felanders/preprocessed huggingface dataset:
The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," which is effective for fiscal quarters of all fiscal years beginning after June 15, 2000 (as amended by SFAS Nos. 137 and 138). SFAS No. 133 requires that all derivative instruments be recorded on the balance sheet at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction, and if it is, the type of hedge transaction. Because we currently do not use derivative instruments, we anticipate that the adoption of SFAS No. 133 will not affect our results of operations or financial position.
The Company's balance sheet includes a significant amount of assets and liabilities whose fair value are subject to market risk. Market risk is the risk of loss arising from adverse changes in market interest rates or prices. The Company currently has interest rate risk as it relates to its fixed maturity securities and mortgage loans and equity price risk as it relates to its marketable equity securities. In addition, the Company is also subject to interest rate risk at the time of refinancing as it relates to its mandatorily redeemable Preferred Securities. The Company's bank debt is short-term in nature as the Company generally secures rates for periods ranging from one to six months and therefore approximates fair value. The Company's market risk sensitive instruments are entered into for purposes other than trading.
The Company has conducted a comprehensive review of potential claims related to Year 2000 issues which might be submitted in conjunction with policies of insurance it currently underwrites. Although the Company has concluded Year 2000 exposures are not covered under its existing insurance policies, the Company is acting to eliminate, reduce or mitigate potential claims for coverage of Year 2000 exposures through the use of exclusionary language, new underwriting procedures and pricing practices, withdrawal from certain classes of business, and establishment of a specialized unit within its claims department to respond to such claims.
Travel expense decreased $23,330 due to the phasing out of the ASO product line. Most travel was done at the subsidiary level.
•Share repurchases totaled $516 million, or approximately 3.6 million shares for the year, at an average purchase price of $143.91 per share.
Investment income has decreased by approximately $2.1 million or 14.2% in 1999 as compared to a decrease of $1.2 million, or 7.5% in 1998, primarily as a result of lower invested assets due to a decrease in premiums written and a program to reduce pending claims. During 1999, the Company had realized capital losses of $1.7 million principally due to the sale of fixed maturities to satisfy operating cash needs. During 1998, the Company had realized capital gains of $6.1 million principally from
Other comprehensive (loss) income in our statements of comprehensive income includes net unrealized (losses) gains of ($103,331), ($263,991) and $1.5 million for 2016, 2015 and 2014, respectively, representing our share of DFSC’s unrealized investment gains or losses.
Tax expense in 2005 decreased $2 million, from $23 million in 2004 to $21 million in 2005. The current year expense include a favorable adjustment of $36 million reflecting the resolution of substantially all issues relating to the Internal Revenue Service examination of our consolidated federal income tax returns for the 1997 to 2001 periods, largely offset by higher income before taxes, as described above.
The Reports of the Independent Registered Public Accounting Firm, the Company’s consolidated financial statements and notes to the Company’s consolidated financial statements appear in a separate section of this Form 10-K (beginning on Page following Part IV). The index to the Company’s consolidated financial statements appears on Page.
Liquidity is the ability of the Company to generate sufficient cash flows to meet the cash requirements of operating, investing, and financing activities. The Company's principal sources of liquidity are premiums, product charges, investment income, maturing investments, proceeds from debt issuance, and capital contributions. Primary uses of these funds are payments of commissions and operating expenses, interest and premium credits, investment purchases, repayment of debt, as well as withdrawals and surrenders.
1. The possibility of increasing price competition in the Company's market place.
The Company has adopted Statement of Financial Accounting Standards No. 128, "Earnings Per Share", resulting in the restatement of earnings per share for all prior periods. Basic earnings per common share are based upon the weighted average shares outstanding. Outstanding stock options are treated as common stock equivalents for purposes of computing diluted earnings per share. Shares held in the Company's Stock Compensation Trust (see Note 11) are excluded from the calculation of basic and diluted earnings per share.
1. Certain 1996 quarterly revenue and expense amounts are different from the amounts originally reported due to reclassifications necessary to conform to the current presentation.
NOTES: (a) Included in the results of operations for the eight months ending December 31, 1997 are sales and operating loss of $164 and $(188), respectively, of the Company for the period from February 19, 1997 to April 30, 1997. (b) Pro forma net income (loss) reflects (1) the effects of purchase accounting for Sybra as if the purchase was effective on January 1, 1994; (2) increased interest expense for the Predecessor Period as a result of a difference in capital structure; and (3) increased general and administrative expenses reflecting the costs of operating as a stand-alone public company; and has been tax effected using a combined federal and state income tax rate of 40%. (c) Balance sheet data are presented as of December 31, 1994, December 30, 1995, December 28, 1996, December 31, 1997 and December 31, 1998. (d) EBITDA on a pro forma basis gives effect to the adjustments discussed in Note (b) above. For the combined period, pro forma EBITDA would have been $10,421. For 1998, EBITDA is actual. Management believes that EBITDA is generally accepted as providing useful information regarding a company's ability to service and/or incur debt. EBITDA should not be considered in isolation or as a substitute for net income, cash flows, or other consolidated income or cash flow data prepared in accordance with generally accepted accounting principles or as a measure of a company's profitability or liquidity.
