felanders/preprocessed huggingface dataset:
In addition to the hospitals listed in the table above, as of December 31, 1999, Triad operated 14 ambulatory surgery centers, including three surgery centers that are operated by an unaffiliated third party pursuant to a long-term lease. Medical office buildings also are operated in conjunction with its hospitals. These office buildings are primarily occupied by physicians who practice at Triad's hospitals.
During the years ended December 31, 1999 and 1998, Triad experienced declines in revenue and volumes. Management believes three primary factors have contributed to the declines in revenue during the years ended December 31, 1999 and 1998:
Triad's bank debt is collaterized by a pledge of substantially all of its assets. The bank debt agreements require that Triad comply with various financial ratios and tests, including a minimum net worth test, a total funded debt to EBITDA ratio, a senior funded debt to EBITDA ratio, and a minimum fixed charge coverage ratio, all as defined in the bank debt agreements. The bank debt agreements and the indenture relating to the senior subordinated notes also contain covenants that, among other things, limit the ability of Triad to incur additional indebtedness, pay dividends on, or redeem or purchase, its capital stock, make investments and capital expenditures, engage in transactions with affiliates, create certain liens, sell assets, and consolidate, merge or transfer assets.
For the year ended December 31, 2000, PIC, ACIC and BICC provided $5.8 million of net income which resulted principally from favorable recoveries on prior years' reinsurance at BICC. For the period from October 15, 1999 to December 31, 1999, PIC, ACIC and BICC provided a $3.6 million net loss which was due primarily to strengthening of prior year reserves at ACIC.
In May 1999, White Mountains exercised FSA Options to acquire 666,667 shares of FSA Common Stock for $15.7 million in cash. In September 1999, White Mountains exercised FSA Options to acquire 1,893,940 shares of FSA Common Stock in exchange for White Mountains' $50.0 million investment in MediaOne preferred stock.
In September 2000 White Mountains entered into a definitive agreement with CGNU to purchase its U.S. property and casualty insurance operations, CGU. The CGU purchase agreement, which was amended on October 15, 2000 and February 20, 2001, calls for a purchase price of $2.17 billion, subject to certain adjustments, of which $260.0 million will consist of a note payable (which must be paid in eighteen months in cash or Shares valued at $245.00 per Share, at the Company's sole option). In addition, CGU will repay approximately $.5 billion of debt outstanding to its parent at closing.
On March 15, 2001 White Mountains commenced a cash tender offer (the "Note Offer") for its $96.3 million aggregate principal amount of outstanding medium-term notes. In conjunction with the Note Offer, noteholder consents are being solicited to effect an amendment to the indenture governing these notes, which will facilitate White Mountains' pending acquisition of CGU. The Note Offer is scheduled to expire at 5:00 p.m., New York City time on April 16, 2001, unless extended or terminated.
Selling, general and administrative expenses increased $8,811, or 54.1 percent, for the twelve months ended December 31, 1997. This was primarily due to the acquisitions of First American and Advantage with the related selling, general and administrative costs of those businesses. Goodwill and intangible amortization expense related to the acquisitions was $1,525 for the twelve months ending December 31, 1997 compared to $312 for same period in 1996. Excluding the effect of the two acquisitions, the ratio of selling, general and administrative expenses to revenues increased to 23.0 percent from 21.3 percent for the twelve months ended December 31, 1997, compared to the same period of 1996. This was as a result of increases in telecommunications and computer network systems costs, as well as increases in management staffing levels.
(1) Phase 1: Planning and Awareness - identify all IT and other systems and facilities and risk rate each according to its potential business impact;
The Insurance Subsidiaries began writing private passenger automobile and homeowners insurance in New Hampshire during 2008. During the years ended December 31, 2016, 2015, and 2014, we wrote $26,128, $22,731, and $18,755 in direct written premiums, respectively, and approximately 26,626, 24,364, and 20,626 policies, respectively, in New Hampshire.
Realized Gains (Losses) on Investments. Net realized gains on investments were $5,559 for the year ended December 31, 2016 compared to net realized losses on investments $469 for the comparable 2015 period. The increase is a result of sales of equity securities during 2016.
The following table presents our total net reserves and the corresponding case reserves and IBNR reserves for each line of business as of December 31, 2016 and December 31, 2015.
Advertising costs are charged to expense when they are incurred. Total advertising costs were $2,063, $1,906 and $2,108 for the years ended December 31, 2016, 2015, and 2014, respectively.
At December 31, 2016 and December 31, 2015, investments in fixed maturities and equity securities classified as available-for-sale had a fair value which equaled carrying value of $1,259,364 and $1,191,841, respectively. At December 31, 2016 and December 31, 2015, we held no short-term investments. The carrying values of cash and cash equivalents and investment income accrued approximated fair value.
