Headquartered in Cincinnati, Ohio, the Dental Care Plus Group offers to employer groups of all sizes dental HMO, dental PPO, dental indemnity and vision PPO benefit plans and related services. The Company also offers low cost dental PPO plans to individuals and small groups on the Ohio and Indiana exchanges and individual dental HMO and individual dental PPO plans in Ohio and Kentucky. As of December 31, 2015, we had approximately 362,200 members in our dental and vision benefit programs with approximately 2,800 dentists participating in our dental HMO network, approximately 3,000 dentists participating in our DentaSelect dental PPO network and approximately 2,100 in our Balanced Value dental PPO network. The Company has a network access agreement with a national dental network management company that has one of the largest PPO networks of dentists under contract in the United States. With this network access agreement, our dental PPO members have access to approximately 2,500 additional dentists in Ohio and Indiana and approximately 44,200 additional dentists throughout the United States. The Company also has other network access arrangements for the dental PPO plans that it offers on the Ohio and Indiana exchanges. With these network access arrangements, Dental Care Plus exchange members have access to approximately 1,600 and 1,000 dentists in Ohio and Indiana, respectively.
Historically, healthcare services expense has generally increased for both the fully-insured dental segment and the self-insured dental segment. We continue to review and adjust our provider fee schedules where appropriate. Other important factors that have an impact on our profitability are both the competitive pricing environment and market conditions. With respect to pricing, there is a tradeoff between sustaining or increasing underwriting margins versus increasing enrollment. With respect to market conditions, economies of scale have an impact on our administrative overhead. As a result of a decline in preference for more closely managed dental HMO products, dental costs have become increasingly comparable among our larger competitors. Product design and consumer involvement have become more important drivers of dental services consumption, and administrative expense efficiency is becoming a more significant driver of margin sustainability. Consequently, we continually evaluate our administrative expense structure and attempt to realize administrative expense savings principally through technology improvements.
In March 2015, we paid a dividend of $39.86 per share to shareholders of record for all Redeemable Common Shares. We also paid a dividend of $35.77 per share in March 2014 to holders of our Redeemable Common Shares.
The following table shows membership totals and revenues and expenses for our four business segments for the years ended December 31, 2015 and 2014 (dollars in thousands):
Our fully-insured dental HMO/IND membership increased by approximately 3,000 in 2015. This membership increase is primarily attributable to an increase in fully-insured dental HMO membership resulting from new sales of approximately 6,500 members in the Cincinnati and Northern Kentucky markets during 2015. An increase of approximately 2,300 is due to an increase of new sales of our individual dental HMO product. These increases were offset by the loss of approximately 5,800 members due to employer groups that did not renew with the Company or reduced employee counts of retained employer groups. Some of our fully-insured dental HMO membership losses were the result of employer groups moving to medical carriers to take advantage of medical/dental package savings.
Our fully-insured dental PPO membership increased by approximately 9,700 members in 2015. This membership increase is due to new sales in the Dayton and Central Ohio markets and the Southern Kentucky market of approximately 11,600 members during 2015, offset by the loss of approximately 3,200 members with employer groups that did not renew with the Company or reduced employee counts of retained employer groups in these markets. The remaining increase of approximately 1,300 members is due to the new sales on individual and on exchange dental PPO products in 2015.
Our corporate, all other membership increased by approximately 7,300 members in 2015. The increase is due to increased membership in our vision plan.
Fully-insured dental HMO/IND premium increased approximately $1,510,000 in 2015 compared to 2014. Fully-insured dental HMO/IND premium rates negotiated with employer groups at their renewals resulted in an increase of approximately $499,000 in fully-insured dental HMO/IND premium revenue. An increase in fully-insured dental HMO/IND membership in 2015 resulted in an increase in fully-insured dental HMO/IND premiums of approximately $1,011,000. The membership increase is the result of new fully-insured employer group business as well as an increase in the fully-insured individual product membership. The fully-insured dental HMO/IND segment represented approximately 50.3% of our total dental business in 2015.
