felanders/preprocessed huggingface dataset:
Lloyd's presents its results on an underwriting year basis, generally closing each underwriting year after three years. The Company makes estimates for each year and timely accrues the expected results. At Lloyd's, the amount to close an underwriting year into the next year is referred to as the "reinsurance to close." At December 31, 2000, Syndicate 1221 closed its 1998 underwriting year, the net effect of which resulted in a portfolio transfer to NCUL and Millennium of $7.9 million at December 31, 2000. At December 31, 1999, Syndicate 1221 and an unaffiliated syndicate on which NCUL participated in 1997 closed their 1997 underwriting year resulting in a portfolio transfer to NCUL of $15.5 million at December 31, 1999. At December 31, 1998, Syndicate 1221 and an unaffiliated syndicate on which NCUL participated in 1997, closed their 1996 underwriting year resulting in a portfolio transfer to NCUL of $19.7 million at December 31, 1998. These transactions accounted for part of the increases in the premium volume in the Company's Lloyd's Operations. The reinsurance to close transactions were recorded as additional written and earned premium, losses incurred, loss reserves and receivables, all in the same amount. There were no gains or losses recorded on the transactions.
Ceded Written Premium. In the ordinary course of business, the Company reinsures certain insurance risks with unaffiliated insurance companies for the purpose of limiting its maximum loss exposure, protecting against catastrophic losses, and maintaining desired ratios of net premiums written to statutory surplus. The increase in ceded premium in the Lloyd's Operations during 2000 was due to the purchase of additional quota share protection in the marine business and increased gross written premium. The Insurance Companies' ceded premium declined 2.8% from 1999 to 2000 primarily due to more favorable reinsurance rates in the program insurance. The decrease in the ceded premium from 1998 to 1999 resulted from the decrease in engineering and aviation business which were heavily reinsured.
Invested assets and cash increased from $246.7 million at December 31, 1999 to $251.2 million at December 31, 2000. The increase was primarily due to the fair value of the fixed maturities portfolio moving from a $5.3 million unrealized loss at December 31, 1999 to a $3.3 million unrealized gain at December 31, 2000. Net investment income was $15.2 million in 1998, $16.0 million in 1999 and $18.4 million in 2000. The average yield of the portfolio, excluding net realized capital gains, was 5.87% in 1998, 5.84% in 1999, and 6.55% in 2000 reflecting the prevailing interest rates during those years, the decrease in the tax-exempt portfolio and reduction in expenses to manage the portfolio in 2000. As of December 31, 2000, all fixed maturity securities and equity securities held by the Company were classified as available-for-sale.
American Memorial's home office buildings in Rapid City, South Dakota, contain approximately 52,000 square feet, of which approximately three- fourths is utilized for American Memorial's purposes. The remainder of the buildings are leased to unaffiliated tenants. American Memorial also leases marketing and administrative space in several locations throughout the United States.
At December 31, 1997, AAG (parent) had approximately $75 million of unrestricted cash and marketable investments on hand. If AAG had used this amount to retire outstanding indebtedness, its consolidated debt to capital ratio would have been 18% at December 31, 1997.
The NAIC assigns quality ratings to publicly traded as well as privately placed securities. At December 31, 1997, 93% of AAG's fixed maturity portfolio was comprised of investment grade bonds (NAIC rating of "1" or "2"). Management believes that the high credit quality of AAG's investment portfolio should generate a stable and predictable investment return.
Equity in Net Earnings (Loss) of Affiliate Equity in net earnings (loss) of affiliate represents AAG's proportionate share of the results of Chiquita Brands International. Chiquita's income from continuing operations before unusual items was $0.3 million in 1997, $43 million in 1996 and $9 million in 1995. Chiquita's income (loss) before extraordinary items was $0.3 million in 1997, ($28 million) in 1996 and $17 million in 1995. Included in equity in Chiquita's 1997 earnings is a gain attributable to Chiquita's issuance of common stock.
Interest and Other Debt Expenses Interest expense on borrowings decreased 38% in 1997 and 19% in 1996 due primarily to the retirement of debt during both years, as well as the use of lower cost bank borrowings to finance purchases of higher cost debt. (See Note G.)
Included in AAG's retained earnings at December 31, 1997, was $8.1 million applicable to equity in undistributed net losses of Chiquita. In 1996 AAG recorded a pretax extraordinary charge of $1.1 million representing its proportionate share of Chiquita's loss on the retirement of debt.
