felanders/preprocessed huggingface dataset:
At December 31, 1996, the Partnership was operating with a revenue backlog of approximately $.39 million.
Independent Auditors' Report. . . . . . . . . . . . . . . . . . . . . 16
A summary of the initial shareholders' equity resulting from the pro forma adjustments is as follows:
Cash and cash equivalents, trade accounts receivable, accounts payable and accrued expenses - The carrying amounts approximate fair value because of the short maturity of these instruments.
Interim construction loan - The carrying amount of the interim construction loan approximates market because the interest rate is based on prime lending rates.
The credit provisions in 1996 and 1995 of $93,871 and $478,075, respectively, can be attributed to the recovery of certain accounts receivable during such years that had been charged-off in previous years. A significant portion of the credit provision reflected in 1995 can be attributed to one account receivable totaling approximately $376,000 which was fully reserved for in 1994 due to significant uncertainties surrounding its collection, but was ultimately collected during 1995.
The 2013 and 2012 growth in gross written premium from our insurance underwriting segments occurred primarily in: 1) the U.S. Property & Casualty segment, from new business lines started in 2011 and increased writings of our disability product, 2) the Accident & Health segment, from the growth of our medical stop-loss product and 3) the International segment, from new business and price increases in 2012 in our energy line of business. Our net written premium was flat in 2013 compared to 2012 due to increased quota share reinsurance in 2013. See the “Segment Operations” section below for further discussion of the relationship and changes in premium revenue within each insurance segment.
The various lines of business included in Other recognized net favorable development of $24.2 million, $12.1 million and $8.3 million in 2013, 2012 and 2011, respectively. One product line, which is a run-off assumed quota share contract for business that we wrote from 2003 - 2008, recognized favorable development of $17.0 million in 2013, $5.6 million in 2012 and $7.5 million in 2011, due to continued better than expected actuarial results since the prior annual review. The remaining net favorable development in Other was not material for any one product line in any of the years presented.
Our International segment pretax earnings decreased $72.2 million in 2013, compared to 2012, primarily due to the impact of higher catastrophe losses in 2013 and net adverse loss development in 2013, compared to net favorable development in 2012. Segment earnings increased $78.2 million in 2012, compared to 2011, due to lower catastrophe losses and increased net earned premium in 2012.
The favorable development in energy included the release of $3.0 million, $5.1 million and $5.1 million in 2013, 2012 and 2011, respectively, of reserves related to prior years’ catastrophes. The remaining 2013 development related to the 2008 - 2010 and 2012 accident years, and the remaining 2012 and 2011 development related to the 2010 and prior accident years, based on detailed review of our outstanding claims during each annual review. Our actual loss experience for energy and U.K. professional liability in 2013, 2012 and 2011 was better than our actuarial expectations in the current year reserve review compared to the prior year reserve review.
The net favorable development in liability included favorable development related to our U.K. professional liability product as follows: 1) 2013 - $16.1 million (for 2011 and prior accident years); 2) 2012 - $12.8 million (for 2010 and prior accident years); and 3) 2011 - $18.8 million (for 2010 and prior accident years). In addition, there was net (favorable) adverse development of $1.5 million in 2013, ($7.7) million in 2012 and $6.6 million in 2011, primarily related to other liability business written through our syndicate for accident years 2011 and prior. The U.K. professional liability actual loss experience in 2013, 2012 and 2011 was better than our actuarial expectations in the current year reserve review compared to the prior year reserve review.
The information set forth under the caption "Selected Financial Data" in the Annual Report to Shareholders of Argonaut Group for the fiscal year ended December 31, 1996, is incorporated herein by reference. See Exhibit Index.
In addition, the Company considered the carrying value of the Company’s stockholders’ equity as compared with the Company’s market capitalization at year end and the implied control premium to reconcile these amounts:
We are also subject to various other administrative actions and inquiries into our conduct of business in certain of the states in which we operate. While we cannot predict the outcome of the various regulatory and administrative matters referenced above, we believe that we have adequately reserved for these matters and that any outcome will not materially affect our consolidated financial condition or results of operations.
Cash payments on title claims have risen for each of the last three years, as follows: $136.8 million, $117.6 million, and $107.2 million for the years ended December 31, 2008, 2007, and 2006, respectively. This increase is consistent with our historical experience that title claims are filed more quickly, and there is a higher incidence of agency defalcations in declining real estate markets. While it is difficult to predict the amount of cash to be paid for policy claims, our expectation for 2009 is that claims payments will be generally equivalent to the 2008 level, and begin to decline in 2010. The insurance regulators of the states in which our underwriters are domiciled require our statutory premium reserves to be fully funded, segregated and invested in high-quality securities and short-term investments. At December 31, 2008, investments funding the statutory premium reserve aggregated $384.2 million and our statutory estimate of claims that may be reported in the future totaled $326.4 million. In addition to this restricted cash and investments, we had unrestricted cash and investments (excluding investments in affiliates) of $200.1 million which is available for their operations, including claims payments.