Self-Insured ASO Fees - Self-insured ASO fees increased approximately $61,000, or 4.5%. Approximately $72,000 of this increase is attributable to self-insured product sales and an increase in membership for existing employer groups, offset by approximately $11,000 due to a decrease in average self-insured ASO fee rates for 2015 compared to 2014.
Corporate, all other premium revenue is primarily derived from the non-DCP dental indemnity product, dental PPO product and vision product underwritten by third party insurance carriers. In the aggregate, corporate, all other premium revenue increased by approximately $59,000, or 9.5%, to $683,000 in 2015 from $624,000 in 2014.
Fully-insured dental HMO/IND healthcare services expense increased by $1,351,000, or 3.7%. This increase is attributable to an increase in fully-insured dental HMO/IND healthcare services expense on a per member per month basis of approximately $592,000, or 1.6%, in 2015 for both existing and new fully-insured dental HMO/IND membership. Fully-insured dental HMO/IND healthcare services expense increased by approximately $551,000 due to the fee schedule increases effective January 1, 2015 and by approximately $41,000 due to an increase in dental service utilization level by our fully-insured dental HMO/IND members in 2015 compared to 2014. This increase in fully-insured dental HMO/IND healthcare services expense is also the result of an increase of approximately $759,000, or 2.1%, due to an increase in fully-insured dental HMO/IND member months of 2.0% in 2015 compared to 2014.
Fully-insured dental PPO healthcare services expense increased by $1,723,000, or 13.6%. This increase was primarily the result of an increase of approximately $1,810,000 related to the increase in fully-insured group and individual dental PPO membership. This increase in fully-insured dental PPO healthcare member volume change was offset to an overall decrease of approximately $87,000 due to a decrease in claims expense on a PMPM basis. Lower dental service utilization resulted in a decrease of approximately $303,000 offset by an increase in healthcare service expense of approximately $216,000 due to the fee schedule increases effective January 1, 2015.
Our fully-insured dental HMO/IND membership increased approximately 2,200 in 2014. This membership increase is primarily attributable to an increase of approximately 1,200 fully-insured dental HMO members and an increase of approximately 1,000 fully-insured dental indemnity members underwritten by Dental Care Plus, Inc. (“DCP"). The increase in fully-insured dental HMO membership is due to new sales of approximately 9,400 members in the Cincinnati and Northern Kentucky markets during 2014, offset by the loss of approximately 8,200 members with employer groups that did not renew with the Company or reduced employee counts of retained employer groups. A significant portion of the fully-insured dental HMO membership losses were the result of not renewing certain employer groups that did not accept the premium rate increases we proposed. In addition, some of these membership losses were due to corporate acquisitions where our employer group customers moved to the new parent company benefit plans.
Our corporate, all other membership increased by approximately 1,700 members in 2014. The increase is primarily due to an increased membership in our vision plan.
Other income increased approximately $31,000 or 50.8% to $92,000 in 2014 from $61,000 in 2013. This increase is primarily the result of realized gains due to the sale of investments in 2014 that did not occur in 2013.
Self-insured healthcare services expense increased by approximately $997,000, or 4.5%, in 2014. An increase of 3.5% in self-insured member month volume in 2014 compared to 2013 resulted in an increase in self-insured healthcare services expense of approximately $767,000. Self-insured dental healthcare services expense increased by approximately $342,000 due to the 1.5% fee schedule increase effective January 1, 2014. This increase was offset by a decrease in self-insured claims of $112,000 due to a decrease in dental service utilization level by our self-insured members in 2014 compared to 2013.
Our effective tax rate for 2014 was 39.8% compared to the 37.1% effective tax rate in 2013. The increase in the effective tax rate for 2014 compared to 2013 is the result of the new 2014 federal premium tax assessment that is not deductible for federal tax purposes. Also, our 2014 and 2013 effective tax rates were higher than the federal statutory rate primarily due to the impact of permanent tax differences related to meal and entertainment expenses and legal fees. See Note 6 to the consolidated financial statements included in Item 8 - Financial Statements and Supplementary Data for a complete reconciliation of the federal statutory rate to the effective tax rate.