Depreciation and Amortization - Depreciation and amortization expense was $5.4 million, or 4.8% of sales in 1997 as compared to $6.0 million, or 5.1% of sales in 1996, a decrease as a percent of sales as a result of the impact of the sale/leaseback as explained above net of goodwill amortization as a result of purchase accounting related to the Sybra acquisition.
Our surplus notes of $300,000 and $250,000 matured on August 1, 2016 and September 1, 2016, respectively. Due to the nature of surplus notes a repayment cannot be made without the prior approval of the Nebraska regulators and they have not approved any repayment to date.
Although the industry experienced significant losses in 2017 and 2018, there continues to be significant underwriting capacity available and market conditions remain challenging. While many market participants were hopeful that the significant catastrophe losses in recent years would lead to improvements in pricing, terms and conditions within the property catastrophe line of business with the possibility of improvements in other reinsurance lines, improvements have been modest. Catastrophe pricing on loss impacted programs has improved but pricing on other, non-loss impacted contracts has remained broadly flat. Outside of property catastrophe reinsurance we are seeing some signs of improvement in reinsurance terms and conditions and underlying pricing in the capital relief structures on which we have historically focused. We are cautiously optimistic that we will continue to see similar improvements across our in force portfolio as well as new business opportunities.
The following tables present the total long, short and net exposure of our net investments managed by Third Point LLC as of December 31, 2018 and 2017 by strategy and geography. The tables as of December 31, 2018 include our investments in TP Fund and collateral assets managed by Third Point LLC. The tables as of December 31, 2017 include collateral assets managed by Third Point LLC and our investments in the separate accounts in place prior to the change in the investment account structure described in Note 4 to the consolidated financial statements included in this Form 10-K.
If one or more of the variables or assumptions used changed such that the Company’s recorded loss ratio, or loss provision as a percentage of net title premiums, increased or decreased two loss ratio percentage points, the impact on after-tax income for the year ended December 31, 2010, would be as follows. Company management believes that using a sensitivity of two loss percentage points for the loss ratio provides a reasonable benchmark for analysis of the calendar year loss provision of the Company based on historical loss ratios by year.
As of December 31, 2010, the Company held $967,023 in equity securities with unrealized losses of $16,579. As of December 31, 2009, the Company held $780,241 in equity securities with unrealized losses of $31,298. The unrealized losses related to holdings of equity securities were caused by market changes that the Company considers to be temporary. Since the Company has the intent and ability to hold these equity income securities until a recovery of fair value, the Company does not consider these investments other-than-temporarily impaired.
The following table sets forth gross premiums written, net premiums written and net premiums earned for the periods indicated:
increased to 55% of total premium writings as compared to approximately 43% and 35% for 1996 and 1995, respectively. Underwriting expenses, which generally do not vary with premium volume, were approximately $15.4 million, $14.2 million and $12.6 million in 1997, 1996 and 1995, respectively. The underwriting expense ratio increased 1.4 percentage points in 1997 compared to 1996 primarily as a result of the decrease in premium writings.
Income taxes are provided based on income reported in the financial statements. Deferred income taxes are provided based on an asset and liability approach which requires the recognition of deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities.
The stock prices are based on closing prices reported by the NASDAQ National Market System.
The Company also benefited from a 28.3% increase in investment income during 1996 as compared to that of 1995, and an increase in the realized investment gains of the Company of 92.7% when comparing the same periods. The increase in investment income was principally due to an increase in the average size of the investment portfolio. The average size of the Company's investment portfolio increased by 25.3% from $321.3 million for the twelve months ended December 31, 1995 to $402.4 million for the twelve months ended December 31, 1996, while the pre-tax yield on the portfolio increased from 6.4% in 1995 to 6.6% in 1996. The size of the Company's investment portfolio increased from retained earnings and positive cash flows from operations.