Capital resources. We consider our capital resources to be adequate, and we currently have no plans to seek any debt or equity funding in 2009. Other than scheduled maturities of debt, in 2009, operating lease payments and anticipated claims payments, we have no material commitments. Total debt and stockholders’ equity were $135.3 million (excluding a fully-collateralized line of credit of $222.7 million - see Note 10 to the consolidated financial statements), and $493.8 million, respectively, at December 31, 2008. We expect that cash flows from operations, cash flows from other sources such as income tax refunds and cash available from our underwriters, subject to regulatory restrictions, will be sufficient to fund our operations, including claims payments. However, to the extent that these funds are not sufficient, we may be required to borrow funds on terms less favorable than we currently have, or seek funding from the equity market, which may be on terms that are dilutive to existing shareholders.
Independence Holding Company, a Delaware corporation (NYSE: IHC), is a holding company principally engaged in the life and health insurance business through: (i) its insurance companies, Standard Security Life Insurance Company of New York ("Standard Security Life"), Madison National Life Insurance Company, Inc. ("Madison National Life"), and Independence American Insurance Company (“Independence American”); and (ii) its marketing and administrative companies, including IHC Specialty Benefits Inc., IHC Carrier Solutions, Inc. and a majority interest in PetPartners, Inc. (“PetPartners”). IHC also owns a significant equity interest in Ebix Health Exchange Holdings, LLC (“Ebix Health Exchange”), an administration exchange for health insurance. Standard Security Life, Madison National Life and Independence American are sometimes collectively referred to as the “Insurance Group”. IHC and its subsidiaries (including the Insurance Group) are sometimes collectively referred to as the "Company", or “IHC”, or are implicit in the terms “we”, “us” and “our”.
oOn December 31, 2017, as a result of the Tax Act, the Company recorded a deferred income tax expense of $9.4 million due to the re-measurement of deferred tax assets, liabilities and related valuation allowance.
oThe loss ratio in 2018 was lower than in 2017 due to better experience on 2018 business and favorable development on 2017 reserves primarily related to hospital indemnity and short term medical business. In addition, 2017 included unfavorable developments related to 2016 reserves.
Results of Operations for the Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017
The Company had $30.8 million and $32.2 million of cash, cash equivalents and restricted cash as of December 31, 2018 and 2017, respectively.
As of April 30, 2012, the Company had assets equal to $4,343, comprised exclusively of cash. This compares with assets of $7,808, comprised exclusively of cash, as of April 30, 2011. The Company’s current liabilities as of April 30, 2012 totaled $54,044 comprised of $14,044 of accounts payable and $40,000 due to a related party. This compares with total liabilities of $30,950, comprised of $10,950 of accounts payable and $20,000 due to a related party, as of April 30, 2011. The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 to the financial statements, the Company has suffered recurring losses from operations and its total liabilities exceed its total assets. The Company is a shell company as defined in Rule 12b-2 of the Exchange Act. The Company's business is to pursue a business combination through acquisition, or merger with, an existing company. The Company's ability to continue as a going concern is dependent upon its ability to develop additional sources of capital, locate and complete a merger with another company, and ultimately achieve profitable operations. No assurances can be given that the Company will be successful in locating or negotiating with any target company. This raises substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The weighted-average number of common shares outstanding for computing basic EPS for the years ended April 30, 2012 and 2011 were 1,848,853 and 994,729, respectively, as adjusted for the reverse stock split effective April 27, 2011.
The information under the caption "Selected Financial Data" on page 26 of the Annual Report is incorporated herein by reference.
Administrative Service Fees. Administrative service fees include amounts paid to us for administrative services provided to self-insured contracts. We provide a range of customer services pursuant to our administrative services only (“ASO”) contracts, including claims administration, billing, access to our provider networks and membership services. TSS has a contract with the Government of Puerto Rico, to administer the provision of the physical health component of the Medicaid program in designated service regions in Puerto Rico. On July 1, 2013, TSS extended this contract for a 12-month period. This amendment also transferred the administration of the three remaining service regions to TSS upon completion of a transition period, which ended on October 1, 2013. On February 5, 2014 the Government of Puerto Rico issued an RFP for the Medicaid business and announced its intention to convert the current program to a managed care organization model, under which the selected contractors will be at risk for the provision of the physical and behavioral health components of the program. We are currently evaluating the requirements of this RFP and have not concluded whether or not we will participate in the competitive bid process to retain the Medicaid business. Administrative service fees are recognized in the month in which services are provided.