An unaudited summary of the Company’s 2016 and 2015 quarterly performance, and audited annual performance, is as follows.
Net cash flow provided by operating activities was $539.8 million for the year ended December 31, 1997, compared with $410.9 million in 1996. The positive cash flow from operations is due primarily to net income of $227.4 million, adjusted for certain operating liabilities such as increased medical claims payable of $170.7 million and accounts payable and accrued expenses of $116.9 million.
Net cash used in financing activities totaled $116.6 million in 1997, compared to net cash used in financing activities of $431.0 million in 1996. The net cash used in financing activities in 1997 was primarily due to borrowings and repayments on long-term debt which totaled $150.0 million and $387.0 million, respectively, partially offset by net proceeds from common stock offering of $110.3 million.
Additionally, we lease office and/or warehouse space through our subsidiaries in Little Rock, Arkansas; Sacramento, California; Tulsa, Oklahoma; Portland, Maine; Miramar, Florida; Latham, New York; and Dallas, Texas. The aggregate annual rental payments for leased space in Little Rock are approximately $154,000; for Sacramento approximately $605,000; for Tulsa approximately $24,000; for Miramar approximately $151,000; for Portland approximately $129,000; for Latham approximately $383,000; and for Dallas approximately $72,000. In addition, upon completion of the build-out of the office space which is anticipated to be in October 2005, we will occupy rental office space in Pittsburgh, Pennsylvania with aggregate annual rent of approximately $74,320 and annual increases thereafter over a five year term. While the space is being built-out, we are currently occupying temporary office space in the same office building.
Revenue for the PBM division is earned and recognized as follows: administrative fees are agreed upon with the sponsor on either a per claim charge or a per plan participant per month charge. Per claim fees are billed to sponsors for the claims adjudicated during the period. Per plan participant per month fees are generally billed to sponsors at the end of the month. The amount of revenue related to the drugs dispensed by pharmacies participating in our pharmacy network is recognized at the time of dispensing the drug as the cost is incurred. The amount of revenue recognized is reduced by the amount of rebates that we share with our sponsors. The specific terms of the contracts that we enter into with our sponsors will determine whether we recognize the gross revenue related to the cost of the prescriptions filled. In certain cases, we do not recognize the gross revenue or cost related to prescriptions filled for a specific sponsor. This has no impact on our gross profit since neither the prescription revenue nor the related cost of the prescriptions is recorded.
If such rebate programs were to be discontinued or adversely altered by drug manufacturers, or government action, or if the terms of NMHC's rebate sharing arrangements with its sponsors were adversely altered when these arrangements expire, there could be a material adverse effect on our business, operating results and financial condition.
Net income for the fiscal year ended June 30, 2005 was approximately $12.4 million as compared to approximately $8.0 million for the fiscal year ended June 30, 2004; a 56% increase. The increase in net income is attributable to the same factors causing the increase in income before income taxes, in addition to the lower effective tax rate.
NMHC has entered into various capital lease transactions for hardware and software. NMHC has also assumed various capital leases through its acquisitions. The principal balance of all capital leases as of June 30, 2005 was approximately $45,000.
(1) Assumes conversion of Series A and Series B Cumulative Convertible Preferred stock into common stock of the Company on a share-for-share basis in years 1995, 1994 and 1993 and conversion of Series A Cumulative Convertible Preferred stock in 1996.
Net income: The Company's 1996 Net income applicable to common stock was $15.9 million or $1.46 per share compared to a loss of $4 million or $.44 per share for 1995. The Company's 1996 Net income was favorably impacted by a "Litigation Settlement" representing $14.6 million of net income plus related realized gains on the sale of stock received as a result of Litigation Settlement as described in Note J - Litigation Settlement in the Notes to Consolidated Financial Statements.
Accident and health policy benefits ratio improved in 1996 compared to 1995 as the result of more first duration business where underwriting and policy provisions tend to produce loss ratios that are lower than subsequent durations.
The Company has a line of credit with a bank in the amount of $250,000 with interest at 1% above the prime rate. The line of credit is collateralized by an assignment of agents contracts, agents right to certain future life insurance commissions due to be paid by PILIC and all of the assets of the Company and Agency except the stock of PILIC. Outstanding borrowings at December 31, 1996, 1995 and 1994, amounted to $0, $230,000 and $166,000.
All amounts set forth in the following tables are in thousands, except for ratios and per share data.