The Company is also a party to a Credit Agreement which provides a three-year revolving credit facility in amounts not to exceed $75 million. Until July 26, 1996, the Credit Facility also included a one-year Term Loan Facility not to exceed $15 million. This Term Loan Facility expired on July 26, 1996, as the Company had not drawn upon this facility as of that date. Under the Revolving Credit Facility, interest is payable quarterly at a rate selected by the Company equal to either the prime rate or LIBOR plus a margin which varies depending on the Company's debt to equity ratio. At December 31, 1996, the outstanding balance under the facility was $69 million, with an interest cost of 6.7%. Borrowings under the facility were used to provide capital for the insurance companies and to repay other debt. The Revolving Credit Facility expires on July 26, 1998, and may be extended annually by additional one-year periods with the consent of the lenders. The Company is currently negotiating with its banks to restructure the Credit Facility to incorporate the previous Term Loan Facility and current Revolving Credit Facility into one Credit Facility.
Property and Casualty Insurance Reserve activity for the years ended December 31, 2019, 2018 and 2017 was:
When a funding agreement is issued, United Insurance is then required to post collateral in the form of eligible securities including mortgage-backed, government, and agency debt instruments for each of the advances that are entered. The fair value of the collateral pledged must be maintained at certain specified levels above the borrowed amount, which can vary depending on the assets pledged. If the fair value of the collateral declines below these specified levels of the amount borrowed, United Insurance would be required to pledge additional collateral or repay outstanding borrowings. Upon any event of default by United Insurance, the FHLB’s recovery on the collateral is limited to the amount of United Insurance’s liability under the funding agreements to the FHLB of Chicago.
Kemper’s insurance subsidiaries are also required to hold minimum levels of statutory capital and surplus to satisfy regulatory requirements. The minimum statutory capital and surplus, or company action level risk-based capital (“RBC”), necessary to satisfy regulatory requirements for the Company’s life and health insurance subsidiaries collectively was $122.0 million at December 31, 2019. The minimum statutory capital and surplus necessary to satisfy regulatory requirements for the Company’s property and casualty insurance subsidiaries collectively was $641.9 million at December 31, 2019. Company action level RBC is the level at which a company is required to file a corrective action plan with its regulators and is equal to 200% of the authorized control level RBC.
The grant-date fair values of DSU awards granted to Non-employee Directors are determined using the closing price of Kemper common stock on the date of grant. The total fair value of DSUs that vested during the years ended December 31, 2018 and 2017 was $1.0 million and $0.9 million, respectively.
Coverage provided under the 2018 aggregate property catastrophe reinsurance contract is summarized below.
losses from wind pools and joint underwriting associations are based on a variety of factors, including, but not limited to, actual or estimated assessments provided by or received from such entities, insurance industry estimates of losses, and estimates of the Company’s market share in the assessable states. Actual assessments may differ materially from these estimated amounts.
The Company's financial position at December 31, 2003 reflected increases in assets, liabilities and common shareholders' equity of 11.4%, 10.8% and 12.6%, respectively, when compared to the immediately preceding year-end. Cash and invested assets represented 70.5% and 70.8% of consolidated assets as of December 31, 2003 and 2002, respectively. Consolidated results produced positive and growing consolidated operating cash flows for the latest three years, with the Company's three largest operating segments providing substantially all such funds from operations. In 2003, the invested asset base increased 11.0% to $6,849.2 principally as a result of such higher operating cash flow and the greater increase in fair value of investments resulting from the aforementioned reclassification of fixed maturity securities.
In December, 2003, the Company's Board of Directors declared a 50 percent stock dividend on the Company's outstanding common shares. At the same time, the Board of Directors also declared a special year-end cash dividend of $.667 per common share ($1.00 per common share before adjustment for the 50 percent stock dividend).
Life insurance companies domiciled in the United States and qualifying as life insurers for tax purposes are taxed under special provisions of the Internal Revenue Code. As a result of legislation, 1983 and prior years' tax deferred earnings (cumulatively $13.3 at December 31, 2003) credited to the former memorandum "policyholders' surplus account" will generally not be taxed unless they are subsequently distributed to shareholders. The Company does not presently anticipate any distribution or payment of taxes on such earnings in the future.
(c) Stock Option Plan-The Corporation has stock option plans for certain eligible key employees. The plan in effect since 1992 was amended in 2002 for grants made in 2002, prior to the plan's expiration, as to the granting of new shares in May, 2002. A new plan was adopted and approved by the shareholders in May, 2002 to cover grants in 2003 and after. The combination of options awarded at the date of grant and previously issued options still outstanding at such date, may not exceed 6% of the Old Republic common stock then issued and outstanding. The exercise price of options is equal to the market price of the Corporation's stock at the date of grant, and the term of the options is generally ten years from such date. Options granted in 2001 and prior years under the 1992 plan may be exercised to the extent of 10% of the number of options covered thereby on and after the date of grant, and cumulatively to the extent of an additional 10% on and after each of the first through ninth subsequent calendar years. Options granted in 2002 and 2003 may be exercised to the extent of 10% of the number of options covered thereby on and after the date of grant, and cumulatively to the extent of an additional 15%, 20%, 25% and 30% on and after the second through fifth calendar years, respectively.
