felanders/preprocessed huggingface dataset:
Initial license revenues for 1997 increased $18.0 million compared to 1996 with the following increases by business segment: domestic property and casualty up 18.0% ($3.7 million); domestic life insurance and financial solutions up 34.2% ($5.0 million); and international up 55.1% ($9.3 million).
Amortization of goodwill and other intangibles for 1997 remained relatively unchanged compared to 1996.
In May 1996, the Company resolved its litigation with the California State Automobile Association Inter-Insurance Bureau and the California State Automobile Association ("CSAA"), concluding with an agreement for the mutual dismissal of all related claims and counterclaims as well as the Company's recovery of certain defense costs incurred relative to the CSAA matter, with interest. As a result, the Company recorded a $9.4 million pre-tax gain for this recovery during the second quarter of 1996. Additionally, in February 1997, the Company determined it was necessary to increase its estimate of anticipated liability for the costs associated with the verdict in the Security Life of Denver Insurance Company ("SLD") matter and as of December 31, 1996 recorded an additional $6.0 million for the costs in this matter (see Note 7 of Notes to Consolidated Financial Statements).
Income from operations of the discontinued property and casualty information services segment (before taxes) for 1996 increased 114.4% compared to 1995, due in part to restructuring costs of $3.9 million recorded in 1995 and an operating loss attributable to the risk services portion of the segment of approximately $4.2 million for 1995.
In June 1997, Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("FAS 131"), was issued. FAS 131 is designed to improve the information provided in financial statements about the different types of business activities in which the enterprise engages and economic environments in which the enterprise operates, and is effective for fiscal years beginning after December 15, 1997, with earlier application encouraged. The Company adopted FAS 131 at December 31, 1997 and has included the appropriate disclosures in Note 12 of Notes to Consolidated Financial Statements.
Basic and diluted earnings per share ("EPS") are calculated according to the provisions of Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128"). For the Company, the numerator is the same for both basic and diluted EPS. The following is a reconciliation of the denominator used in the calculation:
Also during 1996, the Company repurchased 645,500 shares of its common stock on the open market. There were no shares repurchased during the twelve months ended December 31, 1995.
our mortality and morbidity experience on individual life insurance and annuity products which can fluctuate significantly from period to period;;
The future rate of return assumptions used in evaluating DAC for our variable annuity and variable life insurance products are derived using a reversion to the mean approach, a common industry practice. Under this approach, we consider actual returns over a period of time and initially adjust future projected returns over a four year period so that the assets grow at the long-term expected rate of return for the entire period. If the projected future rate of return over the four year period is greater than our maximum future rate of return, we use our maximum future rate of return. In light of 2008 market conditions, we have determined that adjustments to our estimate of total gross profits to reflect actual fund performance and any corresponding changes to the projected future rate of return assumptions for our variable annuity contracts should no longer be dependent on a comparison to a statistically generated range of estimated gross profits. Instead, beginning in the fourth quarter of 2008, the projected future rate of return and our estimate of total gross profits are updated each quarter to reflect the result of the reversion to the mean approach. These market performance related adjustments to our estimate of total gross profits result in cumulative adjustments to prior amortization, reflecting the application of the new required rate of amortization to all prior periods’ gross profits. The new required rate of amortization is also applied prospectively to future gross profits in calculating amortization in future periods. For variable annuities products and variable life policies, as of December 31, 2008, our expected rate of return for the next four years across all asset types is 10.5% and 10.9% per annum, respectively, which are our current maximum future rates of return under the reversion to the mean approach. Included in these composite four year rates are assumptions for returns on various asset classes, including limits on implied returns on equity investments that range from 13.3% to 15.0%. Our long-term expected rate of return across all asset types for variable annuities products and variable life policies range from 8.1% to 8.2%, depending on the specific block of business, and reflect, among other assumptions, an expected rate of return of 9.5% per annum for equity investments.
In addition to its expansion into this growing market for "large accounts", the Company also intends to expand through the acquisition of, or combination with, medical professional liability insurers that have a significant presence in states other than Alabama. During 1996, 1995 and 1994, the Company completed the following business combinations:
Equity securities of $33 million at December 31, 1996 and $6.6 million at December 31, 1995 are primarily fixed rate preferred stocks. Disposition of investments prior to maturity may result in a net gain or loss which would be classified as "Other Income".
The reserve for losses and loss adjustment expenses represents management's best estimates of the ultimate cost of all losses incurred but unpaid. The reserves were evaluated by independent consulting actuaries and reflect consideration of prior loss experience and changes in the frequency and severity of claims. Actual incurred losses may vary from estimated amounts due to the inherent difficulty in estimating development of long-tailed lines of business. The estimated liability is continually reviewed and any adjustments which become necessary are included in current operations. However, the Company's management believes its actual incurred losses and loss adjustment expenses will not vary significantly from reported estimated amounts.
