felanders/preprocessed huggingface dataset:
the extent to which fair value is less than cost basis
Infinity is organized as a holding company with all of its operations being conducted by its insurance subsidiaries. Accordingly, Infinity will have continuing cash needs for administrative expenses, the payment of interest on borrowings, shareholder dividends, share repurchases and taxes. Administrative expenses at the holding company have averaged approximately $6.7 million annually since 2003.
Credit risk is managed by diversifying the portfolio to avoid concentrations in any single industry group or issuer and by limiting investments in securities with lower credit ratings. The average credit quality rating for Infinity’s fixed maturity portfolio was Aa3 at December 31, 2005. Non-performing fixed maturities, securities that have not produced investment income during the previous twelve months, were $1.1 million or 0.08% of the $1.3 billion portfolio as of December 31, 2005.
Infinity’s net earned premiums and policies-in-force are as follows (in thousands, except for policies-in-force):
NM: not meaningful due to the low premium for these lines.
Other expenses increased $1.8 million for the twelve-month period ended December 31, 2003 to 2004 due to increased bad debt expense on uncollectible premiums, and increased litigation expenses during 2004, partially offset by a larger loss recorded in 2003 on office subleases. The increase in premiums receivable charged off is in part due to an increase of charge-offs in Florida, where the Department of Insurance prohibited canceling coverage for non-payment after hurricanes occurred in the third quarter of 2004.
(a) Financial Statements The following consolidated financial statements of the Registrant and its subsidiaries, included in the Annual Report of the Registrant to its shareholders on pages 19 to 29 for the year ended December 31, 1993, are incorporated herein by reference (see Exhibit 13 to this filing).
Anticipatory Hedging -- For certain liabilities, the Company commits to the price of the product prior to receipt of the associated premium or deposit. Anticipatory hedges are routinely executed to offset the impact of changes in asset prices arising from interest rate changes pending the receipt of premium or deposit and the subsequent purchase of an asset. These hedges involve taking a long position in interest rate futures or entering into an interest rate swap with duration characteristics equivalent to the associated liabilities or anticipated investments. The notional amount of anticipatory hedges as of December 31, 1998 and 1997 was $712 and $255, respectively.
(1) As of December 31, 1998 and 1997, the fair value of the Company's investment contracts, including guaranteed separate accounts, was $21.7 billion and $21.9 billion, respectively.
The primary uses of funds are to pay claims, policy benefits, operating expenses and commissions, and to purchase new investments. In addition, Hartford Life carries a significant short-term investment position and accordingly does not anticipate selling intermediate-
Reserves for unpaid policy claims are a sensitive accounting estimate unique to the insurance industry. Management uses an independent actuary to formulate this estimate. Differences in the estimates may result in revised claims expense which is recognized in the period in which the difference is determined. See Note 11 to our financial statements for the effect on the year 2003.
For 2003, the consolidated net income from operations before taxes was $3,341,340 compared to $2,876,727 in 2002 and $1,579,471 in 2001. The increase in 2003 was due to a decrease in claims on group dental business and an increase in realized gains. The increase in 2002 was due to a decrease in the dental loss ratio, and increases in premium revenue, investment income and marketing fees.
(7) The methodologies used to estimate fair value are described in the notes to the consolidated financial statements contained herein.
On November 7, 1997 the Company transferred substantially all of the assets and operations of ARM Capital Advisors to New ARMCA and sold an 80% interest in New ARMCA. Although third-party assets managed by ARM Capital Advisors grew since 1995 when ARM Capital Advisors began its operations, the Company believes that market attitudes towards developing an asset management service for defined benefit pension plans within a holding company structure consisting predominantly of insurance companies constrained ARM Capital Advisors' growth.
In June 1997, the Company completed an initial public offering of 9.2 million shares of Class A Common Stock of which 5.75 million shares were sold by the Company for net proceeds of $78.8 million. The remaining 3.45 million shares were sold by Morgan Stanley Stockholders. On June 30, 1997, the Company used a portion of such net proceeds to make a $40 million capital contribution to its primary insurance subsidiary, Integrity, thereby strengthening Integrity's capital base to provide for future growth. The Company plans to also use the net proceeds to enhance the Company's retail market presence, to consolidate operating locations and for other corporate purposes, which may include acquisitions.
