Capitol Transamerica Corporation leases premises in the Pyare Square building located at 4610 University Avenue, Madison, Wisconsin 53705, as follows:
Approximately 45,940 square feet occupying all or a portion of the 1st, 2nd, 3rd, 6th, and 9th through 14th floors. The term of the lease is from June 1, 1999 through August 31, 2002, with two three year options to renew after that date.
Management's Discussion and Analysis of Financial Condition and - -------- ------------------------------------------------------------------- Results of Operations -----------------------
Gross premiums written during 2000 were $102,110,215, compared with $86,002,801 in 1999 and $87,929,152 in 1998. The premium growth in 2000 is due to the Company's concerted efforts to profitably grow its business as well as from rate increases. Management continually monitors the Company's expansion efforts to ensure that the Company is growing profitably.
The Company's underwriting results can be measured by reference to the combined loss and expense ratios. The following table includes the operating results of the Company's two subsidiary insurance companies on a statutory basis. Losses and loss adjustment expenses are stated as a ratio of net premiums earned, while underwriting expenses are stated as a ratio of net premiums written. The combined ratios were as follows:
The Companys' combined ratio continues to compare very favorably to the industry average, as indicated by the following chart:
The Company follows the customary practice of reinsuring with other companies, i.e., ceding a portion of its exposure on the policies it has written. This program of reinsurance permits the Company greater diversification of business and the ability to write larger policies while limiting the extent of its maximum net loss. It provides protection for the Company against unusually serious occurrences in which a number of claims could produce a large aggregate loss. Management continually monitors the Company's reinsurance program to obtain protection that should be adequate to ensure the availability of funds for losses while maintaining future growth.
The Company's fixed maturities and equity securities are classified as available-for-sale and are carried at fair value. The unrealized gains and losses, net of tax, are reported as "Accumulated Other Comprehensive Income (Loss)" in the equity portion of the balance sheet.
Reserves for losses and loss adjustment expenses reflect the Company's best estimate of the liability for the ultimate cost of reported claims and incurred but not reported (IBNR) claims at the end of each period. The estimates are based on past claim experience and consider current claim trends as well as social and economic conditions. The Company's reserves for losses and loss adjustment expenses were $77,980,973 as of December 31, 2000, compared with $77,256,192 as of December 31, 1999. Management continues to closely monitor the reserves for losses and loss adjustment expenses to assure adequate recognition of the ultimate liability for claims and claim expenses.
The Company's investment portfolio is actively managed to minimize downward price risk.
In prior years, the Company discussed the nature and progress of its plans to become 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 technology and non-information technology systems and believes those systems successfully responded to the year 2000 date change.