felanders/preprocessed huggingface dataset:
The results for 2007 include a $4.2 million ($2.6 million after-tax) charge for an assessment levied by the Florida OIR with respect to the insolvency of the subsidiaries of Poe Financial Group. The results for 2006 included a $9.4 million ($5.8 million after-tax) charge for a separate assessment made by the Florida OIR with respect to the same insolvency. As allowed by Florida law, our insurance subsidiaries are entitled to recoup these assessments from their Florida policyholders and have made the necessary filings to do so. For additional information, see Note 16, Commitments and Contingencies to the consolidated financial statements included elsewhere herein.
Losses and LAE for claims related to prior years represent the total net change in estimates charged or credited to earnings in the current year with respect to liabilities established in prior years. Information regarding losses and LAE is accumulated over time and the estimates of the liability are revised accordingly, with the change recognized in the period revisions are made. As noted in the table above, during 2007 our loss and LAE reserve estimates for prior years decreased $16.0 million, excluding the impact of the PRI commutation. In addition, the PRI commutation decreased incurred losses and LAE on prior years by $14.0 million. The favorable prior year loss development reflects a decline in expected ultimate losses for years prior to 2007, primarily the 2004 through 2006 accident years, as a result of improved claim trends including lower frequency, a lower number of claims closed with indemnity payment and stable severity.
For accident years 1998 through 2002, we experienced higher than expected claims trends in Missouri.
The following table shows the expected versus actual rate of return on plan assets for our defined benefit plans.
The increase in interest expense for 2006 compared to 2005 was due to increases in the three-month London Inter-Bank Offer Rate (“LIBOR”), which is the base rate used to determine the interest on our long-term debt. The increase in interest expense also reflects interest on our initial investment in trust-preferred securities and senior notes for which there is a corresponding amount reflected in net investment income as we earn interest on the amounts invested in the statutory capital trusts. The amortization of the initial cost of the hedging agreements also contributed to the increase in interest expense. The interest rates on our long-term debt ranged from 9.2% to 9.6% as of December 31, 2006. However, the hedging instruments that we have in place with maturity dates in 2008 essentially limited the maximum floating rate interest cost at 8.6% for those long-term debt arrangements where the interest rate was higher.
Net cash from operating activities was $1.1 million in fiscal 2006 compared to net cash from operating activities of $5.6 million in fiscal 2005. Investing activities in fiscal 2006 included the purchase of marketable securities of $6.6 million.
The Company's wholly owned subsidiary, UAHC-TN, had a required minimum net worth requirement using statutory accounting practices of $7.5 million at June 30, 2006. UAHC-TN had excess statutory net worth of approximately $3.9 million at June 30, 2006.
Property and casualty insurers are expected to experience higher earnings in 1996 due to large capital gains, the relative absence of major catastrophes, and stabilizing provisions for environmental and asbestos losses. Consequently, return on equity has been projected at 15% or higher for 1996, despite stagnant (3.6%) premium growth. A.M. Best, however, has reported a weakening of business fundamentals and increased competition, which is forcing property and casualty insurers to cut prices, particularly in the commercial sector.
The effective tax rate remained constant at 31% in 1996 and 1995 despite an increase in operating losses from our United Kingdom insurance subsidiary. These losses did not provide any tax benefit to the Company and were also the primary cause for the increase in 1995 from an effective tax rate of 29% in 1994. The Company continues to increase its concentration of tax-exempt and tax-credit investments to minimize its income tax expense.
Capital expenditures planned for 1997 are not expected to be significant compared to the Company's overall liquidity and cash flow. The Company began expanding its headquarters and incurred costs of approximately $2.9 million in 1996. The cost to complete the expansion in 1997 is expected to be an additional $2.6 million. The one million share stock buyback program is not expected to significantly impact the Company's liquidity or cash flow in any one financial reporting period.
Payment of dividends to ABIG by its insurance subsidiaries is dependent on regulations dictated by statutory authorities in each state in which they are domiciled. The National Association of Insurance Commissioners has introduced standards which would treat dividends in excess of the lesser of 10% of surplus or net income as extraordinary dividends requiring insurance department approval. While some states have adopted the standards, others have not. The payment of dividends by the subsidiaries is subject to restrictions discussed further in Notes 7 and 8 to the Consolidated Financial Statements.
AMERICAN BANKERS INSURANCE GROUP, INC. AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
The fair value of options granted was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions for 1996 and 1995:
*Excluding net realized investment gains of $7,812, $721 and $2,679 for 1996, 1995 and 1994, respectively. **Excluding Life and Annuity premiums.
In January 2000, the Company sold its 10% equity interest in JTP for $27,300,000, and recorded a pre-tax gain of $24,800,000. Further consideration of approximately $7,500,000 may be received in the future upon the favorable resolution of certain contingencies.
