felanders/preprocessed huggingface dataset:
At December 31, 2017, we have made an estimate of the effects on our existing deferred tax balances and recognized a provisional amount of $12.5 million which is included as a component of the provision for income taxes. We remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is 21% for federal purposes. However, we are still analyzing certain aspects of the Act and refining our calculations which could potentially affect the measurement of these balances as permitted under SAB 118.
The following table summarizes our contractual obligations by period at December 31, 2017 (in thousands).
The resultant valuation allowance at December 31, 2017 was specifically related to capital losses that are deductible only to the extent of capital gains (which we do not currently anticipate) and state income taxes for specific entities in certain jurisdictions where we do not forecast future taxable income.
A valuation allowance for the deferred taxes is established based upon management’s estimate of whether it is more likely than not that the Company would not realize tax benefits in future periods to the full extent available. Changes in the valuation allowance are recognized in income during the period in which the circumstances that cause such a change in management’s estimate occur.
Cumulative paid losses and loss adjustment expenses, net of reinsurance, by accident year are as follows (in thousands).
On June 29, 2015, to finance the acquisition of the Titan Agencies, the Company borrowed the full amount under a $30 million Loan Agreement (the “Loan Agreement”) with Diamond Family Investments, LP, an affiliate of Gerald J. Ford, the Company’s controlling stockholder. The Loan Agreement provided a $30 million interest-only senior term loan facility, maturing in full on June 29, 2025. Commencing June 29, 2016, the Company has the right to prepay the loan in whole or in part, in cash, without premium or penalty, upon written notice to the lender. Amounts prepaid under the Loan Agreement may not be reborrowed. The term loan outstanding under the Loan Agreement bears interest at a rate of 8% per annum. The Loan Agreement contains certain representations, warranties and covenants. The Loan Agreement also contains customary events of default, including but not limited to: nonpayment; material inaccuracy of representations and warranties; violations of covenants; cross-default to material indebtedness; certain material judgments; certain bankruptcies and liquidations; invalidity of the loan documents and related events; and a change of control (as defined in the Loan Agreement). At December 31, 2017 the unamortized loan issuance costs of $0.2 million are being amortized to interest expense over the term of the loan.
Generated Return on Equity (ROE) of 18.5% that is competitive relative to our peers
Achieved overall underwriting profitability for the year of $479.8, with a total combined ratio of 91.4%
(1) Excluding impact of SFIS, which we sold on April 30, 2006, for all periods.
Expenses - The decrease in our expense ratio of 1.6 points in 2007 compared with 2006 reflects our ongoing focus on expense management. The increase in our expense ratio of 0.8 points in 2006 compared with 2005 was the result of higher agent bonus commissions and employee performance bonus expenses related to our improved underwriting results.
Net earned premiums decreased $2.9, or 1.1% in 2007 compared with 2006 and decreased $19.0, or 6.7%, in 2006 compared with 2005.
Our Surety segment provides surety bonds for construction and commercial businesses.
We collect money from reinsurers for losses we incur that are covered by reinsurance. We had $461.9 of reinsurance recoverables at December 31, 2007, net of an allowance of $35.9 that we estimated as uncollectible. We had $429.9 of reinsurance recoverables at December 31, 2006, net of an allowance of $12.9 that we estimated as uncollectible.
Under our working layer, our reinsurer reimburses us for the next $15.0 of the loss.
The terms of our commercial umbrella reinsurance in 2007 and 2008 are:
Asbestos - This table shows our loss and ALAE reserves for asbestos-related claims. The table excludes ULAE reserves, which were $13.5 at year-end 2007, $15.1 at year-end 2006 and $16.1 at year-end 2005:
In 2007, we reduced our estimates for prior years’ loss and LAE reserves by $123.6. This total decrease included:
$43.9 reduction in Surety reserves due to lower-than-expected number of claims
$17.9 reduction in personal auto reserves excluding catastrophes due to lower-than-expected severity
$13.3 reduction in commercial umbrella reserves due to lower-than-expected number of claims
Section B shows the cumulative amount we have actually paid through the years. For example:
Net gains on fixed maturities transactions decreased $14.1 in 2007 compared with 2006, and increased $12.3 in 2006 compared with 2005.