Cash increased $1,084,000, or 13.4%, for the year ended December 31, 2014 to approximately $9,190,000 million at December 31, 2014 from approximately $8,106,000 million at December 31, 2013. This cash increase is primarily the result of cash flow from operations of approximately $2,556,000, that was offset by cash used in investing activities of approximately $845,000 and cash used in financing activities of approximately $627,000. The change in cash for the years ended December 31, 2015, 2014 and 2013 is summarized as follows (in thousands):
In 2014, we invested approximately $530,000 in building improvements, office equipment and computer equipment and software. In 2014, approximately $1.8 million of our investments in FDIC insured certificates of deposit, investment grade corporate bonds and money market funds either matured or were liquidated. We also invested approximately $2.6 million in additional FDIC insured certificates of deposit, investment and non-investment grade corporate bonds and money market funds. In addition, in December of 2014, we sold certain office equipment and computer equipment with a value of approximately $516,000 to a leasing company and entered into a capital lease agreement to lease back these same assets over a four year period. We invested an additional $5,000 in a dental and vision discount product. Collectively, these investments and transactions resulted in a decrease in cash from investment activities of approximately $845,000.
In 2013, we paid approximately $46,000 of our outstanding mortgage balance and repaid approximately $137,000 related to the capital lease that we executed in December 2010. We sold $1 million of Institutional Preferred Shares and approximately $97,000 of Class A and Class B common shares. Also during 2013, we repurchased Redeemable Common Shares of $264,000 from provider shareholders. In addition, we paid dividends to our institutional preferred shareholders and our common shareholders totaling approximately $392,000 in 2013.
A mortgage note, secured by the land and the office building, accrues interest based on the 30-day LIBOR rate plus 1.95%. The note requires us to make principal payments of $4,100 per month in 2015 and higher principal payments in subsequent years through 2022 in accordance with the agreed upon loan amortization schedule. At the maturity date of the mortgage note in 2022, the expected outstanding balance of the note of approximately $804,000 must be repaid or refinanced. We also entered into an interest rate swap agreement that effectively changed the interest rate related to the $1,340,000 mortgage note with a commercial bank from a variable rate based on the 30-day LIBOR rate plus 1.95% to a fixed rate of approximately 3.90% for the 10-year period through December 2022. At December 31, 2015, the carrying value of the mortgage note approximates fair value. Under this mortgage, the Company is required to have a minimum tangible net worth equal to or greater than $3,500,000 at the end of each fiscal year and a debt service ratio of at least 1:1. The Company was in compliance with these covenants at December 31, 2015. The Company also entered into a capital lease agreement with a leasing company in 2014 and 2015 that obligates the Company to pay lease payments over a four year period for each capital lease. Under these capital lease agreements, the Company is required to have a minimum tangible net worth equal to or greater than $2,500,000 at the end of each fiscal year. At December 31, 2015, the Company was in compliance with this minimum tangible net worth requirement.
As of December 31, 2015, we believe our most significant other commitments are:
Deferred Compensation - We expect to pay our deferred compensation liability of approximately $3,287,000 to the Company directors and employees as they retire or otherwise terminate their association with the Company in future years. As of December 31, 2015, we do not expect to pay any of our deferred compensation liability to any directors or key employees in 2016.
Redeemable Common Shares - Pursuant to the Company’s Code of Regulations, holders of Class A, Class B and Class C shares have the right to require the Company to repurchase such holder’s common shares on the terms contained in the Code of Regulations. At December 31, 2015, approximately $85,000 in redeemed common shares are to be paid in 2016.
This increase in cash and short term investments from December 31, 2014 to December 31, 2015 is primarily due to the net cash provided by operating activities of approximately $2,994,000 and an increase of approximately $818,000 of financing activities, offset by cash used in investing activities of approximately $1,344,000. In addition, there was a shift of approximately $505,000 from short term investments to long term investments during this period.