Investment income in 1998 was $10,375,464 compared to $5,704,678 and $5,341,924 for the years ended December 31, 1997 and 1996, respectively. The increase in investment income during 1998 arose primarily as a result of increases in gains on sale of investment securities as more fully described below. The increase in investment income during 1997 compared to 1996 was attributable to an overall increase in funds available for investment and somewhat higher yields available in the U.S. and other global bond markets.
4. Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996 ............ 37
MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Management's Discussion and Analysis of financial condition and results of operations appears on pages 13-26 in the Annual Report to the Stockholders for the year ended December 31, 2002, and is incorporated herein by reference.
Security Capital reported net income of $3,360,000 for the twelve month period ended December 31, 1997. This compares to net income of $125,000 and $1,013,000 for the three month transitional period ended December 31, 1996 and the twelve month period ended September 30, 1996, respectively. The Company changed its reporting year from a September 30th fiscal year end to a calendar year end as of December 31, 1996. The net earnings per common share (after accrual for Class A Preferred Stock dividends) was $.66 for the twelve month period ended December 31, 1997 as compared to net earnings per common share (after accrual for Class A Preferred Stock dividends) of $0.0 and $.14 for the three month transitional period ended December 31, 1996 and the twelve month period ended September 30, 1996, respectively.
DISPOSITION OF FOSTER INSURANCE SERVICES, INC. AND FOSTER INSURANCE MANAGERS INC.
INCOME TAXES The Company computes deferred income taxes based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.
The Company’s other insurance operations generate commissions and fees from various insurance products. The events that have the most significant economic impact are as follows:
The amount of favorable development recognized during the year ended December 31, 2016, decreased $2,420,782 (99%) to $23,530 from $2,444,312 during the year ended December 31, 2015, due primarily to higher than expected incurred losses and loss adjustment expenses on long-tail claims in accident years 2015, 2013, and 2011. The amount of favorable development recognized during the year ended December 31, 2015, decreased $864,452 (26%) to $2,444,312 from $3,308,764 during the year ended December 31, 2014, due primarily to higher than expected incurred losses and loss adjustment expenses on long-tail claims in accident years 2013 and 2011. The favorable development in the above table is not necessarily indicative of the results that may be expected in future periods.
The Company believes that Crusader's statutory capital and surplus are sufficient to support the written premium guidelines established by the NAIC.
In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154 “Accounting Changes and Error Corrections” (“SFAS 154”). The Statement replaces APB Opinion No. 20 and SFAS 3. SFAS 154 requires retrospective application to prior periods’ financial statements of changes in accounting principle. However, if it is impracticable to determine the effects of such changes, then other rules apply. SFAS 154 became effective January 1, 2006. The Company adopted this standard on January 1, 2006. SFAS 154 had no immediate impact on the Company’s consolidated financial statements, though it will impact the presentation of future voluntary accounting changes, should such changes occur.
In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (SFAS 158). SFAS 158 requires calendar year-end companies with publicly traded equity securities that sponsor postretirement benefit plans to fully recognize, as an asset or liability, the funded status of the benefit plans as of December 31, 2006. The funded status is to be measured as the difference between the fair value of the plan assets and the projected benefit obligation. The Company adopted this statement as of December 31, 2006. See Note 7 - Pensions and Other Postretirement Benefits in the Notes to Consolidated Financial Statements.
Most of the Company’s mortgage loans are secured by commercial real estate and are carried net of a valuation reserve of $3,600 (2005 - $3,478). The valuation reserve for mortgage loans is maintained at a level believed adequate by management to absorb estimated credit losses. Management’s periodic evaluation and assessment of the adequacy of the valuation reserve is based on known and inherent risks in the portfolio, historical and industry data, current economic conditions and other relevant factors. No mortgage loans were foreclosed upon and transferred to real estate investments during the past two years. Also, there were no delinquent mortgage loans at December 31, 2006. The Company does not hold mortgage loans of any borrower that exceeds 5% of stockholders’ equity.
In the normal course of business, the Company has open purchase and sale commitments. At December 31, 2006, the Company had purchase commitments to fund mortgage loans and other investments of $15.6 million and sale commitments of $6.2 million. Subsequent to December 31, 2006, the Company entered into commitments to fund additional mortgage loans of $5.3 million.