(1) We have commitments to invest a certain amount of capital in various limited partnerships and investment funds. Our total remaining commitments to these limited partnerships and investment funds was approximately $71.4 as of December 31, 2007. The actual timing and amount of payments could differ from our current estimates.
(2) Loss and LAE reserves represent our best estimate of losses from claims and related settlement costs. Because of the nature of insurance policies, there is typically no minimum contractual commitment associated with covered claims. Both the amounts and timing of such payments are estimates, and the inherent variability of resolving claims as well as changes in market conditions make the timing of cash outflows uncertain. Therefore, the ultimate amount and timing of Loss and LAE payments could differ significantly from our estimates.
Merger expense represents non-recurring items incurred to consummate the acquisitions and mergers which are accounted for as poolings-of interests. The amounts incurred during 1996 were due to the combination with LDG and included a compensatory stock grant of $24.0 million to certain key LDG
Effective December 30, 1997, the Company executed a $120.0 million revolving credit facility (the "Facility") with a group of banks. Borrowings under the Facility may be made by the Company until the expiration of the Facility on December 30, 1999, at which time all principal is due. Outstanding loans under the Facility bear interest at the Company's option at either the prime rate (8 1/2% at December 31, 1997) or at the current London Interbank Offering Rate ("LIBOR") (5.72% at December 31, 1997) plus 1%. The Facility is collateralized by the common stock of HC and AIC. The agreement contains restrictive covenants, including without limitation, minimum net worth requirements for the Company and certain subsidiaries, restrictions on certain extraordinary corporate actions, notice requirements for certain material occurences and required maintenance of specified financial ratios. The initial funding from the Facility was used, among other things, to refinance HCC's then existing outstanding loans.
Property and casualty insurance companies domiciled in the State of Texas are limited in the payment of dividends to their shareholders in any 12 month period, without the prior written consent of the Commissioner of Insurance, to the greater of net investment income or 10% of statutory policyholders' surplus. HC paid no dividends in 1997 to HCC. During 1998, HC's ordinary dividend capacity will be approximately $23.3 million.
Results of operations by segment for the three years ended December 31, 2003:
During 2003, policy income increased $2.8 million or 34%, to $10.8 million.
During 2003, fee and other income decreased by $0.4 million or 55% to $0.3 million. This decrease results from the termination of a marketing and administration contract in 2002.
During 2002, fee and other income decreased by $0.3 million or 27% to $0.7 million. This decrease results from the termination of a marketing and administration contract in 2002.
In 2003, interest credited increased $29.0 million to $71.6 million, of which $23.0 million related to equity indexed annuity products and the remaining $48.6 million related to all other interest sensitive annuity and life insurance products. Interest credited increased $22.0 million due to the impact of improved equity market performance on equity products. Interest credited increased $12.5 million due to a 33% increase in average interest sensitive liabilities of $381 million compared to 2002, partially offset by $5.5 million of reductions due to reduced crediting rates.
Amortization in 2002 increased by $11.6 million or 130%, to $20.5 million. This increase relates primarily to a $7.8 million acceleration of DAC amortization due to DAC unlocking and the emergence of gross profits from business sold in recent years.
Lease Income. Effective January 1, 2002, we entered into a lease agreement with Standard Life whereby Standard Life will lease approximately 43,000 square feet of our corporate headquarters in Indianapolis. During 2003, we received approximately $.8 million in lease income from Standard Life and we expect to receive the same amount in 2004. Also associated with this lease, Standard Life is responsible for its share of building maintenance expenses. During 2003, we received $.7 million in maintenance expenses for 2003 and 2002. We expect to receive $.3 million in maintenance expense in 2004.