As of December 31, 2002, the pre-tax net unrealized gain on investments was $38.5 million compared to a pre-tax net unrealized loss of $1.5 million at December 31, 2001. This change is primarily due to declining market interest rates. The Company's policy is to investigate on a quarterly basis any investment for possible "other-than-temporary" impairment in the event the fair value of the security falls below its amortized cost, based on all relevant facts and circumstances (see further discussion under Critical Accounting Policies - Investments).
The following table summarizes the provision for losses and LAE, net of applicable reinsurance, for the periods indicated:
The following table lists issuers of securities held by the Company having an unrealized loss of $100,000 or more and aggregate information relating to all other investments in unrealized loss positions as of December 31:
within a reasonable and acceptable range of adequacy. The methods of making such estimates and for establishing the resulting reserves are reviewed and updated quarterly and any adjustments resulting therefrom are reflected in current operations.
The Company sponsors a contributory savings and security plan for eligible employees. The Company provides matching contributions equal to 75% of the lesser of 6% of an employee's compensation or the amount contributed by the employee. Contributions charged against operations were $4.2 million, $4.0 million and $3.1 million in 2002, 2001 and 2000, respectively. The plan offers a variety of investment types among which employees exercise complete
Homeowner and Earthquake Lines in Runoff and All Other. The underwriting loss for the homeowner and earthquake lines decreased by $18.8 million in 2002 compared to 2001 and increased $74.9 million in 2001 compared to 2000 due to losses and loss adjustment expenses related to SB 1899. See Notes 8 and 16 of the Notes to Consolidated Financial Statements.
DERIVATIVE FINANCIAL INSTRUMENTS The Company uses derivative financial instruments, including financial futures contracts, options, forward contracts, interest rate swaps, currency swaps, and equity swaps, as a means of hedging exposure to interest rate and foreign currency risk. Hedge accounting is used to account for derivatives. To qualify for hedge accounting the changes in value of the derivative must be expected to substantially offset the changes in value of the hedged item. Hedges are monitored to ensure that there is a high correlation between the derivative instruments and the hedged investment.
INVESTMENT GAINS AND LOSSES Realized investment gains and losses are included as a component of pre-tax revenues based upon specific identification of the investments sold on the trade date. Also included are gains and losses arising from the remeasurement of the local currency value of foreign investments to U.S. dollars, the functional currency of the Company. The foreign exchange effects of Canadian operations are included in unrealized gains and losses.
FUTURE POLICY BENEFITS Future policy benefits represent liabilities for future insurance policy benefits. Benefit reserves for life insurance and annuities have been computed based upon mortality, morbidity, persistency and interest assumptions applicable to these coverages, which range from 2.5% to 10.0%, including adverse deviation. These assumptions consider Company experience and industry standards. The assumptions vary by plan, age at issue, year of issue and duration. Appropriate recognition has been given to experience rating and reinsurance.
At December 31, 1999 and 1998, investments in fixed maturities had a carrying value and a fair value of $23.9 billion and $23.9 billion, respectively. See Notes 1 and 12.
The net deferred tax liabilities at December 31, 1999 and 1998 were comprised of the tax effects of temporary differences related to the following assets and liabilities:
(a) Other represents revenue attributable to unallocated capital and run-off businesses.
Income before income taxes for 1997 increased 24.3% to $10 million from $8.1 million. The increase was primarily due to top line growth.
Interest rate swap agreement (derivative) -- The fair value reflects the estimated amount the Company would pay to terminate the contract at year-end, thereby taking into account the current unrealized gains or losses of the open contract. Dealer quotes are available for the Company's derivative (note 9).
All expenses incurred on the Company's behalf by its affiliates have been reflected in the accompanying financial statements. Management believes the costs incurred by its affiliates and allocated to the Company are reasonable and would not be materially different than if they had been incurred from a third party nonaffiliate. During the normal course of business the aforementioned transactions result in intercompany balances that are created and are settled on a monthly basis.
The Company entered into a Stock Rights Agreement with ALLIED Mutual to grant both parties certain rights in terms of registration, transfer, voting, board nominations, and other matters. Pursuant to the Stock Rights Agreement executed July 5, 1990, ALLIED Mutual is entitled to nominate for election to the Company's Board of Directors a number of director nominees that most closely approximates the same percentage of the total number of members of the Company's Board of Directors as is equal to ALLIED Mutual's percentage ownership of the total number of shares of the Company voting stock.
On March 7, 1996, the commercial bank acting on behalf of the ESOP participants as the trustee for the ESOP Trust (Trustee) converted all of its shares of ESOP Convertible Preferred Stock (ESOP Series) to shares of common stock.
