, exercisable for 3.1 million shares of Coventry common stock. We received proceeds of $325.4 million, resulting in a net realized capital gain of $183.0 million, or $114.5 million net of income taxes.
RECOGNITION OF PREMIUMS AND OTHER CONSIDERATIONS, FEES AND OTHER REVENUES AND BENEFITS
In 2002 and 2001, we recognized gains of $17.2 million and $18.3 million, respectively, on the securitization of commercial mortgage loans.
7. DERIVATIVES HELD OR ISSUED FOR PURPOSES OTHER THAN TRADING (CONTINUED)
As a result of the demutualization, 363.7 thousand shares with a value of $6.7 million were issued to rabbi trusts held by us for certain benefit plans. These shares were reported as treasury stock and additional paid-in capital in the consolidated statements of stockholders' equity at December 31, 2001. In February 2002, these shares were sold, which generated proceeds of $8.0 million, with a cost of $6.7 million.
Mortgage loan servicing rights represent the present value of estimated future net revenues from contractually specified servicing fees. The fair value was estimated with a valuation model using an internal prepayment model and discounted at a spread to London Interbank Offered Rates.
The Life and Health insurance segment provides individual life and disability insurance to the owners and employees of businesses and other individuals in the U.S. and provides group life and health insurance to businesses in the U.S.
The Corporate and Other segment includes an equity ownership interest in Coventry Health Care, Inc. The ownership interest was sold in February 2002, described further in Note 4. The Corporate and Other segment's equity in earnings of Coventry Health Care, Inc., which was included in net investment income, was $2.1 million, $20.2 million and $20.6 million for the year ended December 31, 2002, 2001 and 2000, respectively.
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. To achieve our targeted net combined ratio (non-GAAP) we continually seek ways to reduce our operating costs and lower our expense ratio. For the year ended December 31, 2019, our operating leverage (the ratio of net earned premium to average total stockholders’ equity) was 1.7x, which was within our planned target operating leverage of between 1.5x and 2.0x.
Net earned premium. Net earned premium is the earned portion of our net premium written. We earn insurance premium on a pro rata basis over the term of the policy. At the end of each reporting period, premium written that is not earned is classified as unearned premium, which is earned in subsequent periods over the remaining term of the policy. Our policies typically have a term of six months or one year. For a six-month policy written on January 1, 2019, we would earn half of the premium in the first quarter of 2019 and the other half in the second quarter of 2019.
Loss and loss adjustment expense; net loss ratio. Loss and LAE increased by $202.9 million, or 8.7%, from $2,340.9 million for the year ended December 31, 2018 to $2,543.8 million for the year ended December 31, 2019, primarily reflecting decreased ceded losses to the Quota Shares ($94.2 million), the acquisition of Farmers Union Insurance ($54.1 million) and unfavorable prior year loss development. Losses related to weather-related events, excluding the Reciprocal Exchanges, were $51.2 million in 2019 compared to $128.7 million in 2018, a decrease of $77.5 million year over year.
Underwriting income; net combined ratio (non-GAAP). Underwriting income increased by $61.5 million, or 67.3%, from $91.4 million for the year ended December 31, 2018 to $152.9 million for the year ended December 31, 2019. The increase was primarily driven by organic growth, partially offset by decreased cession to the Quota Shares in 2019. Our P&C segment net combined ratio decreased from 97.0% for the year ended December 31, 2018 to 95.5% for the year ended December 31, 2019. The decrease in net combined ratio was driven by lower net loss ratio.
Underwriting income; net combined ratio (non-GAAP). Underwriting income increased by $34.7 million, or 34.2%, from $101.5 million for the year ended December 31, 2018 to $136.2 million for the year ended December 31, 2019. The increase was primarily due to domestic organic growth. Our A&H net combined ratio decreased from 83.5% for the year ended December 31, 2018 to 79.5% for the year ended December 31, 2019. The net combined ratio decrease was primarily due to lower net loss ratio due to higher favorable prior year loss development in 2019 compared to 2018, partially offset by higher operating expense ratio.