Net proceeds from short-term borrowings decreased by $30.0 million during the year ended December 31, 2013, addressing timing differences between cash receipts and disbursements.
On December 21, 2005, we issued and sold $60.0 million of our 6.6% senior unsecured notes due December 2020 (the “6.6% notes”). The 6.6% notes were privately placed to various institutional accredited investors. The notes pay interest each month until the principal becomes due and payable. These notes can be redeemed after five years at par, in whole or in part, as determined by us. On October 1, 2010 we repaid $25.0 million of the principal of these senior unsecured notes. The 6.6% notes contain certain non-financial covenants. At December 31, 2013, we are in compliance with these covenants.
Federal regulations require that we begin using a new set of standardized diagnostic codes, known as ICD-10, by October 2014, which will require a significant information technology investment. In order to become ICD-10 compliant, we changed TSS’s core business application, which we implemented in the third quarter of 2012. We completed the version upgrade process of such business application in the third quarter and expect to have completed the migration of our membership on time to comply with the current ICD-10 deadline. The estimated cost of the core business application upgrade and ICD-10 compliance efforts is approximately $6.5 million.
Our secured term loan, with original principal balance of $41,000, restricts the amount of dividends that we and our subsidiaries can declare or pay to shareholders. Under this secured term loan, dividend payments cannot be made in excess of the accumulated retained earnings of the paying entity.
On January 26, 2006, the Service officially closed the audit of the parent company’s consolidated federal income tax returns for the 1997 to 2001 periods. As a result of certain favorable resolutions, the Company’s consolidated statement of operations for the year ended December 31, 2005 includes an income tax benefit of $33 million, reflecting a reduction in the Company’s liability for income taxes.
Stockholder’s equity increased by $270 million, from $2.066 billion at December 31, 2005, to $2.336 billion at December 31, 2006, primarily as a result of net income.
We believe that the most critical accounting policies relate to the reporting of reserves for loss and LAE, including losses that have occurred but have not been reported prior to the reporting date, amounts recoverable from third party reinsurers, deferred policy acquisition costs, deferred income taxes, the impairment of investment securities, intangible assets and the valuation of stock based compensation (see Note 2 to the Consolidated Financial Statements - “Accounting Policies and Basis of Presentation”).
We have changed the presentation of our business results by reclassifying our previously reported continuing operations based on reporting standards for insurance underwriters. The prior period disclosures have been restated to conform to the current presentation. General corporate overhead not incurred by our underwriting business is allocated to other operating expenses.
The following table summarizes the changes in the results of our franchise business discontinued operations (in thousands) for the periods indicated:
Homeowners results were profitable in 1995, benefiting from lower catastrophe losses, fewer large losses and a reduction in non-catastrophe loss frequency. Results were adversely affected by significant catastrophe losses in each of the past three years, but particularly in 1994 due to the winter storms and, to a lesser extent, the California earthquake. Catastrophe losses represented 10.4 percentage points of the loss ratio for this class in 1995 compared with 19.6 percentage points in 1994 and 13.4 percentage points in 1993. Other personal coverages, which include insurance for personal valuables and excess liability, were increasingly profitable in 1994 and 1995. Personal excess liability results improved in both years due to favorable loss experience. Our automobile business produced profitable results in each of the last three years. Results in 1995 were particularly strong due to lower loss frequency and severity. Automobile results were adversely affected each year by losses from the mandated business that we are required by law to accept for those individuals who cannot obtain coverage in the voluntary market.
Life and health insurance earnings after taxes were $28 million in 1995 compared with $14 million in 1994 and $62 million in 1993. Premiums and policy charges were $623 million in 1995 compared with $836 million in 1994 and $801 million in 1993.
In consideration of the difficult environment in most real estate markets, we have curtailed our construction of new office buildings in recent years. We have focused instead on leasing newly constructed facilities and maintaining established properties at high occupancy levels. Current development activities consist almost exclusively of preconstruction type efforts such as site planning, zoning and similar activities. As a consequence, we expect revenues from our commercial real estate activities for the next several years to come from ongoing income from owned properties and from management and financing
The Corporation filed a shelf registration statement which the Securities and Exchange Commission declared effective in June 1995, under which up to $400 million of various types of securities may be issued by the Corporation or Chubb Capital. No securities have been issued under this registration.
The Company’s critical accounting policies and estimates are discussed below. For a full description of these and other accounting policies see Notes to Financial Statements, Note 1 Summary of Significant Accounting Policies, for further discussion.