We maintained aggregate statutory capital and surplus of approximately $10.5 million as of December 31, 2015 and were in compliance with applicable statutory requirements. Although the minimum required levels of equity are largely based on premium volume, product mix, and the quality of assets held, minimum requirements can vary significantly from state to state. Given our anticipated premium growth in 2016 resulting from the expansion of our networks and membership, capital requirements will increase. We expect to fund these increased requirements through the retention of earnings and future capital raising activities, if any.
Between December 31, 2014 and December 31, 2015, our claims payable liability estimate increased by approximately $256,000 or 9%, primarily due to higher fully-insured dental HMO/IND and fully-insured dental PPO membership at December 31, 2015 compared to December 31, 2014, along with a significant increase in fully-insured dental HMO/IND utilization in December 2015 compared to December 2014.
We develop our estimate for claims payable liability using actuarial methodologies primarily based on historical claim payments and claim receipt patterns, as well as historical dental cost trends. Depending on the period for which incurred claims are estimated, we apply a different method in determining our estimate. Throughout the year, we use both the “completion factors” and the “claims trend factor” to estimate our claims payable liability. On a quarterly basis, for periods prior to the most recent month, we calculate “completion factors” which indicate the percentage of claims payable estimated for a prior period that have been paid as of the end of the current reporting period. We use the completion factors to determine historical patterns over a rolling 12-month period, made consistent period over period with making adjustments for known changes in claim inventory levels and known changes in claim payment processes. Then, for the most recent month, we calculate a “claims trend factor” that estimates incurred claims primarily from a trend analysis based upon per member per month claims trends developed from our historical experience in the preceding months, adjusted for known provider contracting changes, changes in benefit levels and seasonality. We have consistently applied the key actuarial methodologies to estimate the IBNR and reported claims in process components of our claims payable liability.
DCP Holding Company (the “Company”) is the parent holding company of three wholly-owned subsidiaries which include Dental Care Plus, Inc., an Ohio corporation, Insurance Associates Plus, Inc., an Ohio corporation, and Adenta, Inc., a Kentucky corporation. The Company is primarily owned and controlled by dentists who participate in one or more of the networks that offers Dental Care Plus products. The Company is also partially owned by retired dentists, Company board members, non-dentist individuals and employees who hold voting Redeemable Common Shares and by institutional investors that hold non-voting Redeemable Preferred Shares. The Company primarily offers to employer groups of all sizes dental health maintenance organization (“HMO”), participating provider organization (“PPO”) and indemnity benefit plans and vision benefit plans. As of December 31, 2015, we had approximately 326,000 members in our dental benefits plans and approximately 36,200 members in our vision benefit plans and approximately 2,800 dentists participating in our dental HMO network, approximately 3,000 dentists participating in our DentaSelect dental PPO network and approximately 2,100 in our Balanced Value dental PPO network. The Company has a network access agreement with a national dental network management company that has one of the largest PPO networks of dentists under contract in the United States. With this network access agreement, our dental PPO members have access to approximately 2,500 additional dentists in Ohio and Indiana and approximately 44,200 additional dentists throughout the United States. The Company also has other network access arrangements for the dental PPO plans that it offers on the Ohio and Indiana exchanges. With these network access arrangements, Dental Care Plus exchange members have access to approximately 1,600 and 1,000 dentists in Ohio and Indiana, respectively.
Property and Equipment- Property and equipment is carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The building and the building improvements have useful lives of 27 years and 15 years, respectively. Furniture and fixtures have useful lives of 5 years, and computer equipment and software have useful lives of up to 5 years. Maintenance and repair costs are expensed as incurred. If an impairment exists, a loss is recorded as the amount by which the carrying value of the asset exceeds its fair value.
Redeemable Institutional Preferred Shares are participating securities that share in total comprehensive income as a change to the redemption value of the Redeemable Institutional Preferred Shares to accrete (dilute) the carrying value to the redemption value at the end of each reporting period. Under this method, the end of the reporting period is treated as if it were also the redemption date for the securities. Redeemable Institutional Preferred Shares are considered to be redeemable shares due to the fact that the shareholders have the option to require the Company to repurchase these shares upon the shareholder’s discretion.