At December 31, 1999, the Company had outstanding promissory notes of Conseco, Inc. in the principal amount of $250,000,000. During the third quarter of 2000, the entire principal amount and accrued interest then outstanding on these notes was repaid. In addition, the Company received $7,500,000 directly from Conseco which constituted a prepayment penalty due under the terms of these notes.
Upon execution of the commitment, FINOVA Capital paid Berkadia a non-refundable commitment fee of $60,000,000 and has agreed to pay a funding fee of $60,000,000 upon funding (or a termination fee of $60,000,000 if the commitment is not funded except in certain limited circumstances). In addition, FINOVA Capital has agreed to reimburse Berkadia, Berkshire Hathaway and the Company for all fees and expenses incurred in connection with Berkadia's financing of its funding obligation under the commitment.
Under the agreement governing Berkadia, the Company and Berkshire Hathaway have agreed to equally share the commitment fee, funding or termination fee and all management fees. An annual facility fee to be paid by FINOVA Capital, equal to .25% of the outstanding amount of the loan, will be shared 70% to Berkshire Hathaway and 30% to the Company, and all income related to the Secured Note will be shared 90% to Berkshire Hathaway and 10% to the Company. All decisions with respect to the management of Berkadia will require the mutual consent of the Company and Berkshire Hathaway, except for decisions related to the commitment, the financing of the commitment or the Secured Note, which are in the sole control of Berkshire Hathaway.
Cash flows from financing activities during 2003 included $19.3 million in proceeds from the issuance of junior subordinated debentures net of related issuance costs and purchase of common securities of related trusts, less $12.8 million for payments to purchase $16.7 million principal amount of Chandler USA's Debentures. See Note 6 to Consolidated Financial Statements.
Certain officers and directors of Chandler USA and Chandler Insurance were named as defendants in certain litigation involving CenTra, Inc. ("CenTra"). This litigation was concluded in 2002. As a result of various events in 1995, 1996 and 1997 related to the CenTra litigation, Chandler Barbados and Chandler USA recorded estimated recoveries of costs from its Director and Officer Liability Insurance policy totaling $3,456,000 and $1,044,000, respectively, for reimbursable amounts previously paid that relate to allowable defense and litigation costs. Chandler Barbados and Chandler USA received payment for a 1995 claim during 1996 in the amount of $636,000 and $159,000, respectively. Chandler Insurance assumed Chandler Barbados' remaining receivable in December 2003 under the reorganization of these companies. During June 2004, Chandler Insurance and Chandler USA received payment in the amount of $558,000 and $167,000, respectively, in exchange for releasing certain insurers with respect to policies covering periods from June 28, 1997 up to June 28, 2002. During the third quarter of 2004, Chandler Insurance and its subsidiaries settled the remaining litigation with the insurer for policy periods from June 28, 1992 to June 28, 1997. Based on the terms of the settlement, Chandler Insurance and Chandler USA recorded additional estimated recoveries of $1,204,000 and $359,000, respectively, during the third quarter of 2004. Chandler Insurance and Chandler USA received payment of $3,527,000 and $1,053,000, respectively, during December 2004 and expect to receive payment of the remaining settlement funds of $497,000 and $192,000 during the first quarter of 2005.
(a) Consists of cash, investments and investment income due and accrued. (b) Total capitalization consists of debt, preferred stock, and common shareholders' equity. (c) In February 1996, the Company called for the redemption of its 10% debentures maturing in 2018 ($75.0 principal amount), and its 5.75% convertible subordinated debentures maturing in 2002 ($110.0 principal amount). In April 1996, the Company called for redemption its 11.5% debentures maturing in 2015 ($30.0 principal amount). Redemption of the debentures was effected with internally available funds, while the subordinated debentures were converted by their terms into approximately 9.6 million Old Republic common shares. The early retirement of the Company's debentures produced a net of tax charge of $4.4 or $.03 per share that has been reflected as an extraordinary item in 1996. (d) Calculated after deduction of preferred stock dividend requirements of $.1 in 1999, $.2 in 1998, $1.7 in 1997, $7.5 in 1996 and $6.7 in 1995. (e) Calculated after deduction of preferred stock dividend requirements and, as applicable, after adjustment for post-tax convertible debentures interest of $4.0 in 1996 and $.6 in 1995.
(f) Future Policy Benefits/Unearned Premiums-General insurance and level term credit life insurance policy liabilities represent unearned premium reserves developed by application of monthly pro-rata factors to premiums in force. Disability/accident & health and decreasing term credit life insurance policy liabilities are calculated primarily on a sum-of-the-years-digits method. Mortgage guaranty unearned premium reserves are calculated primarily on a pro- rata basis. Ordinary life policy liabilities are determined on a level premium method and take into account mortality and withdrawal rates based principally on anticipated company experience; assumed interest rates range from 3.0% to 6.0%. With respect to annuity policies, the liabilities represent the surrender value of such policies during deferral periods, without adjustment for surrender charges; such values are deemed appropriate to provide for ultimate benefit reserves in the event policyholders exercise an annuity benefit option at a later date.