These securities represent an undivided beneficial interest in the assets of SMAN Capital Trust I, a Delaware business trust organized to purchase our junior subordinated debentures and issue preferred securities. The assets of the Trust consist solely of the debentures which were purchased by the Trust with the proceeds of the offering. On August 9, 2001, the Trust completed a public offering of $20.7 million of its 10.25% preferred securities. The Trust used the proceeds of this offering to purchase our 10.25% junior subordinated debentures.
The following is a summary of operations by quarter for the years ended December 31, 2003 and 2002:
The Company is required to reduce its net deferred tax asset by a valuation allowance to the extent that, based on the weight of available evidence, it is “more likely than not” that any deferred tax asset will not be realized. Any increase in the related allowance account would decrease reported earnings on a dollar for dollar basis in the year in which such recognition was to occur. Because of the quasi-reorganization effected by the Company in 2003, any decrease in the valuation allowance will be a direct increase to additional paid in capital.
Commission income. Commission income increased 43.6% to $16.7 million for 2003 from $11.6 million for 2002. The increase was largely driven by increases in Pan Am’s placement of crop insurance which has been a focus of the Company since mid-2002. In 2003, approximately 50% of the total increase in commission income is due to increases in the crop line of business. The Company has made efforts to expand this line through producer recruitment and the 2003 acquisition of Roudebush & Avina Insurance Agency, Inc. (“R&A”), a Modesto, California agency specializing in crop insurance to commercial wine grape growers.
In 2003, approximately 96% of the Company’s agency commission revenue was generated in the state of California compared to 93% in 2002 and 89% in 2001. In 2003, approximately 43% of commission revenue was derived from the workers’ compensation line of business compared to 45% in 2002 and 52% in 2001.
Additionally, the Company’s agencies placed business with PICO. As of December 31, 2003 the agencies had commissions receivable from PICO totaling $481. The Company intends to pursue all available avenues for recovering such balances but given the nature of the receivable the Company has established a valuation allowance for the full amount of the outstanding balance. The expense associated with this allowance is included in discontinued operations for the year ended December 31, 2002.
Employees of the Company receive an annual year-end bonus. Amounts expensed under bonus programs related to discontinued operations were $209 for the year ended December 31, 2001.
American Skandia Life Assurance Corporation (the "Company") is a stock life insurance company domiciled in Connecticut with licenses in all 50 states. It is a wholly-owned subsidiary of American Skandia Investment Holding Corporation (the "Parent"), whose ultimate parent is Skandia Insurance Company Ltd., a Swedish company.
The Company markets its products to independent financial planners and broker-dealers through an internal field marketing staff. In addition, the Company markets through and in conjunction with financial institutions such as banks that are permitted directly, or through affiliates, to sell annuities and life insurance.
Consolidated Statements of Income for the Years ended December 31, 1998, 1997 and 1996 15
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of American Skandia Life Assurance Corporation at December 31, 1998 and 1997, and the consolidated results of its operations and cash flows for the years then ended in conformity with generally accepted accounting principles.
Acquisition costs amortized during the year (86,628) (52,507) (17,335) --------- --------- ---------
To comply with certain state insurance departments' requirements, the Company maintains cash, bonds and notes on deposit with various states. The carrying value of these deposits amounted to $3,747,000 and $3,757,000 as of December 31, 1998, and 1997, respectively. These deposits are required to be maintained for the protection of contractowners within the individual states.
The surplus note for $20,000,000 dated December 29, 1993 was converted to additional paid-in capital on December 31, 1998.
At December 31, 2017, our investments in fixed maturities, equity securities and certain other invested assets were held as available-for-sale and carried at fair value. The unrealized holding gains or losses, net of applicable deferred taxes, are included as a separate component of stockholders’ equity as accumulated other comprehensive income (loss) and as such are not included in the determination of net income.