Other income increased by $3,629,000 for the year ended December 31, 1995 compared to the year ended December 31, 1994. The increase is principally attributable to higher capital gains realized upon the sale of securities during 1995 as compared to 1994.
The Company's losses and loss adjustment expenses for the year ended December 31, 1995 reflect a loss ratio of 78% compared to a loss ratio of 77% for the year ended December 31, 1994. The above loss ratios reflect improvement of loss development in prior years coverage.
Results of Operations for the Years Ended December 31, 2003 and 2002 IDS Life's 2003 income before accounting change rose 33 percent to $507.6 million. IDS Life's net income increased 44 percent to $552.1 million in 2003, up from $382.2 million in 2002. Among other things described below, IDS Life's 2003 results reflect a $41.3 million reduction in tax expense due to adjustments related to the finalization of the 2002 tax return filed during the third quarter of 2003 and the publication of favorable technical guidance related to the taxation of dividend income.
Net investment income, the largest component of revenues, increased by $76.2 million from 2001. This increase primarily reflects the effect of credit related yield adjustments on fixed maturity investments in 2001 and higher invested asset levels in 2002, which were somewhat offset by lower portfolio yields in 2002, driven by investment portfolio repositioning as described below. Investment income also benefited from the effect of less depreciation in the S&P 500 in 2002 on the value of options hedging outstanding equity indexed annuities, which is offset in the related provisions for losses and benefits.
The timing between when we submit a consumer’s application for insurance to the insurance company and when we generate revenues has varied over time. The type of insurance product and the insurance company’s backlog are the primary factors that impact the length of time between submitted applications and revenue recognition. Over the past three years, the time between application submission and revenue recognition has averaged approximately three months. Any changes in the amount of time between submitted application and revenue recognition, which will be influenced by many factors not under our control, will create fluctuations in our operating results and could affect our business, operating results and financial condition.
Intangible assets acquired in 2004 in the acquisition of certain assets of Life Quotes, Inc. consist of the following:
Interest income was $281,000 in 2009 compared to $365,000 in 2008. There was no interest expense in 2009 or 2008. Interest income decreased due to lower interest rates in 2009, as well as a decrease in invested assets prior to the sale of our former website and related assets in the fourth quarter of 2009. The current low interest rate environment will likely continue to negatively impact our interest income, as much of our interest income is derived from short term investments.
We had income tax expense in 2009 related to alternative minimum tax. The taxes paid may be recouped in the future through a credit against future income taxes. However, given the lack of historical taxable income, we fully reserved the amount of the prepayment, which resulted in tax expense of $290,000. We had no income tax benefit for 2008 due to valuation allowances provided against net deferred tax assets as a result of the uncertainty of the future utilization of our net operating loss carryforward assets.
Cash provided by investment activities was $15.2 million in 2009 and $600,000 in 2008. In 2009, the sale of the Insure.com name, website and related assets provided cash of $14.7 million, net of expenses. Cash was also provided from the proceeds of investment and certificate of deposit maturities exceeding amounts reinvested and spent on fixed asset purchases. During 2008, fixed asset purchases totaled $336,000, which was significantly higher than the $86,000 spent in 2009, and resulted primarily from investing in new computer hardware and software, both from life cycle replacements as well as the development of a new customer management system.
Credit facilities, which allow for borrowing or issuances of letters of credit (“LOCs”), and LOCs (in millions) were as follows:
Customary terms and conditions, including covenants restricting the ability of LNC and its subsidiaries to incur liens and the ability of LNC to merge or consolidate with another entity where it is not the surviving entity and dispose of all or substantially all of its assets;
The NAIC has adopted RBC requirements for life insurance companies to evaluate the adequacy of statutory capital and surplus in relation to investment and insurance risks. The requirements provide a means of measuring the minimum amount of statutory surplus appropriate for an insurance company to support its overall business operations based on its size and risk profile. Under RBC requirements, regulatory compliance is determined by the ratio of a company’s total adjusted capital, as defined by the NAIC, to its
Changes in the fair value of the embedded derivative liabilities related to index options we may purchase or sell in the future to hedge contract holder index allocations applicable to future reset periods for our indexed annuity products accounted for at fair value (“indexed annuity forward-starting option”); and
Pre-tax results for the banking and lending segment for 2001 also reflect $6,500,000 of charges primarily resulting from a mark-to-market loss on its interest rate swaps. The Company uses interest rate swaps to manage the impact of interest rate changes on its customer banking deposits. Although the Company believes that these derivative financial instruments serve as economic hedges, they do not meet certain effectiveness criteria under SFAS 133, and therefore are not accounted for as hedges.