The decline in 2016 primarily relates to lower losses from Assurant Health and only two months of results of AEB prior to its sale. 2016 includes $157,437 of reportable catastrophe losses primarily related to Hurricane Matthew and flooding. 2015 includes higher loss experience and adverse claim development on 2015 individual major medical policies. During 2012, we incurred losses of $250,206, net of reinsurance, mainly associated with Superstorm Sandy. Reportable catastrophe losses include only individual catastrophic events that generated losses to the Company in excess of $5,000, pre-tax and net of reinsurance.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and accompanying notes which appear elsewhere in this Report. It contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Report, particularly under the headings “Item 1A - Risk Factors” and “Forward-Looking Statements.”
If the actual level of loss frequency and severity are higher or lower than expected, the ultimate reserves required will be different than management’s estimate. The effect of higher and lower levels of loss frequency and severity levels on our ultimate costs for claims occurring in 2016 would be as follows:
Excluding realized gains and losses, the yield is computed at 6.0% in 1996, 6.1% in 1995 and 5.3% in 1994. The changes in the yields excluding realized gains and losses reflect the relatively stable market yields of the last three years.
We particularly focus on our combined ratio and investment returns, both of which directly affect our return on equity (ROE) and growth of our book value. Historically we targeted a long-term average ROE of 12% to 14%. Given the persistent low interest rate environment which prevails in the United States and the soft pricing environment for our products, the realization of this long-term ROE target in the next few years will likely prove difficult.
Payments of $5.9 million made in 2011 for the 2008 and 2007 tax years as a result of federal tax return audits conducted by the Internal Revenue Service. The payments reduced tax liabilities recognized prior to January 1, 2011 and did not increase or decrease 2011 tax expense.
A decrease in the final payments for the prior fiscal year of $13.0 million.
These increases to tax payments were offset by an increase in Federal tax refunds received in 2010 of $4.2 million.
These adverse severity trends later moderated with that moderation becoming more pronounced beginning in 2009. We have been cautious in giving full recognition to indications that the pace of severity increase has slowed, but have given measured recognition of the improving trends in our reserve estimates, as discussed more fully under “Critical Accounting Estimates-Reserve for Losses and Loss Adjustment Expenses (reserve for losses or reserve).” The favorable development has been most pronounced for years 2004 to 2008, since the initial reserves for these accident years were established prior to substantial indication that severity trends were moderating. We give stronger recognition to a lower severity trend as time elapses and the percentage of closed claims increases.
Our net investment result (which includes both net investment income and earnings from unconsolidated subsidiaries) decreased $2.6 million or 2.0%. Net investment income decreased during 2012, primarily due to lower yields on our fixed income portfolio and lower average fixed income investment balances. Approximately $0.8 million of the decrease is due to increased amortization of tax credit investments in 2012.
Net premiums earned increased during 2011 by approximately $46.3 million or 8.9%, including an increase of approximately $53.0 million attributable to the business acquired from APS. Our results also reflect the effects of a competitive market place and rate reductions that reflect improved loss trends.
In all the tables that follow, the abbreviation “nm” indicates that the percentage change is not meaningful.
Total benefits and expenses increased $384.4 million or 16% in 2000 when compared to 1999. The increase in 2000 was due to General American group life and health business, which resulted in an increase in benefits and expenses of $296.6 million. Excluding General American benefits and expenses would have increased $87.8 million or 4% in 2000. The total benefits and expenses increase of $235.7 million from 1998 to 1999 was a combination of the acquisition of Alta, which resulted in benefits and expenses increasing $245.3 million, offset by a decrease in benefits and expenses due to the effect of a change in accounting policy, which resulted in the capitalization of $18.4 million of software costs in 1999.
Life and health premium and fee income for Alta totaled $376.7 million and $489.0 million for the years ended December 31, 2000 and 1999, respectively, while self-funded premium equivalents were $480.4 million and $436.5 million for the years ended December 31, 2000 and 1999, respectively. The results of Alta since the date of acquisition are included in the Employee Benefits segment.
The Employee Benefits segment experienced a net increase of 107 group health care customers (employer groups) during 2000 (versus a net increase of 468 in 1999). Much of the health care growth can be attributed to the Company's ability to offer a choice of managed care products.
Fee income increased $29.9 million or 37%, from $81.3 million in 1999 to $111.2 million in 2000. Fee income related to savings products increased $10.3 million or 15%, from $71.0 million in 1998 to $81.3 million in 1999. The growth in fee income in 2000 and 1999 was the result of new sales and increased fees on variable funds related to significant growth in equity markets during the first three quarters of 2000.