INDIVIDUAL LIFE & ANNUITY (ILAD) ILAD is the largest of HLIC's segments in terms of assets under management and net income. The annuity line continues to be a leader in the industry (see business section). In 1994, the segment assumed life and annuity policies from Pacific Standard Life Insurance Company, adding $219 million of annual life premiums and $181 million of annuity assets. In 1993, ILAD assumed $3.2 billion in fixed and variable annuity assets and $.9 billion of modified guaranteed life insurance from Fidelity Bankers Life Insurance Company. The significant growth from these assumptions along with new deposits from fixed and variable annuity sales of $7.0 billion in 1994 and $4.2 billion in 1993 increased assets under management, but are not reported as revenues. The management and maintenance fees and cost of insurance associated with this growing policyholder base were the source of ILAD's increased revenues and net income. The growth in this segment has caused the ratio of benefits, claims and expenses to average assets under management has declined from 3.6% in 1993 to 2.6% in 1994.
Integration expense during the year ended December 31, 1998 was $4.2 million. These costs included $2.1 million in converting the data center and three claims platforms for CENTRA and $1.9 million in converting the information systems from our Framingham, Massachusetts office to the Tampa office. Integration expense for the year ended December 31, 1997 was $4.9 million. Of this expense, $3.2 million related to the integration of information systems used by the TMG block of business, Consolidated Group, Inc. and an affiliated company, and Harrington Services Corporation, while $1.7 million represented other costs associated with transferring functions from certain offices, the consolidation of treasury functions, and employee relocations.
On April 14, 2000, after agreeing to terminate the UICI transaction, we entered into an extension of the Standstill Agreement pursuant to which HealthPlan Services and the lenders agreed to amend certain terms of the May 1, 1998 credit agreement, with documentation to be formalized by May 31, 2000. The agreement provides for a $90 million term loan including up to $73.7 million maximum borrowings and remaining amounts available for letters of credit. The agreement requires repayment of $250,000 of principal per month for a three-month period commencing May 31, 2000 and $500,000 each month thereafter with additional repayments of $15 million on January 31 and July 31, 2001, with a final payment in 2001. The agreement also provides for a $25 million revolving credit facility and an August 31, 2001 final maturity. Interest rates vary from base rate plus 1.5% to base rate plus 3.0%.
Interest expense increased $0.9 million, or 6.4%, in 2008 over 2007 primarily as a result of the additional $25.0 million that was borrowed in February 2008. Interest expense increased $0.4 million, or 3.3%, in 2007 over 2006 as a result of the additional $25.0 million that was borrowed in December 2006 but which was partially offset by the $12.9 million reduction in the term loan balance due to the normal quarterly principal payments.
Amortization expense recorded for other amortizable intangible assets for the years ended December 31, 2008, 2007 and 2006 was $46,631,000, $40,436,000 and $36,498,000, respectively.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2009 expressed an unqualified opinion on the Company’s internal control over financial reporting.
The selected consolidated financial data of the Company appears in a separate section of this Annual Report on Form 10-K on page 31 and is incorporated herein by this reference.
However, during 1999, the aforementioned completion of the Policy Term Conversion, in conjunction with the rate rollback required under the 1998 PPA reforms, may increase the Registrant's expense ratio. Although the Registrant anticipates that the net impact of these reforms will be a modest net negative, the impact of these reforms on premiums, losses, expenses or related financial ratios cannot be completely quantified.
These increases in book value were offset by the dilutive effects ($.09 per share) of the issuance of 22,000 shares of common stock upon exercise of employee stock options granted under the 1987 and 1992 Stock Option plans. See Note O of the Notes for additional information regarding the Registrant's stock option plans.
All prior period results have been restated to reflect a pooling of interests following the acquisition of Captive Resources, Inc.
Loans on securities, cash in Bank and in Hand Frs. 13,247,636. 85
In the year ended December 31, 2009, premium earned before reinsurance decreased $2,669,886 (6%) to $40,050,878 compared to $42,720,764 in the year ended December 31, 2008. In the year ended December 31, 2008, premium earned before reinsurance decreased $5,941,209 (12%) to $42,720,764 compared to $48,661,973 for the year ended December 31, 2007. The decrease in earned premium before reinsurance in both 2009 and 2008 is a direct result of the decrease in written premium in 2009 and 2008, respectively.
During the fiscal year ended March 31, 1986, the Company adopted the Unico American Corporation Profit Sharing Plan. Company employees who are at least 21 years of age and have been employed by the Company for at least two years are participants in this plan. Pursuant to the terms of this plan, the Company annually contributes to the account of each participant an amount equal to a percentage of the participant's eligible compensation as determined by the Board of Directors. Participants must be employed by the Company on the last day of the plan year to be eligible for contribution. Participants are entitled to receive distribution of benefits under this plan upon retirement, termination of employment, death, or disability.