A summary of the status of the Corporation's stock options as of December 31, 1999, 1998 and 1997, and changes in outstanding options during the years then ended follows:
(a) As discussed in Note 2 to the consolidated financial statements, White River adopted the provisions of SFAS No. 115, effective September 30, 1995. (b) See Note 3 to the consolidated financial statements for a discussion of the acquisition of CCC by White River. (c) The calculation of book value per common and common equivalent share reflects the potentially dilutive effects of White River's outstanding incentive and directors' compensation awards. See Note 2 to the consolidated financial statements. (d) See Note 2 to the consolidated financial statements for a discussion of the investment in Richard C. Blum & Associates - NWA Partners, L.P.
White River acquired its interest in NWA Partners in connection with the Capitalization. White River's interest in NWA Partners represented approximately 21% of partnership assets as of December 31, 1997 and 1996. During the year ended December 31, 1997, White River received a $26.3 million partial distribution on its investment resulting in a pretax investment gain of $19.4 million. The distribution represented White River's share of proceeds arising primarily from the redemption of NWA Partners' investment in preferred stock of NWA Corp., but also in part due to the sale of 0.7 million shares of NWA Corp. common stock subject to a call option. No distributions were received during 1996. During the year ended December 31, 1995, White River received distributions totaling $3.5 million from NWA Partners, resulting in pretax net investment gains of $2.8 million. These distributions represented White River's share of the proceeds from the sale of a portion of NWA Partners' assets. As of December 31, 1997, NWA Partners' remaining assets consisted primarily of 4.7 million shares of Northwest Airlines Class A common stock, par value $0.01 per share (the "Northwest Common Stock").
Under the current credit facility, CCC is, with certain exceptions, prohibited from making certain sales or transfers of assets, incurring nonpermitted indebtedness or encumbrances, and redeeming or repurchasing
To estimate reinsurance recoverables which might be uncollectable, our senior managers evaluate the financial condition of our reinsurers, on a reinsurer by reinsurer basis, both before purchasing the reinsurance protection from them and after the occurrence of a significant catastrophic event. We believe that our process is effective, and to date we have not written off any significant reinsurance recoveries. As of December 31, 2001, we have recorded a valuation allowance of $8 million relating to reinsurance recoverables, based on specific facts and circumstances evaluated by management.
(1) Net underwriting income consists of net premiums earned less claims and claim expenses incurred, acquisition costs and operational expenses. (2) Net operating income excludes realised gains and losses on investments.
During 2000, the increase in investment income resulted primarily from an increase in interest rates, together with an increase in the investment base during the year. Although invested assets at December 31, 2000 only reflected an increase of $22.3 million from the prior year end, we had an additional $200.0 million in bank loans during most of 2000, which was repaid during the fourth quarter of 2000.
During 2001, our claims and claim expense reserves, our claims recoveries and our net reserves all increased as a result of losses we incurred from the World Trade Center tragedy. During 2002, as we pay losses related to the World Trade Center tragedy and other currently known loss events, if no additional significant loss events occur, we would expect the balance of our claims and claim expense reserves to decrease.
- -------------------------------------------------------------------------------- At December 31, 2001 2000 - -------------------------------------------------------------------------------- (In thousands)
From time to time, we have returned capital to our shareholders through share repurchase programs. At December 31, 2001, we had $27.1 million remaining under our existing program. During 2000, we purchased 671,900 common shares for an aggregate value of $25.1 million. During 1999, we repurchased 2,226,700 common shares for an aggregate value of $80.1 million. No shares were repurchased during 2001.
The Company provides for income taxes on its statements of operations pursuant to Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). Total tax expense for 1997 was $1.7 million. The effective rate reflects the significant amount of net investment income from tax advantaged fixed income securities and the magnitude of the underwriting loss in relation to net taxable investment income. For 1996, the Company recognized the benefit of its net operating loss. With respect to losses for periods preceding the Distribution (January 23, 1996), no tax benefit was recorded in the statements of operations pursuant to SFAS 109 and the Company's tax-sharing arrangement with its former parent, Halliburton. Tax receipts under its intercompany tax-sharing arrangements with Halliburton were recorded as additions to stockholders' equity for the periods preceding the Distribution.
Loss and Loss Adjustment Expense Incurred. Loss and loss adjustment expense incurred for 1997, 1996 and 1995 amounted to $108.9 million, $139.5 million and $196.9 million, respectively. The 1997 decrease of $30.6 million, or 21.9% less than 1996, and the 1996 decrease of $57.4 million, or 29.2% less than 1995, can be primarily attributed to declining premium volume and stricter underwriting criteria.
