Ratios AFC's debt to total capital ratio at the parent holding company level (excluding amounts due AFG) improved from nearly 60% at the date of the Mergers to approximately 17% at December 31, 1997. Including amounts due AFG, the ratio was 31% at the end of 1997.
Great American's liability for unpaid losses and loss adjustment expenses includes amounts for various liability coverages related to environmental, hazardous product and other mass tort claims. At December 31, 1997, Great American had recorded $348 million (net of reinsurance recoverables of $173 million) for such claims on policies written many years ago where, in most cases, coverage was never intended. Due to inconsistent court decisions on many coverage issues and the difficulty in determining standards acceptable for cleaning up pollution sites, significant uncertainties exist which are not likely to be resolved in the near future.
Results for 1996 include $203 million in pretax gains primarily on the sales of Citicasters and Buckeye Management Company, reduced by a charge of $80 million resulting from a decision to strengthen insurance reserves relating to asbestos and other environmental matters ("A&E").
For certain lines of business and products where the credibility of the range of loss projections is less certain (primarily the various specialty lines listed above), management believes that it is prudent and appropriate to use conservative assumptions until such time as the data, experience and projections have more credibility, as evidenced by data volume, consistency and maturity of the data. While this practice mitigates the risk of adverse development on this business, it does not eliminate it.
Chiquita During the second half of 1997, Chiquita issued 4.6 million shares of its common stock in acquisitions of operating businesses. AFC recorded a pretax gain in the fourth quarter of 1997 of approximately $11 million representing the excess of AFC's equity in Chiquita following the issuances of its common stock over AFC's previously recorded carrying value.
Held to Maturity $ 202.2 $331.0 $ 9.3 $ 2.4 ($ 1.2) Available for Sale 1,925.8 284.8 871.8 29.6 (47.3) Total $2,128.0 $615.8 $ 881.1 $32.0 ($48.5)
Q. Insurance Securities owned by insurance subsidiaries having a carrying value of approximately $1.4 billion at December 31, 1997, were on deposit as required by regulatory authorities.
2. Financial Statement Schedules: A. Selected Quarterly Financial Data is included in Note P to the Consolidated Financial Statements. B. Schedules filed herewith for 1997, 1996 and 1995: Page I - Condensed Financial Information of Registrant S-2
4 Instruments defining the The rights of holders of rights of security holders. Registrant's Preferred Stock are defined in the Articles of Incor- poration. Registrant has no out- standing debt issues exceeding 10% of the assets of Registrant and consolidated subsidiaries.
Deferred Acquisition Costs Policy acquisition costs (principally commissions, premium taxes and other underwriting expenses) related to the production of new business are deferred ("DPAC"). For the property and casualty companies, the deferral of acquisition costs is limited based upon their recoverability without any consideration for anticipated investment income. DPAC is charged against income ratably over the terms of the related policies. For the annuity companies, DPAC is amortized, with interest, in relation to the present value of expected gross profits on the policies.
Signed: March 26, 1998 BY:s/Carl H. Lindner Carl H. Lindner Chairman of the Board and Chief Executive Officer