Mandatorily redeemable preferred securities of subsidiary trusts $ 225 $ 75
Consolidated Statement of Cash Flows: Years Ended December 31, 1997, 1996 and 1995
We intend to distribute a minimum of 90% of annual Distributable Income by continuing to make regular quarterly dividend payments for each of the first three fiscal quarters of each fiscal year, followed by either repurchases of Common Shares or payment of a special dividend after the end of our fiscal year. Any future determination to pay dividends or repurchase Common Shares will remain at the discretion of the Board and will be dependent upon many factors, including: (i) our financial condition, liquidity, results of operations (including our ability to generate cash flow in excess of our expenses) and capital requirements; (ii) general business conditions, (iii) legal, tax and regulatory limitations; (iv) contractual prohibitions and other restrictions; (v) trading price of the Company's Common Shares as compared to the Company's book value per share; and (vi) any other factors that the Board deems relevant. We currently expect that our dividends will be subject to customary dividend tax treatment in the U.S., but if our total dividends paid during any given year exceed our current and accumulated earnings and profits as of the end of such year (determined under U.S. tax principles), a portion of our dividends paid in that year will be treated: (i) first, as a nontaxable return of capital, to the extent of a shareholder’s tax basis in Common Shares (on a dollar-for-dollar basis); and (ii) subsequently, as capital gain.
Most of our reinsurance contracts are comprised of business that has both a low frequency of claims occurrence and a high potential severity of loss, primarily from claims arising from natural and man-made catastrophes. Given the high-severity, low-frequency nature of these events, the losses typically generated therefrom do not lend themselves to traditional actuarial reserving methods, such as statistical calculations of a range of estimates surrounding the best point estimate of our loss and LAE reserves. Therefore, our reserving approach for these types of coverages is to estimate the ultimate cost associated with a single loss event rather than to analyze the historical development patterns of past losses as a means of estimating ultimate losses for an entire accident year. We estimate our reserves for these large events on a contract-by-contract basis by means of a review of policies with known or potential exposure to a particular loss event.
We do not expect to experience any significant claims processing backlogs, although such backlogs may occur following a major catastrophic event.
This section reviews our consolidated financial condition at December 31, 2014 and 2013; our consolidated results of operations for the years 2014, 2013 and 2012; and, where appropriate, factors that may affect our future financial performance. This discussion should be read in conjunction with “Item 6: Selected Financial Data” and our consolidated financial statements in this Form 10-K. We define increases or decreases greater than or equal to 200% as “NM” or not meaningful.
Recent trends in the life insurance industry may affect our mortality, policy persistency and premium persistency for certain blocks of in force business. Deviations in experience from our assumptions have had, and could continue to have, an adverse effect on the profitability of certain universal life products. Most of our current products permit us to increase charges and adjust crediting rates during the life of the policy or contract (subject to guarantees in the policies and contracts). We have made, and may in the future make, such adjustments.
Partially offsetting the increase in income from continuing operations were the following items:
Primarily includes swaptions, put options, call options and equity futures, excluding those associated with the fixed indexed annuity products.
Total assets increased $104.8 million from December 31, 2013 to December 31, 2014. The increase is primarily attributable to an increase invested assets driven by the following:
An increase in pension and post-employment liabilities of $66.9 million, which is driven primarily by a decrease in the discount rate and an update to the underlying mortality assumptions, which reflect the assumption that mortality is improving which increases the expected projected benefits.
Total stockholder’s equity decreased $254.7 million from December 31, 2013 to December 31, 2014. The decrease is primarily attributable to the following:
The changes in the projected benefit obligations of the employee plan at December 31, 2014 as compared to December 31, 2013 were principally the result of actuarial losses due to assumption changes.
The RBC of Phoenix Life as of December 31, 2014 was in excess of 300% of the Company Action Level.
Loss and loss adjustment expenses incurred. Loss and loss adjustment expenses (“LAE”) incurred represent our largest expense item, and for any given reporting period, include estimates of future claim payments, changes in those estimates from prior reporting periods and costs associated with investigating, defending and servicing claims. These expenses fluctuate based on the amount and types of risks we insure. We record loss and LAE related to estimates of future claim payments based on case-by-case valuations, statistical analyses and actuarial procedures. We seek to establish all reserves at the most likely ultimate liability based on our historical claims experience. It is typical for certain claims to take several years to settle and we revise our estimates as we receive additional information on such claims. Our ability to estimate loss and LAE accurately at the time of pricing our insurance policies is a critical factor affecting our profitability.
We believe that the most critical accounting policies relate to the reporting of reserves for loss and LAE, including losses that have occurred but have not been reported prior to the reporting date, amounts recoverable from third party reinsurers, deferred ceding commission revenue, deferred policy acquisition costs, deferred income taxes, the impairment of investment securities, intangible assets and the valuation of stock-based compensation. See Note 2 (Accounting Policies and Basis of Presentation) of the Notes to Consolidated Financial Statements following Item 15 of this Annual Report.