In addition to the ESOP, the Company sponsors a health care plan that provides postretirement medical benefits to full-time employees who meet age and service requirements. The plan is contributory with retiree contributions adjusted annually, and contains other cost-sharing features such as deductibles and coinsurance. The Company's policy is to fund the cost of medical benefits in amounts determined at the discretion of management.
The excess & surplus lines segment accounted for 6% of 1997 consolidated revenues, and its performance is evaluated on profit. Included in all other are mortgage banking, data processing operations, and employee leasing services to affiliated companies. All segments of the Company operate exclusively in the United States.
An increase or decrease in our effective tax rate by one percent, would have resulted in a decline or increase in consolidated income from continuing operations in 2007 of $3.1 million.
Sichuan Kangzhuang Insurance Agency Co., Ltd. (“Sichuan Kangzhuang”) was founded on July 10, 2006 in Sichuan province in the PRC and provides insurance agency services in the PRC. On August 23, 2010, at Sichuan Kangzhuang’s general meeting of shareholders, its shareholders voted to sell their shares to Henan Anhou for RMB532,622 ($78,318). On September 6, 2010, the equity transfer agreements were signed between Henan Anhou and each shareholder of Sichuan Kangzhuang.
The Company’s revenue is from insurance agency and brokerage services. The Company, through its subsidiaries, sells insurance products to customers, and obtains commissions from the respective insurance companies according to the terms of each insurance company service agreement. The Company recognizes revenue when the following have occurred: persuasive evidence of an agreement between the insurance company and insured exists, services were provided, the fee for such services is fixed or determinable and collectability of the fee is reasonably assured. Insurance agency services are considered complete, and revenue is recognized, when an insurance policy becomes effective. The customers are entitled to a 10-day cancellation period from the date of the issuance of the policies, in which the customers can cancel the contract without any fees. The Company is notified of such cancellations by the insurance carriers.
The carrying amounts reported in the balance sheet represent the outstanding balances and approximate fair value.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is expected to expand the use of fair value measurement, which is consistent with the FASB’s long-term measurement objectives for accounting for financial instruments. Most of the provisions of SFAS 159 apply only to entities that elect the fair value option. However, the amendment to FASB Statement No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” applies to all entities with available-for-sale and trading
The Company maintains the United America Indemnity, Ltd. Share Incentive Plan (as so amended, the “Plan”). The purpose of the Plan is to give the Company a competitive advantage in attracting and retaining officers, employees, consultants and non-employee directors by offering stock options, restricted stock and other stock-based awards. As amended in May 2005, the Company may issue up to 5.0 million Class A common shares for issuance pursuant to awards granted under the Plan. Award activity for stock options granted under the Plan is summarized as follows:
On September 5, 2003, the Company granted options to purchase 256,074 Class A common shares to two officers of the Company (“Option-A Tranche”). The Option-A Tranche options have an exercise price of $6.50 per share, expire on September 5, 2013 and were fully vested at the time of the grant. The Company recorded $0.9 million of compensation expense during the period from September 5, 2003 to December 31, 2003, which represents the fair value of the Option-A Tranche on the date of the grant since they were fully vested on that date. During 2005, 93,825 of the Option-A Tranche options were forfeited and 78,000 options were exercised. During 2006, 28,175 Tranche-A options were exercised.
The Company recognized compensation expense for restricted stock of $2.5 million and $0.6 million for 2006 and 2005, respectively. The total unrecognized compensation expense for the non-vested restricted stock was $2.4 million at December 31, 2006, which will be recognized over a weighted average life of 1.9 years. The fair value of the 92,852 Restricted Shares that vested during the year ended December 31, 2006 was $21.14 per share.
The Company agreed to commute its reinsurance agreement with Lumbermens Mutual Casualty Company. As part of the commutation, the Company received $3.5 million in cash during the first quarter of 2007. The impact of the commutation was reserved in prior years, and the transaction should not have a material effect on the Company’s 2007 results.
(1) The Company leases an additional 8,800 square feet of the facility to unrelated third parties for approximately $136,000 per year, under leases which expire at various dates after 2000.
Insurance premiums and other considerations decreased by $300,000, from $13,176,000 in 1999 to $12,876,000 in 2000. This reduction was primarily the result of a change in the sales mix of the Company's insurance subsidiary, Southern Security. Since March 1998, Southern Security has sold more final expense policies, which have lower face amounts, than universal life products, which have larger face amounts. Consequently, the insurance revenues from final expense products were less than those from universal life products.
Net investment income increased by $1,505,000 from $10,631,000 in 1999 to $12,136,000 in 2000. This increase was primarily attributable to more loan originations made by the Company's mortgage subsidiary in 2000 due to the expansion of business activities in new geographic markets.