Fully-Insured-Membership contracts are written on an annual or multi-year basis and are subject to cancellation by the employer group upon thirty days written notice. The Company’s unearned premium revenue was approximately $32,631,000 and $32,637,000 at December 31, 2015 and 2014, respectively, and primarily relates to the estimated premium revenue associated with the remaining contract periods. Related unbilled amounts recorded in accounts receivable were approximately $30,955,000 and $31,554,000 at December 31, 2015 and 2014, respectively. Premiums are due monthly in advance and are recognized evenly as revenue during the period in which the Company is obligated to provide services to members. Any amounts not received by the end of a reporting period are recorded as accounts receivable by the Company. Any premiums received prior to the beginning of a reporting period are recognized as premiums received in advance and are included in unearned premium revenue in the accompanying consolidated balance sheets. Premiums received in advance were approximately $1,676,000 and $1,083,000 at December 31, 2015 and 2014, respectively. Management has determined that as of December 31, 2015 and 2014, respectively, no premium deficiency reserve is required. The Company’s premium deficiency reserve analysis includes an allocation of investment income.
Healthcare Services Expense- Healthcare services expense is recognized on a monthly basis. In the case of the fully-insured dental HMO and indemnity (“dental HMO/IND”) and dental PPO segments, healthcare services expense is calculated by taking the paid claims associated with the fully-insured membership and adjusting this amount for the change in the claims payable liability determined using actuarial estimates. For the self-insured dental segment, the healthcare services expense is based solely on the paid claims for the self-insured membership. The Company incurred claim costs related to dental care providers amounting to approximately $76,684,000, $71,696,000, and $67,762,000, for the years ended December 31, 2015, 2014, and 2013, respectively.
The Company had one customer that had a balance of approximately 28% and 23% of the uncollected premium receivable balance at December 31, 2015 and 2014, respectively.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 introduces a new lease model that requires the recognition of lease assets and lease liabilities on the balance sheet and the disclosure of key information about leasing arrangements. While this new standard retains most of the principles of the existing lessor model under U.S. GAAP, it aligns many of those principles with ASC 606: Revenue from Contracts with Customers. The effective date of ASU 2016-02 is for interim and annual reporting periods beginning after December 15, 2018. The ASU has not yet been adopted by the Company. Management is currently evaluating the impact on our company’s consolidated financial position, cash flows and results of operations, but it is not expected to have a significant impact.
Goodwill and intangible assets were recorded as a result of the acquisition of Adenta, Inc. in 2005 related to goodwill, an acquired contract, memberships and a provider network. Goodwill amounted to approximately $136,000 at December 31, 2015 and 2014. There has not been any impairment on goodwill. Identifiable and amortizable intangible assets amounted to approximately $66,000 net of approximately $174,000 of accumulated amortization at December 31, 2015 and to approximately $81,000 net of approximately $159,000 of accumulated amortization at December 31, 2014. Amortization expense was approximately $15,000 for each of the three years ended December 31, 2015, 2014 and 2013. The provider network intangible asset of approximately $52,000 at December 31, 2015 is being amortized over a period of 20 years, a period during which the Company expects that all of these providers will have retired from the network. Membership intangible assets (net of individual memberships written-off in the year of acquisition) of approximately $14,000 at December 31, 2015 are being amortized over an 11 year useful life in accordance with the Company’s expectation for the membership retention. The remaining weighted-average amortization period for these intangible assets is approximately 8 years. Goodwill and intangible assets are included in other assets in the accompanying consolidated balance sheets at December 31, 2015 and 2014.
The Company owned certificates of deposit insured by the Federal Deposit Insurance Corporation (“FDIC”) with an amortized cost of $1,090,000 and $1,050,000 as of December 31, 2015 and 2014, respectively. The certificates of deposit included in short-term and fixed maturities investments are classified as available-for-sale and are carried at fair value. The Company also invests in money market funds included in short-term investments and are classified as available-for-sale, with a cost and fair value of approximately $249,000 as of December 31, 2015. The Company invested in corporate bonds with an amortized cost of approximately $7,855,000 and $7,047,000 as of December 31, 2015 and 2014, respectively. The investment and non-investment grade corporate bonds included in fixed maturity investments are classified as available-for-sale and are carried at fair value.