Net investment income was $1,800,000 in 2014 compared to $1,170,000 in 2013. The increase of $630,000, or 53.8%, was due to an increase in average invested assets in 2014. The increase in cash and invested assets resulted primarily from the net proceeds of $18,804,000 that we received on December 13, 2013 from our public offering and increased operating cash flows. The tax equivalent investment yield, excluding cash, was 4.67% and 5.28% at December 31, 2014 and 2013, respectively.
Depreciation and amortization was $875,000 in 2014 compared to $646,000 in 2013. The increase of $229,000, or 35.4%, in depreciation and amortization was primarily due to depreciation on newly purchased assets used to upgrade our systems infrastructure and the building from which we operate.
Interest expense was $-0- in 2014 compared to $76,000 in 2013. The $76,000 decrease in interest expense, or 100%, was due to the $747,000 redemption of outstanding notes and $210,000 repayment of the outstanding balance on our credit line from the proceeds of our public offering in December 2013.
(2) For the year ended December 31, 2014, includes the sum of net catastrophe losses and loss adjustment expenses of $941,027 resulting from severe winter weather, which occurred in January and February 2014.
U.S. Treasury securities included in held to maturity securities are held in trust pursuant to the New York State Department of Financial Services’ minimum funds requirement.
Discontinuation of a segment of business that may affect future earnings
Includes policy acquisition expenses, and other general and administrative expenses, excluding commissions and salaries and benefits, related to insurance operations and corporate operating expenses.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The bill intended to bolster the U.S. economy, among other things, and provide emergency assistance to qualifying businesses and individuals. The Company was able to take advantage of a provision in the Act delaying payment of certain payroll taxes until 2021 and 2022. The CARES Act had no material impact on the Company’s financial statements.
Tax years 2017 through 2020 are subject to examination by the federal and state taxing authorities.
Gross written premiums increased by 1.4% to $5,063.7 million in 2016, compared to $4,995.6 million in 2015, reflecting, a $195.0 million, or 13.2%, increase in our insurance business, partially offset by a $127.0 million, or 3.6%, decrease in our reinsurance business. The rise in insurance premiums was primarily due to increases in most lines of business, as we have focused on expanding the insurance operations. The decline in reinsurance premiums was mainly due to a decrease in treaty property business, a decline in international premiums related to quota share agreements and a negative impact of $42.9 million from the year over year movement in foreign exchange rates. Net written premiums decreased by 2.2% to $2,048.1 million in 2016, compared to $2,093.3 million in 2015. The decline in net written premiums compared to the increase in gross written premiums is primarily due to a higher level of reinsurance purchased on the insurance business. Premiums earned decreased by 2.3% to $2,094.0 million in 2016, compared to $2,143.8 million in 2015. The change in premiums earned is consistent with the change in net written premiums.
Losses and Loss Adjustment Expenses. Loss and loss adjustment expenses increased 33.2% from $5.2 million in 1998 to $6.9 million in 1999 primarily due to an increase in net earned premiums. Increases in general liability and surety business accounted for the largest portion of the increase in loss and loss adjustment expenses. During 1999, the Company experienced favorable development on prior accident years and released approximately $553,000 of reserves.
Direct premiums written for 2000 totaled $97.1 million, an increase of $11.0 million (12.8%) from 1999. This increase is primarily attributable to increases in fleet trucking's large trucking fleet and independent contractor programs of $3.9 million (22.4%) and $1.6 million (7.8%), respectively, from 1999 levels. Direct premium writings from the Company's private passenger automobile, small trucking fleet and small business workers' compensation programs also increased by $2.4 million, $2.2 million and $1.2 million, respectively. Large trucking fleet volume increases resulted primarily from the addition of new accounts. Increases in independent contractor premiums resulted from the addition of new accounts and volume increases on existing accounts, while increases in private passenger automobile, small fleet and small workers' compensation were due primarily to geographic expansion.
One customer of the fleet trucking segment represents approximately $23,739, $22,301 and $18,436 of the Company's consolidated revenue in 2000, 1999 and 1998, respectively.
The following is management’s discussion and analysis of the consolidated financial condition and consolidated results of operations of the Company. It is intended to be a discussion of certain key financial information regarding the Company and should be read in conjunction with the Consolidated Financial Statements and related Notes to this report on Form 10-K.
Realized Gains (Losses) on Investments. During the current year, the Company realized net gains of $1.7 million on security sales that were primarily below investment-grade quality and related to assets of an acquired entity. In 2010 and 2009, the Company sold equity mutual funds, which were previously impaired, and realized gains of $6.4 million and $4.9 million, respectively. The Company also sold a number of fixed maturity investments in 2009, resulting in a total gain of $8.0 million.