Underwriting income for the year ended December 31, 1993 increased $5.3 million as compared to the prior year, principally due to the inclusion of Western Surety results for a full year. The consolidated combined ratio increased to 82.3% in 1993 from 75.9% in 1992. The consolidated loss ratio decreased to 23.2% in 1993 from 25.8% in 1992, largely due to the inclusion of Western Surety for a full year partially offset by increased losses at United Capitol. The surety and fidelity loss ratio increased to 16.7% in 1993 from 14.6% in 1992, mainly due to increased losses on certain motor vehicle dealer bonds. United Capitol's loss ratio increased to 47.5% in 1993 from 43.4% in 1992, reflecting the impact of competitive market conditions. Excluding the effects of favorable development, United Capitol would have reported loss ratios of 110.3% and 86.2% in 1993 and 1992, respectively.
Net premiums earned for 1997, 1996 and 1995 were $312.0 million, $152.0 million and $201.4 million, respectively. The increase of $160.0 million in 1997 is primarily attributable to the inclusion of the American Reliance Division.
Underwriting Expenses. Underwriting expenses for the eight months ended December 31, 1997 were $72.7 million.
Underwriting results of the property and casualty industry are significantly influenced by estimates of loss and loss adjustment expense reserves. (See Note 11 to the Consolidated Financial Statements.) These reserves are an accumulation of the estimated amounts necessary to settle and pay all outstanding and unreported claims including loss adjustment expenses, net of estimated claim recoveries. The case reserve estimates for reported claims are based upon the facts of each case and the Company's experience with similar cases. Consideration is given to historical trends regarding reserving patterns, changes in the Company's operations (such as underwriting and claims handling), loss payments, and the effects of court decisions, economic conditions and public attitudes. The process of establishing reserves is an imprecise science involving significant judgment and assumptions. As information develops that varies from experience, provides additional data or, in some cases, augments data that previously were not considered sufficient for use in determining reserves, changes in the Company's estimate of ultimate liabilities may be required. Changes in prior year reserve estimates (net of reinsurance), which may be material, are reflected in the results of operations in the period such changes are determined to be required.
Net cash used in financing activities during 2008 was $1,169,000 due to: (i) a $562,000 decrease in our revolving credit line utilized in our discontinued operations prior to the sale of our premium finance portfolio on February 1, 2008, and (ii) principal payments on long-term debt and lease obligations of $607,000.
In response to rising medical and pharmacy costs, the Company has from time to time implemented premium increases with respect to certain of its products. The Company will continue to evaluate the need for further premium increases, plan design changes and other appropriate actions in the future in order to maintain or restore profit margins. There can be no assurances, however, that
Interest expense increased $25.9 million to $49.9 million for the year ended December 31, 2001 compared to $24.0 million for the year ended December 31, 2000. The increase in interest expense was related to the higher average debt balance for the year ended December 31, 2001 in comparison to the year ended December 31, 2000, primarily due to the Cerulean acquisition. The weighted average interest rate for all debt for the year ended December 31, 2001, including the fees associated with the Company's borrowings and interest rate swap agreements, was 6.70%.
Earnings per share for the year ended December 31, 2000 is based upon weighted average shares outstanding of 125.1 million, excluding potential common stock, and 130.2 million shares, assuming full dilution. Earnings per share for the year ended December 31, 1999 is based on 132.1 million shares, excluding potential common stock, and 136.2 million shares, assuming full dilution. The decrease in weighted average shares outstanding primarily resulted from the repurchase of approximately 5.0 million shares during the year ended December 31, 2000. For weighted average shares outstanding assuming full dilution, the decline was partially offset by the impact of the assumed conversion of the Debentures.
Net cash provided by financing activities totaled $512.6 million in 2001 compared to net cash used in financing activities of $28.6 million in 2000. The increase was primarily related to additional debt incurred to finance the Cerulean acquisition of $500.0 million, in addition to the receipt of proceeds from the issuance of stock related to the Company's employee stock option and purchase programs of $86.1 million less $7.4 million in Company stock repurchases. During 2001, the Company decreased indebtedness under its revolving credit facility by $15.0 million.
The failure to properly adhere to these and other applicable regulations could result in the imposition of civil and criminal penalties, which could adversely affect the Company's results of operations or financial condition. In addition, pharmacies are exposed to risks inherent in the packaging and distribution of pharmaceuticals and other health care products. Although the Company intends to maintain professional liability and errors and omissions liability insurance, there can be no assurances that the coverage limits under such insurance programs will be adequate to protect against future claims or that the Company will be able to maintain insurance on acceptable terms in the future.
Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policy. At December 31, 2008 and 2007, amounts recoverable from reinsurers consisted of the following:
The Company also paid investment commissions to a firm controlled by an individual who held a surplus note at December 31, 2006. The note was paid in full in September 2007. Total investment commissions paid during the years ending December 31, 2007 and 2006 were approximately $40,000 and $30,000, respectively.