As of July 1, 2017, the State Auto Group renewed its reinsurance coverage for E&S casualty and programs casualty risks. Under this reinsurance agreement, the State Auto Group is responsible for the first $2.0 million of losses. This reinsurance agreement provides 95.0% coverage up to $9.0 million excess of $2.0 million for any one insured, all policies, and 100.0% of $14.0 million excess of $11.0 million clash only coverage.
Long-Tail Business: For long-tail business, a material portion of claims may not be settled within five years. Reserve estimates for long-tail business use the same methods listed above along with several other methods as determined by the actuary. For example, premium-based methods may be used in developing ultimate loss estimates, including the Expected Loss Ratio, Bornhuetter-Ferguson, and Least-Squares techniques as described below.
Incurred Bornhuetter-Ferguson Method: The Incurred Bornhuetter-Ferguson Method is a weighted average of the Expected Loss Ratio Method and the Incurred Loss Development Method, using the percentage of losses reported as the weight. This method is particularly useful where there is a low volume of data in the current accident period, or where the experience is volatile. In general, this method produces estimates that are similar to the Incurred Loss Development Method.
The estimated cumulative impact that this additional, unexpected 5% increase in the loss cost trend would have on our results of operations over the lifetime of the underlying claims in workers’ compensation is an increase of $110.9 million on reserves, or a $87.6 million reduction to net income, assuming a tax rate of 21%. Inflation changes have much more impact on the longer tail commercial lines like workers’ compensation, and much less impact on the shorter tail personal lines’ reserves.
The following table sets forth the effect of the Company’s external reinsurance on its balance sheets at December 31, 2017 and 2016, prior to the reinsurance transaction with State Auto Mutual under the Pooling Arrangement, as discussed in Note 7a:
Share-based compensation expense recognized during 2017, 2016 and 2015 was $4.2 million, $3.7 million and $4.5 million, respectively. Share-based compensation is recognized as a component of loss and loss adjustment expense and acquisition and operating expense in a manner consistent with other employee compensation. As of December 31, 2017, there was $2.7 million of total unrecognized compensation cost related to compensation arrangements granted under the plans. The remaining cost is expected to be recognized over a period of 2.25 years.
(2) See note (2) to the consolidated financial statements in this Annual Report on Form 10-K
The Company's primary source of cash is internally generated funds. At March 31, 1998, the Company had working capital of $7,988,972 as compared to working capital of $7,607,725 at March 31, 1997.
Assessment of both Company and client information systems has been initiated. Outside companies such as vendors and banks are also being asked to verify their Year 2000 readiness. We expect these projects to be successfully completed during the upcoming fiscal year.
In June 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income, which becomes effective for the Company's Fiscal 1999 financial statements. SFAS No. 130 requires disclosure of comprehensive income, which consists of all changes in equity from nonshareholder sources. The adoption of the statement will be limited to form and content of the Company's disclosures and will not affect results. Currently, the Company does not have any comprehensive income type items.
Total revenues from continuing operations decreased $6.9 million (6.1%), from $112.5 million in fiscal 1997 to $105.6 million in fiscal 1998.
On September 8, 1998, the Company sold the stock of CHF for $17.75 million, comprised of $2 million in cash, a secured note for $13.25 million and an unsecured note for $2.5 million. The secured note is payable to the Company in four monthly installments of $.5 million each on the last day of September through December 1998 with the balance due in January 1999, with options to extend the final payment to March 1999, plus interest at the prime rate on short-term unsecured commercial borrowings. The unsecured note is payable to the Company in two annual installments of $.25 million with the balance due August 31, 2001, plus interest at 6% per annum. The security for the secured note includes a pledge of the stock of CHF and a limited personal guarantee of Louis J. Nicholas, a principal of the buyer. The proceeds from the sale of CHF have been and will be used to reduce debt and provide security for the Company's bank indebtedness.
A business combination with a target business will normally involve the transfer to the target business of the majority of our common stock, and the substitution by the target business of its own management and board of directors.
