felanders/preprocessed huggingface dataset:
The Company engages an outside actuarial firm to attest to the adequacy of its carried property and casualty reserves. This firm has rendered their opinion for the year ended December 31, 1998, and they attest to the adequacy of the Company's held reserves. The Company is committed to maintaining adequate loss reserves and places a high priority on balance sheet integrity.
plus credit spread; the maturity was extended to August 31, 2002 and the notional amount will be decreased from $58 million to $50 million on August 31, 2000. The interest rate swap is non-amortizing. In August 1998, the Company entered into an interest rate swap agreement in the notional principle amount equal to the $30 million of the term loan that is amortizing. This agreement effectively fixes the interest rate at 5.705% plus credit spread until May 31, 2004. The Company's exposure to credit risk is limited to interest movements and is considered to be negligible. The Company does not hold or issue any other material amounts of derivative financial instruments.
The following table provides information on the Company's fixed maturity investments as of December 31, 1998 that are sensitive to changes in interest rates. It presents the expected cash flows of principle (par value) amounts and related average after-tax yield by expected maturity dates. The table also presents the maturities of long-term debt with the corresponding interest rate swaps on this debt. Since the interest rate swaps effectively fix the interest rate on the notional amount of debt, changes in interest rates have no current effect on the interest expense recorded by the Company.
Real estate and equipment owned by the Company is carried at cost less accumulated depreciation. Depreciation is computed over the estimated useful lives of the assets, primarily by the straight-line method for financial reporting and accelerated methods for income tax purposes.
Comprehensive income is defined as any change in equity from transactions and other events originating from non-owner sources. The following summarizes the components of comprehensive income, other than net income, for the last three years.
Assets 1999 1998 - ------ ---- ---- Investments (note 3): Fixed maturities held-to-maturity (fair value, $3,985,336 and $5,064,541 at December 31, 1999 and 1998, respectively) $ 3,978,871 $ 4,956,910 Securities available-for-sale, at fair value: Fixed maturities (cost of $24,789,267 at December 31, 1999 and $27,671,425 at December 31, 1998) 23,951,111 28,479,161 Equity securities (cost, $225,980 and $210,370 at December 31, 1999 and 1998, respectively) 378,440 250,232 Mortgage loans 1,497,688 -- Policy and student loans 8,458,972 8,462,438 Short-term investments (note 11) 8,595,093 11,434,983 ----------- ----------- 46,860,175 53,583,724
1999 1998 1997 ---- ---- ---- Revenues: Net insurance revenues $ 6,901,546 $ 7,228,227 $ 7,643,650 Net investment income (notes 3, 8 and 11) 3,909,373 3,587,147 3,545,311 Realized gain on investments (note 3) -- 525,181 506,795 Other revenue, net 715,128 -- -- ------------ ------------ ------------
(i) Future policy benefits ---------------------- The liability for future policy benefits for traditional life policies has been provided on a net level premium basis based upon estimated investment yields, withdrawals, mortality and other assumptions that were appropriate at the time the policies were issued. Such estimates are based upon industry data and the Company's past experience as adjusted to provide for possible adverse deviation from the estimates.
Equity securities consist of $378,440 and $250,232 of common stock at fair value at December 31, 1999 and 1998 respectively.
1999 1998 1997 ---- ---- ---- Held-to-maturity: Gross realized gains $ -- $ -- $20,205 Available-for-sale: Gross realized gains -- 1,740 21,997 ------- ------- ------- $ -- $ 1,740 $42,202 ======= ======= =======
acquisition costs (3,029,223) (3,484,689) (3,542,617) ------------ ------------ ------------ Deferred policy acquisition costs at end of year $ 12,874,219 $ 13,583,956 $ 15,451,689 ============ ============ ============
10. Income taxes, continued ----------------------- Total income taxes including taxes on the change in the value of investments for the years ended December 31, 1999, 1998, and 1997 were as follows:
11. Related party transactions -------------------------- The Company's general agent, Insuradyne Corporation, is a wholly-owned subsidiary of Security National Financial Corporation. The balances due to an affiliated insurance agency reflected in the accompanying balance sheets principally represent earned commission due to Insuradyne. The Company incurred commission expense to Insuradyne aggregating $175,409, $252,955 and $323,303, in 1999, 1998, and 1997, respectively. These amounts are included as components of acquisition costs deferred and related amortization. Insuradyne incurred insurance-related expenses aggregating $495, $33,374, and $25,604 in 1999, 1998 and 1997, respectively.
these locations as set forth in the Administrative Services Agreement, without penalty, by providing CCC with 30 days written notice.
At December 31, 1998 and 1997, $51.2 million and $55.1 million, respectively, of the fixed income portfolio were invested in mortgage-backed securities ("MBS"). At December 31, 1998, all of the MBS were investment grade and approximately 97% have underlying collateral guaranteed by the U.S. government entities; thus credit risk is minimal.
Based upon the information and assumptions the Company uses in its duration calculation and interest rates in effect at December 31, 1998, management estimates that a 100 basis point immediate, parallel increase in interest rates ("rate shock") would decrease the net fair value of its assets identified above by approximately $6.8 million, an amount essentially unchanged from the amount reported for December 31, 1997. The selection of a 100 basis point immediate rate shock should not be construed as a prediction by the Company's management of future market events; but rather, to illustrate the potential impact of such an event.
Liabilities Reserve for life-contingent contract benefits $ 338,069 $ 252,195 Contractholder funds 6,785,070 6,607,130 Current income taxes payable 3,659 1,128 Deferred income taxes 5,546 4,149 Other liabilities and accrued expenses 64,470 43,609 Separate Accounts 763,416 447,658 ---------- ---------- Total liabilities 7,960,230 7,355,869 ---------- ----------
Separate Accounts The Company issues flexible premium deferred variable annuities and variable life policies, the assets and liabilities of which are legally segregated and reflected in the accompanying consolidated statements of financial position as assets and liabilities of the Separate Accounts. The Company's Separate Accounts consist of: Lincoln Benefit Life Variable Annuity Account and Lincoln Benefit Life Variable Life Account. Each of the Separate Accounts are unit investment trusts registered with the Securities and Exchange Commission.
Fixed income securities $ 134 $ 17 $ 6 Income taxes 47 6 2 ------ ------ ------ Realized capital gains and losses, after tax $ 87 $ 11 $ 4 ====== ====== ======
The fair value of contractholder funds on investment contracts is based on the terms of the underlying contracts. Reserves on investment contracts with no stated maturities (single premium and flexible premium deferred annuities) are valued at the account balance less surrender charges. The fair value of immediate annuities and annuities without life contingencies with fixed terms is estimated using discounted cash flow calculations based on interest rates currently offered for contracts with similar terms and durations. Separate Accounts liabilities are carried at the fair value of the underlying assets.
The Internal Revenue Service ("IRS") has completed its review of the Allstate Group's income tax returns through the 1993 tax year. Any adjustments that may result from IRS examinations of tax returns are not expected to have a material impact on the financial position, liquidity or result of operations of the Company.
/s/ Douglas F. Gaer - ------------------- Douglas F. Gaer Director March 30, 1999
During 1998, economic and financial market conditions had the effect of depressing yields on the company's portfolio through lowering the yield to maturity on corporate and other fixed securities.
For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of one month or less to be cash equivalents.
b. The liability for future policy benefits and expenses is based on conservative estimates of expected mortality, morbidity, interest, withdrawals and future maintenance and settlement expenses, rather than on statutory rates for mortality and interest.
Net investment income for the years ended December 31, 1998, 1997, and 1996 consists of the following:
The Company routinely cedes and, to a limited extent, assumes reinsurance to limit its exposure to loss on any single insured. Ceded insurance is treated as a risk and liability
The Company is engaged primarily in the life insurance business. The principal subsidiaries, AHL and CUL, generate major sources of cash flow from premiums collected for traditional insurance products, deposits and policy charges for interest-sensitive products, and investment income attributable to its life insurance operations and associated investment portfolio. This results in a significant portion of the Company's assets being liquid.
(2) Investments: Bonds and redeemable preferred stocks, which are classified as debt securities available-for-sale, are stated at fair value.
Mortgage loans are reported at amortized cost, less an allowance for possible losses.
Other operating expenses include primarily interest expense related to bank borrowings and mandatorily redeemable preferred securities, other general corporate expenses of AHLIC and insurance agency expenses.
In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding insurance to other insurance companies or reinsurers under excess coverage and co-insurance contracts. The maximum risk generally retained on ordinary life insurance on any one insured ranges from $100,000 to $200,000. The amount retained on group and credit life insurance is generally $50,000. Generally, income from reinsurance arrangements is recognized in a manner similar to the income recognition on the underlying policy contracts.
See Footnote 1(c) on page 30 which sets forth the accounting policies related to investments.
SCHEDULE III AMERICAN HERITAGE LIFE INVESTMENT CORPORATION SUPPLEMENTARY INSURANCE INFORMATION ($ IN THOUSANDS)
Income from insurance underwriting and related services, however, declined significantly in 2014 as claim costs remained under upward pressure for both workers’ compensation and general liability policies. The combination of more costly claim settlements and a re-evaluation of prior years’ established reserves led to significant increases in both reserve levels and claim costs incurred throughout 2014. As a consequence, Old Republic’s General Insurance Group sustained unfavorable developments of prior years’ reserves, a departure from its long history of reserve adequacy. For all of 2014, these adversities caused an increase of 3.9 percentage points in the above noted claim ratio. By contrast, the claim ratio for 2013 benefitted from a .9 percentage point reduction due to favorable developments of prior years’ reserves.
