The Registrant's and Arista's principal executive offices are located at 116 John Street, New York, New York 10038. The offices contain approximately 16,100 square feet. Effective on June 1, 2000, the Company entered into a new seven year lease for its principal executive office space at an average rent over the term of the lease of approximately $422,000 per year, exclusive of electricity and a share of various operating expenses.
The Company has the option to terminate the lease provided it notifies the landlord six months prior to the termination date, and remits to the landlord a sum equal to six months of the then existing rent plus all unamortized capital improvement costs.
The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements of the Company and the notes thereto appearing elsewhere in this Form 10-K. Except for the historical information contained herein, the following discussion contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those projected in the forward-looking statements discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this section, as well as in other sections herein.
Prior to July 1, 1998, the Company, through its wholly-owned subsidiary, Arista Insurance Company, operated principally as an underwriter of New York State disability insurance to some 23,000 policyholders and 229,000 covered lives in the New York Metropolitan Area. In November 1998, effective July 1, 1998, the Company ceded its disability insurance underwriting operations to The Guardian pursuant to the Treaty and concurrently, the Registrant entered into the TPA Agreement under which the Company performs various functions as an independent administrator for all disability policies ceded to The Guardian and for other New York State statutory disability policies issued by The Guardian and other entities (the "TPA services") and as a managing general agency with respect to a substantial portion of the business administered herein.
Consolidated total revenues during the years ended December 31, 2001 and 2000 were $4,001,187 and $4,015,601, respectively. During the years 2001 and 2000, the Company operated solely as full-time third party administrative and managing general agency service provider (a "Provider").
Consolidated investment income in 2001 was $19,937 as compared to $39,275, in 2000. The decrease in 2000 was due a to a lower average annual yield on total investments.
Consolidated general and administrative expenses for 2001 was $4,134,294 as compared to such expenses of $3,773,390 for 2000. The increase in consolidated general and administrative expenses in 2001 was due principally to increases in rent, legal expenses and corporate insurance. Effective October 1, 2001, officers reduced their salaries and benefits, and management decreased the number of clerical staff in order to reduce the total general and administrative expenses.
Consolidated revenues during the years ended December 31, 2000 and 1999 were $3,966,704 and $3,505,816, respectively, from the Company's continuing third party administrative service operations. During the years of 2000 and 1999, the Company operated solely as a Provider. Revenues increased in 2000 mainly due to the additional fees earned by the Company acting as a Provider for an acquisition completed by its primary client in August 1999 and other increased business. In addition, the Company entered into a third party administration agreement effective October 1, 2000, with a new client.
YEAR ENDED DECEMBER 31, 2001 AS COMPARED TO DECEMBER 31, 2000
Retained earnings decreased from $1,161,829 at December 31, 2000 to $1,055,663 at December 31, 2001 as a result of the Company's net comprehensive loss of ($106,166).
The Guardian represents the Registrant's largest customer in its third party administration business, accounting for more than 90% of such business during the years ended December 31, 1999, December 31, 2000 and December 31, 2001.
The response to this item is submitted in Part IV of this Form 10-K on page to S-5.