(See Overview for an explanation of this comparison. SSLIC Holding Company, Southern Security and Insuradyne results from operations for 1999 have been excluded)
Due to former stockholders of Civil Service Employees Life Insurance Company resulting from the acquisition of such entity. 7% note payable in seven annual installments with principal payments of $151,857, due December 2003 303,714 455,571
Stock Dividends 219,892 259,374 Conversion of Class C to Class A 1,336 (13,352) Stock Issued (cancelled) 69,514 (238) --------- ---------
December 31, 2000 1999 $5,046,448 revolving line of credit at bank prime rate less 1%, (8.5% at December 31, 2000) interest only to December 2000 thereafter interest and principal, collateralized by 15,000 shares of Security National Life Insurance Company stock, due December 2005 $4,904,426 $5,610,111
Because of the nature of the risks we insure on a direct basis, losses and LAE emanating from the insurance policies that we issue are generally characterized by relatively short settlement periods and quick development of ultimate losses compared to claims emanating from other types of insurance products. Therefore, we believe we can estimate our cash needs to meet our policy obligations and utilize cash flows from operations and cash and short-term investments to meet these obligations. The Company considers the relationship between the duration of our policy obligations and our expected cash flows from operations in determining our cash and
Direct Business. For our direct business, estimates of ultimate loss and LAE reserves are based on our historical loss development experience. In using this historical information, we assume that past loss development is predictive of future development. Our assumptions allow for changes in claims and underwriting operations, as now known or anticipated, which may impact the level of required reserves or the emergence of losses. However, we do not anticipate any extraordinary changes in the legal, social or economic environments that could affect the ultimate outcome of claims or the emergence of claims from causes not currently recognized in our historical data. Such extraordinary changes or claims emergence may impact the level of required reserves in ways
In establishing our reserves, we tested our data for reasonableness, such as ensuring there are no outstanding case reserves on closed claims, and consistency with data used in our previous estimates. We found no material discrepancies or inconsistencies in our data. We did not experience any significant change in the number of claims paid (other than for growth in our business and claims related to the discontinued bond program), average claim paid or average claim reserve that would be inconsistent with the types of risks we insured in the respective years.
We file a consolidated federal income tax return with our subsidiaries. Accordingly, deferred tax liabilities and assets have been recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred income taxes are recognized at prevailing income tax rates for temporary differences between financial statement and income tax basis of assets and liabilities for which income tax benefits will be realized in future years.
The following table summarizes, for all securities in an unrealized loss position at December 31, 2005, the estimated fair value, pre-tax gross unrealized loss and number of securities by length of time those securities have been continuously in an unrealized loss position.
No of Loans State Book Value ----------- ------- --------------- 5 Alabama $ 313,697 6 Florida 443,165 81 Georgia 4,013,415 ---- ---------- 92 $4,770,277 == =========
Investments deemed to have a loss in value, which is other than temporary, are written down to their estimated net realizable value. Unrealized gains and losses on fixed maturities available for sale are accounted for as direct increases or decreases in stockholders' equity, net of deferred taxes.
Effective January 1, 1994, the Company adopted the provisions of Statement of Financial Accounting Standards No. 115 (SFAS No. 115), Accounting for Certain Investments in Debt and Equity Securities. The adoption of SFAS No. 115 resulted in reporting fixed maturities available for sale at fair value with changes in unrealized gains and losses included in stockholders' equity, net of applicable deferred taxes, and deferred acquisition cost adjustments. The adoption of SFAS No. 115 had no effect on net earnings in 1994.
1996 1995 ------ ------- Accumulated postretirement benefit obligation: Retirees $ 180,396 151,075 Other active participants 10,269 103,805 --------- --------- Accumulated postretirement benefit obligation in excess of plan assets 190,665 254,880
The per share weighted average fair value of stock options and restricted stock granted during 1996 and 1995 was estimated using an option pricing model with the following weighted average assumptions: expected life of five years, expected dividend yield of 2.1%, risk-free interest rate of 6.0%, and an expected volatility of 30% for both years.
Although the Company determined on January 31, 2008 that it would cease underwriting new policies as previously described, the Company does not anticipate any negative effects to its capital adequacy in the foreseeable future as a result of this decision.
Net realized gains on real estate declined due to realized gains in 2006 from the sale of the Company’s remaining real estate properties classified as held for sale.
Real estate revenue was primarily earned from the leases on the buildings at the Company’s River Place Corporate Park office complex in Austin, Texas. Net real estate income (revenues from leases less associated operating expenses and depreciation) totaled $0.6 million for the year ended December 31, 2005. The Company sold its River Place Corporate Park office complex in June, 2005, and the remaining real estate properties held for sale were sold in January 2006. Accordingly, the Company no longer had real estate income in 2007 nor 2006.