For fixed maturity securities, premiums are amortized to the earlier of the call or maturity date, discounts are accreted to the maturity date, and interest income is accrued daily. For equity securities, dividends are recognized on the ex-dividend date. Investment transactions are recorded on the trade date. Realized gains and losses on the sale or maturity of investments are determined on the basis of specific identification.
The Company had a deferred tax asset at December 31, 2016 and December 31, 2015 for the benefit of net operating loss carry forwards of $627.9 million (net of an ASC 740 reduction of $12.5 million) and 577.8 million (net of an ASC 740 reduction of $9.7 million), respectively, with a carry forward period of fifteen years that will expire at various dates between 2023 and 2031. At both December 31, 2016 and December 31, 2015, the Company had a deferred tax asset for a capital loss carry forward of $0.1 million for federal income tax purposes with a carry forward period of five years that will expire in 2018. At December 31, 2016 and December 31, 2015, the Company had a deferred tax asset for foreign tax credit carry forward of $9.8 million and $8.9 million, respectively, with a carry forward period of ten years that will expire at various dates up to 2026. Finally, the Company had a deferred tax asset for an Alternative Minimum Tax credit carry forward for federal income tax purposes of $4.2 million at both December 31, 2016 and December 31, 2015, with an indefinite carry forward period.
The Company’s $0.6 million of gross unrealized losses within the commercial MBS sector relates to securities with a fair value of $31.7 million, as fundamentals continued to slowly improve during the year as the pace of credit deterioration moderated and financing availability remained high. Commercial real estate valuation increases have slowed as peaked levels have been reached.
Details underlying securities in a continuous gross unrealized loss and OTTI position for AFS investment grade securities are as follows:
Operating revenues of OmniCare-MI decreased in 1997 due primarily to a net decrease in enrollment rates of approximately 2%, which resulted in decreased management fees to the Company of approximately $1.4 million. These decreases were offset by a $2.0 million increase in management fees from PPC, attributable primarily to increased PPC enrollment of approximately 52%, offset by a decrease in premium rates of approximately 15% and 11 months of management fees in 1997 compared to 12 months in 1996.
The Company's investments are generally managed to match related insurance and policyholder liabilities. The Company, in conjunction with the decrease in average yield of the Company's fixed maturity portfolio has decreased the average crediting rate for the insurance and investment products. The comparison of investment return with insurance or investment product crediting rates establishes an interest spread. The minimum interest spread between earned and credited rates is 1% on the "Century 2000" universal life insurance product, the Company's primary product. The Company monitors investment yields, and when necessary takes action to adjust credited interest rates on its insurance products to preserve targeted spreads. Over 60% of the insurance and investment product reserves are crediting 5% or less in interest and 39% of the insurance and investment product reserves are crediting 5.25% to 6% in interest. It is expected that the monitoring of the interest spreads by management will provide the necessary margin to adequately provide for associated costs on insurance policies the Company has in force and will write in the future.
Cost of insurance acquired and cost in excess of net assets purchased decreased 7% in 1995 compared to 1994. The decrease is directly attributed to normal amortization during the period. The Company did not recognize any impairments during the period.
Consolidated Statements of Operations. . . . . . . . . . . . 36
EARNINGS PER SHARE Earnings per common share amounts are based on the weighted average number of Common and Class A Common Shares outstanding and the dilutive effect, if any, of outstanding stock options. The sum of Common and Class A Common Stock is used because the two classes are identical except for certain transfer restrictions. Earnings per common share assuming full dilution are based on the actual shares outstanding and the dilutive effect, if any, of outstanding stock options. The assumed conversion of these options was anti-dilutive or had no impact for all periods presented.
In connection with the Tranche A and Tranche B loans, Possible Dreams issued warrants to purchase 250 shares (12.5%) of Possible Dreams Class B Common Stock at a price of $.01 per share. The Class B Common Stock is non-voting and convertible at any time into voting, Class A Common Stock of Possible Dreams. The warrants were valued at approximately $428,571 and recorded as an original issue discount. The discount will be amortized over the life of the debt using the effective interest method. The Tranche A and B loans contain financial and prepayment of principal covenants. If Possible Dreams' cash flows meet certain thresholds, as defined in the loan agreements, payments due under the Tranche A and B loans will become accelerated.
We have audited the accompanying balance sheets of Bowen, Miclette, Descant & Britt (the "Company") as of September 30, 1996 and 1995 and the related statements of income, partners' equity and cash flows for each of the three years in the period ended September 30, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
The accompanying Statements of Income reflect results for the years ended September 30, 1996, 1995 and 1994 of BMDB. The Company conducts operations as a retail insurance agency collecting commissions on property and casualty, life and health policies and bonds placed with insurance carriers.