The Financial Services segment's core savings business is in the public/non-profit pension market. The assets of the public/non-profit business, including separate accounts but excluding Guaranteed Investment Contracts ("GICs"), remained flat during 2000 and 1999 at $7.9 billion. In 2000, the drop in the equity markets during the fourth quarter offset a large portion of the new premiums in the variable annuity business. This, along with the reduction of fixed premiums, resulted in a zero increase for the year in the total assets of the public/non-profit business.
In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements", which provides guidance with respect to revenue recognition issues and disclosures. As amended by SAB No. 101 no later than the fourth quarter of the fiscal year ending December 31, 2000. The adoption of SAB No. 101 did not affect the Company's revenue recognition practices.
Interest expense attributable to these related party obligations was $1,950, $2,665, and $9,891 for the years ended December 31, 2000, 1999, and 1998, respectively.
As of December 31, 2000, the PFC options outstanding have an exercise price of $2.29 and a weighted-average remaining contractual life of 3.33 years.
Our Assumed Reinsurance division offers property and casualty reinsurance products in the form of treaty and facultative contracts targeting specialty insurers, risk retention groups and captives. We provide this coverage on an excess of loss and, to a lesser extent, a quota share basis. We reinsure casualty business, which includes medical malpractice, general liability, commercial auto, professional liability and workers’ compensation. The assumed reinsurance division also participates in one property catastrophe treaty that provides a maximum of $15 million of coverage over the treaty period. The treaty covers world-wide property catastrophe losses including hurricanes and earthquakes. Our subsidiary, American Safety Reinsurance, Ltd., focuses on treaty reinsurance for captives, Risk Retention Groups and specialty insurance companies. Lines of business written include medical malpractice, general liability across multiple sectors, commercial automobile liability, professional liability, workers compensation and one property catastrophe treaty that provides a finite limit over the exposure period. Business is sourced from a combination of London, U.S. and Bermuda based reinsurance brokers. The portfolio is a spread of smaller treaties across multiple lines of business written on both an excess of loss and quota share basis.
Income tax expense totaled $(2.1) million and $0.5 million for the years ended December 31, 2010 and 2009, respectively. In 2010, $1.6 million of the remaining valuation allowance established in 2008 was reversed. Additionally, as shown below, a larger percentage of our earnings for 2010 were generated in Bermuda.
We determine the fair values of certain financial instruments based on the fair value hierarchy established in Statement of Financial Accounting Standard 157, “Fair Value Measurements” (“ASC 820-10-15”). ASC 820-10-15 requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value.
Property and casualty insurance premiums are established before the amount of losses and loss adjustment expenses, or the extent to which inflation may affect such amounts, is known. Substantial future increases in inflation could result in increased interest rates, which, in turn, are likely to result in a decline in the market value of the Company’s investment portfolio and result in unrealized losses and/or reductions in shareholders’ equity. Inflation can also impact our ultimate losses and we consider such in evaluating our loss and loss adjustment expense reserves. However, inflation could materially impact our financial results.
The following table shows the results of operations for the years ended December 31, 2020 and 2019:
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion.
The corporate structure as of March 19, 2021 is as follows:
Restricted cash represent amounts held in banks by the Company in conformity with Provisions of the Supervision and Administration of Specialized Insurance Agencies by the CIRC and a trust account held for bonus accrued for officers.
As of December 31, 2020, and 2019, the Company’s accounts receivable due from an insurance company individually accounted more than 10% of the total account receivable were:
The management does not believe that other than disclosed above, accounting pronouncements the recently issued but not yet adopted will have a material impact on its financial position, results of operations or cash flows.
As of December 31, 2020 and 2019, the Company’s long-term investments consisted the following:
One of the subsidiaries, Law Broker, has a defined benefit retirement plan for eligible employees and the benefits are based on years of service and average service. The plan was underfunded by $318,542 and $208,230 as of December 31, 2020 and 2019, respectively.
The Company has operating leases for its offices with lease terms ranging from one to six years. The Company recorded operating lease cost of $3,455,588 and $2,202,195 for the years ended December 31, 2020 and 2019.
On May 01, 2009 the Company filed a Certificate of Designation to designate 36,000 shares of Series A Convertible Preferred Stock, out of the 10 million preferred stock. These shares have no votes for matters brought before the common shareholders, only with matters regarding the Series A shares where they will be the only voters. They can convert into common but cannot at anytime convert to hold more than 4.95% of the issued and outstanding common shares.
Prior Company management was unresponsive to shareholders and had refused to respond to requests to meet statutory requirements to get current with the secretary of state and with the required filings of the Securities and Exchange Commission (“SEC”).