Investments classified at December 31, 2015 and 2014, as fixed maturities and short-term investments were as follows:
Activity in the liability for claims payable for members is summarized as follows:
For the years ended December 31, 2015, 2014, and 2013, the Company did not have any significant uncertain tax positions. The Company is primarily subject to U.S. federal and various U.S. state and local tax authorities. Tax years subsequent to 2011 remain open to examination by the Internal Revenue Service (“IRS”), and tax years subsequent to 2010 remain open to other state and local tax authorities.
The Company had depreciation expense of approximately $449,000 $318,000, and $347,000 for the years ended December 31, 2015, 2014 and 2013, respectively.
Share-based compensation cost is measured at the grant date based on the fair value of the awards and is recognized as expense over the vesting periods and is included in total insurance expense in the condensed consolidated statements of comprehensive income. The fair value of employee awards is remeasured at the end of each reporting period through the remaining vesting period with the change in fair value recognized in earnings.
The maximum aggregate number of share based awards that may be issued under the Plans are 15,000 Class B Common Shares. In 2015, the non-employee members of the Board were granted a total of 228 share based awards. In 2015, key employees were granted 88 share based awards. In 2015, individuals who elected to defer a portion of their cash compensation purchased approximately 52 phantom shares. As of December 31, 2015, the Company has granted a total of 4,123 share awards, net of share based dividends, forfeitures and rescinded share awards of which 2,672 are outstanding.
The following is a summary of activity of non-vested awards for the years ended December 31, 2015 and 2014:
The following is a summary of activity of vested awards for the years ended December 31, 2015 and 2014:
Participating providers along with Company directors and employees have the option to purchase one or more voting Class B Redeemable Common Shares of the Company, when offered. Non-dentist individuals are eligible to purchase Class C voting Redeemable Common Shares, when offered. The maximum percentage of Class C Common Shares outstanding at any time as a proportion of all voting Common Shares is 40%. The book value of a common share was approximately $1,012 and $997 at December 31, 2015 and 2014, respectively. In 2015, 2014, and 2013, the Board declared a per share cash dividend for all Class A, Class B and Class C Redeemable Common Shares in the amounts of $39.86, $35.77, and $32.60, respectively.
The Company has 100,000 authorized Class D Redeemable Common Shares, without par value. The Class D Redeemable Common Shares are non-voting redeemable common shares that Preferred Shares may be converted to under certain circumstances. As of December 31, 2015 and 2014, none of these Class D Redeemable Common Shares were issued or are outstanding.
The Company is authorized to issue 100,000 preferred shares, without par. In 2010, the Company entered into a Preferred Stock Purchase Agreement with an investor for 300 Redeemable Institutional Preferred Shares at a purchase price of $1,000 per share. In 2012 and 2013, the Company entered into additional Stock Purchase Agreements with an investor for the sale of 1,000 Redeemable Institutional Preferred Shares each year at a purchase price of $1,000 per share. The annual dividend payable on each Redeemable Institutional Preferred Share is 5% of the book value at the beginning of the dividend period. As of December 31, 2015, 2014, and 2013, dividends declared and paid were approximately $135,000, $128,000, and $123,000, respectively.
Redeemable Provider Preferred Shares-2009 Series are entitled to a cumulative cash dividend equal to 5% of the year end book value of the Redeemable Provider Preferred Shares. As of December 31, 2015 and 2014, none of these Provider Preferred Shares were issued or are outstanding.
Dividend restrictions vary among the subsidiaries. Dental Care Plus is restricted by regulatory requirements of its domiciliary state, which limit by reference to statutory net income and net worth, the dividends that can be paid without prior regulatory approval. Dividends paid by Dental Care Plus cannot, without prior approval of the Ohio Department of Insurance, exceed in any one year the lesser of: (i) 10% of net worth (as of the preceding December 31), or (ii) net income for the prior year, and only if net worth exceeds $250,000 and only out of unassigned surplus. There were no dividends declared or paid by any subsidiaries in 2015, 2014 or 2013. During 2016, the total dividend that the Dental Care Plus subsidiary may declare without prior regulatory approval is approximately $1,044,000.