Net investment income rose at a faster pace in 2014, as it benefitted from the combination of a greater invested asset base and higher yields obtained from a greater commitment to high quality dividend-paying common stocks.
adjusted for potential reversals of rescissions or adverse rulings for loans under dispute since such reversals of claim rescissions and denials have historically been immaterial to the reserve estimation process.
Company currently reinsures limits of $195.0 in excess of $5.0 for claims arising from certain acts of terrorism for casualty clash and catastrophe workers' compensation liability insurance coverages.
From time to time, in order to assure possible liquidity needs, the Company may guaranty the timely payment of principal and/or interest on certain intercompany balances, debt, or other securities held by some of its insurance, non-insurance, and ESSOP affiliates. At December 31, 2014, the aggregate principal amount of such guaranties was $194.0.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Old Republic International Corporation and subsidiaries as of December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also in our opinion, Old Republic International Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
(g) Losses, Claims and Settlement Expenses-Reserves are estimates that provide for the ultimate expected cost of settling unpaid losses and claims reported at each balance sheet date. Losses and claims incurred but not reported, as well as expenses required to settle losses and claims are established on the basis of various criteria, including historical cost experience and anticipated costs of servicing reinsured and other risks. Long-term disability-type workers' compen-
The data in the table above, incorporates the Corporation's estimates for various asbestosis and environmental impairment ("A&E") claims or related costs that have been filed in the normal course of business against a number of its insurance subsidiaries. Many such claims relate to policies issued prior to 1985, and during a short period between 1981 and 1982 pursuant to an agency agreement canceled in 1982. During all years and through the current date, the Corporation's insurance subsidiaries have typically issued general liability insurance policies with face amounts ranging between $1 million and $2 million and rarely exceeding $10 million. Such policies have, in turn, been subject to reinsurance cessions which have typically reduced the Corporation's retentions to $500,000 or less as to each claim.
Scheduled maturities of the above debt (including redeemable preferred stock classified as a debt equivalent see (a)below) at December 31, 1995 are as follows: 1996: $97.5; 1997: $4.3; 1998: $2.5; 1999: $6.9; 2000: $6.8; 2001 and after $202.3. During 1995, 1994 and 1993, $23.0, $19.8 and $20.0, respectively, of interest expense on debt was charged to consolidated operations.
Reinsurance protection for General Insurance operations generally limits the net loss on any one risk to the following maximums (in thousands):fire and other physical perils-$300; accident and health-$15; workers' compensation-$1,000; other liability-$750; and loan credit guaranty-$200. A substantial portion of the mortgage guaranty insurance business is retained, with the exposure on any one risk currently averaging less than $22. Title insurance risk assumptions, based on the title insurance subsidiary's financial resources, are currently limited to $25,000 as to any one policy. The maximum amount of ordinary life insurance retained on any one life by the Life Insurance Group (without reinsurance) is $250.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Information regarding the Company’s financial condition and results of operations is included under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2000 Annual Report to Share Owners and is incorporated herein by reference.
2000 1999 1998 ---- ---- ---- REVENUES Dividends from subsidiaries* $ 27,362 $ 18,980 $ 77,639 Service fees from subsidiaries* 78,999 82,559 56,683 Net investment income 7,173 10,506 9,295 Realized investment gains (losses) 6,856 (5,817) 985 Other income (loss) (2000 sale of affiliate) 24,856 1,327 (406) ------- ------- ------- 145,246 107,555 144,196 ------- ------- ------- EXPENSES Operating and administrative 50,600 44,074 36,737 Interest - subsidiaries* 14,085 17,217 20,351 Interest - others 18,082 12,215 3,541 ------ ------ ------ 82,767 73,506 60,629 ------ ------ ------ INCOME BEFORE FEDERAL INCOME TAX AND OTHER ITEMS BELOW 62,479 34,049 83,567
•Beginning January 1, 2008, the MAIP replaces CAR as the method of distributing residual market risks and apportioning the residual market burden to companies in Massachusetts.
CAR annually approves the rules that set the value of credits and the cost to cede business. On March 9, 2005, CAR approved rules for the operation of the residual market for 2005 (the "2005 Rules"), and has subsequently sought clarification from the Suffolk Superior Court that the stay of the Approved Rules does not otherwise affect CAR's ability to implement the 2005 Rules. The 2005 Rules revise the value of credits based on the actual rate subsidies contained in the Commissioner's rate decision, and reduce the cost for ceding high loss ratio ERP business to CAR. The 2005 Rules would reduce the penalty in the current rules for ceding high loss ratio ERP business to CAR, and would therefore result in a reduction of the expense we incur because of our disproportionate share of high loss ratio ERP business. At the present time, we are unable to predict the outcome of the litigation surrounding the Approved Rules or the clarification sought by CAR regarding the 2005 Rules.