Investment and other income declined in 2001 as compared to 2000 in part from income recognized in 2000 totaling $25,900,000, consisting of foreclosure gains from certain domestic real estate properties, a prepayment penalty related to certain promissory notes and a gain from the sale of a corporate owned aircraft. In addition, investment and other income declined in 2001 due to decreased gains from sales of real estate properties and rental income related to Fidei ($26,000,000), decreased gains from sales of various domestic real estate properties ($8,500,000) and a reduction in revenues related to MK Gold ($10,100,000). Such decreases were partially offset by a gain of $6,300,000 from the sale of the Company's investment in two inactive insurance companies and increased revenues from the Company's oil and gas operations ($6,200,000).
Other liabilities increased $4.6 million to $20.2 million for the twelve months ended December 31, 2000 from $15.6 million for the twelve months ended December 31, 1999. The increase in other liabilities is attributable to changes in salary assumptions used in the actuarial calculation of the Company's supplemental executive retirement program and an increase in the amounts accrued for employee benefits. Also, the Company recorded additional accruals in accordance with the purchase agreements of McCreary and its subsidiaries and a restructuring charge associated with the reorganization of the TPA operations during 2000.
After increasing 13.0% during the first half of 2005, written premiums declined in the second half of the year resulting in a growth rate, for the twelve months ended December 31, 2005, of 5.2%. The decline in premiums in the second half of the year was primarily attributable to increased competition in several states, slowing growth in select states where Infinity raised rates to improve profitability and slowing growth in California. In Infinity’s 17 Focus States, personal auto premium growth was 8.0% for the year with premiums in California, Infinity’s largest state, growing 5.6%.
The following is a reconciliation of Infinity’s net liability to the gross liability for unpaid losses and LAE.
Approximately 94% of the fixed maturities that Infinity held at December 31, 2005 were rated “investment grade” (credit rating of AAA to BBB) by nationally recognized rating agencies. The average credit rating of Infinity’s fixed maturity portfolio was Aa3 at December 31, 2005. Investment grade securities generally bear lower yields and lower degrees of risk than those that are unrated or non-investment grade. Management believes that a high quality investment portfolio is more likely to generate a stable and predictable investment return.
The combined ratio in the Non-Focus States increased 35.4%. Earned premiums in these states dropped more than 50% in 2004 to $50.3 million. The increase in the loss and LAE ratio is primarily attributable to unfavorable development on prior accident period loss and LAE reserves in New York, North Carolina and New Jersey.
Revenues. Our pro forma revenues for fiscal year 2001 increased by $1.4 billion, or 14% compared to the pro forma revenues for fiscal year 2000. Approximately $1.1 billion, or 81%, of the increase in revenues was attributable to data services and a 9.9% increase in the number of pharmacy claims processed during the period. Pro forma claims processed increased from 397.2 million in fiscal year 2000 to 436.5 million for fiscal year 2001. Approximately 15% of the increase was attributable to additional sales of our mail pharmacy services, resulting from an 10% increase in the number of mail prescriptions dispensed. The remaining 4% of the increase in revenues resulted from an increase in clinical and other services revenues derived from formulary and disease management services.
The information required by this item is found on pages through hereof.
On July 12, 2010, in order to provide additional capital to support our continued growth, we commenced an offering of up to 2,000,000 additional shares of voting common stock to existing shareholders who were residents of the State of Nebraska. This offering was completed on February 28, 2011 and a total of 1,554,326 additional shares of voting common stock were sold. The gross proceeds of this sale were approximately $7.7 million. These proceeds were used to fund the acquisition of Old Reliance Insurance Company as described below, to further capitalize our insurance operations, for working capital and general corporate purposes.
The Company compared the carrying value of its identifiable indefinite-lived intangible assets to the sum of the future discounted cash flows. As of December 31, 2012, the sum of the future discounted cash flows exceeded the carrying value of the indefinite-lived intangible assets. The assumptions and estimates used to determine future values are complex and subjective. They can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our revenue forecasts.
These are some of the investments we made in the future of our company that will strengthen our presence and capabilities and increase our ability to produce sustainable outperformance. We are off to a good start in 2015 and we remain confident in our strategy and are relentless in our drive to execute with excellence.