During the year ended April 30, 2008, the Company granted 10,000,000 warrants to Paragon Capital LP who holds majority interest in the Company. The Company received $10,000 cash as consideration for the warrants.
As of April 30, 2009, if Mr. Donenfeld and Paragon Capital, LP exercise the warrants that have been granted, they would be required to pay $425,000.
Due to the Company's significant liquid asset position and its consistent ability to generate cash flows from operations, management believes that its resources are sufficient to satisfy its anticipated cash requirements. The Company's strong financial position will enable management to react to future opportunities for acquisitions or other investments in support of the Company's continued growth and expansion.
Debt securities are carried at fair value and consist primarily of investments in obligations of the United States Treasury, various corporations and certain state and political subdivisions.
The fair value of notes receivable was $12.0 million and $9.7 million at December 31, 1995 and 1994, respectively, and was estimated based on the discounted value of the future cash flows using the current rates at which similar loans would be made to borrowers of similar credit quality.
The Company's principal profit sharing plan was amended effective January 1, 1995, to discontinue future contributions. The plan holds 1,675,000 and 1,844,000 shares of the Company's common stock, representing 15% and 16% of the total shares outstanding at December 31, 1995, and 1994, respectively. Contributions to the Company's profit sharing plans totaled $2.0 million and $3.0 million for 1994 and 1993, respectively.
For the year ended December 31, 1996, ceded reinsurance premiums totaled $1,287,308, representing approximately 16% of gross written premiums. For the year ended December 31, 1995, ceded reinsurance premiums totaled $717,741, representing approximately 15% of gross written premiums. The increase in ceded reinsurance premiums from the 1995 period to the 1996
The consolidated financial statements have been prepared in conformity with generally accepted accounting principles (GAAP). The consolidated financial statements include the accounts of Mountbatten, Inc. and its subsidiary, the Surety Company. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and related disclosures in the notes to the consolidated financial statements. Significant estimates used in determining subrogation recoverable, unearned premiums and unpaid claims and claim expenses are discussed throughout these notes. Actual results could differ from those estimates. All intercompany amounts are eliminated in consolidation.
December 31, 1996 December 31, 1995 ----------------- ----------------- Cost Fair Value Cost Fair Value ---- ---------- ---- ----------
The provision for income taxes differs from the amount of income tax determined by applying the applicable statutory federal income tax to pretax income from operations as a result of the following differences:
In July 1993, the Company issued a warrant to an underwriter to purchase 4,800 shares of common stock at an exercise price of $4.50 per share of common stock until July 1996. The exercise price then increases by $.45 per share until July 1999. The warrant expires July 2000.
Underwriting, acquisition and insurance expenses increased $1,189,000 from $5,509,000 in 1997 to $6,698,000 in 1998. Approximately $469,000 of the increase came from increases in variable expenses such as commissions and premiums taxes. The remaining increase was largely due to additional management fees for staff needed to expand MMIC market share and added costs from the conversion to a new insurance company operating system.
Based on the due diligence performed above, the overall success of businesses in dealing with Year 2000 issues, and no Year 2000 claims reported as of the date of this report, the Company believes it has little, if any, exposure to Year 2000 claims. The potential does still exist, however, in a worst case scenario for claims to be made by MMIC policyholders for Year 2000 failures they experience. In the event Year 2000 claims are made on policies written by MMIC, the Company believes these claims will be without merit and will vigorously defend its position. Depending on whether such claims are deemed to have merit and to the extent these claims are awarded compensation, such claims could have a material adverse effect on the Company's business, financial condition and results of operations.
During 1997, MMIHC formed Midwest Medical Solutions, Inc. (Solutions) as a business development company to strengthen and promote the independence and interdependencies of physicians, clinics and hospitals that MMIC serves. Business development opportunities being pursued include practice enhancement, strategic consulting and technology services and support.