The Company's headquarters are located in Miami, Florida, where it owns approximately 55 acres of an office park with the following improvements: (i) a seven-story office building containing approximately 231,000 rentable square feet of office space, (ii) three six-story office buildings containing approximately 130,000 rentable square feet per building and (iii) five single-story buildings and two mid-rise buildings containing, in the aggregate, approximately 384,000 rentable square feet of office and warehouse space. The Company occupies the entire seven-story building and one of the six-story buildings, a portion of the space in a second six-story building, and a majority of the space in two of the single-story buildings.
The Company owns an office building in Boise, Idaho which contains 50,000 rentable square feet of office space. The Western Diversified Group's operations are located in Deerfield, Illinois, where it leases 34,600 square feet of office space under a lease expiring in March 2003. The Company also leases sales offices and six service centers throughout the United States.
Total benefits as a percent of net insurance premiums and contract charges earned ("net premiums") increased from 66.5% in 1994 to 73.9% in 1995. In early 1995, the Company began to experience an increase in the group gross medical loss ratio over the 1994 levels resulting primarily from increased utilization of medical services and lack of historical experience in pricing in an environment of healthcare reform, primarily at the state
Historically, the Company has generally experienced a relatively high gross loss ratio in the fourth quarter of the year. The Company believes that these higher loss ratios are primarily due to the increased incidence of claims associated with the colder, winter climate and the fact that insureds generally exceed the deductible and out-of-pocket expense limits of their policies by that time of year. The Company cannot predict the extent to which this disparity may continue, increase or decrease in the future.
The Company’s results and growth have allowed it to consistently generate positive cash flow from operations, which was $469 million in 2004. The Company’s cash flow from operations has exceeded $100 million every year since 1994 and has been positive for over 20 years. Cash flows from operations has been used to pay shareholder dividends and to help support growth.
The Company monitors its investments closely. If an unrealized loss is determined to be other than temporary it is written off as a realized loss through the Consolidated Statement of Income. The Company’s methodology of assessing other-than-temporary impairments is based on security-specific analysis as of the balance sheet date and considers various factors including the length of time and the extent to which the fair value has been less than the cost, the financial condition and the near term prospects of the issuer, whether the debtor is current on its contractually obligated interest and principal payments, and the Company’s intent to hold the investment for a period of time sufficient to allow the Company to recover its costs. The Company recognized $0.9 million and $9.1 million in realized losses as other-than-temporary declines to its investment securities during 2004 and 2003, respectively.
years 1997 through 2007 and an 85% DRD for tax years after 2007. The Company intends to refile its 1997 through 2003 tax returns based on the DRD established by AB 263. The tax liability for this item is included in the tax liabilities at December 31, 2004.
LEASED PROPERTIES. The Company (with the exception of American Southern, Association Casualty, and SIA, Inc.) leases space for its principal offices in an office building located in Atlanta, Georgia, from Delta Life Insurance Company, under leases which expire at various times from May 31, 2002 to July 31, 2005. Under the current terms of the leases, the Company occupies approximately 65,489 square feet of office space. Delta Life Insurance Company, the owner of the building, is controlled by J. Mack Robinson, Chairman of the Board of Directors and largest shareholder of the Company. The terms of the leases are believed by Company management to be comparable to terms which could be obtained by the Company from unrelated parties for comparable rental property.