Standard actuarial reserving methods include, but are not limited to, expected loss ratio, paid and reported loss development, and Bornhuetter-Ferguson methods. A general description of these methods is provided below. In the subsequent discussion on short-tail and long-tail business, reference is also made, where appropriate, to how consideration in method selection impacted 2014 results. In addition to these standard methods, depending upon the product line characteristics and available data we may use other recognized actuarial methods and approaches. To ensure that the projections of future loss emergence based on historical loss development patterns are representative of the underlying business, historical loss and premium data is required to be of sufficient homogeneity and credibility. For example, to improve data homogeneity, we may subdivide product line data further by similar risk attribute (e.g., geography, coverage such as property versus liability exposure, or elements of program structure such as attachments or limits), project ultimate losses for these homogeneous groups and then combine the results to provide the overall product line estimate. The premium and loss data are aggregated by origin year (e.g., the year in which the losses were incurred - “accident year” or “report year”) and annual or quarterly development periods, and data at all valuations is converted at the same foreign exchange rates in order to avoid distortions from exchange rate movements over time. Implicit in the standard actuarial methods that we generally utilize is the need for two fundamental assumptions: first, the pattern by which losses are expected to emerge over time for each origin year, and second the expected loss ratio for each origin year.
For origin year 2014, loss reserves for short-tail lines were typically established for the non-catastrophe exposures using a combination of the initial expected loss ratio method (see above) and loss development methods that incorporate actual loss emergence. As the year progressed, we also adjusted these reserves for non-catastrophe large loss activity that we considered to be greater or less than the assumptions used to establish the initial expected loss ratio. Catastrophe activity was relatively low in 2014 and accordingly the judgments and uncertainties used to establish reserves for incurred catastrophe events were correspondingly less complex. For our short-tail businesses taken as a whole, overall loss trend assumptions did not differ significantly relative to prior years.
(2)Commencing with the third quarter 2005, we suspended declaration of dividends on our common stock. We have, however, continued to pay the full accrued dividends on our outstanding preferred stock.
Loss and Loss Adjustment Expenses. Loss and loss adjustment expenses are recognized based on formula and case basis estimates for losses reported in respect to direct business, estimates of unreported losses based on past experience and deduction of amounts for reinsurance placed with reinsurers. The loss and LAE ratio is calculated by taking the ratio of incurred losses and LAE to net premiums earned. The loss and LAE ratio for the year ended December 31, 2008 and 2007 of 69.8% and 53.8%, respectively, has been adjusted to remove the effect of losses attributable to the prior owner. The increase in the loss and LAE ratio is due to several catastrophic hurricanes that occurred in July and September 2008. The actual loss related to Hurricane Dolly, Gustav, and Ike, excluding reinstatement premium, was $13.0 million after reinsurance.
Results of insurance operations. The following table shows the underwriting gain or loss as well as other revenue and expense items included in the financial results of NLASCO for the year ended December 31, 2007. NLASCO's underwriting gain or loss consists of net premiums earned less loss and LAE and policy acquisition and other underwriting expenses. NLASCO's underwriting performance is one of the most important factors in evaluating the overall results of operations given the
Our insurance operating subsidiary, NLASCO, has primary investment objectives to preserve capital and manage for a total rate of return in excess of a specified benchmark portfolio. NLASCO's strategy is to purchase securities in sectors that represent the most attractive relative value. Bonds, cash and short-term investments constituted $164.8 million, or 96%, of NLASCO's $171.7 million in investments at December 31, 2008. NLASCO had $6.8 million, or 4% of its investments, in equity investments as of December 31, 2008. We currently do not have any significant concentration in both direct and indirect guarantor exposure. NLASCO has no investments in subprime mortgages. NLASCO has custodial agreements with A.G. Edwards and Wells Fargo Bank and an investment management agreement with Hyperion Brookfield Asset Management, Inc.
Our financial statements required by this item are submitted as a separate section of this Annual Report on Form 10-K. See "Financial Statements," commencing on page hereof.
Commissions and fees. Commissions and fees increased $116.2 million, or 33.4%, to $464.4 million in 2003 compared with $348.2 million in 2002. The increase was due to business generated by firms that were acquired in 2002 and in 2003 as well as an increased volume of business from our existing firms. Commissions and fees from new acquisitions was approximately $61.3 million in 2003. Commissions and fees from existing firms was $403.1 million in 2003, an increase of $54.9 million, or 15.8%, from $348.2 million in 2002.
Some of our firms maintain premium trust accounts, which represent payments collected from insureds on behalf of carriers. Funds held in these accounts are invested in cash, cash equivalents and securities purchased under resale agreements (overnight). As of December 31, 2004, we had cash, cash equivalents and securities purchased under resale agreements in premium trust accounts of $53.7 million, an increase of $12.4 million from the balance as of December 31, 2003 of $41.3 million. The increase was due primarily to acquisitions of firms with premiums trust accounts. As of December 31, 2003, we had cash, cash equivalents and securities purchased under resale agreements in premium trust accounts of $41.3 million, an increase of $15.7 million from the balance as of December 31, 2002 of $25.6 million.