In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 108 to address diversity in practice in quantifying financial statement misstatements. SAB 108 requires that registrants quantify the impact on the current year’s financial statements of correcting all misstatements, including the carryover and reversing effects of prior years’ misstatements, as well as the effects of errors arising in the current year. SAB 108 is effective as of the first fiscal year ending after November 15, 2006, allowing a one-time transitional cumulative effect adjustment to retained earnings as of January 1, 2006, for errors that were not previously deemed material, but are material under the guidance in SAB No. 108. There was no impact on our consolidated financial statements with respect to the adoption of SAB No. 108.
SFAS No. 115 addresses accounting and reporting for (a) investments in equity securities that have readily determinable fair values and (b) all investments in debt securities. SFAS 115 requires that these securities be classified into one of three categories, Held-to-maturity, Trading securities or Available-for-sale.
Premiums receivable in connection with our automobile line of business decreased $3.0 million, or 72.3%, to $1.2 million as of December 31, 2006, as compared to $4.2 million as of December 31, 2005. The decrease in automobile related premiums receivable is associated with the sale of our distribution channels in connection with the sale of our agencies, effective December 31, 2004.
The September 2004 Notes pay interest at the annual rate of 6%, mature on September 30, 2007, and rank pari passu in terms of payment and priority to the July Notes. Quarterly payments of principal and interest due on the September Notes, like the July 2003 Notes, may be made in cash or, at our option, in shares of our Common Stock. If paid in shares of Common Stock, the number of shares to be issued shall be determined by dividing the payment due by 95% of the weighted-average volume price for the Common Stock on Nasdaq as reported by Bloomberg for the 20 consecutive trading days preceding the payment date.
The NAIC has also developed IRIS ratios to assist state insurance departments in identifying companies which may be developing performance or solvency problems, as signaled by significant changes in the companies’ operations. Such changes may not necessarily result from any problems with an insurance company, but may merely indicate changes in certain ratios outside the ranges defined as normal by the NAIC. When an insurance company has four or more ratios falling outside “usual ranges,” state regulators may investigate to determine the reasons for the variance and whether corrective action is warranted.
Activity in our stock option plans for the period from January 1, 2004 to December 31, 2006 is summarized below:
The result of this process is that each half year, the actuary has made recommendations to AIIC's Board of Directors, which for each period adopted the recommendation.
The above table of losses reestimated has been prepared on a net basis (i.e., loss and loss adjustment expenses and reinsurance recoveries receivable have not been grossed-up, as required under FAS 113). The schedule has been prepared on a net basis due to the relative immateriality of reinsurance balances when considered in relation to total loss and loss adjustment expense reserves, and due to the cost/benefit of providing such information.
The lower section of the table shows the cumulative amount paid with respect to the previously recorded liability as of the end of each succeeding year. For example, the 1994 year end liability was originally $21,264,000. As of December 31, 1998, the Company had paid $8,551,000 of the currently estimated $9,322,000 of losses and LAE that had been incurred for 1994 and prior years through the end of 1998; thus an estimated $771,000 in losses incurred through 1994 remain unpaid as of the current financial statement date.
The technical reserves of the Life Department at the end of 1957 are correctly calculated on the basis approved by the Swiss Federal Council. W. Saxer, Actnarial Aadltor
As the Registrant continues to write additional new PPA business, PPA loss and loss expense ratios should generally continue to trend higher, although within levels that should remain profitable. However, the effects of the 1997 and 1998 PPA reforms continue to be uncertain as to their ultimate outcome. As noted previously, the Registrant believes that the collective effect of these reforms to be a modest net negative. During 1999 however, PPA revenue may decline on a per policy basis and its combined ratio may increase as a result of the reforms.
During 1996, winter storm losses of $635,000 increased Preserver's loss ratio from 69.2% to 75.5%. The remaining improvement in Preserver's loss ratio during 1997 was attributable to reduced amounts of losses, particularly large losses greater than $35,000. Frequency of losses remains at acceptable levels for all lines of Preserver's business.
The following should be read in connection with the Company's consolidated financial statements and related notes, and other financial information included elsewhere in this report.
Benefits increased $1.9 million, or 6%, from $31.2 million in the year ended December 31, 1997 to $33.1 million in the year ended December 31, 1998, due to increases in death benefits and surrender benefits in proportion to the increases in overall policies in-force, increases in future policy benefits due to higher levels of policies in-force, and interest credited to policyholder accounts for the Woodmen Block and the World Block. These increases were partially offset by decreases in future policy benefits due to the impact of the surrenders and deaths.
Net investment income and net realized gains increased $3.1 million, or 54%, from $5.7 million in 1996 to $8.8 million in 1997. This increase was attributable to a higher level of average invested assets (primarily resulting from the Woodmen Block) and a more actively managed investment portfolio. Average invested assets increased $31.7 million, or 56%, from $56.5 million in 1996 to $88.2 million in 1997.
Receivables from related parties increased $1.1 million from $478,000 at December 31, 1997 to $1.5 million at December 31, 1998, due primarily to receivables due under the Company's cost sharing agreement with NPS.
