During 2000, premiums written by CCS increased as a result of the continued marketing direction of the Company, which is to penetrate the direct market while decreasing the volume of reinsurance premiums assumed through pooling agreements. CCS's reinsurance assumed premium is a result of quota share agreements whereby CCS assumes a portion of the premiums written by agencies contracted to produce business using Cumberland's Bond-Pro(R) issuance program. The increase in ceded premiums is correlated to the direct premium written and the association to excess of loss treaties on these premiums. The following table reflects the written premium activity, net of reinsurance ceded, for 2000 and 1999.
Written Premiums ------------------------------------------------ 2000 1999 % Change ------------------------------------------------ Direct ................. $ 13,775,266 $ 10,816,114 27.4% Assumed ................ 2,393,468 2,421,346 (1.2)% Ceded .................. (3,510,537) (2,740,148) 28.1% ------------ ------------ ---- Total .................. $ 12,658,197 $ 10,497,312 20.6% ============ ============ ====
------------------------------------------- Premiums Earned Claims Incurred Ratio ------------------------------------------- Direct, net ................. $ 9,647,241 $ 3,182,274 33.0% Assumed, net ................ 2,480,712 178,084 7.2% ----------- ----------- ---- Total ....................... $12,127,953 $ 3,360,358 27.7% =========== =========== ====
Written direct and assumed premiums reached a record $13,237,460 during 1999. Overall written premiums, net of ceded premiums, increased by $1,922,427 or 22%. Earned premiums increased by $2,084,108 or 28% to $9,617,792 for 1999 compared to $7,533,684 for 1998. The increase in earned premiums resulted from CCS's continued growth in the direct surety bond market.
During 1999, premiums written by CCS increased as a result of the continued marketing direction of the Company, which is to penetrate the direct market while decreasing the volume of reinsurance premiums assumed through pooling agreements. CCS's reinsurance assumed premium is a result of quota share agreements whereby CCS assumes a portion of the premiums written by agencies contracted to produce business using Cumberland's Bond-Pro(R) issuance program. The increase in ceded premiums is correlated to the direct premium written and the association to excess of loss treaties on these premiums. The following table reflects the written premium activity, net of reinsurance ceded, for 1999 and 1998.
Written Premiums ------------------------------------------------ 1999 1998 % Change ------------------------------------------------ Direct ................. $ 10,816,114 $ 9,451,746 14.4% Assumed ................ 2,421,346 1,478,109 63.8% Ceded .................. (2,740,148) (2,354,970) (16.4)% ------------ ------------ ------ Total .................. $ 10,497,312 $ 8,574,885 22.4% ============ ============ ======
During the year ended December 31, 1999 and 1998, net investment income earned was $333,462 and $377,218, respectively. Realized net losses and gains for the years ended December 31, 1999 and 1998 were $129,101 and $(437,565), respectively. CCS wrote down its investment in certain equity securities during the fourth quarter of 1998 as management determined the decline in value to be other than temporary. As a result, CCS recorded a loss of $580,360 in 1998, which was offset by net capital gains of $142,795.
Losses and loss adjustment expenses decreased to $2,394,532 from $2,648,074 for the year ended December 31, 1999 and 1998, respectively. The decrease of $253,542 or 9.6% is attributed to a decrease on claims incurred on assumed pooling business. Direct incurred losses increased $423,081 or 183.9% while losses under the assumed pooling agreements decreased $981,978 or 94.5%. Assumed claims on the expired pooling agreements were impacted during 1998 by losses incurred of $1,039,232. The following tables reflects the 1999 activity as it pertains to earned premiums and incurred claims:
-------------------------------------------- Premiums Earned Claims Incurred Ratio -------------------------------------------- Direct, net ...................... $7,538,112 $1,684,078 22.3% Assumed, net ..................... 2,079,680 653,201 31.4% Assumed (pooling) net ............ -- 57,253 -- ---------- ---------- ---- Total ............................ $9,617,792 $2,394,532 24.9% ========== ========== ====
At December 31, 2000, the Company's $24,309,585 of total assets calculated were distributed primarily as follows: 44.6 percent in cash and investments (including accrued investment income), 37.7 percent in receivables and reinsurance recoverables, 12.6 percent in intangibles and deferred policy acquisition costs, 1.4 percent in deferred income tax asset (including income tax recoverable) and 3.7 percent in other assets.
Net cash (used in) provided by investing activities was $(1,316,601), $(4,133,973) and $1,410,318 for the years ended December 31, 2000, 1999 and 1998, respectively. Investing activities consist primarily of purchases and sales of investments.
Reconciliation of Liability for Losses and Loss Adjustment Expenses - -------------------------------------------------------------------
The following table provides a reconciliation of the beginning and ending liability balances, net of reinsurance recoverable, for 2000, 1999 and 1998 to the gross amounts reported in Cumberland's balance sheets: