Approximately 40,936 square feet occupying all or a portion of the 1st, 2nd, 6th, and 9th through 14th floors. The term of the lease is from June 1, 1999 through August 31, 2002.
Premiums earned are recognized as net revenues after reduction for reinsurance ceded and after establishment of the provision for the pro rata unearned portion of premiums written. Net premiums earned in 1999 totaled $82,841,104, compared with $88,629,476 and $87,451,620 in 1998 and 1997, respectively. The net unearn- ed premium reserve was $39,454,257, $41,541,432 and $47,411,849 at each year end.
Interest and Dividend Income: Interest on fixed maturities is recorded as in- come when earned and is adjusted for any amortization of purchase premium or accretion of discount. Dividends on equity securities are recorded as income on ex-dividend dates.
Liquidity refers to the Company's ability to meet obligations as they become due. The obligations and cash outflow of the Company include claim settlements, acquisition and administrative expenses, investment purchases and dividends to shareholders. In addition to satisfying obligations and cash outflow through premium collections, there is cash inflow obtained from interest and dividend income, maturities and sales of investments. Because cash inflow from premiums is received in advance of cash outflow required to settle claims, the Company accumulates funds which it invests pending liquidity requirements. Therefore, investments represent the majority (84.7% in 1999, 85.9% in 1998 and 85.7% in 1997) of the Company's assets. Cash outflow can be unpredictable for two reasons: first, a large portion of liabilities representing loss reserves have uncertainty regarding settlement dates; and second, there is potential for losses occurring either individually or in the aggregate. As a result, the Com- pany maintains adequate short-term investment programs necessary to ensure the availability of funds. The investment program is structured so that a forced sale liquidation of fixed maturities should not be necessary during the course of ordinary business involvement and activities. The Company has no material capital expenditure commitments.
Market risk is defined by the SEC as exposure to fluctuations in interest rates, foreign currency exchange rates, and commodity or other price changes. The Com- pany does not invest in derivatives or similar financial instrumenmts, which are highly sensitive to market risk and which are the main focus of the new require- ments. However, the requirements are broad enough in scope to encompass the po- tential impact of interest rate fluctuations on the Company's fixed income port- folio, as well as the potential impact of a severe drop in the stock market on the Company's equity investments.
In prior years the Company discussed the nature and progress of its plans to be- come year 2000 ready. In 1999 the Company completed its remediation and testing of systems. As a result of the planning and implementation efforts, the Company experienced no significant disruptions in mission critical information technolo- gy and non-information technology systems and believes those systems successful- ly responded to the year 2000 date change.
Financial Statements- The financial statements filed by CTC in connection with this Annual Report are consolidated financial statements which present all of the operations of the parent company and its subsidiaries.