This item is incorporated by reference to pages 40 through 76 of the 1998 Annual Report to Shareholders filed with this Form 10-K.
The following table summarizes the fair value by contractual maturities of the fixed income securities portfolio, excluding cash and cash equivalents, at the dates indicated.
As of December 31, 2012, Atlas has the following cash obligations related to its operating leases.
As of February 28th, 2013, there were 6,833,421 ordinary shares outstanding and 1,262,471 restricted shares outstanding, and 20,000,000 preferred shares issued and outstanding.
Amounts and expiration dates of the operating loss carry forwards as of December 31, 2012 are as follows (all amounts in '000s):
Claims liabilities - The changes in the provision for unpaid claims, net of amounts recoverable from reinsurers, for the years ended December 31, 2012 and December 31, 2011 were as follows (all amounts in '000s):
Information about options outstanding at December 31, 2012 is as follows:
The decline in the supplemental benefits gross margins in the current year over the comparable period in 2006 is reflective of supplemental benefits reduced billings offset by the incremental direct expenses attributable to the conversion of our previously disclosed marketing partner relationships.
Net Income. Net income for year ended December 31, 2006 increased by approximately $8.6 million over the same period in 2005 to $31.6 million. The increase in net income was primarily a function of increased gross margins in the PBM segment and an increase in interest income, reduced by an increase in selling, general and administrative expenses. PBM segment gross margins increased to $79.9 million in 2006 from $56.7 million in 2005, largely attributable to the onset of new clients. Segment operating information for 2006 and 2005 is as follows (in millions):
We anticipate continuing to generate positive operating cash flow which, combined with available cash resources, should be sufficient to meet our planned working capital, capital expenditures and operating expenses for the next year. However, there can be no assurance that we will not require additional capital. Even if such funds are not required, we may seek additional equity or debt financing. We cannot be assured that such financing will be available on acceptable terms, if at all, or that such financing will not be dilutive to our stockholders.
Our audited Financial Statements are contained in a separate section of this Annual Report on Form 10-K on pages through and Financial Statement Schedule on page S-1 attached hereto.
Premium and service revenues of $15.7 billion, representing 48.8% growth year over year.
Florida. In August 2013, our Florida subsidiary, Sunshine Health, began operating under a contract in 10 of 11 regions with the Florida Agency for Health Care Administration to serve members of the Medicaid managed care Long Term Care (LTC) program. Enrollment began in August 2013 and was implemented by region through March 2014.
Texas. In September 2014, we began operating under a new contract with the Texas Health and Human Services Commission to expand our operations and serve STAR+PLUS members in two Medicaid Rural Service Areas. We also began providing expanded coverage in September 2014 under our STAR+PLUS contracts to provide acute care services for intellectually and developmentally disabled members.
In February 2015, LHC began operating under a new contract with the Louisiana Department of Health and Hospitals to serve Bayou Health (Medicaid) beneficiaries. Members previously served under the shared savings program were transitioned to the at-risk program on February 1, 2015.
In February 2014, the Texas Health and Human Service commission expanded our STAR+PLUS contracts to include nursing facility benefits. The additional coverage is expected to commence in the first quarter of 2015.
The consolidated G&A expense ratio for the years ended December 31, 2014 and 2013 was 8.4% and 8.8%, respectively. The year over year decrease in the G&A ratio reflects the leveraging of expenses over higher revenues in 2014, offset by the acquisition of U.S. Medical Management and start up of Health Insurance Marketplaces which operate at higher G&A ratios.
Amortization expense was $16 million, $6 million and $5 million for the years ended December 31, 2014, 2013 and 2012, respectively. Estimated total amortization expense related to intangible assets for each of the five succeeding fiscal years is as follows ($ in millions):
We account for the purchase of life insurance policies in accordance with ASC 325-30, Investments in Insurance Contracts (“ASC 325-30”), which requires us to use either the investment method or the fair value method. We have elected to account for all of our life insurance policies using the fair value method.
The following forward-looking table seeks to illustrate the impact of the sale of our portfolio of life insurance assets at various discount rates on our ability to satisfy our debt obligations as of December 31, 2016. In all cases, the sale of the life insurance assets owned by DLP III and DLP IV will be used first to satisfy all amounts owing under the respective senior credit facilities. The net sale proceeds remaining after satisfying all obligations under the senior credit facilities would be applied to L Bonds and Series I Secured Notes on a pari passu basis.
● Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Since valuations are based quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
Effective February 16, 2017, Paul Siegert, Director and Executive Chairman, voluntarily resigned from the Board of Directors. As part of his resignation, we agreed to repurchase Mr. Siegert’s 200,445 shares of GWG common stock for an aggregate of approximately $1.604 million. As a separation payment, Mr. Siegert will continue to receive his regular salary payments (annualized to approximately $201,000) through December 31, 2017 and he forfeited all options, both unvested and vested, to purchase shares of GWG common stock. Following his resignation, the Board of Directors appointed Mark Schwarzmann as a director of the Board and Jon Sabes was appointed Chairman of the Board.
