In addition to the acquisition price on September 1, 1999, the total purchase price will include the unamortized balance of $6.9 million resulting from a purchase on January 4, 1999, of the right to receive approximately 27.5% of the renewal revenue from certain inforce policies, due The Wamberg Organization, for a cash payment of $7.5 million. Concurrent with the acquisition of The Wamberg Organization, we purchased all of the renewal revenue not acquired on January 4, 1999.
- 326,363 shares of common stock, having an aggregate value of $5.3 million based on the closing price of the common stock on April 5, 1999;
- the direct payment of $3.6 million for certain outstanding loans; and
- commissions paid by the insurance companies that underwrite the policies underlying the various non-qualified benefit programs;
- a higher volume of first year revenue coming from internal sales efforts.
Because of the acquisition of The Wamberg Organization and NICB, commission and fee expense actually declined from 1998 to 1999. The gross profit on our ten-year projected renewal revenue as of December 31, 1999 increased 79.8% from a year ago.
The increase in general and administrative expenses should be reviewed in the same context as the decrease in commission expense. Since the beginning of the year, four significant events have affected this relationship:
(3) consolidation of certain financial and administrative functions into our new corporate offices in North Barrington, Illinois; and,
We believe that our net cash flow from operations will continue to provide sufficient funds to service our debt obligations. We estimate renewal revenue in future periods, which is not reflected on our balance sheet, to represent approximately $246 million over the next five years. However, renewal revenue can be adversely affected by policy surrenders or exchanges, material contract changes, asset growth and case mortality rates.
As our business grows, our working capital and capital expenditures requirements will also continue to increase. We believe that net cash flows from operations will be sufficient to finance our debt payments, working capital and capital expenditures for the next twelve months. There can be no assurance, however, that the net cash flows from operations will be sufficient to meet our anticipated requirements or that we will not require additional debt or equity financing within this time frame. We may continue to issue stock to finance future acquisitions.
We depend heavily on a select group of insurance companies to underwrite the insurance policies underlying the programs we sell. As of December 31, 1999, 20 life insurance companies underwrote substantially all of the insurance policies underlying our clients' programs. Seven of these companies accounted for approximately 76.3% of 1998 first year commission revenue and 63.1% of our first year commission revenue for the year ended December 31, 1999. We cannot be sure if these relationships will continue or if we will be able to develop relationships with other insurance companies.
We believe our most serious competitive threat will likely come either from large, diversified financial services firms which are willing and able to expend a lot of resources to gain market share or from large direct competitors that choose to pursue an acquisition or consolidation strategy similar to ours. Our business and market share may be materially adversely affected if we do not remain competitive.