(b) On August 9, 2013, we distributed our ownership interests in the parent company of FSRCI to HRG. As a result, FSRCI’s results are not included in our results for any period after Fiscal 2013. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations” for further details on FSRCI results.
The following table summarizes the components of our consolidated loss and LAE incurred and our loss and LAE ratios for the seven month period ended July 31, 2019 and the year ended December 31, 2018:
For reinsurance contracts which incorporated minimum premium amounts, we typically wrote the entire ultimate premium at inception, and earned the associated premium after the premium was written over the term of the contract. For reinsurance contracts which did not incorporate minimum premium amounts, we typically wrote the premium over the term of the contract, and earned the associated premium in the same periods that the premium was written.
Some of our reinsurance contracts may include contract terms that require an automatic reinstatement of coverage in the event of a loss. Reinstatement premiums are fully earned or expensed as applicable when a triggering loss event occurs and losses are recorded. We record reinstatement premiums on a basis consistent with our estimates of losses and LAE. During the seven months ended July 31, 2019 and the year ended December 31, 2018, we recorded net written and earned reinstatement premiums totaling $0.4 million and $4.6 million, respectively.
The following table reflects all long-term contractual obligations of the Company as of December 31, 2005.
The Company receives marketing fees from EBI per the marketing agreement mentioned above. The Company received marketing fees of $115,233 in 2005, $165,275 in and $146,107 in 2003. The decrease in marketing fees in 2005 is due to reduced operating income at EBI and the increase in 2004 was due to an increase in third party administrator income at EBI in 2004.
Earnings per share was $.13, $.14, and $.14 in 2005, 2004 and 2003, respectively. The effect of the treasury shares acquired in 2005 (see Market for Stock) increased earnings per share by $.02 in 2005.
Manufacturers Life and its subsidiaries have consistently received excellent ratings from Standard & Poor's Insurance Rating Service, A. M. Best Company, Moody's Investors Service Inc. and Duff & Phelps Credit Rating Co.
The Manufacturers Life Insurance Company of America ("ManAmerica" or the "Company") is a wholly-owned subsidiary of The Manufacturers Life Insurance Company (U.S.A.) ("ManUSA" or the "Parent"), which is in turn a wholly-owned subsidiary of The Manufacturers Life Insurance Company ("Manulife Financial"), a Canadian-based mutual life insurance company. The Company markets variable annuity and variable life products in the United States and traditional insurance products in Taiwan.
(a) The Company assumes two blocks of insurance from ManUSA under coinsurance treaties. The Company's risk is limited to $100,000 of initial face amount per claim plus a pro-rata share of any increase in face amount.
The earnings per share amounts have been restated to comply with the accounting standard, "Earnings per Share"
or from our retrocessionaires based on estimated contract experience. If we determine that adjustments to earlier estimates are appropriate, such adjustments are recorded in the period in which they are determined.
2017 Large Loss Events includes Hurricanes Harvey, Irma and Maria and the Mexico City Earthquake, the wildfires in California during the fourth quarter of 2017 and losses associated with aggregate loss contracts.
Gross premiums written in the other property class of business were $336.0 million in 2017, an increase of $109.1 million, or 48.1%, compared to 2016. The increase in gross premiums written in the other property class of business were driven in large part by proportional and delegated authority business where we were able to increase our participation on a select number of transactions and enter into certain new transactions we believe have comparably attractive risk-return attributes.
(1) For a discussion of gross premiums produced, see "Management's Discussion of Financial Condition and Results of Operations."
A measure of the Company's underwriting performance is its combined ratio, which is the total of its loss ratio and expense ratio. A combined ratio below 100% generally indicates profitable underwriting prior to the consideration of investment income. The Company's combined ratio increased to 125.2% (94.9% excluding the special charge) in 1995 from 92.3% in 1994 as a result of the factors discussed above.
The note payable was a revolving credit facility with a total commitment limited to $16 million. During 1996, an additional $2 million was borrowed against the revolving credit facility. In December 1996, $13,250 of the proceeds received from the issuance of the Series D Preferred Stock was used to pay the revolving credit facility balance, and the revolving credit facility was terminated by the Company.
The income tax provision (benefit) differs from that computed at the federal statutory corporate tax rate for the years ended December 31, 1996, 1995 and 1994, as follows:
Until December 31, 2003, the holders of Series D Preferred Stock collectively are entitled to cast 20% of the votes eligible to be cast on any matter submitted to a vote of the holders of capital stock of the Company; except if the aggregate number of shares of Common Stock into which the Series D Preferred Stock is then convertible is less than 20% of the outstanding shares of Common Stock on a fully diluted basis, then the Series D Preferred Stock will be entitled to cast one vote for each share of Common Stock into which it is convertible.
o Financial instruments actively traded in a secondary market have been valued using quoted available market prices.