There is no historical financial information about us upon which to base an evaluation of our performance. We have not generated any revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the launching of our games and market or wider economic downturns. We do not believe we have sufficient funds to operate our business for the next 12 months.
Revenue. During the fiscal years ended December 31, 2019, and 2018, we did not generate any revenues.
Annuity and life insurance sales increased 20% in 2000 to $8,216,167,000 as compared to 65% in 1999. Overall sales growth in 2000 was driven by significant sales volume in the first quarter of 2000 due to the strong equity market performance. However, the decline in the equity markets during the remainder of the year negatively impacted sales as the first quarter growth rate was not sustained. The Company continues to focus on increasing sales through innovative product development activities, the recruitment and retention of top producers, high quality customer service and improvements in web-based technology. All three major distribution channels achieved sales growth in 2000.
The unfavourable repercussions of the war on reinsurance operations, already referred to in our last report, increased during the past year and affected the experience in almost every branch. However, the combined underwriting result remains satisfactory, although it is inferior to that of the previous year.
The Fire Account was affected by major losses in some of the principal territories in which we operate. Besides this, loss ratios were generally higher. The experience in Storm and Hurricane Insurance was particularly heavy. Thus the aggregate result has con­ siderably deteriorated in comparison with last year.
Premium Reserve from 1943 Reserve for Unsettled Claims from 1943 Reserve for Extraordinary Losses Premiums, less cancellations Prs. 248,626,556.32 Premiums for which no reserve is necessary „ 12,180,677.86
For the year ended December 31, 2000, the Company reported an excess of benefits and expenses over revenues of $1,823,000, which includes pension expense of $1,554,000 (an offsetting increase in net assets of $1,122,000 is stated separately on the Statements of Changes in Net Assets in Liquidation, resulting in the net reduction of $432,000 referred to above). Excluding pension expense, the excess expenses in 2000 totaled $269,000. These excess expenses are largely attributable to a $173,000 decrease in fee revenues received from the sale of the credit insurance accounts and to increased legal fees, as discussed more fully below.
A reconciliation of beginning and ending balances of the pension plan's projected benefit obligation for the year ended December 31, 2000 is presented below.
(2) Includes after tax net realized gains of $457,000, $212,000, $307,000, $70,000 and $87,000 for 1998, 1997, 1996, 1995 and 1994, respectively.
Plan servicing revenues from commercial automobile plans decreased 7% in 1998 from 1997 following an 12% decrease in 1997. Written premiums decreased 4% in 1998 and 14% in 1997 as a result of decreases in the Louisiana and Pennsylvania plans. The Company terminated its servicing carrier agreements effective December 31, 1998 and this operation is in run-off.
Underwriting and operating expenses were up 9% in 1998 over 1997 and up slightly in 1997 from 1996. The increase in 1998 included approximately $2 million in non-recurring expenses associated with a reduction in force, legal fees and consulting fees.
With regard to long term liquidity, the average duration of the investment portfolio is approximately 3 years. The fair value of the fixed maturity portfolio at December 31, 1998 was $2,971,884 above amortized cost. With regard to the availability of funds to the holding company, see Note 7 of Notes to Consolidated Financial Statements for restrictions on the payment of dividends by the insurance companies. Various insurance departments of states in which the Company operates require the deposit of funds to protect policyholders within those states. At December 31, 1998 and 1997, the balance on deposit for the benefit of such policyholders totaled approximately $14,115,000 and $12,965,000, respectively.
Our consolidated financial statements, together with the Independent Auditors’ Report thereon, appearing on pages 40 through 63 of our Annual Report to Shareholders for the fiscal year ended December 31, 2002, are incorporated herein by reference.