Life insurance and annuity liabilities are generally long-term in nature although subject to earlier surrender as a result of the policyholder's ability to withdraw funds or surrender the policy, subject to surrender and withdrawal penalties. The Company believes its policyholder liabilities should be backed by an investment portfolio that generates predictable investment returns. The Company seeks to limit exposure to risks associated with interest rate fluctuations by concentrating its invested assets principally in high quality, readily marketable debt securities of intermediate duration and by attempting to balance the duration of its invested assets with the estimated duration of benefit payments arising from contract liabilities.
In addition, factors such as regulation, competition, interest rates, taxes and general economic conditions affect the Company’s profitability.
Management’s best estimate of the gross reserve for losses and loss expenses at December 31, 2007 was $926.1 million. The following table sets forth a breakdown between gross case reserves and gross IBNR by segment at December 31, 2007.
Reinsurance receivable and reinsurance recoverable balances include amounts owed to us in respect of paid and unpaid ceded losses and loss expenses, respectively. The balances are presented net of a reserve for non-recoverability. As at December 31 2008, reinsurance recoverable balances were $208.8 million and reinsurance receivable balances were $1.4 million. At December 31, 2008, the Company had fully collateralized reinsurance balances related to Hurricane Ike of $8.5 million and $69.5 million on the property and marine lines, respectively. In establishing our reinsurance recoverable balances, significant judgment is exercised by management in determining the amount of unpaid losses and loss expenses to be ceded as well as our ability to cede losses and loss expenses under our reinsurance contracts.
The Company examined several sources in the determination of an appropriate, risk-adjusted discount rate. In doing so, the Company concluded that liquidity risk was the primary driver of the discount rate as prepayment, default and credit risk are incorporated into the underlying cash flows and thus it is not appropriate to include the associated risks in the discount rate. The risk adjusted discount rate used in the income valuation calculation was the three month over USD LIBOR at December 31, 2008 plus a spread of 564 basis points, representing the average spreads of BBB U.S. Corporate Securities over U.S. Treasuries for the last six months of 2008. While the majority of the identified RMBS securities are rated AAA, a number have been downgraded, mostly to BBB. The Company has conservatively used BBB as a benchmark in determining an appropriate discount rate.
determination that goodwill has suffered impairment in value. Any determined impairment would be reflected as an expense in the period identified.
Accident year refers to the accounting period in which the insured event becomes a liability of the insurer. For occurrence policies the insured event becomes a liability when the event takes place; for claims-made policies the insured event becomes a liability when the event is first reported to the insurer. We believe that measuring losses on an accident year basis is the most indicative measure of the underlying profitability of the premiums earned in that period since it associates policy premiums earned with our estimate of the losses incurred related to those policy premiums. Calendar year results include
The effect of adjustments made to reinsured losses is mitigated by the corresponding adjustment that is made to insurance recoveries. Thus, in any given year, we may make significant adjustments to gross losses that have a less significant effect on our net losses. The following table reflects our losses on both a gross and a net basis.
Our 2005 underwriting, acquisition and insurance expenses reflect higher compensation and benefit costs offset by a decrease in variable costs due to lower premium volume. The slight upward shift of the expense ratio as compared to 2004 is principally due to the increase in compensation costs.
Premiums exhibited strong growth in 2004; however, the growth was at a slower pace than in 2003 primarily because we implemented smaller rate increases in 2004 as compared to 2003. Our rates are based on our expected losses for the coverages provided; the cumulative effect of the rate increases we obtained in the past several years allowed us to pursue lower rate increases in some states in 2004. On average, renewals during the year ended December 31, 2004 were at rates that are approximately 19% higher than expiring rates. Rate increases on 2003 renewals, on average, were at rates that were 28% higher than expiring rates. New business written in 2004 was largely offset by business that did not renew, including business that we selectively chose not to renew.
The total volume of business, which includes investmentlinked life insurance, amounted to CHF 8,358.3 million (2011: CHF 8,144.5 million), which equated to growth of 2.6 per cent. This increase came to 3.8 per cent in local-currency terms. Investment-linked life insurance generated strong growth of 20.5 per cent. Premiums earned from non-life business also performed well, rising by 5.5 per cent. Part of this increase was
Interest expenses on insurance liabilities – 73.8 – 69.4 – 61.2 – 51.6 – 50.6
2002 Outlook: We expect that claim and claim settlement expenses will be affected by the following factors:
Commission expense decreased to 7.6% of gross premiums earned in 2001 from 7.9% in 2000 and 8.0% in 1999. The decreased commission percentages in 2001 and 2000 are the result of (i) a focus on reducing commissions paid on new business in our non-Minnesota states and (ii) increased renewal premiums on which we pay lower commission rates in all our states. Historically, as we entered new markets, we introduced higher commission rates to attract business from established agents. These rates continued through early 1999, but were reduced in 2001 and 2000. We believe the commission rates we pay are marketplace competitive in all our markets;
Employee Stock Ownership Component - We maintain an ESOP for our qualified employees. Our contributions are discretionary. We may contribute cash or shares of our common stock. No expense was recorded in 2001, 2000 or 1999.
Catastrophe losses, at $202.4 million, were $129.2 million higher than in 2007, driven by Hurricanes Gustav and Ike and a major snowstorm in China. While 2008 ranks as one of the costliest years on record for insured natural catastrophe losses, our losses were generally in line with our modeled expected annual aggregate catastrophe losses as developed through our enterprise risk and catastrophe exposure management processes.
Gross written premiums decreased by 10.7% to $1,193.5 million in 2007 from $1,336.7 million in 2006, primarily due to a $202.6 million (37.9%) decrease in treaty casualty volume and a $70.5 million (32.7%) decrease in facultative volume, partially offset by a $126.8 million (21.6%) increase in treaty property volume. The increase in treaty property writings emanated principally from new quota share treaties. The more competitive environment for the U.S. casualty business resulted in reduced opportunities to write this business profitably. Net written premiums decreased by 13.9% to $854.8 million in 2007 compared to $992.8 million in 2006, primarily due to the decrease in gross written premiums. Premiums earned decreased by 3.9% to $939.7 million for 2007 compared to $978.1 million for 2006. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.
Incurred losses and LAE decreased by 4.5% to $412.7 million for 2007 from $432.2 million for 2006 as the segment loss ratio increased by 7.9 points to 83.2%. From a ratio perspective, the swing in prior years’ development from favorable in 2006 to adverse in 2007 resulted in 18.9 points of increase. The adverse development in 2007 was the result of $64.7 million of adverse reserve run-off on a canceled auto loan credit insurance program, partially offset by favorable development on the remainder of the reserves. The 2007 accident year loss ratio was 72.7%, which was 11.0 points lower than in 2006. The 2006 accident year ratio was negatively impacted by 14.7 points due to the auto loan credit insurance program referenced above.
The National Association of Insurance Commissioners' model law for risk based capital ("RBC") applies to both life and property and casualty companies. RBC formulas determine the amount of capital that an insurance company needs to ensure that it has an acceptable expectation of not becoming financially impaired. At December 31, 1996, the capital ratios of all AFC insurance companies substantially exceeded the RBC requirements.
(4) Prior periods have been restated to reflect the 20% stock dividend distributed on September 30, 1996.
(9) The interest coverage ratio is calculated by dividing income from continuing operations before interest and income tax expense by interest expense (1996 excludes interest paid in connection with the settlement of prior-year federal income taxes).
Net investment income, includes amounts earned on the Company's investment portfolio and cash equivalents. Net investment income decreased $233,764 or 11.0% in 2002 to $1,887,778 from $2,121,542 in 2001. Net investment income in 2001 decreased by $22,837, or 1.1% from the $2,144,379 reported in 2000.
The consolidated financial statements include the established liability for unpaid losses and loss adjustment expenses ("LAE") of the Company's property/casualty ("P/C") insurance operations. The liabilities for losses and loss adjustment expenses are determined utilizing both case-basis evaluations and actuarial projections, which together represent an estimate of the ultimate net cost of all unpaid losses and LAE incurred through December 31 of each year. These estimates are subject to the effect of trends in future claim severity and frequency. The estimates are continually reviewed and, as experience develops and new information becomes known, the liability is adjusted as appropriate, and reflected in current financial reports.
In the ordinary course of business, we make a number of estimates and assumptions relating to the reporting of our results of operations and financial condition in conformity with accounting principles generally accepted in the United States. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from those estimates under different assumptions and conditions. We believe that the accounting policies discussed below are those that are most important to the portrayal of our financial condition and results and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Medicaid segment premium revenue for the year ended December 31, 2003 increased $143.0 million, or 24%, to $740.1 million from $597.1 million for the combined year ended December 31, 2002. The increase was primarily due to an increase in membership of approximately $166.7 million and a change in membership demographics and premium rates, which offset the increase by $23.7 million. During 2003, membership within the Medicaid segment increased 92,000 members, or 22%, from 420,000 members at December 31, 2002 to 512,000 members at December 31, 2003. Membership increased by approximately 44,000 as a result of assignment of SCHIP members in Florida under a competitive bidding process, and the remaining growth in Medicaid membership resulted from a combination of mandatory assignment and successful marketing efforts.