Net Earned Premiums. Net earned premiums for the year ended December 31, 2004 increased by $52,044, or 9.6%, to $592,292 from $540,248 for 2003. This was primarily due to the factors that increased direct written premiums, including increased premium rates on personal automobile, commercial automobile and homeowners product lines.
Interest Expenses. Interest expense for the year ended December 31, 2004 was $672 compared to $646 for the comparable 2003 period.
•an investment banking and sponsorship fee payable up to 2% of the aggregate consideration (i) paid by the Company for any Acquisition by the Company of all or substantially all of the outstanding capital stock, warrants or options or substantially all of the business or assets of another individual or business entity, or (ii) paid to the Company in connection with any sale by the Company of all or substantially all of its stock, warrants, options, business or assets or the stock, warrants, options, business or assets of any of its subsidiaries;
In continuation of its restructuring activity the Company executed an agreement, with an unaffiliated insurer, to 100% reinsure its group dental block of business effective September 1, 1997. The Company will continue to perform the administration on the business for a fee.
The Year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. As a result, those computer programs have time-sensitive software that recognize a date using "00" as the year 1900 rather than the year 2000. This could cause a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities.
The following is a summary of certain financial data of the Financial Services segment:
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of GWL&A Financial, Inc. and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.
4. Equity investments are carried at fair value with net unrealized gains and losses (net of deferred taxes) reported as accumulated other comprehensive income (loss) in stockholder's equity. The Company classifies its equity investments not accounted for under the equity method as available-for-sale. The Company uses the equity method of accounting for investments in which it has more than a minority interest, has influence in the entity's operating and financial policies, but does not have a controlling interest.
At December 31, 2003 and 2002, due to GWL&A Financial includes $656 and $(3,619) due on demand and, at each date, $175,035 of a subordinated note payable. The note, which was issued in 1999, bear interest and mature on June 30, 2048. Payments of principal and interest under this subordinated note shall be made only with prior written approval of the Commissioner of Insurance of the State of Colorado. Payments of principal and interest on this subordinated note are payable only out of surplus funds of the Company and only at such time as its financial condition is such that at the time of payment of principal or interest, its statutory surplus after the making of any such payment would exceed the greater of $1,500 or 1.25 times the company action level amount as required by the most recent risk based capital calculations. The amounts due on demand to GWL&A Financial bear interest at the public bond rate (4.59% and 4.75% at December 31, 2003 and 2002, respectively). The note payable bears interest at 7.25%.
of unearned premiums. If the unearned premiums were less than our expected claims and expenses after considering investment income, we would reduce the deferred costs.
The following table summarizes, as of December 31, 2009, the fair value of, and the amount of unrealized losses on, our investment securities, segregated by the time period each security has been in a continuous unrealized loss position:
changes in market interest rates since the date of purchase, current conditions in the capital markets and the impact of those conditions on market liquidity and prices generally, and the transfer of the investments from the available-for-sale classification to the held-to-maturity classification in January 2004. We expect to recover the carrying value of these securities since management does not intend to sell the securities and it is not more likely than not that we will be required to sell the security before the recovery of its amortized cost basis. In addition, none of the unrealized losses on debt securities are considered credit losses.
In addition, the Company held common securities in unconsolidated variable interest entities of $1,090,000, which are carried at cost.
- - Guaranty National's net premiums written of $491,232,000 for 1996 have been included in the Company's financial statements. Net premiums written for Guaranty National were $397,899,000 in 1995. Guaranty National's net premiums written for its personal lines, commercial lines, and collateral protection unit increased 30.4%, 5.9% and 46.3%, respectively, for 1996 as compared to 1995. The increase for personal lines was the result of Guaranty National's acquisition of Viking Insurance Company of Wisconsin ("Viking") in July 1995. Commercial lines premium increases, which resulted from the expansion of automobile physical damage and property programs, were partially offset by a planned reduction in commercial automobile liability premiums. The increase in the collateral protection unit was primarily due to two new products, automobile financing GAP and mortgage fire insurance.
On July 17, 1995, Orion issued 7 1/4% Senior Notes due 2005 with a face value of $100,000,000 (the "7 1/4% Senior Notes") in a public offering. The net proceeds from the offering were approximately $98,113,000, of which $46,500,000 was used to repay Orion's debt under a bank loan agreement and the balance was used for general corporate purposes. The indentures for the 7 1/4% Senior Notes and for Orion's 9 1/8% Senior Notes due 2002 limit the amount of liens and guarantees by the Company, and the Company's ability to incur secured indebtedness without equally and ratably securing the senior notes.