The carrying value of investments (other than equity securities) that have not produced income for the last twelve months is $80,900,000 at December 31, 1994. Investment gains of $322,364,000 and $1,020,703,000 and losses of $760,268,000 and $161,650,000 were realized on securities available for sale for the years ended December 31, 1994 and 1993, respectively. Total investment gains of $459,000,000 and losses of $155,378,000 were realized on sales of fixed maturities for the year ended December 31, 1992.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Any written or oral statements made by us or on our behalf may include forward-looking statements that reflect our current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks, uncertainties, and other factors that could, should potential events occur, cause actual results to differ materially from such statements. These risks, uncertainties, and other factors, which are described in more detail under Part I, Item 1A, under Risk Factors, starting on page 18 and elsewhere herein and in other documents we file with the U.S. Securities and Exchange Commission (SEC), include but are not limited to:
We discuss financial measures on a "comparative basis" for the 2016 and 2015 periods throughout the Management's Discussion and Analysis section. We believe these measures provide visibility into our results, allow for comparability to our historical results and are consistent with how management evaluates results. We define our results discussed on a "comparative basis" as follows:
At December 31, 2017, net unpaid losses and loss expenses for the Global Reinsurance segment aggregated to $1.7 billion, consisting of $843 million of case reserves and $870 million of IBNR. In comparison, at December 31, 2016, net unpaid losses and loss expenses for the Global Reinsurance segment aggregated to $1.7 billion, consisting of $760 million of case reserves and $978 million of IBNR.
The incremental difference between the fair value of GLB reinsurance contracts and benefit reserves is reflected in Accounts payable, accrued expenses, and other liabilities in the Consolidated balance sheets and related changes in fair value are reflected in Net realized gains (losses) in the Consolidated statements of operations.
The Group and its subsidiaries have in place unsecured lines of credit with local financial institutions under which they may borrow up to an aggregate of $1.5 million. During 1997, no amounts were borrowed against these lines of credit.
In 1997, investing activities used cash of $33.5 million primarily because of the investment of the net proceeds from the subscription offering and the continuing costs of improvements to our computer systems. In 1996, investing activities provided cash of $7.6 million primarily as a result of decreases in the fixed income portfolio needed to fund unprofitable operations in that year. In 1995, investing activities used cash of $2.2 million as the Group invested the positive cash generated from operations.
No one insured accounted for a significant amount of premiums earned or premiums in course of collection in 1997, 1996 or 1995.
The excess of the 80% investment in First Delaware over the net asset value at acquisition is being amortized on a straight- line basis over 15 years. The Group's policy is to evaluate the excess of cost over the net assets of businesses acquired based on an evaluation of such factors as the occurrence of a significant adverse event or change in the environment in which the business operates or if the expected future net cash flows (undiscounted and without interest) would become less than the carrying amount of the asset. An impairment loss would be recorded in the period such determination is made based on the fair value of the related businesses.
Actual maturities may differ from contractual and anticipated maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
In the event a property and casualty insurer becomes or is declared insolvent, state insurance regulations provide for the assessment of other insurers operating in that jurisdiction to fund any capital deficiency of the insolvent insurer. Generally, this assessment is based upon the ratio of an insurer's voluntary written premiums to total written premiums for all insurers in that particular state. The Group charges these assessments to income in the period in which it is notified. The Group is not aware of any material assessments which have not been recorded at December 31, 1997.
On February 11, 1997, the Group completed a plan of conversion under the Pennsylvania Insurance Company Mutual to Stock conversion Act (the "Act").
Gross premiums written were $697.7 million, $689.9 million, and $580.3 million for the years ended December 31, 2014, 2013, and 2012, respectively. The slower rate of growth in gross premiums written in 2014 was primarily the result of actions that we initiated in June of 2014 to increase net rate, specifically in southern California.
We carry our portfolio of equity securities on our balance sheet at fair value. We minimize our exposure to equity price risk by investing primarily in the equity securities of mid-to-large capitalization issuers and by diversifying our equity holdings across several industry sectors. Equity securities represented 7.0% of our investment portfolio at December 31, 2014.
Our reserves for unpaid losses and LAE (gross and net of reinsurance), including the main components of such reserves, were as follows:
Restricted cash and cash equivalents is primarily related to funds held in trust to secure the Company's line of credit and for reinsurance. The Company's line of credit is secured by fixed maturity securities and restricted cash and cash equivalents that had a fair value of $74.6 million and $95.1 million, of which $6.8 million and $2.7 million were classified as restricted cash and cash equivalents at December 31, 2014 and 2013, respectively. The Company held $31.2 million and $32.2 million in trust for
The amortized cost and estimated fair value of fixed maturity securities at December 31, 2014, by contractual maturity, are shown below. Expected maturities differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Since the Company's initial public offering in January 2007 through December 31, 2014, the Company repurchased a total of 23,372,974 shares of common stock at an average cost per share of $15.51, which is reported as treasury stock, at cost, on the accompanying consolidated balance sheets. There were no stock repurchase programs authorized by the Board of Directors as of December 31, 2014.
Benefits and claims are comprised of (i) claims paid, (ii) changes in claim reserves for claims incurred (whether or not reported) and (iii) changes in policy benefit reserves based on actuarial assumptions of future benefit obligations not yet incurred on policies in force.