The Individual Life Division had 1996 pretax operating earnings of $14.7 million, $1.4 million below 1995. Realized investment gains, net of related amortization of deferred policy acquisition costs, associated with this Division were $1.1 million in 1996. As a result, total pretax earnings were $15.9 million in 1996 which was $0.3 million lower than 1995 in which there were no realized investment gains.
Report of Independent Accountants.................................. Consolidated Statements of Income for the years ended December 31, 1996, 1995, and 1994....................... Consolidated Balance Sheets as of December 31, 1996 and 1995....... Consolidated Statements of Stockholder's Equity for the years ended December 31, 1996, 1995, and 1994............................... Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995, and 1994............................. Notes to Consolidated Financial Statements......................... Financial Statement Schedules: Schedule III-- Supplementary Insurance Information................ Schedule IV-- Reinsurance.........................................
1996 1995 1994 ---------- ---------- ------- Deferred policy acquisition costs............. $(16,321) $ (11,606) $ 34,561 Benefit and other policy liability changes.... 15,542 52,496 (52,288) Temporary differences of investment income.... (1,163) (34,175) 15,524 Other items.................................... (200) (13,687) (2,528) ----------- --------- ------- $ (2,142) $ (6,972) $(4,731) ========== ========= =======
Under pre-1984 life insurance company income tax laws, a portion of Protective's gain from operations which was not subject to current income taxation was accumulated for income tax purposes in a memorandum account designated as Policyholders' Surplus. The aggregate accumulation in this account at December 31, 1996 was approximately $50.7 million. Should the accumulation in the Policyholders' Surplus account exceed certain stated maximums, or should distributions including cash dividends be made to PLC in excess of approximately $439 million, such excess would be subject to federal income taxes at rates then effective. Deferred income taxes have not been provided on amounts designated as Policyholders' Surplus. Protective does not anticipate involuntarily paying income tax on amounts in the Policyholders' Surplus accounts.
Receivables from related parties consisted of receivables from affiliates under control of PLC in the amount of $2.0 million at December 31, 1995. Protective routinely receives from or pays to affiliates under the control of PLC reimbursements for expenses incurred on one another's behalf. Receivables and payables among affiliates are generally settled monthly.
The carrying amount and estimated market values of Protective's financial instruments at December 31 are as follows:
(vii) adverse state and federal legislation and regulation, including limitations on premium levels, increases in minimum capital and reserves, and other financial viability requirements; restrictions on mutual fund distribution payment arrangements such as revenue sharing and 12b-1 payments; and regulation changes resulting from industry practice investigations;
products; and surrender fees, which are charged as a percentage of premiums withdrawn during a specified period for annuity and certain life insurance contracts. Net investment income includes earnings on investments supporting fixed annuities, the MTN program and certain life insurance products, and earnings on invested assets not allocated to product segments, all net of related investment expenses. Other income includes asset fees, administrative fees, commissions and other income earned by subsidiaries of the Company that provide administrative, marketing, distribution and retail asset management services.
During 2010, we received $45.7 million in dividends from our regulated subsidiaries, which increased our unregulated cash. During 2009, three of our regulated subsidiaries declared and paid dividends to one of our non-regulated subsidiaries in the aggregate amount of $44.4 million. On December 31, 2008, three of our regulated subsidiaries, declared dividends to one of our non-regulated subsidiaries in the aggregate amount of $105.1 million, of which two dividends were paid in December 2008 and one dividend which was paid in January 2009.
The statutory framework for our regulated subsidiaries’ minimum capital changes over time. For instance, RBC requirements may be adopted by more of the states in which we operate. These subsidiaries are also subject to their state regulators’ overall oversight powers. For example, the state of New York adopted regulations that increased the reserve requirement by 150% over an eight-year period that will be fully implemented by 2013. In addition, regulators could require our subsidiaries to maintain minimum levels of statutory net worth in excess of the amount required under the applicable state laws if the regulators determine that maintaining such additional statutory net worth is in the best interest of our members and other constituents. Moreover, if we expand our plan offerings in new states or pursue new business opportunities, we may be required to make additional statutory capital contributions.
In 2008, financing activities consisted primarily of net cash used in funds held for the benefit of members totaling $31.8 million. These funds, which represent PDP member subsidies and pass-through payments from government partners, are not accounted for in our results of operations since they represent pass-through payments from our government partners to fund deductibles, co-payments and other member benefits for certain of our members.
We record reserves for estimated referral claims related to health care providers under contract with us who are financially troubled or insolvent and who may not be able to honor their obligations for the costs of medical services provided by other providers. In these instances, we may be required to honor these obligations for legal or business reasons. Based on our current assessment of providers under contract with us, such losses have not been and are not expected to be significant.
