(3) Includes capital and surplus of Penncorp Life (Canada) as reported to the Office of the Superintendent of Financial Institutions Canada of C$57,398 as of December 31, 2004, converted at the related exchange rate of C$0.8320 per U.S. $1.00 and C$62,307 as of December 31, 2005, converted at the related exchange rate of C$0.8606 per U.S. $1.00.
On a periodic basis, management reviews the unamortized balances of present value of future profits, goodwill and other identified intangibles to determine whether events or circumstances indicate the carrying value of such assets is not recoverable, in which case an impairment charge would be recognized. Management believes that no impairments of present value of future profits, goodwill or other identified intangibles existed as of December 31, 2005.
As of December 31, 2005, American Progressive and Pyramid Life had 5,078 members enrolled in their PFFS plans. During 2005, American Progressive and Pyramid Life collected $22.2 million of premium from CMS and the members, and reported a medical loss ratio of 67.2%. For the seven months since inception in 2004, American Progressive and Pyramid Life collected $3.3 million of premium from CMS and the members, and reported a medical loss ratio of 75.4%.
The increase in deferred acquisition costs was $2.3 million less in 2004, compared to the increase in 2003. This was a result of a lower level of new business being written relative to the amortization of amounts previously capitalized.
Service fee revenue increased by $2.5 million, or 4%, compared to 2004. Affiliated service fee revenue increased by $0.5 million compared to 2004 as a result of the increase in Medicare Supplement business in force at our insurance subsidiaries offset, in part by a decline in revenues for administration of affiliated
We require cash at our parent company to meet our obligations under our credit facility. We also require cash to pay the operating expenses necessary to function as a holding company (applicable insurance department regulations require us to bear our own expenses), and to meet the costs of being a public company.
(1) Effective September, 2003, we entered into a swap agreement whereby it will pay a fixed rate of 6.7% in exchange for a floating rate of LIBOR plus 400 basis points. The swap contract expires in December 2007.
We paid $5.3 million in interest in connection with the Junior Subordinated Debt during the year ended December 31, 2005, $4.7 million during 2004 and $2.1 million during 2003.
Senior Administrative Services Company. Liquidity for our Senior Administrative Services subsidiary is measured by its ability to pay operating expenses and pay dividends to our parent company. The primary source of liquidity is fees collected from clients. We believe that the sources of cash for our Senior Administrative Services company exceed scheduled uses of cash and results in amounts available to dividend to our parent holding company. We measure the ability of the Senior Administrative Services company to pay dividends based on its earnings before interest, taxes, depreciation and amortization (“EBITDA”). EBITDA for our Senior Administrative Services segment was $11.7 million for the year ended December 31, 2005, $15.3 million for 2004 and $13.1 million for 2003. The reduction in EBITDA from 2004 to 2005 was a result of the $5.9 million of expenses incurred in this segment relating to our implementation of Part D.