Other revenues also increased in 2007 due to fees earned for services performed under an administrative services agreement with Family Life. As previously described, Family Life entered into an administrative services agreement with the Company for a three month period following the sale of Family Life. Pursuant to the agreement, the Company provided administrative services for Family Life through March 31, 2007, at which time Manhattan Life assumed all responsibilities for administering the Family Life business. The Company earned fees totaling $807,000 in the first quarter of 2007 for services performed for Family Life in accordance with the agreement.
Net cash provided by investing activities in 2007, 2006, and 2005 was $37.4 million, $20.2 million and $48.0 million, respectively. Net cash provided by investing activities increased during 2007 primarily due to the proceeds from the sales or maturities of fixed maturity securities, net of purchased fixed maturities. Net cash provided in 2006 is primarily related to the proceeds received upon the sale of Family Life, which due to the timing of the transaction, had not been reinvested into long-term securities as of December 31, 2006. Proceeds from the sales and maturities of fixed maturities and sales of investment real estate in 2005, combined with proceeds from short-term investments, provided substantially all of the cash from investing activities. As market interest rates began to rise during these years, the majority of the proceeds obtained were invested in longer-term fixed maturity securities during 2005 and 2006.
Effective January 1, 2007, the Company adopted SFAS No. 156, “Accounting for Servicing of Financial Assets - an amendment of FASB Statement No. 140” (“SFAS 156”). Among other requirements, SFAS 156 requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in certain situations. The adoption of SFAS 156 did not have a material impact on the Company’s consolidated financial statements.
The products of FIC's and ILCO's insurance subsidiaries are marketed and sold through two divisions:
General. ILCO's insurance subsidiaries and Family Life are subject to regulation and supervision by the states in which they are licensed to do business. Such regulation is designed primarily to protect policy owners. Although the extent of regulation varies by state, the respective state insurance departments have broad administrative powers relating to the granting and revocation of licenses to transact business, licensing of agents, the regulation of trade practices and premium rates, the approval of form and content of financial statements and the type and character of investments.
ILCO leases a building located at 40 Parker Road, Elizabeth, New Jersey. This building, which was formerly the ILCO's headquarters building, contains approximately 41,000 square feet of office space. The remaining term of the lease is 8 years, and the lease calls for a minimum base rental of $450,000 per annum. The lease provides that all costs including, but not limited to, those for maintenance, repairs, insurance and taxes be borne by ILCO. ILCO has sub-leased the space in the property to third parties.
As of December 31, 1996, the outstanding principal balance of ILCO's Senior Loan obligations was $24.9 million. ILCO made scheduled principal payments under its Senior Loan on January 1, 1997 and July 1, 1997, reducing the principal balance to $11.0 million at December 31, 1997.
Amortization of deferred policy acquisition costs increased in 2004 to $88.7 million from $53.8 million and $35.8 million in 2003 and 2002, respectively. Increased amortization in the current year is due in part to the deferral of sales inducement costs of $28.2 million and $43.9 million in 2004 and 2003, respectively, as noted above. This results in increasing gross profits as well as the substantial increase in the Company's business over the past couple of years. In addition to the deferral of sales inducements, an "unlocking" adjustment was made during 2003 and 2004 pertaining to the annuity line of business and the expected emergence of future profits which also resulted in increased deferred policy acquisition costs amortization. No expected changes were made related to the amortization of these costs in 2002. While the Company is required to continually evaluate its emergence of profits, management believes that the current amortization patterns of deferred policy acquisition costs are reflective of actual experience. See additional discussions of amortization relative to the Company's lines of business included in the segment discussion following this section.
The 2004 and 2003 increase in contract interest for equity-indexed annuities is due to increased sales and the effect of the positive performance of the stock market on option values as noted previously. The 2004 contract interest figures include an increase of $2.3 million for certain contractholder account balances as part of a lawsuit settlement. All other annuity contract interest includes sales inducement expenses not deferred of approximately $12 million for 2002. The Company currently defers these sales costs as previously noted.
The investment environment improved during 2003 and continuing into 2004 compared to 2002. The market showed signs of improvement which was reflected in several industries that had been experiencing problems during recent years, such as the airline, energy and telecommunications industries. The Company is continually monitoring developments in these industries that would affect security valuations. Holdings in below investment grade securities by category as of December 31, 2004 are summarized below, including 2003 fair values for comparison.
In 1999, we purchased a building in Petaluma. The building consists of approximately 53,700 total square feet of useable office and warehouse space. Approximately 13,700 square feet of the building is currently used for Legacy Financial operations and training facilities for Legacy Marketing and Legacy Financial employees. The remaining approximate 40,000 square feet is leased to unrelated parties. We sold the building in December 2000. Legacy Financial will remain on-site under the terms of a minor lease agreement that expires in December 2002.
Legacy Marketing’s marketing allowances and commission revenue, combined, decreased approximately $10.5 million, or 26.7%, in 2000 compared to 1999, due to a 35.5% decrease in fixed annuity premium, partially offset by a shift to fixed annuity and life insurance products that yield higher commissions. This overall decrease in premium is primarily attributable to the poor performance of bond investments underlying the annuities’ crediting rates.
Revenue - LifeSurance Corporation’s primary source of revenue is fees paid by Producers for attendance at estate planning seminars. In 2000, total revenue increased by approximately $281,000, or 138.4%, primarily due to overall increased seminar attendance. However, in the second half of 2000, seminar attendance significantly declined. This decrease in attendance is attributed to the fact that Producers began obtaining continuing education credits more easily either by attending local seminars or by utilizing Internet-based alternatives.
In 1998, Producer seminar expenses were recorded in Legacy Marketing’s results and it would have been impractical to present them separately for comparative purposes in this analysis.
Prior to February 2001, LifeSurance Corporation, a wholly owned subsidiary, conducted educational programs that provided continuing education credits for producers at various locations throughout the United States. Producers paid attendance fees to attend the seminars and purchased educational materials that could be used as tools in promoting life insurance and annuity policies and estate planning concepts. The seminars and educational materials were marketed under the business name Wealth Transfer Educational Systems. In February 2001, the Company announced that is was discontinuing a majority of LifeSurance Corporation’s operations (see Note 19).
expire in six years. The Company is also obligated to grant additional options to Producers during 2001, at the market value on the date of grant, based on production levels achieved in 2000. The number of options to be granted has not yet been finalized.
However, neither the Marketing nor Administrative Agreements prevent the Company from entering into similar arrangements with other insurance companies. In January 2001, LMG entered into Marketing and Administrative Agreements with John Hancock Life Insurance Company (see Note 19).
On July 14, 2000, the State of Michigan notified OmniCare-MI that it was one of the successful bidders in the State's extensive bid process for increased Medicaid rates and
Medical services expenses for OmniCare-TN increased $4.8 million (9%), from $53.0 million in the year ended June 30, 1998 to $57.8 million in the year ended June 30, 1999. The OmniCare-TN MLR was 82% for the year ended June 30, 1999 and 83% for the year ended June 30, 1998. The fiscal 1999 OmniCare-TN MLR includes an approximate 3% reduction due to offsets to medical services expenses related to the net recovery of $0.5 million in refundable advances made to a third party dental administrator and an excess adverse selection payment of $1.0 million received in fiscal 1999 for the period June 1997 and prior.
Other specialty lines - We experienced organic growth in our other specialty lines of business from increased writings in several products. The mix of products will affect the retention percentages. Rates in this line have been relatively stable.
programs. The table above recaps the underwriting, claims characteristics and major actuarial assumptions for our assumed reinsurance business.
For additional information on the potential impacts of regulation on the Company, including the topics described above, see “Business-Regulation” and “Risk Factors”.
annuitization, lapse, withdrawal and mortality assumptions, as well as interest rate and equity market return assumptions. Lapse rates are adjusted at the contract level based on the in-the-moneyness of the living benefit and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates are also generally assumed to be lower for the period where surrender charges apply.
The Trust accounts for its interests in life insurance policies at fair value in accordance with ASC 325-30, Investments in Insurance Contracts. The Trust initially recognized the life insurance policies transferred at its inception at their fair market value on December 9, 2016 and the Trust will estimate the fair value at each subsequent reporting period.
YEAR ENDED DECEMBER 31, 2017 and PERIOD FROM INCEPTION (DECEMBER 9, 2016) TO
The Trust maintains the majority of its cash in several accounts with a commercial bank. Balances on deposit are insured by the FDIC. However, from time to time the Trust's balances may exceed the FDIC insurable amount at its banks.
As of December 31, 2017, the Trust owns an interest in 3,140 policies of which 600 are life settlement policies and 2,540 are viaticals (the “PHT Portfolio”). As of December 31, 2016, the Trust owns an interest in 3,252 policies of which 654 are life settlement policies and 2,598 are viaticals. The PHT Portfolio’s aggregate face value is $1.3 billion as of December 31, 2017 of which $1.1 billion is attributable to life settlements and $179.1 million is attributable to viaticals. The PHT Portfolio’s aggregate face value is $1.3 billion as of December 31, 2016 of which $1.12 billion is attributable to life settlements and $191.2 million is attributable to viaticals. The PHT Portfolio’s aggregate fair value is $272.1 million as of December 31, 2017 of which $270.6 million is attributable to life settlements and $1.5 million is attributable to viaticals. The PHT Portfolio’s aggregate fair value is $263.6 million as of December 31, 2016 of which $261.6 million is attributable to life settlements and $2.0 million is attributable to viaticals.