Guaranteed issue and simplified issue products are distributed by approximately 1,900 independent agents and the Company's multi-line exclusive agents. The Company began selling this products in 1996. Premium income from these products were $3,794,585, $1,922,379 and $613,178 in 1998, 1997 and 1996, respectively. These increases represent growth of 97.4% and 213.5% for 1998 and 1997, respectively. The Company expects continued growth in this line of business.
Following is a description of the most significant risks facing insurers and how the Company mitigates those risks:
Premiums on traditional life and accident and health insurance policies are recognized as income when due. Mortality and expense charges on universal life policies are recognized as income when earned.
The estimated fair values and carrying value of the Company's financial instruments at December 31, 1998 and 19967 are the same except for investment securities which are detailed in footnote 2 and mortgage loans as follows:
The following table sets forth the plan's funded status reconciled with the amount shown in the Company's balance sheet at December 31, 1998 and 1997:
The Company's consolidated financial statements have been audited by independent auditors, KPMG LLP. Their role is to audit the consolidated financial statements in accordance with generally accepted auditing standards and render an independent and professional opinion on management's consolidated financial statements. The auditors' report on the Company's consolidated financial statements appears on the previous page.
J. Ridley Howard Gary W. Meader, CPA Chairman of the Board, Chief Financial Officer President and Chief Executive Officer
Revenues. Insurance revenues are primarily generated from premium revenues and investment income. Insurance revenues for the years ended December 31, 2018 and 2017 are summarized in the table below.
Our overall investment philosophy is reflected in the allocation of our investments. We emphasize investment grade debt securities with smaller holdings in equity securities and other investments. The following table shows the carrying value of our investments by investment category and cash and cash equivalents, and the percentage of each to total invested assets as of December 31, 2018 and December 30, 2017.
Financial position of the Company CAPITAL (fully subscribed 25 "/o paid up) • • • Frs. 20,000,000.— RESERVE FUND . . . . ... „ 2,000,000.— SPECIAL RESERVE FUND .... . .... ... „ 4,200,000.— FIRE, Accident, Liability, Burglary, Fidelity,
Premium Reserve from 1918 . . Reserve for unsettled Claims from Reserve for extraordinary Losses Premiums, less cancellations . .
ALLIED, a regional insurance holding company, and its subsidiaries (collectively, the Company) operate exclusively in the United States and primarily in the central and western states. The Company's largest segment includes three property-casualty insurance companies that write personal lines (primarily automobile and homeowners) and small commercial lines of insurance. The other reportable segment is excess & surplus lines insurance. The property-casualty insurance segment accounted for 86.5% of consolidated revenues in 1996 and 85.4% in 1995.
Earned premiums increased to $29.7 million for 1995 from $25.8 million for 1994. Net written premiums increased 13.2% to $30.6 million from $27 million. Direct earned premiums were $37.2 million compared with $32.3 million. As of December 31, 1995, the segment's book of business was comprised of 2.4% personal and 97.6% commercial lines. For 1994, the business mix was 2.8% personal and 97.2% commercial lines.
The table below presents the amortized cost and estimated fair value of fixed maturities by contractual maturity at December 31, 1996. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations without call or prepayment penalties.
ALLIED Mutual participates with a nonaffiliated reinsurance company in a property catastrophe reinsurance agreement to cover the property-casualty segment's share of pooled losses. In 1996, 1995, and 1994, the coverage was $5 million in excess of $5 million. ALLIED Mutual's and the reinsurance company's respective participation in such agreement was 90% and 10% in 1996, 1995, and 1994. Related premiums paid by the property-casualty segment to ALLIED Mutual were $2.7 million in 1996, $2.3 million in 1995, and $1.9 million in 1994. There were recoveries of $3.4 million, $2.6 million, and $2.2 million from ALLIED Mutual in 1996, 1995, and 1994, respectively.
During July of 1996, the Company received $620,000 as the final settlement on the 1994 sale of its investment in the savings and loan holding company. The payment represents the Company's share of the contingent purchase price held by the buyer until all known claims were settled.
The actual income tax expense for the years ended December 31, 1996, 1995, and 1994 differed from the expected tax expense (computed by applying the federal corporate tax rate of 35% to income before income taxes). The difference was primarily a result of investment income exempt from federal income tax, which decreased tax expense by $4.7 million, $4.5 million, and $4.6 million in 1996, 1995, and 1994, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ---------------------------------------------------- LIQUIDITY AND CAPITAL RESOURCES - -------------------------------
rates have leveled off at 50 year historical lows, the Company has continued to remain short in the belief that interest rates have a higher probability of increasing than decreasing or remaining at current levels.