Policyholder Dividends. The Company issues long duration participating policies to foreign residents that are expected to pay dividends to policyholders based upon actual experience. Policyholder dividends are factored into the premiums and have no impact on profitability.
Overall, other non-insurance operations are relatively immaterial to the consolidated results, except for the fair value adjustment related to the Company’s warrants to purchase Class A common stock. The fair value adjustment as of December 31, 2010 was $0.2 million, which was recorded as revenue, compared to revenue of $3.2 million recorded for 2009 and a reduction of revenue of $2.7 million in 2008. These amounts fluctuate due to the movement in our Class A common stock price and fair value calculation using the Black-Scholes valuation model.
The Company evaluates all securities on a quarterly basis, and more frequently when economic conditions warrant additional evaluations, for determining if an OTTI exists pursuant to the accounting guidelines. In evaluating the possible impairment of securities, consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial conditions and near-term prospects of the issuer, and the ability and intent of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer’s financial condition, the Company may consider whether the securities are issued by the Federal government or its agencies, by government-sponsored agencies, or whether downgrades by bond rating agencies have occurred, and reviews of the issuer’s financial condition.
The Company's aggregate reinsurance contracts are maintained on a funds withheld basis whereby the Company holds the ceded premiums in a funds withheld account for purposes of paying losses and related loss adjustment expenses. Interest charges are credited on funds withheld at predetermined contractual rates.
Given the profile of the Company's reserves as discussed above and the results of the periodic actuarial analyses described, the Company has not made any significant adjustments to aggregate reserves reported in the financial statements in the calendar years since 1995 as these analyses did not indicate any changes in loss emergence or other trends that would support such adjustments.
Impairment of capitalized system development costs. Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of" ("SFAS No. 121") requires recognition of impairment losses for long-lived assets whenever events or changes in circumstances result in the carrying amount of an asset to exceed the sum of the expected future cash flow associated with the asset. During 1998 management replaced its policy administration system and accordingly recognized a $12.7 million pre-tax charge which represents the net book value of capitalized costs associated with the old computer system, which is no longer being used for the Company's operations.
Cash and invested assets. Aggregate invested assets, including cash and short term investments, were $1,167.1 million and $1,031.8 million at December 31, 1998 and 1997, respectively. The increase in invested assets between December 31, 1997 and December 31, 1998 resulted primarily from cash flow from operations generated during the period and net realized and unrealized investment gains.
Sources and uses of funds. Our sources of funds are from insurance related operations, financing activities and investing activities. Major sources of funds from operations include premiums collected (net of policy cancellations and premiums ceded), commissions, and processing and service fees.
Long-term contractual obligations. Set forth below is a summary of long-term contractual obligations as of December 31, 2005 (in thousands). Amounts represent estimates of gross undiscounted amounts payable over time. In addition, certain losses and LAE are ceded to others under reinsurance contracts and are therefore recoverable. Such potential recoverables are not reflected in the table.
Total revenue for our Commercial Insurance Operation of $43.1 million for 2005 was $19.5 million more than the $23.6 million reported in 2004. This 82.8% increase in total revenue was primarily due to net premiums earned of $21.8 million from the issuance of AHIC policies and the assumption of premium from Clarendon for business produced by HGA. Increased net investment income contributed $1.5 million to the increase in revenue. These increases in revenue were partially offset by lower ceding commission revenue of $3.2 million and lower processing and service fees of $0.6 million, in both cases due to the shift from a third party agency structure to an insurance underwriting structure. Total earned premium generated by our Commercial Insurance Operation (including premium retained by Clarendon) for 2005 was $78.1 million as compared to $72.5 million for 2004.
Midwest Holding and its subsidiaries own no real estate. Midwest Holding leases office space in Edina, Minnesota with total square feet of 26,069 and a lease term of six years and two months that expires on November 30, 2005. Midwest Holding also leases 5,018 square feet of office space in West Des Moines, Iowa under a three-year lease that expires on August 31, 2003. Midwest Holding leases an additional 4,610 square feet of office space in Omaha, Nebraska under a five-year lease that expires January 31, 2007. Medical Solutions leases 8,031 square feet of office space in Plymouth, Minnesota under a five-year lease that expires November 30, 2006. Benefits leases a separate 5,437-square-foot facility located in Shoreview, Minnesota. This lease expires March 31, 2006. Annual rent expense was approximately $1,215,000 in 2002 and $1,020,000 in 2001.