At December 31, 2015, future required payments under all outstanding capital leases are as follows:
The Company entered into an interest rate swap agreement (“Agreement”) (cash flow hedge) used to manage the Company’s interest rate risk. The swap agreement effectively changed the interest rate related to the Company’s mortgage note with a commercial bank from a variable rate based on the 30-day LIBOR rate plus 1.95% to a fixed rate of 3.90% for the 10-year period through December 22, 2022. The Company’s risk management policy is to not enter into derivatives for speculative purposes. The notional amount decreases in direct correlation to the principal reduction of the mortgage and was approximately $1,198,000 and $1,248,000 at December 31, 2015 and 2014, respectively. The Company believes that the risk of nonperformance by the counter party to this Agreement is not material to the financial statements. At December 31, 2015 and 2014, the fair value of this Agreement was a liability of approximately $18,000 and $5,000, respectively. This amount is included in other payables and accruals in the accompanying consolidated balance sheets. The agreement will terminate upon maturity of the mortgage loan payable (Note 11).
The amounts included in other comprehensive (loss) income related to the interest rate swap was $(8,687), $33,504, and $(9,466), net of income tax (benefit) expense of $(4,475), $17,260, and $(4,877), during 2015, 2014 and 2013, respectively.
The Company has an annually renewable agreement with a commercial bank for a $500,000 working capital line of credit. Interest is payable at a variable rate of LIBOR plus 2.50%. The Company did not have any interest expense or significant fees for the line of credit for each of the three years ended December 31, 2015. As of December 31, 2015 and 2014, there was no amount outstanding on this line of credit. The $500,000 working capital line of credit expires in July 2016. The Company expects to renew this line of credit at its maturity.
The Company has an additional annually renewable working capital line of credit for $1,000,000. Interest is payable at a variable rate of LIBOR plus 2.50%. The Company did not have any interest expense or significant fees for the line of credit for each of the three years ended December 31, 2015. At December 31, 2015 and 2014, there was no amount outstanding on this line of credit. The $1,000,000 working capital line of credit expires in July 2016. The Company expects to renew this line of credit at its maturity.
Seven of our Board members are also participating providers and as a group received approximately $191,000, $191,000, and $154,000 in directors’ fees for the years ended December 31, 2015, 2014, and 2013, respectively.
The following table presents for each of the fair value levels, the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2015 and 2014 (amounts in thousands):
At December 31, 2015 and 2014, there were no assets or liabilities that were required to be measured at fair value on a non-recurring basis. The Company did not have any transfers between fair value hierarchy levels during December 2015 and 2014. As of December 31, 2015 and 2014, the Company did not have any assets or liabilities classified as Level 3 of the fair value hierarchy.
A summary of our unaudited quarterly results of operations for the years ended December 31, 2015 and 2014 is as follows (amounts in thousands):
In accordance with the provisions of the Affordable Care Act of 2010, the federal government imposed an annual assessment on all U.S. health insurers of approximately $13.9 billion in 2016. This annual assessment will increase each year and is expected to be $16.0 billion in 2019. This annual assessment is allocated to individual health insurers based on the ratio of the insurer’s net premiums written during the preceding calendar year to the total health insurance premiums for any U.S. risk premium written for that same year. The first $25 million of a health insurer’s net premium written is exempt from the federal premium tax assessment. The net premium written by a health insurer from $25 million to $50 million is subject to 50% of the federal premium tax rate. Accordingly, in January 2016, the Company established a liability for the federal premium tax of approximately $580,000 that is payable to the United States Treasury in September 2016, along with an offsetting asset that will be amortized during 2016.
On February 10, 2016, the Company’s Board of Directors declared a $40.47 per share dividend for all holders of Class A, Class B and Class C redeemable common shares of record on February 10, 2016, payable on March 25, 2016. With the dividend, the holders of restricted share units will receive an equivalent share based dividend.