Losses and loss expenses incurred during 2003 increased $27.6 million (41%) to $95.7 million. The increase in losses incurred is reflective of the 40% increase in net premiums earned, as previously discussed. The 2003 consolidated loss and loss expense ratio was 65.5% compared to 65.2% for 2002. The Company's loss and loss expense ratios for individual product lines are summarized in the following table.
small business workers' compensation programs are due primarily to improved underwriting selection and rate increases.
A provision in the Technical and Miscellaneous Revenue Act of 1988 created a mechanism which allows for a recognizable deferred tax asset specifically for property and casualty loss reserves discounted for tax purposes. Adopted as Section 847 of the Internal Revenue Code, this provision allows an insurer to take a special tax deduction equal to the discount on post 1986 accident year loss and loss expense reserves while making "special estimated tax payments" equal to the amount of the tax benefit derived from the special deduction. The "special estimated tax payments" can be carried forward for fifteen years to offset taxes arising from decreases in the special deduction and can be treated as regular estimated payments or refunded at the end of the carryforward period. Based upon the concerns regarding the recognition of deferred tax assets, the Company adopted the provisions of Section 847 for all tax years 1987 and subsequent and has taken deductions for the entire amount of discount on post-1986 loss reserves. As mentioned above, special Section 847 estimated tax deposits totaling $5.5 million have been paid in connection with this election.
NOTE I - REPORTABLE SEGMENTS (CONTINUED) The Company, through its subsidiaries, is licensed to do business in all 50 states of the United States, all Canadian provinces and Bermuda. Canadian and Bermuda operations are currently not significant.
NOTE N - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) QUARTERLY RESULTS OF OPERATIONS ARE AS FOLLOWS:
The Company's costs of products consist of the cost of mail order prescription drugs, including labor and overhead charges associated with warehousing, processing and shipping activities. Costs of products for 1996 increased by $19.7 million or 5.5% over 1995 and 1995 costs were $33.3 million or 10.2% greater than 1994.
Interest expense consists of interest on capitalized leases and other borrowings, and was $1.1 million in 1996, $1.7 million in 1995 and $2.6 million in 1994. In 1996, interest expense includes $0.7 million from the Company's line of credit (see note 7). Interest expense in 1995 and 1994 includes interest on Diagnostek, Inc. borrowings which were paid off in 1995, after its merger with the Company.
Health care costs are rising and are expected to continue to rise at rates higher than the Consumer Price Index. The Company believes that its provider discount and risk sharing arrangements, together with its cost control measures such as utilization review and its pricing practices, help to protect against any adverse effect of inflation on its operations.
Costs directly incurred to obtain licenses to do business in new market areas are capitalized and amortized on a straight-line basis over three years.
On August 31, 1994, the Company acquired by merger all of the outstanding common stock of RxNet, Inc. by issuing 256,136 shares of its common stock for all of the outstanding common stock of RxNet.
As a result of the plan to combine certain of the Company's operations, specific locations and facilities were identified to be vacated. Lease vacation costs were then computed for those locations based on actual lease termination costs as provided for in existing lease agreements and/or the estimated cost of idle space from the time of vacating the space to the end of the lease term.
The following table is a reconciliation of the restructuring reserve for the years ended December 31, 1996 and 1995.
To the Stockholders and Board of Directors of Value Health, Inc.:
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Diagnostek, Inc. and subsidiaries as of December 31, 1994, in conformity with generally accepted accounting principles.
Results of Operations for the Three Years Ended December 31, 2011
The litigation settlement amount for 2010 includes a class action settlement benefit to policyholders and attorneys' fees and expenses aggregating $48 million (see Other operating costs and expenses later in this item for additional discussion). The amount disclosed in the reconciliation in Item 6. Selected Consolidated Financial Data is net of related reductions in amortization of deferred sales inducements and deferred policy acquisition costs and income taxes.
At December 31, 2011 and 2010, the amortized cost and fair value of fixed maturity securities and equity securities that were in an unrealized loss position were as follows:
During 2009, we retired $37.2 million of the 2024 notes by issuing five millions shares of our common stock to holders of these notes. This transaction increased our equity by $33.1 million and reduced our liabilities by $32.7 million. Also during 2009, we issued $115.8 million of the 2029 notes with $52.2 million issued for cash and the remaining $63.6 million issued in exchange for the same amount of our 2024 notes. During 2011, we used $46.3 million of the proceeds from the 2029 notes to retire the $46.3 million principal amount of the 2024 notes discussed above. The remaining proceeds from issuing the 2029 notes are available to be used for general corporate purposes.
Our general loan loss allowance as of December 31, 2010 was calculated on the cumulative outstanding principal on loans making up the group of loans currently in workout terms and loans currently more than 60 days past due. We applied a factor to the total outstanding principal of these loans that is calculated as the average specific impairment loss for the most recent 4 quarters divided by the sum of the average of the total outstanding principal of delinquent loans for the most recent 4 quarters and the average of the total outstanding principal of loans in workout for the most recent 4 quarters.