TLIC owns approximately six and one-half acres of land located in Topeka, Kansas. A 20,000 square foot office building has been constructed on approximately one-half of this land.
In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2010-06, Fair Value Measurements (Topic 820 - Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). The new guidance requires entities to separately disclose information relative to transfers in and out of Levels 1 and 2 in the fair value hierarchy. In addition, ASU 2010-06 requires separate presentation of transfers in, transfers out, purchases, sales, issuances and settlements of Level 3 investments in the tabular reconciliation of Level 3 activity. ASU 2010-06 also clarifies the level of disaggregation for which fair value measurements should be disclosed and requires that information about input and valuation techniques be disclosed for Level 2 and Level 3 assets and liabilities. The Company adopted this guidance effective for the first quarter of 2010.
In May 2011, the FASB issued Accounting Standards Update No. 2011-04, Fair Value Measurements (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS (“ASU 2011-04”). The new pronouncement ensures that fair value has the same meaning in U.S. GAAP and International Financial Reporting Standards (“IFRS”) and that their respective fair value measurements and disclosure requirements are the same (except for minor differences in wording and style). The amendments in ASU 2011-04 change the wording used to describe the requirements in U.S. GAAP for measuring and disclosing information about fair value measurements. The amendments clarify the following:
Our benefits, claims and expenses are primarily generated from benefit payments, surrenders, interest credited to policyholders, change in reserves, commissions and other underwriting, insurance and acquisition expenses. Benefit payments can significantly impact expenses from period to period.
$7,712 decrease in renewal whole life and term commissions that corresponds to a $15,553 decrease in renewal whole life and term premiums due to the focus of our captive agents on the public stock offering that began on June 29, 2010.
Revenues from Corporate Operations were $45,954 and $2,011 for the years ended December 31, 2011 and 2010, respectively. This $43,943 increase is primarily due to an increase in net investment income.
As of December 31, 2010, we held the following additional assets (excluding cash and cash equivalents and certificates of deposit that are discussed below under “Liquidity and Capital Resources”): amounts recoverable from reinsurers of $977,397; accrued investment income of $385,948; agent balances and due premiums of $357,979; property and equipment of $102,374 and other assets of $1,151,315. Other assets include federal and state incomes taxes recoverable, prepaid expenses, notes receivable and customer account balances receivable. Please see the summary of total acquisition date fair value of the net assets acquired from Family Benefit Life summarized previously to ascertain the amount of increased assets derived from this acquisition.
During the years ended December 31, 2011 and 2010, cash and cash equivalents increased $14,720,433 and $5,904,586, respectively.
We are subject to various market risks. The quality of our investment portfolio and the current level of shareholders’ equity continue to provide a sound financial base as we strive to expand our marketing to offer competitive products. Our investment portfolio recovered from the disruptions in the capital markets and had unrealized appreciation on available-for-sale securities of $3,071,056 and $3,621,646 as of December 31, 2011 and December 31, 2010, respectively, prior to the impact of income taxes and deferred acquisition cost adjustments. This $550,590 decrease in unrealized gain for the year ended December 31, 2011 is offset by the net realized investment gain of $606,935 due to the sale and call activity for available-for-sale fixed maturity securities during 2011.
We believe that our existing cash and cash equivalents as of December 31, 2011 will be sufficient to fund our anticipated operating expenses.
Other assets consist primarily of prepaid expenses, recoverable federal and state income taxes, notes receivable and customer account balances receivable. Other liabilities consist primarily of accrued expenses, account payables, deposits on pending policy applications and unearned investment income.
The amortized cost and estimated fair value of lottery prize cash flows, by contractual maturity, at December 31, 2011 are summarized as follows:
The statutory net loss for TLIC amounted to $831,650 and $449,123 for the years ended December 31, 2011 and 2010, respectively. The statutory surplus of TLIC was $4,703,946 and $4,316,574 as of December 31, 2011 and 2010, respectively. The statutory net income for Family Benefit Life amounted to $1,226,329 for the year ended December 31, 2011. The statutory surplus of Family Benefit Life was $10,951,137 as of December 31, 2011.