The increase in renewal premium is attributable to increases of $3 million from Senior Benefits, $1 million, or 26.1%, from policies reinsured from FLICA, and $701,000, or 7.6%, for LifeStyles Marketing Products. These increases were offset by decreases of $1.2 million, or 21.3%, from discontinued Medicare Supplement and Medical Expense Products, and $1.2 million in renewal premiums from Acquired Policies. The decrease in renewal premium from
The primary sources of cash for the Insurance Subsidiaries are premiums and income on invested assets. Additional cash is periodically provided from the sale of short-term investments and could, if necessary, be provided through the sale of long-term investments and blocks of business. The Insurance Subsidiaries' primary uses for cash are benefits and claims, commissions, general and administrative expenses, taxes, licenses and fees.
WESTBRIDGE CAPITAL CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE DATA)
In connection with the Credit Agreement (see NOTE 6 - FINANCING ACTIVITIES, Credit Agreement), the Company has funds that are restricted as to withdrawal and as to to use for current operations consisting of cash of $0.3 million and short-term investments of $4.9 million as of December 31, 1996. These balances are held as collateral for the amounts borrowed under the Credit Agreement.
A summary of DPAC by major product line of insurance follows (in thousands):
Deferred Tax Liabilities: Deferred policy acquisition costs $18,581 $8,683 Invested assets 231 604 Unrealized gain on investments 553 1,300 Other deferred tax liabilities 1,822 1,950 -------- -------- Total deferred tax liability 21,187 12,537 -------- --------
Interest rates have generally been low in recent years. Should interest rates remain at December 31, 2005 levels, the average earned rate of return on GAFRI's annuity investment portfolios will decline. Declining portfolio yields may cause the spreads between investment portfolio yields and the interest rate credited to policyholders to narrow, as GAFRI's ability to manage spreads can become limited by GMIRs on its fixed annuity policies. The GMIRs on annuity policies range from 1.5% to 4%, with a weighted average guaranteed rate of approximately 3.4%. The following table provides detail of the differences between the current interest rates being credited to policyholders and the respective GMIRs at the end of 2005. As of December 31, 2005, new policies are being issued with a GMIR of 2.75%.
GAFRI manages its business as four segments: (i) annuity operations; (ii) supplemental insurance; (iii) life operations; and (iv) corporate and other, which includes holding company assets and costs.
Includes pre-tax gain on the sale of the Driskill Hotel. See Note F.
The preferred securities supported by the payable to subsidiary trusts consisted of the following:
Cash payments with respect to the preferred securities were $5.3 million, $8.9 million and $13.7 million in 2005, 2004 and 2003, respectively.
At December 31, 2005, there were 6.8 million shares of GAFRI Common Stock reserved for issuance under GAFRI's stock option plans. Under these plans, the exercise price of each option equals the market price of GAFRI Common Stock at the date of grant. Options generally become exercisable at the rate of 20% per year commencing one year after grant. Options generally expire ten years after the date of grant. In 2005, 722,962 shares of common stock were issued upon the exercise of stock options. In connection with certain of these exercises, 381,290 shares were delivered as payment of the exercise price and these shares were retired. Also during 2005, GAFRI repurchased 151,100 shares of its common stock on the open market for $2.5 million in cash.
FINANCIAL CONDITION CASH AND INVESTED ASSETS. Aggregate invested assets, including cash and short-term investments, were $4,139.2 million at December 31, 1999, $4,325.8 million at December 31, 1998 and $4,163.3 million at December 31, 1997. The decrease in cash and invested assets from 1998 to 1999 resulted primarily from net realized and unrealized losses on investments of $318.9 million and $96.4 million in share repurchases, partially offset by $203.4 million in cash flows from operations generated during the period and $59.0 million in credit facility borrowings. The increase in cash and invested assets from 1997 to 1998 resulted primarily from $183.3 million in cash flows from operations generated during the period together with net realized and unrealized gains on investments of $57.2 million.
Contract benefit costs vary depending on the type of Contract. Closed panel plans provide the Contract benefits only through a designated provider attorney with whom the Company has arranged for the services to be provided in a particular geographic area. Provider attorneys receive a fixed monthly payment for each member in their service area and are responsible for providing the Contract benefits without additional remuneration. The fixed cost aspect of closed panel plans provides significant advantages to the Company in managing its claims risk. Under closed panel plans, the Company has the ability to more effectively monitor the quality of legal services provided and, due to the volume of claims that may be directed to particular provider attorney law firms, has access to larger, more diversified law firms. At December 31, 1997, approximately 91% of the Company's Contracts were closed panel plans compared to 88% at December 31, 1996.