Midwest Medical provides, upon payment of an additional premium, a reporting endorsement which extends the period in which claims otherwise covered by the “claims made” policy may be reported to Midwest Medical. In the event of death or permanent disability of a policyholder, the reporting endorsement is issued without additional premium. Upon retirement, as defined in the policy, a policyholder with at least five years of consecutive coverage with Midwest Medical is eligible for a credit toward the additional premium for the reporting endorsement.
The liability for unpaid losses and loss adjustment expenses represents management’s best estimate of the ultimate cost of all such amounts which are unpaid at the balance sheet dates. The liability is based on both case-by-case estimates and statistical analysis and projections using the historical loss experience of Midwest Medical and gives effect to estimates of trends in claim severity and frequency. These estimates are continually reviewed and, as adjustments become necessary, such adjustments are included in current operations. Midwest Medical believes that the estimate of the liability for losses and loss adjustment expenses is reasonable.
Acquisition costs are expensed when incurred rather than deferred and amortized ratably over the lives of the policies to which they apply. As the majority of the policies are on a calendar-year basis, most of the acquisition costs would be fully amortized by the end of the year.
The components of the unrealized appreciation on available-for-sale securities as of December 31 are as follows:
The amortized cost and market value of fixed maturities at December 31, 2002, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
For the Company’s group and individual dental insurance, the Company’s financial personnel develop and make a Single Point Estimate for the claim liabilities which results in the Company’s Single Point Estimate for the end of each fiscal quarter and year end. The Company’s independent consulting actuary develops and makes its separate Single Point Estimate for such liabilities. The Company’s financial personnel and independent consulting actuary compare their Single Point Estimates, reconcile any differences and agree on a Single Point Estimate for such liabilities. Annually, the Company’s independent consulting actuary gives a Single Point Estimate liability certification to the Company with the agreed amount and the Company uses such certified amount without change.
A working capital deficit of $2.1 million from continuing operations existed at December 31, 1999, as compared to a working capital deficit of $1.0 million from continuing operations at December 31, 1998. The Company originally incurred a $3.0 million demand loan from its bank and a $2.5 million promissory payable to the seller for the acquisition of M&N Risk Management in December 1998. As of December 31, 1999, the Company had used cash generated from continuing operations to pay down $1.5 million of the bank debt plus all of the seller's promissory note (after adjustments for amounts guaranteed
HEALTH POWER, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 - --------------------------------------------------------------------------------
On December 31, 1998, the Company's subsidiary CompManagement acquired M&N Risk Management, Inc. and M&N Enterprise, Inc. (collectively "M&N") in a transaction accounted for under the purchase method of accounting. CompManagement purchased 100% of the issued and outstanding shares of capital stock of M&N for a purchase price of $6,000,000 with the provision for adjustment based on the closing net equity of M&N. Funding for the acquisition was provided by a $3,000,000 demand note with a financial institution and $2,526,736 in a promissory note payable to the seller of M&N. At the time of acquisition, M&N had $5,451,165 in total assets and $5,924,429 in total liabilities, which have been included in the accompanying consolidated financial statements. At December 31, 1998, the Company recognized a reduction in the promissory note due the seller of M&N of $473,264 and a reduction in shareholder's equity for the net liabilities of M&N. The Company also recorded goodwill of $5,526,736 as a result of the application of purchase accounting.
The Company provided a reserve for loss on disposal of the HMO of $1,613,000 at December 31, 1998. The settlement of claims and approval of providers of the final payout of claims has extended over a period of time longer than originally estimated when establishing the reserve. Accordingly, the Company has provided an additional $115,000 to the reserve to cover estimated disposal costs through April 30, 2000, the expected date of final execution of the wind-down plan.
Operating results from discontinued operations for the years ended December 31 were as follows:
General operating and amortization expenses increased to $66.1 million in 2000 from $62.2 million in 1999. Relative to the earned premium volume, the Company's 2000 expense ratio improved to 30.4 percent compared with 31.2 percent for 1999. The increase in premium volume of 8.9 percent, over which to spread slightly reduced general operating expenses, was a factor behind this decrease.
Meridian Security, Meridian Citizens Security, and ICO are participants in a reinsurance pooling arrangement with Meridian Mutual and Meridian Citizens Mutual Insurance Company ("Meridian Citizens Mutual"), in which the underwriting income and expenses of each entity are shared. The participation percentages of the Company's insurance subsidiaries total 74 percent. See Note 6 - Related Party Transactions.
8. Reinsurance The companies that participate in the reinsurance pooling agreement reduce the maximum net loss that can arise from large risks or risks in concentrated areas of exposure by reinsuring their insurance business with unrelated third party insurers. In accordance with industry practice, the Company in its consolidated financial statements treats risks, to the extent reinsured, as though they were risks for which the Company is not liable. Reinsurance recoverables are estimated in a manner consistent with the claim liability associated with the reinsured policy. Insurance ceded by the Company's insurance subsidiaries does not relieve the subsidiaries' primary liability as the originating insurers.