The consolidated financial statements include the accounts of MMIHC and its wholly-owned subsidiaries, MMIC, Services and Solutions, which includes Solution's wholly-owned subsidiary, MedPower. All transactions between MMIHC and its subsidiaries have been eliminated in consolidation with the exception of the distribution of capital to MMIHC by MMIC in the form of dividends.
Acquisition costs are expensed when incurred. Due to the nature of its operations, MMIC does not pay significant amounts in commissions.
In 1999, MMIC instituted a policyholder dividend program which replaced the previous retrospective premium credit program for physicians.
The effect of reinsurance on premiums written and earned for 1999, 1998 and 1997 is as follows (in thousands):
Under Minnesota insurance statutes, MMIC is required to maintain statutory surplus in excess of ten times its per risk reinsurance retention limit. Since MMIC limited its retention to $750,000 on any single risk, the minimum statutory surplus level was $7,500,000 for 1999 and 1998.
The statutory underwriting expense ratio is calculated by dividing statutory underwriting expenses by net premiums written as opposed to the GAAP underwriting expense ratio, which uses net premiums earned as the denominator.
Although considerable variability is inherent in such estimates, we believe that the reserve for unpaid losses and loss adjustment expenses is adequate. However, there can be no assurance that losses will not exceed the reserve for unpaid losses and loss adjustment expenses, as future trends related to the frequency and severity of claims, and other factors, may develop differently than management has projected.
Investment income remained relatively unchanged from 2005 to 2006. However, the overall yield on our portfolio is down to 5.30% in 2006 compared with 5.43% in 2005. The decrease in the yield is the result of a higher allocation of the overall portfolio to tax-exempt securities. Offsetting the decrease in investment income in 2006 related to the lower yields produced by tax-exempt securities is the absence of any charges related to changes in the fair value of derivative securities. In 2005, the fair value of fixed-income securities that were determined to be derivatives decreased $1.1 million, resulting in a charge to investment income.
The unfavorable development in 2004 includes approximately $4.4 million incurred in connection with the commutation of reinsurance treaties with Gerling Global Reinsurance Corporation. The remaining $1.8 million of unfavorable development relates primarily to the run-off of the Company’s workers’ compensation line of business, partially offset by favorable development due to lower than projected paid claim severity, most notably in the Company’s Ohio and Michigan medical professional liability markets.
The reserve associated with DD&R coverage benefits is included as a component of unpaid loss and loss adjustment expense reserves for GAAP. Any change in the estimate of the liability associated with such coverage is charged or credited to the incurred loss and loss adjustment expenses in the GAAP Statement of Income. Statutory accounting principles require that the reserve for DD&R benefits be included as a component of unearned premium reserves, with any change in the estimated reserve treated as an adjustment to earned premium in the period of change.
Net income in the second quarter of 2005 includes a $41.6 million federal income tax benefit related to the reversal of a deferred tax valuation allowance.
Negotiated fee arrangements for an agreed period covering multiple insurance placements, the provision of risk management and/or other services are determined, contract by contract, on the basis of the relative fair value of the services completed and the services yet to be rendered. The Company establishes contract cancellation reserves where appropriate. At December 31, 2003, 2002 and 2001, such amounts were not material.
translated to US dollars at the relevant year-end exchange rate, and (ii) condensed statement of operations data has been translated to US dollars at the relevant average exchange rate.
The new credit agreement contains numerous operating and financial covenants, including, without limitation, requirements to maintain minimum ratios of consolidated EBITDA to consolidated net interest expense and maximum levels of net indebtedness in relation to consolidated EBITDA, in each case subject to certain adjustments. In addition, the credit agreement includes covenants relating to the delivery of financial statements, reports and notices, limitations on liens, limitations on sales and other disposals of assets, limitations on subsidiary indebtedness and other liabilities, limitations on sale and leaseback transactions, limitations on mergers and other fundamental changes, maintenance of property, maintenance of insurance, nature of business, compliance with applicable laws, maintenance of corporate existence and rights, use of proceeds, payment of taxes and access to information and properties.