Maturities of the Company's notes payable are as follows: 1997 - $562,500; 1998 - $750,000; 1999 - $22,375,000; 2000 - $24,000,000; 2001 - $26,000,000; 2002 - $138,000,000; and 2005 - $100,000,000.
The Company is a holding company engaged through its subsidiaries in the business of marketing, underwriting and distributing a broad range of individual life insurance and annuity products to individuals and businesses in 49 states, the District of Columbia and the U.S. Virgin Islands. The Company's primary product offerings consist of whole life, universal life and term life insurance policies and fixed annuities. Since April 1, 1996 the Company has been a party to the Ameritas Joint Venture with Ameritas, through which it markets fixed annuities and sells variable annuities and variable life insurance products.
In accordance with GAAP, universal life insurance premiums and annuity deposits received are reflected as increases in liabilities for policyowner account balances and not as revenues. Revenues reported for universal life and annuity products consist of policy charges for the cost of insurance, administration charges and surrender charges assessed against policyowner account balances. Surrender benefits paid relating to universal life insurance policies and annuity products are reflected as decreases in liabilities for policyowner account balances and not as expenses. Amounts for interest credited to universal life and annuity policyowner account balances and benefit claims in excess of policyowner account balances are reported as expenses in the financial statements. The Company receives investment income earned from the funds deposited into account balances by universal life and annuity policyowners, the majority of which is passed through to such policyowners in the form of interest credited.
Miscellaneous benefits have decreased significantly over the past two years primarily due to the Company's exit from several group life and long-term disability reinsurance pools in 1995 and the sale of the Company's remaining group life operation in 1996.
The fixed maturity securities portfolio consists primarily of investment grade corporate fixed maturity securities, high-quality MBS and United States government and agency obligations. As of December 31, 1997 fixed maturity securities were $7,927.5 million, or 88.9% of the carrying value of invested assets with public and private fixed maturity securities constituting $7,561.9 million, or 95.4%, and $365.6 million, or 4.6%, of total fixed maturity securities, respectively.
Below-investment grade fixed maturity securities as of December 31, 1997 included the securities of 49 issuers representing 2.4% of total invested assets, with the largest being a $10.6 million investment.
The Company held $286.2 million of policy loans on individual insurance products as of December 31, 1997. Policy loans are permitted to the extent of a policy's contractual limits and are fully collateralized by policy cash values.
The Life Company presently leases space for 60 district and detached offices in Delaware, Maryland, the District of Columbia, West Virginia, Virginia, Tennessee and North Carolina. The termination dates on these leases range from 1994 to 2003; all of the longer term leases being for district office purposes. The maximum annual rent paid under any lease is $25,550. The annualized rent under all leases in effect on December 31, 1993 was approximately $795,000.
We do not own any real property. We leased our Tampa corporate office and paid annual rent of $79,715 in 2015, $100,560 in 2016 and $95,083 in 2017. Through September 2018, our total rent expense will be $74,356. The monthly rent through October to December 2018, will be $8,123 per month. The term of the lease is for 5 years beginning in May of 2014 and ending on June 30, 2019. We currently lease approximately 3,133 square feet and pay approximately $7,697 per month. We consider the condition of our leased property to be average and adequate for our current needs. In our Tampa office we maintain clinical operations, business development, accounting, financial and regulatory reporting and other management information systems, and provider and member service functions.
A quantitative summary of our revenues by source category for 2017, 2016 and 2015 follows:
OSA services increased to $564,117 in 2017 from $70,899 in 2016 due to the growth in the number of contracts that the Company had due to an enhanced marketing effort, including extensive travel.
Board of Directors Fees decreased $150,000 due to accruals of Board fees for prior years.
Realized Investment Gains for the year ended December 31, 2010 of $2.0 million reflects the net gain realized from sales of securities during the year. We had no significant investment gains in the year ended December 31, 2009.
Other Operating Expenses for the years ended December 31, 2010 and 2009 were $7.5 million and $5.8 million, respectively. Such expenses include administrative compensation and related benefits, corporate insurance, professional fees, office lease and related expenses, information system expense, and other general and administrative costs. The $1.7 million increase is primarily attributable to an increase for administrative compensation and related benefits. As of December 31, 2010, we had 76 employees compared to 58 employees as of December 31, 2009.
As of December 31, 2010, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.
Reinsurance. In the normal course of business, the Company seeks to reduce the loss that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers. Amounts recoverable from reinsurers are estimated in a manner consistent with the reinsured policy. Reinsurance premiums and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums ceded to other companies have been reported as a reduction of premium income. Prepaid reinsurance premiums represent the unexpired portion of premiums ceded to reinsurers.