Reconciliation of fair value of plan assets: Fair value of plan assets at January 1 $ --- $ --- Employer contributions 72,090 78,476 Benefit payments (72,090) (78,476) Fair value of plan assets at December 31 $ --- $ ---
15. Unaudited Selected Quarterly Financial Data (Amounts in thousands except per-share data)
YEAR ENDED DECEMBER 31, 1999, COMPARED WITH YEAR ENDED DECEMBER 31, 1998
The Company also uses the loss development factor approach for its long-tail lines of business. A minimum of 15 accident years is included in the loss development triangles used to calculate link ratios and the selected loss development factors used to determine the reserves for incurred but not reported losses. A minimum of 20 accident years is used for long-tail workers' compensation reserve projections. More emphasis is placed on the use of tail factors for the Company's long-tail lines of business.
The Company uses historical analysis of the ratios of allocated loss adjustment expenses paid to losses paid on closed claims to arrive at the expected ultimate incurred loss adjustment expense factors for each of its major products. Once developed, the factors are applied to the expected ultimate incurred losses, including IBNR, on all open claims. The resulting ultimate incurred allocated loss adjustment expense is then reduced by amounts paid to date on all open claims to arrive at the reserve for allocated loss adjustment expenses to be incurred in the future for the handling of specific claims.
o The selection of loss development factors in the establishment of bulk reserves for incurred but reported losses and loss expenses
The most significant of the three identified market risks relates to prices in the equities market. Though not the largest category of the Company's invested assets, equity securities have a high potential for short-term price fluctuation. The market value of the Company's equity positions at December 31, 2006 was $129.8 million or approximately 21% of invested assets. This market valuation includes $73.0 million of appreciation over the cost basis of the equity security investments. Funds invested in the equities market are not considered to be assets necessary for the Company to conduct its daily operations and, therefore, can be committed for extended periods of time. The long-term nature of the Company's equity investments allows it to invest in positions where ultimate value, and not short-term market fluctuations, is the primary focus.
The investment commitments in the above table relate to maximum unfunded capital obligations for limited partnership investments the Company owned at December 31, 2006.
for these full-recourse loans, which must be repaid no later than 10 years from the date of issue. This loan program was terminated in 2002.
Our Senior Market Health Insurance segment generated segment income of $10.2 million during 2005, a 71% decline compared to segment income of $35.4 million in 2004. Segment income for 2005 was affected by higher claim costs and reserve adjustments in our Medicare supplement lines and increased
Net investment income increased by approximately $0.3 million, or 2%, compared to 2004. The increase is due primarily to investing cash that we had been accumulating in anticipation of rising interest rates.
Service fee revenue increased by $2.5 million, or 4%, compared to 2004. Affiliated service fee revenue increased by $0.5 million compared to 2004 as a result of the increase in Medicare supplement business in force at our insurance subsidiaries offset, in part by a decline in revenues for administration of affiliated life insurance business. Unaffiliated service fee revenue increased by $2.0 million compared to 2004, due primarily to an increase of $1.9 million, or 30%, for services for long term care products. General expenses for the segment increased by $6.1 million, or 14%, due to the Part D implementation costs, as well as an increase in business.
Bonds and Preference Shares of Banks, Public Utilities, Industrial and other Gompanies 664,149,000 510,705,000
If this proposal is accepted, an amount of Sw. frs. 75.— will be paid on presentation of Dividend Coupon No. 14 (Sw. frs. 52.50 after deduction of the Federal Withholding Tax of 30 %).
Sw. frs. Sw. frs. Sw. frs. Sw. frs. All Classes excl. Life
We have pleasure in recommending that the Accoimts as at the 30th June, 1969 be approved, that the Adminis­ tration of the Company be given full discharge in this respect with best thanks, and that the proposals of the Board regarding the distribution of the profit be accepted.
The gross business in force increased by US $ 319 million to US S 3,044 million. The mortality experience was again favourable. However, the increased pre-financing costs for new business reduced the underwriting result shown, so that the appreciably improved financial result could not prevent a substantial decrease of the net profit for the year. — The dividend remained unchanged at US $ 360,000.