Operating Ratios Two principal operating measures monitored by the Company in addition to Contract persistency are the loss ratio and the expense ratio. The loss ratio represents Contract benefit costs as a percentage of Contract premiums. The expense ratio represents the total of commissions, general and administrative expenses and premium taxes as a percentage of Contract premiums. The Company has revised the expense ratio definition for 1997 to provide data it believes more accurately reflects trends in the Company's growth. All prior periods have been conformed to current year presentation. The Company strives to maintain a combined loss and expense ratio as low as possible. The combined ratio does not measure total profitability because it does not take into account all revenues and expenses.
The Company believes that it has significant ability to finance expected future growth in Contract sales based on its existing amount of unpledged cash and investments at December 31, 1997 of $26.7 million.
Year Ended December 31, ----------------------- 1997 1996 1995 ------ ------ ------ Statutory Federal income tax rate............................ 34.0% 34.0% 34.0% Tax exempt interest.............. (.2) (.2) (.2) State income taxes and other..... 1.2 1.2 1.2 ---- ---- ---- Effective income tax rate........ 35.0% 35.0% 35.0% ==== ==== ====
Weighted Average Range of Exercise Number Remaining Weighted Average Prices Outstanding Contractual Life Exercise Price - ------------------------------------------------------------------------------- $.38 15,000 2.72 $ .38 $8.13 - $10.38 85,000 3.02 9.32 $14.25 -$16.00 200,000 4.25 14.60 ------- ---- ------ 300,000 3.82 $12.39 ======= ==== ======
Weighted Average Range of Exercise Number Remaining Weighted Average Prices Outstanding Contractual Life Exercise Price $.50 - $2.69 14,750 1.55 $ 1.73 $16.75 - $19.00 144,000 4.55 17.13 ------- ----- ------- 158,750 4.28 $ 15.69 ======= ===== =======
Basic earnings per common share: As reported.................. $ .85 $ .58 Pro forma.................... $ .80 $ .57
A new version of one of the third party catastrophe modeling tools that we and others in the insurance industry utilize for estimating potential losses from natural catastrophes was released during the first quarter of 2011. Overall, the model indicates higher risk estimates for our exposure to hurricanes in the United States, but the impact of the new model on our book of business varies significantly among the regions that we model for hurricanes. Based on our analysis, and the indications of other catastrophe models, we are implementing targeted underwriting and rate initiatives in some regions and we purchased additional catastrophe reinsurance. We will continue to take underwriting actions and/or purchase additional reinsurance to reduce or mitigate our exposure as we believe is warranted.
The following table presents the overall prior year loss development for the three years ended December 31, 2011 by accident year.
The net favorable development of $767 million in 2011 was due to various factors. The most significant factors were:
The effective tax rate on our investment income was 19.0% in 2011 compared with 19.1% in 2010 and 19.2% in 2009. The effective tax rate fluctuates as the proportion of tax exempt investment income relative to total investment income changes from period to period.
If both investment yields and average foreign currency to U.S. dollar exchange rates are similar in 2012 to 2011 year-end levels, property and casualty investment income after taxes for 2012 is expected to decline modestly. This expected decline results, in part, from the effect of investing funds from securities that matured in 2011 in securities with yields lower than the yields of the maturing securities, and the expectation that this pattern will continue in 2012. To a lesser extent, the decline is also impacted by the lower amount of average invested assets estimated to be held during 2012, based on expectations of cash flows during the year.
The above table excludes certain commitments totaling $600 million at December 31, 2011 to fund limited partnership investments. These commitments can be called by the partnerships (generally over a period of five years or less), if and when needed by the partnerships to fund certain partnership expenses or the purchase of investments. It is uncertain whether and, if so, when we will be required to fund these commitments. There is no predetermined payment schedule.
SOURCES OF LIQUIDITY are readily available to the Company in the form of the Company's existing portfolio of cash and short-term investments, Reverse Repo capacity on invested assets and, if required, proceeds from invested asset sales. At September 30, 1997, approximately $163.3 million of the Company's Bond Portfolio had an aggregate unrealized gain of $4.0 million, while approximately $21.4 million of the Bond Portfolio had an aggregate unrealized loss of $0.2 million. In addition, the Company's investment portfolio currently provides approximately $1.9 million of monthly cash flow from scheduled principal and interest payments. Historically, cash flows from operations and from the sale of the Company's annuity products have been sufficient in amount to satisfy the Company's liquidity needs.
factors, which is recognized in other comprehensive income. Impairment losses result in a reduction of the underlying investment’s cost basis.