The Company regularly reviews its individual investment securities for OTTI. The Company considers various factors in determining whether each individual security is other-than-temporarily impaired, including:
During the years ended December 31, 2010 and 2009, there were no recoveries pertaining to reinsurance contracts that were deducted from losses incurred and there were no such amounts recoverable at December 31, 2010 and 2009. Thus, there were no concentrations of credit risk associated with reinsurance receivables as of December 31, 2010 and 2009. At December 31, 2010 and 2009, prepaid reinsurance premiums related to 18 and 26 reinsurers, respectively.
(IN THOUSANDS) 2006 2005 ----------- ----------- Fixed income securities (1) $ 268,058 $ 267,545 Short-term 8,264 3,824 ----------- ----------- Total investments $ 276,322 $ 271,369 =========== =========== Cash $ 23,352 $ 8,349 Reinsurance recoverable from ALIC 19,131,870 18,350,983 Reinsurance recoverable from non-affiliates 1,203,864 1,019,850 Contractholder funds 18,195,622 17,462,104 Reserve for life-contingent contract benefits 2,126,455 1,892,194 Separate accounts assets and liabilities 3,097,550 2,718,509
At December 31, 2006, all securities in the fixed income portfolio were rated investment grade, which is defined as a security having a rating from The National Association of Insurance Commissioners ("NAIC") of 1 or 2; a rating of Aaa, Aa, A or Baa from Moody's or a rating of AAA, AA, A or BBB from Standard and Poor's, Fitch or Dominion or a rating of aaa, aa, a or bbb from A.M. Best; or a comparable internal rating if an externally provided rating is not available.
(IN THOUSANDS) 2006 2005 2004 -------- -------- -------- Common stock, additional capital paid-in and retained income $276,804 $268,544 $259,757 Accumulated other comprehensive income (178) 707 5,479 -------- -------- -------- Total shareholder's equity $276,626 $269,251 $265,236 ======== ======== ========
(IN THOUSANDS) 2006 2005 ----------- ----------- Balance, beginning of year $17,462,104 $16,231,489 Deposits 2,668,782 2,822,820 Interest credited 865,479 779,071 Benefits (512,353) (443,444) Surrenders and partial withdrawals (1,962,149) (1,665,497) Net transfers to separate accounts (58,681) (70,542) Contract charges (255,710) (206,363) Other adjustments (11,850) 14,570 ----------- ----------- Balance, end of year $18,195,622 $17,462,104 =========== ===========
In our opinion, such financial statements present fairly, in all material respects, the financial position of Lincoln Benefit Life Company as of December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
Title insurance personnel expenses increased 32.3% in 1998 over 1997 and 20.6% in 1997 over 1996. These increases were primarily attributable to the costs incurred servicing the increasing volume of title orders at the Company's direct operations and, to a lesser extent, acquisition activity and salary increases, offset in part by productivity gains as measured by new orders per person. Contributing to the increases for 1998 and 1997 was an increased volume of labor intensive residential resale transactions. The Company's direct operations opened 1,585,400, 1,173,300 and 1,026,900 title orders in 1998, 1997, and 1996, respectively, representing increases of 35.1% in 1998 over 1997 and 14.3% in 1997 over 1996.
Pursuant to various insurance and other regulations, the maximum amount of dividends, loans and advances available to the Company in 1999 from its principal subsidiary, First American Title Insurance Company, is $158.5
At December 31, 1998, the Company's remaining borrowings under its amended bank credit agreement consisted of fixed rate indebtedness of $2.0 million, maturing in April 1999 and bearing interest at 9.38% per annum.
Effective January 1, 1998 the Company adopted Statement of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." SFAS No. 132 revises employers' disclosures about pension and other postretirement benefit plans but does not change the measurement or recognition of those plans.
Net realized capital losses were $1,140 in 1995 as compared to net realized capital losses of $2,533 in 1994. This loss is due to realized net losses of $1,962, with $822 being transferred to the IMR (Interest Maintenance Reserve) in 1995 as compared to realized net losses of $7,332 in 1994, with $4,799 being transferred to the IMR.
Net investment income increased by $2,427 over 1993; this increase is attributable to increased invested assets.
In accordance with the life insurance laws and regulations under which C.M. Life operates, it is obligated to carry on its books, as liabilities, actuarially determined reserves to meet its obligations on outstanding contracts. Reserves are based on mortality tables in general use in the United States and are computed to equal amounts that, with additions from premiums to be received, and with interest on such reserves computed annually at certain assumed rates, will be sufficient to meet C.M. Life's policy obligations at their maturities or in the event of an insured's death. In the accompanying financial statements, these reserves are determined in accordance with statutory regulations which is a generally accepted accounting principle for wholly owned stock life insurance subsidiaries of mutual life insurance companies.
The Board of Directors of Connecticut Mutual has authorized the contribution of funds to C.M. Life sufficient to meet the capital requirements of all states in which C.M. Life is licensed to do business. Substantially all of the statutory stockholder's equity is subject to dividend restrictions relating to various state regulations which limit the payment of dividends without prior approval.