Underwriting Result (incl. Management Expenses) Investment Income, Net Realized Capital Gains, and Taxes
The Company has two statutory trusts which exist for the exclusive purpose of issuing trust preferred securities representing undivided beneficial interests in the assets of the trusts and investing the gross proceeds of the trust preferred securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”). The outstanding $18.0 million and $23.2 million of Junior Subordinated Debentures mature on December 4, 2032 and May 15, 2033, respectively, are callable quarterly, in whole or in part, only at the option of the Company, and have an interest rate of three-month LIBOR plus an applicable margin. The margin ranges from 4.00% to 4.10%. At December 31, 2013, the effective interest rate was 4.30%. The obligations of the Company with respect to the issuances of the trust preferred securities represent a full and unconditional guarantee by the Parent of each trust’s obligations with respect to the trust preferred securities. Subject to certain exceptions and limitations, the Company may elect from time to time to defer Junior Subordinated Debenture interest payments, which would result in a deferral of distribution payments on the related trust preferred securities. The Company has not made such an election.
In addition, we entered the financial and political risks, financial institutions and management and technology liability markets in 2008 which are written through Aspen U.K. We also obtained authorization to underwrite general insurance business in Australia and reinsurance in Singapore.
Gross written premiums. Total gross written premiums increased by 10.1% in 2008 compared to 2007 but reduced by 6.5% in 2007 compared to 2006. The changes in gross written premiums in each of our segments for the twelve months ended December 31, 2008 and 2007 are as follows, with reductions shown as negative percentages.
within the group between our Bermuda and U.K. operating companies, particularly in the fourth quarter of 2008.
As at December 31, 2008, total ordinary shareholders’ equity was $2,359.9 million compared to $2,398.4 million at December 31, 2007.
Tangible book value per ordinary share is based on total shareholders’ equity, less intangible assets and preference shares (liquidation preference less issue expenses), divided by the number of ordinary shares in issue at the end of the period. Balances as at December 31, 2008 and December 31, 2007 were:
We have recently announced that Dr. Norman Rosenthal, one of our directors, will not be standing for re-election at our next annual general meeting on April 29, 2009.
Selection of reported gross reserves. In arriving at our selected reserves for each line of business we take into account all of the factors set out above, and in particular the quality of the historical information we have on which to establish our reserves.
The prior year adjustment for our international insurance segment is attributable mainly to reserve releases in the U.K. liability line of business. Prior year adjustments are discussed further in the “Reserves for Losses and Loss Adjustment Expenses” below.
The operating and administrative expense ratio increased in 2007 by 2.0 percentage points due to the investment in new teams, increases in personnel costs connected with increased bonuses and long-term incentive charges and the weakening of the U.S. Dollar against the British Pound in 2007.
International Insurance. The international insurance reserves release was $80.8 million, spread across several lines of which the largest contributor is U.K. commercial liability which accounted for $58.3 million of releases. This reduction was attributable mainly to a reduction in the uncertainty surrounding the initial case reserving methodology and continued favorable loss experience. Most other classes exhibited releases of between $3 million and $8 million with the exception of marine and specialty liability which deteriorated by $4.9 million.
The following discussion and analysis of the liquidity and capital resources and results of operations of the Partnership should be read in conjunction with the audited Consolidated Financial Statements of the Account and the Partnership and the related Notes included in this filing.
The Partnership recorded a net realized gain of approximately $0.7 million for the year ended December 31, 2007, compared to a net realized gain of approximately $0.1 million for the prior year. The Partnership recorded a net unrealized gain of approximately $4.8 million for the year ended December 31, 2007, compared to a net unrealized gain of approximately $18.3 million for the prior year. The Partnership recorded a net realized and unrealized gain of approximately $5.5 million for the year ended December 31, 2007, compared to a net realized and unrealized gain of approximately $18.4 million for the prior year. The net realized and unrealized gain of approximately $5.5 million for the year ended December 31, 2007 was attributable to valuation gains in the office, apartment and hotel sectors. Partially offsetting these gains for the year ended December 31, 2007 was a loss recorded in the retail sector. The components of these valuation gains and/or losses are discussed below by property type sector.
The retail properties owned by the Partnership recorded a net realized and unrealized loss of approximately $2.4 million for the year ended December 31, 2007, compared to a net realized and unrealized gain of approximately $6.3 million for the prior year. The net realized and unrealized loss for the year ended December 31, 2007 was primarily due to the $3.8 million loss recorded at the retail property in Roswell, Georgia, which reflects revised offers received in connection with the continued sale marketing efforts of the property. In addition, redevelopment and leasing expenses amounted to approximately $0.1 million in unrealized losses for the retail property in Ocean City, Maryland. Partially offsetting these unrealized losses were (a) unrealized gains at the retail property in Dunn, North Carolina subsequent to its acquisition on August 17, 2007 at a discount to replacement cost, which resulted in approximately $0.7 million in valuation gains; (b) unrealized gains of approximately $0.5 million at the retail property in Hampton, Virginia due to continued investor demand; (c) realized gains of $0.3 million due to the disposition of the retail property in Kansas City, Kansas on June 29, 2007; and (d) unrealized gains of $0.1 million at the retail property in Westminster, Maryland due to improving market fundamentals.