Potential for variability in our reserves is evidenced by this development. As further illustration of reserve variability, we initially estimated unpaid loss and settlement expense net of reinsurance at the end of 2017 at $41,044,000. As of December 31, 2018, that amount was re-estimated at $42,545,000, which is $1,501,000, or 3.7%, higher than the initial estimate.
The Company may make discretionary contributions to the ESOP and pay dividends on unallocated shares to the ESOP. The ESOP uses funds it receives to repay the loan. When loan payments are made, ESOP shares are allocated to participants based on relative compensation and expense is recorded. The Company contributed $288,538 to the ESOP during the fourth quarter of 2018. The Company contributed $269,344 to the ESOP during the fourth quarter of 2017.
The following table is also used as part of the impairment analysis and displays the total value of securities that were in an unrealized loss position as of December 31, 2018 and 2017. The table segregates the securities based on type, noting the fair value, cost (or amortized cost), and unrealized loss on each category of investment as well as in total. The table further classifies the securities based on the length of time they have been in an unrealized loss position.
Policy acquisition costs deferred and amortized to income for the years ended December 31 are summarized as follows:
The following table represents the average annual percentage payout of incurred losses by age, net of reinsurance.
Prior to the Change of Control and as of December 31, 2009, we did not own or lease any property.
At December 31, 2008 and 2007, a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded.
In March 2008, the FASB issued SFAS No. 161, “Disclosure about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133.” This statement requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The Company is required to adopt SFAS No. 161 on January 1, 2009. The Company currently has not such instruments and does not anticipate that its adoption of SFAS 161 will have an impact on its consolidated financial statements.
Rineon Group, Inc. f/k/a Jupiter Resources Inc. (the “Company”) was incorporated in the State of Nevada on June 15, 2006, and that is the inception date. The Company was an Exploration Stage Company as defined by Statement of Financial Accounting Standard (SFAS) No. 7 "Accounting and Reporting for Development Stage Enterprises". The Company acquired a mineral claim located in British Columbia, Canada in March 2007. On May 14, 2008, the claim was forfeited due to nonpayment of renewal fees.
Simultaneous with its receipt of the Amalphis Preferred Stock, Rineon, NatProv and Amalphis entered into a stockholders agreement under which the parties agreed that, unless additional shares of Amalphis have previously been issued with Rineon's prior written consent, in the event of any sale of the outstanding common stock or assets and business of Amalphis, whether by stock sale, asset sale, merger, consolidation or like combination to any person, firm or corporation not affiliated with the parties (a "Sale of Control"), Rineon shall receive the greater of (a) $36,000,000, or (b) 81.5% of the total consideration. NatProv or its transferees shall receive any remaining balance of the total consideration. In addition, the parties agreed that, without the prior written consent of Rineon:
addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method. The EITF 03-6-1 affects entities that accrue dividends on share-based payment awards during the awards’ service period when the dividends do not need to be returned if the employees forfeit the award. EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008. The Company is currently assessing the impact of EITF 03-6-1 on its consolidated financial position and results of operations.
Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase.
On March 27, 2007, the Company acquired a 100% interest in one mineral claim located in British Columbia for total consideration of $7,500.
----------------------- Florida $ 180.8 $ 270.8 $ 284.8 Alabama 39.1 21.7 - North Carolina 32.2 41.4 - Other 28.4 22.8 - ---- ---- ------- Total $ 280.5 $ 356.7 $ 284.8 ======= ======= =======
The Company has historically met its cash requirements and financed its growth through cash flow generated from operations and borrowings. The Company's primary sources of cash flow from operations are premiums and investment income, and its cash requirements consist primarily of payment of losses and loss adjustment expenses, support of its operating activities including various reinsurance agreements and managed care programs and services, capital surplus needs for its insurance subsidiaries, and other general and administrative expenses.
Certificates of deposit $ 1,470 6.10% U. S. government & agency obligations 57,878 6.34% Corporate obligations 89,200 6.52% Municipal obligations 63,257 6.71% Asset-backed securities 9,966 6.43% Mortgage-backed securities 1 ,967 7.23% ----------- ------ $223,738 6.53% ======== =====