The Position Holder Trust’s net increase in net assets resulting from operations for the year ended December 31, 2017 was $35.2 million. The Trust recognizes income on its respective portion of the Policies primarily from changes in their aggregate fair value. There was no tax expense nor benefit for the year ended December 31, 2017. The following is the analysis of net increase in net assets resulting from operations for the year ended December 31, 2017:
Under the Plan, the Trustee will distribute at least annually to the Unit holders all of the distributable cash (as defined in the Position Holder Trust Agreement) generated during each calendar year, subject to any reserve established by the Trustee reasonably necessary to maintain the value of the Registrant’s assets or to meet claims and contingent liabilities. All distributions by the Trust will be made in accordance with such holder’s Pro Rata share of the outstanding Units.
Interest and other income decreased 51.0%, or $8.3 million, to $4.1 million in 1996 due to decreases in WellCare University revenues, management fees, third-party and insurance reimbursements.
Premiums earned in 1995 increased 20.0%, or $24.1 million, to $144.5 million from $120.4 million in 1994, attributable to increases in HMO membership and in premium rates. Total member months increased 13.9% in 1995 to 1,046,559, accounting for $16.9 million of the increase in premiums earned. Premium rates increased 6.4% and .7% for commercial and Medicaid members, respectively, and including the premium rates earned for Full Risk Medicare members, resulted in a 5.4% total weighted average increase and accounted for the $7.2 million balance of the increase in premiums earned.
Losses and loss adjustment expenses were $5,969,980 in 1996 compared to $7,115,371 in 1995. The decreases in the losses and loss adjustment expenses are attributable to the decline in earned premiums from 1995 to 1996 without any fluctuations in the loss ratios. Losses and loss adjustment expense reserves represent management's estimate of the ultimate cost of unpaid losses incurred for these periods relative to premiums earned.
During 1997, the Company purchased, in the open market and privately negotiated transactions, 3,400 shares of its Common Stock at an average price of $20.44. The Company also purchased, in open market and privately negotiated transactions, 1,347,686 shares of its Class A Stock at an average price of $14.98 per share.
Insurance premiums are recognized over the terms of the respective policy contracts. Unearned premiums represent the portion of premiums written that is applicable to the unexpired terms of policies in force, calculated on a prorata basis.
Under applicable insurance regulations, ACMAT's insurance subsidiaries are restricted as to the amount of dividends they may pay, without the prior approval of any insurance department, and are limited to approximately $10,032,000 in 1998.
As of and for the years ended December 31, 1997, 1996 and 1995
Revenue: Revenue for the year ended December 31, 2009 was $5,041,711 as compared to $4,926,674 for the same period in 2008. The increase of $115,037 or approximately 2% was mainly due to increases of commission income fee from the existing clients. This increase was partially offset by a decrease in consulting income, website advertising, enrollment fees and other income. Commission income is based on a percentage of the premiums paid by the insured. Because of an increase in insurance call and premium rates in the market, commission income increased by $141,791 or 3%. On the other hand, consulting income for the year ended December 31, 2009 decreased to $134,882 from $146,923 in 2008. The decrease of $12,041 or 8% was because demand for consulting services decreased. Furthermore, website advertising and enrollment fees for the year ended December 31, 2009 were $14,000 and $5,894 respectively, as compared to $17,083 and $6,410 for the same period of 2008. The decreases were mainly due to decreases of customer’s demand and enrollment. In addition, other revenues for the year ended December 31, 2009 decreased to $25,463 from $36,577 in 2008. The decrease of $11,114 was due to the drop of commission from business referral.
Other general and administrative expenses - decreased by $15,096 or 3% from $497,522 in 2008 to $482,426 in 2009. In general, the decrease was the result of tightening of expenses and the closure of the liaison office at Korea in August 2009.
In preparing financial statements that conform to generally accepted accounting principles, management makes estimates and assumptions that may affect the reported amount of assets and liabilities. Actual results could differ from these estimates. Particularly, the areas requiring the use of management estimates relate to the valuation of accounts receivable and payable, equipment, accrued liabilities, and the useful lives for amortization and depreciation.
The balance sheets of ALC and CAC were translated at year-end exchange rates. Income and expenses were translated at exchange rates in effect during the year, substantially the same as the year-end rates.
The Company has three material operating lease commitments for its facilities. The initial term of the lease arrangement for Director Quarter is two years beginning July 19, 2008 with a minimum lease commitment of $207,693. For the Shanghai Office, the initial term of the lease is two years beginning July 3, 2007 with a minimum lease commitment of $18,462. All the lease arrangements mentioned above have no renewal option and rent holiday. For the Hong Kong Office of Room 505, Bank of America Tower, the initial term of the lease is two years beginning November 15, 2009 with a minimum lease commitment of $134,400. This lease arrangement has a three-month rent free period from November 15, 2009 to February 14 2010. In addition, when the lease is ended in 2011, the company has an option to renew the lease for two years (from November 15, 2011 to November 14, 2013) at the prevailing market rent.