The following schedules provide information concerning the Company's UK and US defined benefit pension plans as of and for the years ended December 31:
2001 Share Purchase and Option Plan-This plan, which was established on May 3, 2001, provides for the granting of time-based options and various other share-based grants at fair market value to employees of the Company. There are 15,000,000 shares available for grant under this plan. Options are exercisable on a variety of dates, including from the first, third, sixth or eighth anniversary of grant, although for certain options the exercisable date may accelerate depending on the achievement of certain performance goals. Unless terminated sooner by the board of directors, the 2001 Plan will expire 10 years after its adoption. That termination will not affect the validity of any grant outstanding at that date.
The purchase price allocation has yet to be finalized. None of the goodwill will be deductible for tax purposes.
The following table sets forth unaudited quarterly operating data for the most recent five quarters. Such data has been prepared substantially on the same basis as the audited financial statements appearing in our Form 10-K, and includes all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the data. However, our operating results have fluctuated significantly in the past and we expect that they will continue to fluctuate in the future. Future fluctuations may be a result of a variety of factors, including interest rates and general real estate economic conditions, seasonality, the timing of acquisitions, and our ability to control costs in response to declining order volume. Accordingly, we believe that period-to-period comparisons of our historical results may be neither meaningful nor predictive of our future performance. The quarterly data should be read together with the financial statements and accompanying notes appearing elsewhere in our Form 10-K.
Cash and cash equivalents include all highly liquid investments purchased with an initial maturity of three months or less.
Under FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, securities are generally classified as available-for-sale, held-to-maturity, or trading. The Company has classified its entire fixed maturity bonds and equity securities portfolios as available-for-sale. Securities classified as available-for-sale are reported at fair value in the consolidated statements of financial position with the related unrealized holding gains and losses on such available-for-sale securities reported as a separate component of equity after adjustments for related changes in deferred income taxes. The cost, gross unrealized gains and losses and fair value of fixed maturity bonds available-for-sale as of December 31, 2004 and 2003, are as follows ($ in thousands):
Includes reportable catastrophe losses, net of reinsurance and client profit sharing adjustments, and including reinstatement and other premiums. Reportable catastrophe losses include only individual catastrophic events that generated losses to us in excess of $5.0 million, pre-tax.
Consolidated net income attributable to common stockholders increased $127.1 million, or 54%, to $363.9 million for Twelve Months 2019 from $236.8 million for Twelve Months 2018. The increase was driven by $128.7 million of lower reportable catastrophes (reportable catastrophe losses, net of reinsurance and client profit sharing adjustments, and including reinstatement and other premiums) and expansion in our Global Lifestyle segment, as well as full-year contributions from
For Twelve Months 2019, net cash provided by operating activities totaled $1.41 billion; net cash used in investing activities totaled $619.8 million and net cash used in financing activities totaled $179.2 million. We had $1.87 billion in cash and cash equivalents as of December 31, 2019. Please see “ - Liquidity and Capital Resources” below for further details.
Corporate litigation losses represent estimates of losses incurred from actual or threatened litigation by claimants alleging improper handling of claims by the Company, which are commonly known as “bad faith” claims. Oftentimes, the onset of such litigation, subsequent discovery, settlement discussions, trial and appeal may occur several years after the date of the original claim. Because of the infrequent nature of such claims, each case is accrued based on its own merit based on Statement of Financial Accounting Standard (“SFAS”) No. 5 requirements that such accrual be probable and estimable. As such, no estimate is permissible under SFAS 5 for IBNR for threatened litigation yet to occur on accidents with dates prior to the balance sheet date. Consequently, the effect of setting accruals for such items likely will result in unfavorable reserve development in the reserve table below.