PROPERTY AND CASUALTY The following table sets forth certain summarized financial data and key operating ratios for the Company's property and casualty operations for 1996 and 1995. All ratios are computed using data reported in accordance with SAP.
Commercial Lines Commercial lines results weakened in 1996, with the SAP combined ratio increasing to 100.4% from 95.8% in 1995. The majority of this increase was due to an increase in the LAE ratio, driven primarily by the aforementioned increase in legal expense reserves related to construction defect claims. Increased natural peril losses accounted for the remainder of deterioration in the combined ratio.
Loss On Operating Properties In 1995, a $28.4 million provision was made to recognize the expected loss on operating properties which the Company occupied and plans to dispose of in connection with the Realignment.
We have audited the accompanying consolidated balance sheets of American States Financial Corporation and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1996. Our audits also include the financial statement schedules listed in the index at item 14(a)(2). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
The reconciliation shows a decrease to the liability for estimated losses and loss adjustment expense arising in prior years. Such reserve adjustments, which affected current operations during each of the years, resulted from developed losses from prior years being different than were anticipated when the liability for losses and loss expense were originally estimated. Favorable development trends are partially a result of the change the Company has initiated in its underwriting and claims adjudication practices. These development trends have been considered in establishing the current year liabilities.
AMERICAN STATES FINANCIAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The discussion of our financial condition and results of operations for the year ended December 31, 2018 included in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2019 is incorporated by reference into this MD&A.
All fee income is recognized as follows. An installment fee is recognized at the time each policy installment bill is due. A late payment fee is recognized when the customer’s payment is not received after the listed due date and any applicable grace period. A policy cancellation fee is recognized at the time the customer’s policy is canceled. A policy reinstatement fee is recognized when the customer’s policy is reinstated. An insufficient fund fee is recognized when the customer’s payment is returned by the financial institution. The amounts charged are primarily intended to compensate us for the administrative costs associated with processing and administering policies that generate insurance premium; however, the amounts of fees charged are not dependent on the amount or period of insurance coverage provided and do not entail any obligation to return any portion of those funds. The costs associated with generating fee income are not separately tracked. We estimate an allowance for doubtful accounts based on a percentage of fee income.
Provision for income taxes. Income tax expense increased by $59.4 million, from $77.0 million for the year ended December 31, 2019, reflecting an effective tax rate of 19.0%, to $136.5 million for the year ended December 31, 2020, reflecting an effective tax rate of 20.7%.
The following is a summary of certain financial data of the Company. This summary has been derived in part from, and should be read in conjunction with, the financial statements of the Company, which are included in Item 8 (Financial Statements and Supplementary Data).
In 1998, the Company will continue to enhance managed care programs and services, further HMO development, seek National Committee for Quality Assurance accreditation for its HMOs, refine quality assurance programs and introduce member communications directed at health improvements. The Company will enhance the 401(k) product by placing more emphasis on improved enrollment strategies for the employer and by online participant education.
Fixed maturities owned at December 31, 1997 are summarized as follows:
Net Loss: The decrease in net loss in 2017 compared to 2016 was due to the one-time impairment of the goodwill of $1,129,824 in 2016, the loss of $420,720 on the revised valuation of Midwest’s equity method investment in First Wyoming mentioned below in 2016, the increase in investment income and realized gains, the decrease in interest credited and benefit reserves, and the decrease of approximately $1,000,000 in salaries and other operating expenses. These were offset by the bargain purchase gain on the revised valuation of the Midwest and First Wyoming merger of $1,326,526 in 2016. There were also higher death benefits and an increase in amortization of deferred acquisition costs in 2017.
Other operating expenses: Other operating expenses decreased significantly by one-time expenses of $380,000 in 2016 for write-off of investments and loans in unconsolidated subsidiaries, expenses related to Northstar and First Wyoming mergers and the redomestication and merger of our former life subsidiaries of $289,159, consulting fees associated with former employees, rent expenses of $120,000 due to termination of leases during 2017, decrease in travel due to capital raising efforts of $63,000, decrease in our VOBA amortization due to the coinsurance agreement between US Alliance and American Life where the VOBA associated with the Great Plains Life and First Wyoming Life was written off in the transaction. These decreases were offset by the Nebraska Department of Insurance exam fees of $140,000, the addition of the director’s and officer’s insurance policy of $79,000, and legal fees associated with the private placement memorandum for a new Series B stock offering. We expect to continue to see reductions in other operating expenses due to our cost cutting initiatives.