Future payments due on the Company's contractual obligations as of December 31, 2003 are as follows:
The liabilities for medical and other benefits represent estimates of the ultimate net cost of all reported and unreported claims that are unpaid at year end. These estimates are developed using actuarial methods based upon historical data for payment patterns, cost trends, product mix, seasonality, utilization of health care services and other relevant factors. Estimated liabilities for asserted claims and policy-related litigation, which are included in medical and other benefits payable, reflect judgments made by management based on the facts and merits of the case, advice from legal counsel, the general litigation and regulatory environment of the originating state, the Company's past experience with outcomes of cases in a particular jurisdiction, historical results of similar cases and other relevant factors. The estimates are reviewed periodically and, as adjustments to the liabilities become necessary, the adjustments are reflected in current operations. Although considerable variability is inherent in these estimates,
Year ended December 31, -------------------------------------------- (THOUSANDS) 2003 2002 2001 - --------------------------------------------------------------------------------
The Company recognized depreciation expense on property and equipment of $6,816,000, $7,064,000 and $5,555,000 in 2003, 2002 and 2001, respectively.
Line of credit, commercial banks, adjusted periodically, interest payments due quarterly through December 2005 $ 30,158 $ 30,158
The Company maintains a revolving bank line of credit agreement with maximum available credit of $50,000,000. At December 31, 2003, the outstanding balance of advances under the credit agreement was $30,158,000. Interest is charged on the outstanding balance based upon an indexed floating rate of interest. The credit agreement provides for a lump-sum repayment of the outstanding balance at the end of 2005. During 2003, 2002 and 2001, interest paid on the Company's outstanding debt totaled $1,060,000, $1,856,000 and $2,931,000, respectively.
The Company has a stock-based compensation plan, the Equity Incentive Plan (the "Plan"), for the benefit of eligible employees and directors of the Company. The Plan permits the grant of nonqualified stock options ("NQSO"), incentive stock options, stock appreciation rights, restricted stock awards and performance awards. Persons eligible to participate in the Plan include all full-time active employees and outside directors of the board of directors. The Plan allows for the granting of up to 4,000,000 shares of which 41,413 shares are available for grant as of December 31, 2003. The Company's 1995 Director Stock Option Plan also permits the grant of NQSOs. The plan allows for the granting of up to 75,000 shares of which 9,000 shares are available for grant as of December 31, 2003.
During the third quarter of 2003, the Company sold its networking subsidiary and reported the sale transaction and the subsidiary's operating results in discontinued operations. See Note 3, "Discontinued Operations" for further discussion regarding the sale.
During the past several years, the Group has experienced poor underwriting results and adverse reserve development in all of its lines of business. The Group has recently announced that it will no longer accept any applications for new insurance policies, has filed plans of orderly withdrawal with the New York Insurance Department, has entered into an agreement to sell its renewal rights to an unaffiliated insurance company and made arrangements with the unaffiliated insurance company to offer renewal policies in those lines of business (other than private passenger automobile insurance) where New York insurance law imposes a renewal obligation. Assuming this agreement is consummated, the Group will only have renewal obligations for remaining personal lines insurance (primarily automobile) not replaced by the unaffiliated insurance company, the remaining policy term of all existing policies and a claim run-off operation.
See Notes 1, 2, 3, 8, 9, 10 and 11 regarding Allcity's relationships with the Group and Leucadia.
Until December 2008, our continuing operations primarily consisted of the ownership and operation of 19 insurance brokerage and agency storefronts, including 12 Barry Scott locations in New York State, three Atlantic Insurance locations in Pennsylvania, and four Accurate Agency locations in New York State. In December 2008, due to declining revenues and profits, we made a decision to restructure our network of retail offices (the “Retail Business”). The plan of restructuring called for the closing of seven of our least profitable locations during December 2008 and the sale of the remaining 19 Retail Business locations. On April 17, 2009, we sold substantially all of the assets, including the book of business, of the 16 remaining Retail Business locations that we owned in New York State (the “New York Sale”). Effective June 30, 2009, we sold all of the outstanding stock of the subsidiary that operated our three remaining Retail Business locations in Pennsylvania (the “Pennsylvania Sale”). As a result of the restructuring in December 2008, the New York Sale on April 17, 2009 and the Pennsylvania Sale effective June 30, 2009, our Retail Business has been presented as discontinued operations and prior periods have been restated.