C.M. Life makes only limited use of derivative instruments (as defined in Statement of Financial Accounting Standards No. 119 `Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments') which include swaps, options and futures, to hedge equity exposure and to hedge reinvestment of proceeds from major anticipated transactions. Derivatives are not used for trading purposes. C.M. Life held one swap investment totaling $12,000 notional amount as of December 31, 1995.
The estimated fair values for assets and liabilities, which the Company has identified as investment contracts and borrowed funds, are as follows:
Provision for Income Taxes. Our provision for income taxes decreased $2.8 million or 3.8% to $70.1 million from $72.9 million in 2000. Our effective tax rate of 35.1% in 2001 was 4.2 percentage points higher than the effective tax rate of 30.9% in 2000. The higher effective tax rate in 2001 was primarily the result of an intercompany agreement with an affiliate which assumed, on a non-recourse basis, the liability for certain tax exposure items in 2000.
QSPE’s raise cash by issuing beneficial interests (rights to cash flows from the assets) primarily to GE Capital-sponsored special purpose entities that issue highly-rated commercial paper to third-party large institutional investors. GE Capital’s sponsored special purpose entities use commercial paper proceeds to obtain beneficial interests in the financial assets of qualified SPE’s, including QSPE’s that have acquired financial assets from us, as well as financial assets originated by multiple third parties.
Before December 31, 2001, we amortized goodwill over our estimated period of benefit on a straight-line basis; we amortized other intangible assets on appropriate bases over their estimated lives. No amortization period exceeded 40 years. When an intangible asset’s carrying value exceeded associated expected operating cash flows, we considered it to be impaired and wrote it down to fair value, which we determined based on either discounted future cash flows or appraised values.
Software - Costs incurred for internally developed and purchased software are capitalized after technological feasibility is established. Capitalization ceases when the software is ready for its intended use and is amortized over a period of 3 to 5 years.
We evaluate the economic, liquidity and credit risk related to the above SPEs and believe that the likelihood is remote that any such arrangements could have a significant adverse effect on our operations, cash flows, or financial position. Financial support for certain SPE’s is provided under credit support agreements, in which GE Financial Assurance provides limited recourse for a maximum of $119 million of credit losses in qualifying entities. Assets with credit support are funded by demand notes that are further enhanced with support provided by GE Capital. We may record liabilities, for such guarantees based on our best estimate of probable losses. To date, no QSPE has incurred a loss.
Summarized quarterly financial data for the years ended December 31, 2002 and 2001 were as follows:
The titles in this chart are those used by Swiss Re, Zurich, worldwide excluding North America and certain other territories tor which the corresponding hierarchical titles are as follows: General Manager
The premium volume in Nuciear Energy reinsurance shows a growth which, while reflecting the effect of foreign currency rates, is also due to new business. The year under report remained largely claims-free. The profit shown is therefore correspondingly high and is allocated to reserves for possible major losses.
Gross premiums in the year under report totalled Sw.frs. 3,920.6 million, as against Sw.frs. 3,581.1 million in the previous year. After deduction of retrocession premiums, the net premiums amounted to Sw. frs. 3,147.5 million, an increase of 11.2% over 1983.
Balance Sheet Assets Cash) in hiand, postal bank account, bank balances Current-account balances Gasti deposits Fixed-interest securities Loans (including mortgages) Stiares Real estate Holdings Loans to Group companies Transitory entries and otfier assets
At the Swiss Reinsurance Company (UK) Limited, Lon­ don, and the Paiatine insurance Company Limited, Lon­ don, gross premiums in the Non-Life sector rose by 6.7% to £ 84.4 million. This increase was mainly due to higher conversion rates for business settled in US dollars. The underwriting result showed a slight improvement, but re­ mains unsatisfactory. - It was possible to increase the gross amount of Life business in force to £ 2,400 million, and the underwriting result again improved. - Despite a further rise in investment income, the overall result was still a loss of £ 0.5 million (previous year, loss of £ 1.6 mil­ lion). No dividend was paid, as in the previous year.
Casfi in fiand, postal bank account, bank balances 422 89 522 364 Current-account balances 2,160 268 2,436 2,283 Casfi deposits 2,182 120 2,302 2,356
The Group accounts were compiled according to the published statements as at 31st December, 1984, of the companies belonging to the Swiss Re Group. Only the resuits of the Bavarian Reinsurance Company Limited and the European General Reinsurance Company of Zurich had not yet been published at the time of the consolida­ tion.
Cf the foreign currencies used in the Group accounts, the U.S. dollar showed a very pronounced higher valuation against the Swiss franc than at the previous year's clos­ ing date, whilst the Canadian and the Australian dollar, as well as the German mark, were valued considerably higher; in contrast, the South African rand and the pound sterling were valued lower (cf. table on page 22).
