For an analysis of the Company’s securities with gross unrealized losses as of December 31, 2016 and 2015, and for other than temporary impairment losses that the Company recorded for the years ended December 31, 2016, 2015, and 2014, please see Note 5 of the notes to the consolidated financial statements in Item 8 of Part II of this report.
(1) Excludes business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement of $35.3 million and $55.8 million during the years ended December 31, 2016 and 2015, respectively.
(1) Includes excise tax related to cessions from the Company’s Commercial Lines to its Reinsurance Operations of $523, $1,051, and $1,114 for the years ended December 31, 2016, 2015, and 2014, respectively.
The current accident year property non-catastrophe loss ratio for 2016 increased by 0.8 points compared to 2015. The current accident year property non-catastrophe loss ratio for 2015 increased by 5.3 points compared to 2014 which is mainly attributable to one large fire loss in Florida.
in prior year losses resulting in higher contingent commission partially offset by a reduction in profit sharing commissions and a recovery of prior year cascading excise tax.
On October 29, 2015, Global Indemnity acquired rights, expiring December 31, 2019, to redeem an additional 3,397,031 ordinary shares for $78.1 million, which is subject to an annual 3% increase. In addition, the Company has future funding commitments of $24.8 million related to investments. The timing of this commitment is uncertain. Other than the impact of this potential redemption and the Company’s future funding commitments related to investments, Global Indemnity has no commitments that could have a material impact on its short-term or long-term liquidity needs.
The Company has commitments in the form of operating leases, commitments to fund limited liability investments, subordinated notes, and unpaid losses and loss expense obligations. As of December 31, 2016, contractual obligations related to Global Indemnity’s commitments, including any principal and interest payments, were as follows:
The following table presents information about the Company’s invested assets and derivative instruments measured at fair value on a recurring basis as of December 31, 2016 and 2015, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.
The Company has exposure to asbestos and environmental (“A&E”) claims. The asbestos exposure primarily arises from the sale of product liability insurance, and the environmental exposure arises from the sale of general liability and commercial multi-peril insurance. In establishing the liability for unpaid losses and loss adjustment expenses related to A&E exposures, management considers facts currently known and the current state of the law and coverage litigation. Liabilities are recognized for known claims (including the cost of related litigation) when sufficient information has been developed to indicate the involvement of a specific insurance policy, and management can reasonably estimate its liability. In addition, liabilities have been established to cover additional exposures on both known and unasserted claims. Estimates of the liabilities are reviewed and updated regularly. Case law continues to evolve for such claims, and uncertainty exists about the outcome of coverage litigation and whether past claim experience will be representative of future claim experience. Included in net unpaid losses and loss adjustment expenses as of December 31, 2016, 2015, and 2014 were IBNR reserves of $26.7 million, $26.0 million, and $26.4 million, respectively, and case reserves of approximately $3.2 million, $4.5 million, and $4.8 million, respectively, for known A&E-related claims.
2. the reserves created on the cancellation of the Global Indemnity plc ordinary shares were used to issue 17,597,230 Global Indemnity plc ordinary shares to Global Indemnity Limited; and
(3) Of these shares, 7,928,004 shares were converted from B ordinary shares to A ordinary shares. Of the 7,928,004 converted shares, 4,555,061 were redeemed and 3,372,943 went into a liquidating trust.
As of December 31, 2016, Fox Paine & Company beneficially owned shares having approximately 84% of the Company’s total outstanding voting power. Fox Paine & Company has the right to appoint a number of the Company’s Directors equal in aggregate to the pro rata percentage of the voting shares of the Company beneficially held by Fox Paine & Company for so long as Fox Paine & Company holds an aggregate of 25% or more of the voting power in the Company. Fox Paine & Company controls the election of all of the Company’s Directors due to its controlling share ownership. The Company’s Chairman is a member of Fox Paine & Company. The Company relies on Fox Paine & Company to provide management services and other services related to the operations of the Company.
The Company recorded $0.3 million, $0.4 million, and $0.3 million of compensation expense for stock options outstanding under the Plan in each of the years ended December 31, 2016, 2015, and 2014, respectively.
Based on the standards currently adopted, the Company reported in its 2016 statutory filings that the capital and surplus of the U.S. insurance companies are above the prescribed Company Action Level RBC requirements.
The following are tabulations of business segment information for the years ended December 31, 2016, 2015, and 2014. Corporate information is included to reconcile segment data to the consolidated financial statements.
(3) Includes excise tax of $1,114 related to cessions from Commercial Lines to Reinsurance Operations.