Provision for Income Taxes. Provision for income taxes increased from $86.0 million in 1999 to $90.4 million in 2000 due to higher pretax operating income.
Net cash provided by operating activities increased from $926.3 million in 1999 to $1,038.4 million in 2000, an increase of $112.1 million, or 12.1%. This increase in cash was due primarily to a $57.6 million increase in life insurance policy liabilities and a $48.3 million increase in consolidated net income.
As a result of a unification of the holding structure of the Zurich Financial Services Group in October 2000, Zurich Financial Services was renamed Zurich Group Holding, as noted above, and a new group holding company, Zurich Financial Services, was formed. As such, references to "Zurich" are to the new group holding company, Zurich Financial Services.
to its call option agreements are financially responsible and that the counterparty risk associated with these transactions is minimal.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2000 and 1999 are presented in the following tables:
In 2000, the Company used $580,000,000 of proceeds received from the sale of the notes receivable from UKISA (see Note F) to help fund the payment of the $1,075,000,000 special dividend associated with the Zurich capital structure unification in October 2000. Also, in 2000, the Company purchased $370,000,000 of certificates of contribution of the P&C Group to help fund the Exchanges' acquisition of Foremost (see Note G).
The assets and liabilities held in Separate Assets relate to the variable universal life and annuity products offered by Farmers Life beginning in April 2000. The assets and liabilities held in the Separate Accounts are legally segregated from the general assets and liabilities of the Company. The assets of the Separate Accounts are carried at fair market value. The Separate Accounts liabilities represent the contract holders' claims to the related assets and are carried at the fair market value of the assets. Investment income and realized capital gains and losses of the Separate Accounts accrue directly to the contract holders and therefore are not included in the Company's consolidated statements of income and comprehensive income. Revenues to the Company from the Separate Accounts generally consist of administration, surrender and mortality fees.
Information about recent developments relating to units in force within each major coverage line follows.
Premiums and investment income represent the Company's major sources of cash, while loss and loss adjustment expense payments are the most significant cash out-flows. The Company continually monitors loss payments to provide projections of future cash requirements. Additional cash requirements include servicing the bank debt and paying dividends as approved from time to time by the Company's Board of Directors.
The Company is required to establish a "valuation allowance" for any portion of the deferred tax asset that management believes will not be realized. The Company believes that because of its historically strong earnings performance, and tax planning strategies available, it is more likely than not that the Company will realize the full benefit of the deferred tax asset, and therefore, no valuation allowance has been established.
The Northridge Earthquake, which occurred on January 17, 1994, significantly affected the operating results and the financial position of the Company. Provisions charged to income for this event amounted to $40 million and $24.75 million in 1998 and 1997, respectively. No provision was recorded in 1999.
The costs of acquiring business, principally commissions, certain expenses related to policy issuance, and certain variable sales expenses that relate to and vary with the production of new and renewal business are deferred and amortized based on the estimated future gross profits for a group of contracts. DAC are subject to recoverability testing at the time of policy issuance and loss recognition testing at the end of each reporting period. At December 31, 2012, and 2011, variable annuities accounted for the Company’s entire DAC asset of $44.7 million and $45.0 million, respectively.
The amortized cost/cost and estimated fair value of investments in fixed maturity and equity securities at December 31, 2012 and 2011 were:
The Company is not dependent upon any single customer, and no single customer accounted for more than 10% of its revenues during 2012, 2011, or 2010.
Net assets in the MetLife Policyholder Trust decreased $2,804 million for the year ended December 31, 2001. This decrease is primarily due to a change in unrealized gains on the Trust Shares and the impact of withdrawals by Beneficiaries from the Trust and the Purchase and Sale Program. Unrealized gains decreased $2,230 million and represent the difference between the market value and the cost basis of the Trust Shares at December 31, 2001. In addition, a net decrease of 17,574,050 Trust Interests in connection with the Purchase and Sale Program and a net decrease of 23,247,409 Trust Interests due to withdrawals by Beneficiaries from the Trust contributed to the decrease. Beginning on April 7, 2001, beneficiaries were able to withdraw all, but generally, not less than all, of their allocated shares of Common Stock at any time by providing written notice to the Custodian. Net redemptions by Beneficiaries through the Purchase and Sale Program and withdrawals by Beneficiaries from the Trust resulted in a $242 million and $331 million decrease in net assets, respectively. Net investment income of $84 million, which consists of dividends received from the Holding Company's Common Stock, and net realized investment gains recognized on the sale of Trust Shares sold in the Purchase and Sale Program of $288 million were fully distributed to Beneficiaries.