The Partnership's management is responsible for these financial statements. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Commercial automobile: Until recently we provided liability and physical damage coverage for light commercial vehicles. However, due to the poor performance of this line, effective October 1, 2014, we decided to no longer accept new commercial auto policies. In February 2015, we decided to no longer offer renewals to our existing commercial auto policies beginning with those that expired on or after May 1, 2015. As of April 30, 2016 we had no commercial auto policies in force and we have 34 open claims remaining as of December 31, 2016.
Our insurance underwriting business reported on a standalone basis for the years ended December 31, 2016 and 2015 follows:
(3) For the years ended December 31, 2016 and 2015, the effect of catastrophe loss from severe winter weather on our net combined ratio only includes the direct effects of loss and loss adjustment expenses and ceding commission revenue and does not include the indirect effects of a $84,149 and $324,906, respectively, decrease in other underwriting expenses.
The table below summarizes the gross unrealized losses of our fixed-maturity securities available-for-sale and equity securities by length of time the security has continuously been in an unrealized loss position as of December 31, 2016 and 2015:
Effective July 1, 2015, reinstatement premium protection for $16,000,000 of catastrophe coverage in excess of $4,000,000. Effective July 1, 2016, reinstatement premium protection for $20,000,000 of catastrophe coverage in excess of $5,000,000.
We have determined it to be in the best interests of our shareholders to prudently reduce our reliance on quota share reinsurance. Our ability to obtain and maintain an upgrade to our financial strength rating from A.M. Best depends, in part, on reducing the amount of premium ceded to reinsurers under our quota share reinsurance treaty. Any such reduction would result in higher earned premiums and a reduction in ceding commission revenue in future years. Such reduction would also lead to increased exposure to net insurance losses.
We are subject to extensive laws and regulations. State insurance regulators are charged with protecting policyholders and have broad regulatory, supervisory and administrative powers over our business practices. These include, among other things, the power to grant and revoke licenses to transact business and the power to regulate and approve underwriting practices and rate changes, which may delay the implementation of premium rate changes or prevent us from making changes we believe are necessary to match rate to risk. In addition, many states have laws and regulations that limit an insurer’s ability to cancel or not renew policies and that prohibit an insurer from withdrawing from one or more lines of business written in the state, except pursuant to a plan that is approved by state regulatory authorities. Laws and regulations that limit cancellation and non-renewal and that subject program withdrawals to prior approval requirements may restrict our ability to exit unprofitable markets.
The operating results of property and casualty insurance companies are subject to significant fluctuations from quarter-to-quarter and from year-to- year due to the effect of competition on pricing, the frequency and severity of losses, including the effect of natural disasters on losses, general economic conditions, the general regulatory environment in those states in which an insurer operates, state regulation of premium rates and other factors such as changes in tax laws. The property and casualty industry has been highly cyclical, with periods of high premium rates and shortages of underwriting capacity followed by periods of severe price competition and excess capacity.
Acquisition costs related to unearned premiums, which consist of commissions, premium taxes and certain other underwriting costs, which vary directly with and are directly related to, the production of business, are deferred and amortized to income ratably over the terms of the policies. Deferred acquisition costs are limited to the amount which will remain after deducting from unearned premiums and anticipated investment income, the estimated losses and loss adjustment expenses and the servicing costs that will be incurred as the premiums are earned.
During October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), which is effective for fiscal years beginning after December 15, 1995. The Company accounts for stock-based compensation under the accounting methods prescribed by Accounting Principles Board (APB) Opinion No. 25, as allowed by SFAS No. 123. Disclosure of stock-based compensation determined in accordance with SFAS No. 123 is presented in Footnote 13. Accordingly, adoption of this pronouncement did not have a material effect on the financial statements of the Company.
The Company and its subsidiaries file a consolidated Federal income tax return.
The Insurance Companies are subject to the financial capacity guidelines established by the Office of the Commissioner of Insurance of their domicile states. The payment of dividends from statutory unassigned surplus of the Insurance Companies is restricted, subject to certain statutory limitations. For the year 1998, the direct insurance subsidiaries of the Company are permitted to pay approximately $67.0 million in dividends to the Company without the prior