Results of Operations for Insurance Underwriting Business on a Standalone Basis
Gross premiums written during the six months ended December 31, 2010 (“2010”) were $16,656,000 compared to $13,573,000 during the six months ended December 31, 2009 (“2009”).The increase of $3,083,000 or 22.7% was due to an increase in policies in-force during 2010 as compared to 2009. Policies in-force increased by 17.3% as of December 31, 2010 compared to December 31, 2009.
Held to maturity securities at December 31, 2010 consist of U.S. Treasury Securities with an amortized cost of $605,424 and a fair value of $606,398. At December 31, 2009 we did not own any held to maturity securities.
General liability commercial policies written by us, except for commercial auto policies, are reinsured under a 75% quota share treaty, which provides coverage up to $700,000 per occurrence. An excess of loss contract provides $1,500,000 in coverage excess of the $700,000 for a total coverage of $2,200,000 per occurrence.
Commercial auto policies are covered by an excess of loss contract which provides $1,750,000 in coverage excess of $250,000 for a total coverage of $2,000,000 per occurrence.
The Sarbanes-Oxley Act of 2002, as well as a variety of related rules implemented by the SEC, have required changes in corporate governance practices and generally increased the disclosure requirements of public companies. As a reporting company, we incur significant legal, accounting and other expenses in connection with our public disclosure and other obligations. Based upon SEC regulations currently in effect, we are required to establish, evaluate and report on our internal control over financial reporting. We believe that compliance with the myriad of rules and regulations applicable to reporting companies and related compliance issues will divert time and attention of management away from operating and growing our business.
LIABILITIES. Our liability for policy benefit reserves increased $741,039,000 and $817,794,000 during 2000 and 1999, respectively, to $2,099,915,000 at December 31, 2000 and $1,358,876,000 at December 31, 2000, primarily due to annuity sales as discussed above. Substantially all of our annuity products have a surrender charge feature designed to reduce early withdrawal or surrender of the policies and to partially compensate us for our costs if policies are withdrawn early. Notwithstanding these policy features, the withdrawal rates of policyholder funds may be affected by changes in interest rates.
At December 31, 2007, approximately $0.9 million (or 1%) of fixed maturity securities were considered below investment grade. At December 31, 2006, MLLICNY did not hold any fixed maturity securities that were considered below investment grade. Below investment grade securities are speculative and are subject to significantly greater risks related to the creditworthiness of the issuers and the liquidity of the market for such securities. These investment grade holdings were the result of ratings downgrades on existing securities as MLLICNY does not purchase below investment grade securities. MLLICNY closely monitors such investments.
MLLICNY recorded net earnings of $7.6 million and $5.5 million for 2006 and 2005, respectively.
Amortization of DAC decreased $3.7 million to $3.3 million during 2006 as compared to $7.0 million in 2005 primarily as a result of period-to-period differences in DAC unlocking as noted in the Critical Accounting Policies section above. Offsetting the impact of DAC unlocking is an increase in normal amortization due to higher policy charge revenue.
The Registrant hereby incorporates by reference "Management's Analysis of Operating Results and Financial Condition" on pages 27 through 32 of the Annual Report.
L&W continues to be a significant producer of business for NAICO. Retail business produced by L&W and placed with NAICO constituted approximately 9% of NAICO's direct premiums written and assumed in 2003. Chandler USA maintains certain wholesale operations related to NAICO's school districts and trucking insurance through CIMI, an underwriting manager that was established in December 2002. L&W previously functioned as Chandler USA's agency segment and is presented as discontinued operations.
Other programs in the preceding table include premiums from the runoff of various programs which are no longer offered by NAICO, NAICO's participation in various mandatory pools covering workers compensation for insureds that were unable to purchase this coverage from an insurance company on a voluntary basis, and direct assignments to write workers compensation for such insureds in certain states in lieu of participating in related pools.
Interest expense decreased less than 1% in 2002 and increased 9% in 2003. The increase in 2003 resulted from the increased total debt including Chandler USA's Debentures and trust preferred securities. See "Liquidity and Capital Resources."