We advance management fees monthly to principals and/or certain entities they own for up to nine months while monitoring the performance of the firms to determine if the actual earnings are on track to meet or exceed target earnings. If earnings are not equal to or greater than pro rata target earnings, we cease to pay or reduce the management fee advance. If an overadvance of a management fee exists, the principal and/or such entities are expected to repay the advance within thirty days of the end of the calendar year. If a principal and/or such entities cannot repay the overadvance, we have allowed principals and/or such entities to repay the advance over time. In these cases, we have generally required the principals and/or such entities to provide us with a note in an amount equal to the overadvance, secured by the principals’ and/or such entities’ shares of our common stock.
December 31, 2002 December 31, 2001 - ------------------------------------------------------------------------------- AAA 34.1% 43.6% AA 9.2 7.3 A 23.4 11.9 BBB 30.2 32.1 BB 2.3 3.8 B and Below 0.8 1.3 - ------------------------------------------------------------------------------- Total 100.0% 100.0% ===============================================================================
In June 2001, the Financial Accounting Standards Board ("FASB") issued FAS No. 142, "Goodwill and Other Intangible Assets," effective for fiscal years beginning after December 15, 2001. Under FAS No. 142, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests. Other intangible assets are still amortized over their estimated useful lives. The Company adopted the new standard effective January 1, 2002.
Application of the nonamortization provision (net of tax) of the new standard resulted in an increase in net income of $3.8 million for the twelve months ended December 31, 2002. Had the Company been accounting for goodwill under FAS No. 142 for all periods presented, the Company's net (loss) income would have been as follows:
INVESTMENT CONTRACT LIABILITIES (INCLUDED IN FUTURE POLICY BENEFITS AND CLAIMS RESERVES):
The ability of Golden American to pay dividends to the Parent is restricted. Prior approval of insurance regulatory authorities is required for payment of dividends to the stockholder which exceed an annual limit. During 2002, Golden American cannot pay dividends to Equitable Life without prior approval of statutory authorities. Golden American did not pay common stock dividends during 2002, 2001, or 2000.
Reinsurance ceded in force for life mortality risks were $90.7 million and $94.8 million at December 31, 2002 and 2001, respectively. At December 31, 2002 and 2001, the Company had net receivables of $196.9 million and $56.0 million, respectively for reinsurance claims, reserve credits, or other receivables from these reinsurers. At December 31, 2002 and 2001, respectively, these net receivables were comprised of the following: $36.7 and $7.8 million for claims recoverable from reinsurers; $6.3 and $3.4 million for payable for reinsurance premiums; $137.2 million and $28.8 million for reserve credits; and $24.0 million and $22.7 million for reinsured surrenders and allowances due from an unaffiliated reinsurer. Included in the accompanying consolidated financial statements, excluding the modified coinsurance agreements, are net considerations to reinsurers of $50.8 million, $30.3 million and $21.7 million and net policy benefits recoveries of $49.5 million, $21.8 million and $8.9 million for the years ended December 21, 2002, 2001 and 2000, respectively.
The rates in 1998 were steady at slightly above or below the 7% mark throughout the year. In 1999, rates stayed at about that same level until June when they began a decided move upward. At year-end 1999, rates were just over 8%. In 2000, the upward trend continued, with rates reaching a peak of 8.5% in May. Then, rates declined for seven consecutive months. At year-end 2000 rates were 7.4%.
LIQUIDITY AND CAPITAL RESOURCES. Cash provided by operations was $31.9 million, $57.9 million and $86.5 million in 2000, 1999 and 1998, respectively. Internally generated cash flow has been the primary source of financing for additions to property and equipment, expanding operations and other requirements. This source may be supplemented by bank borrowings.
The Company's capital resources, represented primarily by long-term debt of $15.4 million and stockholders' equity of $295.1 million at December 31, 2000, are considered adequate.
(a) In the fiscal year, Registrant has not issued any new shares or otherwise created additional outstanding securities; neither has it reduced outstanding securities by purchase or acquisition of treasury shares. Therefore, there were 11,222,600 shares of Registrant's stock outstanding on September 30, 2004.
On December 5, 1996, Health Power HMO was placed under supervision by ODI because of its failure to satisfy Ohio's statutory net worth requirements for HMOs. On March 20, 1997, Health Power HMO was released from supervision after it satisfied ODI's requirements for supervision.
Accounts receivable from primary care providers primarily represent amounts due for referral claims paid by the Company on behalf of capitated Medicaid primary care providers.
The benefit (provision) for income taxes in 1996, 1995 and 1994 consists of the following:
In December 1996, CompManagement entered into a 15-year building lease. The agreement calls for lease payments of approximately $465,600 per year for years 1 through 7 and $536,000 for years 8 through 15. The lease will be accounted for as a capital lease, and the lease commencement date is anticipated to occur during the third quarter of 1997.
During the fourth quarter, the Company made the following adjustments to the financial statements:
Loss and operating expense payments have generally been met from policyholder premium receipts with any excess cash invested. In 2001, operating cash needs primarily from claim payments exceeded premium receipts requiring approximately $8,800,000 of cash from the investment portfolio. Due primarily to the increase in premium volume and rates, operating cash receipts exceeded loss and operating expenses by approximately $24,700,000 in 2002. Based on increasing premium volume and rate trends, management expects positive operating cash flow in 2003. Management regularly analyzes loss liabilities to project the cash flow required in future years. Because the overall investment portfolio is highly liquid, exact matching of bond maturities and loss liabilities is not a goal. Bond maturities are primarily selected to maximize total return.
Loss from continuing operations before income taxes was $(6,120,000) in 2002 compared to $(6,448,000) in 2001. Greater premiums earned and other revenues, along with no policyholder dividends being declared, helped to reduce the loss in 2002. This was partially offset by greater loss liabilities estimated for the current year, unfavorable development on prior years’ loss liabilities, lower realized capital gains and greater operating expenses incurred to support the growth in revenues.
whether a market decline is attributable to general market conditions that reflect prospects of the economy as a whole or prospects of a particular industry
Loss and loss adjustment expenses incurred are net of applicable reinsurance of $8,343,000, $5,452,000 and $5,315,000 for the years ended December 31, 2002, 2001 and 2000, respectively.
The Company is named as a defendant in various legal actions in the course of conducting its business. Management believes the resolution of those actions will not have a material effect on the Company’s financial position or results of operations.
All health care services and other expenses for our specialty companies were previously included within commercial health care costs. In 2003, all health care services and other expenses for our specialty companies are now reported in the specialty and other health care services and other expenses line.
Premiums for our commercial products and Medicare+Choice products are generally fixed in advance of the periods covered. Of our commercial business, more than 50% of our membership renews on January 1 of each year, with premiums that are generally fixed for a period of one year. In addition, each of our subsidiaries that offers Medicare+Choice products must submit adjusted community rate proposals, generally by county or service area, to CMS, in early September for each Medicare+Choice product that will be offered in the subsequent year. As a result, increases in the costs of health care services in excess of the estimated future health care services expense reflected in the premiums or the adjusted community rate proposals generally cannot be recovered in the applicable contract year through higher premiums or changes in benefit designs.
Behavioral health and dental and vision PacifiCare membership represents members that are in our commercial and senior HMO that are also enrolled in our behavioral health or dental and vision plans.
We received $41 million from the issuance of common stock for year ended December 31, 2003 in connection with our Employee Stock Purchase Plan and exercises of employee stock options compared to $5 million during the same period in 2002.
Amounts under information technology outsourcing contracts reflect our payment obligations for the resource baselines specified in the applicable outsourcing contracts and do not take into consideration any rights we may have under these contracts to reduce or eliminate resource usage or baselines.
In February 2004, our debt was rated below investment grade by the major credit rating agencies as follows:
Fourth quarter 1996 benefits, claims and expenses increased $1.2 million, or 9.2%, over the fourth quarter of 1995 primarily due to (i) a $0.9 million, or 36.2%, increase in policyholder benefits and claims resulting from increased traditional life death claims and (ii) a $0.6 million, or 10.6%, increase in the change in liability for future policyholder benefits related to the growth and aging of the block of business in force.
Such delinquent mortgage loans were comprised of $2,951,000 of cash flow loans and a $4,000 residential loan.
The increasing size of Individual risks places ever growing demands on the capacity of Insurance and reinsurance. In the reporting year, drilling and pro­ duction platforms for North Sea oil and a growing number of nuclear power stations were placed on the international reinsurance market.
Motor reinsurance produced a profit lower than that of the previous year. Fewer miles driven and speed limits introduced as a result of the oil crisis led to a reduced loss burden in many places and — pro­ vided this improvement was not undermined by in­ flationary tendencies —• to higher premium rebates. Reinsurers also participated in these rebates under quota-share reinsurance for Motor business.
Bonds and Preference Shares of Banks, Public Utilities, Industrial and other Companies 527; Net Cash Deposits with Insurance Companies 1.159 1,172 1,171 1,210 1,204 4,074 1 4,033 3,809 3,869 3,599 Of tfie assets shown, Sw. frs. 76 million (previous year, Sw. frs. 130 million) are held by trustees appointed by us In overseas territories.
If the Board of Directors' proposal is accepted, an unchanged dividend of Sw. frs. 90.— per share is to be paid. Thus, upon presentation of Coupon No. 21 of the registered and bearer shares, a gross amount of Sw. frs. 90.— or, after deduction of the Federal Withholding Tax of 30 °/o, Sw. frs. 63.— will be paid.
% i from Reinsurances Assumed from Reinsurances Ceded otfier Balances 1 '
The development In Australia was completely differ­ ent, but Its effects were no less unfavourable. The two catastrophes which struck the country (floods in Brisbane and cyclone "Tracy" In Darwin) cost the Australian Reinsurance Company Ltd. about A 1 8.5 million; a catastrophe cover within the Group pro­ vided partial relief of fhe burden which these losses placed on the company.
The SwissRe Holding Ltd. owns all companies whose figures have been consolidated — with the exception of Swiss Re, Zurich — and a number of minority holdings. The dividend payments of Group com­ panies are the most important item of income. In the year under report, these payments amounted to Sw. frs. 15.3 million (previous year, Sw. frs. 21.3 mil­ lion). The decline is due generally to lower foreignexchange rates and specifically to the fact that SwissRe Holding (North America) Inc. retained the reduced dividends paid by the American subsidiary companies for financing requirements. Write-offs on the various holdings were high once again because of foreign-exchange rates, but they were largely offset by non-recurring profits resulting from the above-mentioned transfer of the German majority holdings Into SR Beteiligungen AG. — The net profit was Sw. frs. 2 million (previous year, Sw.frs. 1.8 million), and the dividend paid to Swiss Re remained unchanged at Sw.frs. 2 million.
The "Selected Consolidated Financial Data" section on page 12 of the Company's Annual Report to stockholders for the year ended December 31, 2001, which is included as Exhibit (13) to this Form 10-K Report, is incorporated herein by reference.
Contract charges increased 16.1% and 16.4% in 1999 and 1998, respectively. The increase, for both years, was primarily due to higher interest-sensitive life contract charges which were the result of growth in interest-sensitive life policies in force.
Net realized gains were $2.8 million. The net realized gains consisted primarily of gains on the sale of securities transferred to Zenith in connection with the Asset Purchase Agreement. For 1998, the net realized gains were $4.3 million, of which $1.3 million was the gain on the sale of Third Coast Holding Company recognized in the first quarter of 1998, as more fully discussed in Note 4 of the accompanying consolidated financial statements.
Operating expenses totaled $18.6 million. This amount included three significant non-recurring expenses that relate to the sale to Zenith. The first non-recurring expense totaled $3.4 million and consisted of severance payments to certain of the Company's former executives and employees. The second expense totaled $4.1 million and consisted of the issuance of RISCORP stock to The Phoenix Management Company, Ltd. ("Phoenix") in accordance with a Restricted Stock Award Agreement. The third expense totaled $2.8 million and represented a payment for a tax gross up related to the issuance of
The Company experienced increased pricing pressures during 1997. During 1997, the Company made the strategic decision to discontinue writing business owners' protection, commercial multiple peril, and auto, and to focus on its core workers' compensation business. Net written premiums on those discontinued lines of business were less than $1 million during 1997.
$1.8 million, respectively, of amortization of intangible assets and $15.7 million, $2.1 million and $1.6 million, respectively, of amortization of excess cost over net assets acquired related to the acquisitions of Western Surety, Universal Surety, United Capitol and Fischer. Amortization expense for 1995 included a $13.2 million write-down of goodwill associated with the 1990 United Capitol acquisition to reflect the estimated net realizable value on the sale of those operations. Excess cost over net assets acquired is amortized substantially over 40 years. Other intangible assets are amortized over periods ranging from three to 20 years.
IMPACT OF ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123 is effective for fiscal years beginning after December 15, 1995. SFAS No. 123 introduces a preferable fair value-based method of accounting for stock-based compensation. SFAS No. 123 encourages, but does not require, companies to recognize compensation expense for grants of stock, stock options, and other equity instruments to employees based on the new fair value-based method of accounting. As permitted under SFAS No. 123, the Company intends to continue applying the existing accounting rules contained in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and to disclose net income and earnings per share on a pro forma basis, based on the new fair value-based method of accounting.
Net investment income decreased about 1% to $6,454,038 in 1995 from $6,515,927 in 1994. The decrease was primarily due to the overall decrease in interest rates during 1995. Also, during 1995 the Company reduced its holdings in mortgage-backed securities and convertible bonds. The proceeds were invested in short-term government type securities at lower interest rates, but produced a more liquid and stable position.
Included in the $11.2 million for property and equipment is approximately $8.1 million (net of depreciation) for the home office building and $1.6 million for land. Depreciation for the building is primarily over 31.5 years, except for certain components which will be over 15 years. The straight-line method is used.
At December 31, 1996 Central had certificates of deposit and fixed maturities on deposit with various state insurance departments, carried at $3,394,988, for the protection of policyholders.
The Company executed a note payable, in December 1990, for $9,000,000 bearing interest at 9 1/2% per annum for 10 years. The Company received $8,500,000 of the funds in December 1990 and the remaining $500,000 in December 1991. The mortgage note is collateralized by the home office building and by an assignment of the tenant lease for the building. The Company has been required to make monthly payments, since January 1991, based on a 30 year amortization schedule, of $75,677 for 10 years. After five years, the Company has the right to prepay the loan with a 3% prepayment fee. Principal payments due in the next five years, assuming no prepayments, are $104,748 in 1997, $115,145 in 1998, $126,572 in 1999, $139,134 in 2000 and $24,496 in 2001, the year the note is due.
The Company adopted a noncontributory pension plan in 1978. The plan is a defined contribution money purchase pension plan with an outside company, covering substantially all full-time employees of age 20 1/2 or more who have completed six months or more of service. Participants in the plan begin vesting after two years of service and are fully vested after seven years. The contribution was approximately $1,214,000 for 1996, $1,137,000 for 1995 and $1,013,000 for 1994.
The Securities Valuation Office of the NAIC evaluates the bond investments of insurers for regulatory reporting purposes and assigns securities to one of six investment categories called “NAIC designations”. The NAIC designations generally parallel the credit ratings of the nationally recognized statistical rating organizations for marketable bonds. NAIC designations 1 and 2 include bonds considered to be investment grade, which are those rated “BBB-” or higher by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. NAIC designations 3 through 6 include bonds considered to be below investment grade, rated “BB+” or lower by S&P. All of the debt securities in our portfolio were rated investment grade by the NAIC and S&P as of December 31, 2003. Investment grade securities generally bear lower yields and lower degrees of risk than those that are unrated or are rated non-investment grade. The quality distribution of our investment portfolio as of December 31, 2003 was as follows:
those offices are forward-looking statements. Some important factors that must occur in order for us to achieve these results include:
our ability to obtain timely approval of requested rate changes; and
Management services income, which includes income generated from investment and executive management services provided by Stateco and State Auto P&C, respectively increased $0.7 million or 8.5% to $8.7 million.
We have audited the accompanying consolidated balance sheets of State Auto Financial Corporation and subsidiaries as of December 31, 1997 and 1996 and the related consolidated statements of earnings, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1997. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
The Company incurs costs in connection with acquiring new and renewal insurance and annuity businesses. The portion of these costs which are incremental and direct to the acquisition of a new or renewal insurance policy or annuity contract are deferred. Significant costs capitalized include sales based compensation related to the acquisition of new and renewal insurance policies and annuity contracts, medical inspection costs for successful sales, and a portion of employee compensation and benefit costs based upon the amount of time spent on successful sales. Sales based compensation paid to Ameriprise Financial Services, Inc. ("AFSI"), a subsidiary of Ameriprise Financial, advisors and employees and third-party distributors is capitalized. Employee compensation and benefits costs which are capitalized relate primarily to sales efforts, underwriting and processing. All other costs which are not incremental direct costs of acquiring an insurance policy or annuity contract are expensed as incurred.
The recorded investment in syndicated loans at December 31, 2015 and 2014 was $452 million and $451 million, respectively. The Company’s syndicated loan portfolio is diversified across industries and issuers. The primary credit indicator for syndicated loans is whether the loans are performing in accordance with the contractual terms of the syndication. Total nonperforming syndicated loans at December 31, 2015 and 2014 were $5 million and $3 million, respectively.
The Company also offers term life insurance as well as disability products. The Company no longer offers standalone LTC products and whole life insurance but has in force policies from prior years. Insurance liabilities include accumulation values, unpaid reported claims, incurred but not reported claims and obligations for anticipated future claims.
Once withdrawals begin, the contractholder’s funds are moved to one of the three least aggressive asset allocation models.
(1) Individual variable annuity contracts may have more than one guarantee and therefore may be included in more than one benefit type. Variable annuity contracts for which the death benefit equals the account value are not shown in this table.
The increase (decrease) to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its embedded derivatives was $74 million, $124 million and $(168) million, net of DAC, DSIC, unearned revenue amortization and the reinsurance accrual, for the years ended December 31, 2015, 2014 and 2013, respectively.
At December 31, 2015 and 2014, investment securities with a fair value of $323 million and $435 million, respectively, were received as collateral to meet contractual obligations under derivative contracts, of which $193 million and $151 million, respectively, may be sold, pledged or rehypothecated by the Company. At December 31, 2015 and 2014, the Company had not sold, pledged, or rehypothecated any securities that were accepted as collateral. In addition, at December 31, 2015 and 2014, non-cash collateral accepted was held in separate custodial accounts and was not included in the Company's Consolidated Balance Sheets.
We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Net cash used in investing activities was $98,844 for the fiscal year ended December 31, 2018, due primarily due to the purchase of equipment.
The Company has suffered recurring losses and negative cash flows from operations since inception and has a negative working capital. These factors raise substantial doubt as to the ability of the Company to continue as a going concern.