The Company has entered into various noncancelable operating leases (principally with respect to facilities and equipment) which call for future minimum lease payments as follows:
Prior to the initial public offering ("IPO") which was completed on November 5, 2013, the Company had two classes of common shares outstanding: Class A common shares and Class B-2 common shares. The Class A common shares accrued a 10% cumulative dividend and the Class B-2 common shares had no stated dividend rate with any dividends being declared at the discretion of the Company's Board of Directors. Accordingly, earnings (loss) per common share was calculated using the "two-class" method which provides that earnings and losses be allocated to each class of common shares according to dividends declared and their respective participation rights. Substantially all of the net income (loss) for the periods prior to the IPO was allocated to the Class A common shares for purposes of determining earnings per share. Upon the completion of the IPO, all of the Class A common shares and the Class B-2 common shares converted
Our cancellation activity has been relatively low to date because the average age of our insurance portfolio is young. The following is a summary of our IIF at December 31, 2015 by vintage:
The decrease in the average reserve per default was primarily due to changes in the composition (such as mark-to-market loan-to-value ratios, risk in force, and number of months past due) of the underlying loans in default and improvements in economic fundamentals.
Based on ratings issued by Moody’s, if available. S&P rating utilized if Moody’s not available.
Upon the closing of our IPO, all outstanding Class A common shares and Class B-2 common shares that were eligible for vesting under the 2009 Restricted Share Plan were converted into 64.7 million Common Shares after giving effect to a 2 for 3 share split. All of the remaining Class B-2 common shares that were not eligible for vesting under the 2009 Restricted Share Plan were forfeited. In our IPO, we issued and sold approximately 20.0 million Common Shares at a public offering price of $17.00 per share and certain selling shareholders sold approximately 2.7 million Common Shares. We did not receive any proceeds from the sale of shares by the selling shareholders. The total net proceeds from the IPO were $313.7 million after deducting underwriting discounts commissions and other offering expenses.
With the significant decline in interest rates during the second half of 1992 and the first three quarters of 1993, the Company experienced a substantial increase in the level of prepayments associated with its investments in MBS. Amounts received associated with these prepayments were accounted for as adjustments to investment yield. The Company has experienced a decline in portfolio yield as a result of reinvesting these proceeds into similar investments at lower interest rates. The Company's investment strategy for MBS is to emphasize certain types of MBS that have a more predictable pattern of repayment and avoid risk of a loss of a portion of the original principal due to changes in interest rates. A substantial portion of the MBS portfolio consists of Planned Amortization Class ("PAC") and Target Amortization Class ("TAC") instruments. These investments are designed to amortize in a more predictable manner by shifting the primary risk for prepayment of the underlying collateral to investors in other tranches (support classes) of the MBS. During this period of high levels of prepayment, no loss of principal occurred on the MBS portfolio.
The majority of the Company's life insurance production is from the international market, primarily Central and South American countries. The Company continues to see economic and competitive pressures in the Central and South American market, which has resulted in relatively flat insurance production over the past few years. However, the Company has been accepting policies from foreign nationals for over thirty years and has developed strong relationships with carefully selected brokers in the foreign countries. This experience and strong broker relations have enabled the Company to meet these pressures with continued strong production and successful marketing efforts.
Life and Other Policy Benefits: Expenses in 1997 and 1995 were significantly higher at $37.4 million and $39.8 million, respectively, than expenses in 1996 which totaled only $35.4 million. The significant fluctuation in expenses is due to higher life insurance benefit claims in 1997 and 1995, along with higher policy surrenders on traditional insurance products in 1995. Mortality claims experience fluctuates from period to period, and such deviations are not uncommon in the life insurance industry. Over extended periods of time, higher claims experience tends to be offset by periods of lower claims experience. Also, as the Company's insurance in force continues to grow, increases in life insurance claims are to be expected. However, the Company utilizes reinsurance to help minimize its exposure to adverse mortality experience. The Company's general policy is to reinsure amounts in excess of $200,000 on the life of any one individual. A comparative detail of life and other policy benefits is provided below:
The Year 2000 issue refers to some computer systems' inability to recognize "00" in the date field as the year 2000. As a result, some computer systems may be unable to process date sensitive data accurately beyond the year 1999.
Looking ahead to 2016, we expect to experience continued competition on renewals, due to relatively light industry catastrophe losses experienced over the past several quarters.
The equity investment experienced a net unrealized gain of $0.2 million and $0.1 million for the twelve months ended December 31, 2001 and 2000, respectively. The unrealized gain of $0.2 million for the twelve months ended December 31, 2001 was primarily due to the addition of a tenant that will provide a substantial amount of income to the center in rent and the addition of new space to house this tenant.