In addition to commission payments and profit commis­ sion reimbursements, this item includes the general ex­ penses incurred In insurance operations.
Non-Life Insurance Unearned premiums 1,776 2,117 3,893 3,411 Outstanding claims reserve 7,868 1,493 9,361 7,795 Reserve for profit commission 19 591 610 479
Broker: Insurance or reinsurance intermediary with no contractual connection to a particular ^ insurer or ^ re­ insurer.
Net premiums: Reinsurance premium of a business year less ^ retrocession premiums.
NET PREMIUMS EARNED. For the reasons described above for gross premiums written, the Company's net premiums earned for 1997 increased 67.3% to $92.8 million from $55.5 million in 1996.
DIVIDENDS PROVIDED FOR POLICYHOLDERS. With the advent of open rating in California and an emphasis in most states in which the Company operates on, among other things, competitive pricing at inception, the Company's dividends provided for policyholders decreased significantly commencing in late 1995. Currently, the Company does not anticipate paying additional significant policyholder dividends on 1997 and prior policy years. Therefore, the related accrual was reduced by $2.7 million in 1997.
OVERVIEW. The Company's Year 2000 Project (the "Project") is steadily proceeding. The Project involves resolving the potential impact of the Year 2000 on the processing of date-sensitive information by the Company's internal computer systems and equipment and by the computer systems and equipment utilized by third parties with whom the Company maintains material relationships.
AGENCY SYSTEM. The Company has completed the process of out-sourcing its Agency System needs to James G. Parker Insurance Associates ("Parker"), one of the founders of the PAULA Trading Company. Parker utilizes an agency software system provided by a third party vendor which is Year 2000 compliant according to a written statement received from the vendor.
UNDERWRITING SYSTEM. The Company's in-house Underwriting system is not yet fully Year 2000 compliant. The Company has therefore chosen to make its existing Underwriting system Year 2000 compliant using a technique known as "windowing," which is a solution that will work for many years, but not permanently. Windowing is faster and requires less testing than permanent solutions. The Company believes permanent solutions are not necessary in light of the new system under development.
The Company does not believe that it is materially exposed to any Company-specific Non-IT System Year 2000 issues other than those addressed by purchasing new mainframe computers due to the nature of the Company's business. The Company has no material property, plant or equipment.
At December 31, 1998, the Company had a tax net operating loss carry forward of $2,564 that expires in 2018.
The amortization of deferred policy acquisition costs for 1999 includes $4.2 million of additional amortization due to the higher than expected level of terminations for long-term and short-term disability experienced during the fourth quarter of 1999. Also included in 1999 is $3.3 million of amortization related to the write-off of the unamortized balance of deferred costs related to certain discontinued products in the foreign operations.
Revenue in the Corporate segment was $48.1 million in 2000, $67.7 million in 1999, and $31.7 million in 1998. As previously discussed under "Results of Operations," during 1999 the Company recorded refunds from the Internal Revenue Service relating to the final settlement of remaining issues for the 1986 through 1992 tax years. The interest on the refunds was $35.4 million and is included in 1999 revenue.
Below-investment-grade bonds are inherently more risky than investment-grade bonds since the risk of default by the issuer, by definition and as exhibited by bond rating, is higher. Also, the secondary market for certain below-investment- grade issues can be highly illiquid. Management does not anticipate any liquidity problem caused by the investments in below-investment-grade securities, nor does it expect these investments to adversely affect its ability to hold its other investments to maturity.
Basis of Presentation: The accompanying consolidated financial statements have been prepared on the basis of generally accepted accounting principles (GAAP). Such accounting principles differ from statutory accounting practices prescribed or permitted by state regulatory authorities (see Note 16). The consolidated financial statements include the accounts of UnumProvident Corporation and its subsidiaries (the Company). Material intercompany transactions have been eliminated. Certain prior year amounts have been reclassified to conform to current year presentation.
Statement of Financial Accounting Standards No. 133 (SFAS 133), Accounting for Derivative Instruments and Hedging Activities, and Statement of Financial Accounting Standards No. 138 (SFAS 138), Accounting for Certain Derivative Instruments and Certain Hedging Activities - an Amendment of FASB Statement No.
The Company routinely uses forwards and futures to protect margins by reducing the risk of changes in interest rates between the time of asset purchase and the associated sale of an asset or sale of new business.
The Company has several annual incentive plans for certain employees and executive officers that are designed to encourage achievement of certain goals. Compensation cost recognized in the consolidated statements of operations for annual incentive plans is $28.8 million, $6.6 million, and $38.1 million for 2000, 1999, and 1998, respectively.
Assumptions used in estimating compensation cost for Unum plans in 1998 are as follows: