Upon consummation of the aforementioned sale, the Company ceased to be engaged in the Auto Aftermarket Group business. The consolidated financial statements of the Company, for all periods presented, have been reclassified to reflect the disposition of ALIC and Dublin which comprised the Life/Health business segment. Accordingly, the revenues, benefits and expenses, assets and liabilities, and cash flows of ALIC and Dublin have been excluded from the respective captions in the consolidated statements of operations, consolidated balance sheets and consolidated statements of cash flows. The net operating results of these entities have been reported, net of applicable income taxes, as "Income from discontinued operations"; the assets and liabilities of these entities have been reported as "Assets of discontinued operations" and "Liabilities of discontinued operations"; and the net cash flows of these entities have been reported as "Net cash (used in) provided by discontinued operations."
Reinsurance expense recoveries increased $1.7 million or 120% in 1997 due to the increase in the long-haul trucking business written and reinsurance agreements in place on this business, compared to a $1.4 million or 50% decrease between 1996 and 1995 due to the run off of the farmowners and ancillary inland marine business. Also effecting 1995 was a profit sharing arrangement on the casualty portion of this business.
The Company limits the extent of its risks on fixed maturity securities by generally avoiding securities whose cost significantly exceeds par, by purchasing securities which are backed by stable collateral, and by concentrating on securities that have either a planned amortization or sequential pay classes. The collateralized mortgage obligations and asset backed securities owned have primarily short to intermediate average lives. At December 31, 1997, the Company did not have a significant amount of higher risk mortgage or asset backed securities which had a significant risk of loss or principal. There are negligible default risks on the mortgage and asset backed security portfolios as a whole as the vast majority of the assets are either guaranteed by U. S. government-sponsored entities or are supported in the securitization structure by junior securities enabling the assets to achieve high investment grade status. The Company's collateralized mortgage obligations and asset backed securities are predominantly sequential pay with little or no exposure to interest only obligations ("IOs") or inverse IOs.
Fair values for fixed maturity, equity and asset and mortgage backed securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments at amortized value (see Note C).
The following data summarizes certain aspects of the Company's reinsurance activity for 1997, 1996 and 1995.
The following table provides a reconciliation of beginning and ending liability balances for the Company's insurance claims for 1997, 1996 and 1995.
The 401K Plan allows all employees who meet certain eligibility requirements and choose to participate to defer a percentage of their salary and contribute to the 401K Plan on a tax deferred basis. The ESOP Plan meanwhile has a 2% discretionary contribution from the Company once the employee meets eligibility requirements. The Company contributions to the ESOP Plan are used to purchase shares of ACCEL's common stock. As a result of the reorganization of the 401K and ESOP Plans, the Company funded $68,000 as a partial termination in 1997.
The net income per common share amounts do not equal amounts previously reported due to the restatement of per share amounts under SFAS No. 128. The 1996 net income per common share amounts, in the aggregate, do not equal the amount on the 1996 consolidated statement of operations due to the Rights Offering (see Note E).