The 2006 combined ratio in the Commercial Vehicle business increased 12.0 points compared to 2005. The increase in the loss and LAE ratio is primarily attributable to the state of Florida. During 2006, Infinity incurred losses on a few extra-contractual claims and incurred two large losses. These items combined added 7.5 points to the combined ratio. In addition, Infinity strengthened overall loss and LAE reserves on existing Commercial Vehicle claims during 2006. The underwriting expense ratio declined in part due to a smaller percentage of the shared service costs being attributed to Commercial Vehicle.
American Data Source India Private Limited, a software development and administrative services subsidiary of GAFRI, rents space in Bangalore, India totaling approximately 28,000 square feet under leases expiring primarily in 2003.
To pay interest and principal on borrowings and other holding company costs, GAFRI (parent) and AAG Holding use cash and investments on hand, capital distributions from their principal subsidiary, Great American Life Insurance Company ("GALIC") and bank borrowings. Capital distributions from GAFRI's insurance subsidiaries are subject to restrictions relating to statutory surplus and earnings. The maximum amount of dividends payable by GALIC and GA Life of Puerto Rico in 2002 without prior regulatory approval is $38.8 million and $24.6 million, respectively. In 2001, GALIC paid $18.0 million in dividends and GAFRI made capital contributions to GALIC of $27.5 million.
The information required by the following Items will be included in GAFRI's definitive Proxy Statement for the 2002 Annual Meeting of Stockholders which will be filed with the Securities and Exchange Commission within 120 days of the Company's fiscal year-end and is herein incorporated by reference:
American Financial Group, Inc. ("AFG") and its subsidiaries owned 83% of GAFRI's Common Stock at December 31, 2001.
Derivatives included in GAFRI's balance sheet consist primarily of investments in common stock warrants (included in equity securities), the equity-based component of certain annuity products (included in annuity benefits accumulated) and call options (included in other assets) used to mitigate the risk imbedded in the equity-indexed annuity products.
Effective December 31, 2001, Loyal entered into a reinsurance treaty, whereby a substantial portion of its life insurance was ceded to an unaffiliated company.
The following is a comparison of the Partnership’s results of operations for the years ended December 31, 2009, and 2008.
The following table presents a comparison of the Partnership’s sources of net investment income attributable to the general partners’ controlling interest, and recognized and unrealized gain or (loss) attributable to the general partners’ controlling interests or losses attributable to the general partners’ controlling interests by investment type for the years ended December 31, 2009 and 2008.
Net investment income attributable to the general partners’ controlling interest for the Partnership’s retail properties was approximately $4.4 million for the year ended December 31, 2009, a decrease of approximately $1.6 million from the prior year. The decrease was primarily due to (a) loss of operating income from the Roswell, Georgia retail property sold on May 1, 2009; (b) increased vacancy and reduced rents at the Hampton, Virginia retail property; and (d) a one-time occurrence related to bad debt expense at the retail property in Dunn, North Carolina. Partially offsetting these losses was an increase in net investment income attributable to the general partners’ controlling interest at the property in Ocean City, Maryland due to completion of renovation and increased occupancy over the course of the year.
Our combined ratio increased by 5.3 points to 108.8% in 2018, compared to 103.5% in 2017. The loss ratio component increased 5.3 points in 2018 over the same period last year mainly due to unfavorable development on prior years catastrophe losses. The commission and brokerage ratio components remained flat at 21.9% in 2018 compared to 22.0% in 2017. The other underwriting expense ratios also remained flat at 5.4% in 2018 compared to 5.3% in 2017.
Shareholders’ equity decreased by $465.4 million to $7,903.8 million at December 31, 2018 from $8,369.2 million at December 31, 2017, principally as a result of $228.2 million of unrealized depreciation on investments net of tax, $216.2 million of shareholder dividends, $76.8 million of net foreign currency translation adjustments and the repurchase of 0.3 million common shares for $75.3 million, partially offset by $103.6 million of net income, $23.0 million of share-based compensation transactions and $4.5 million of net benefit plan obligation adjustments, net of tax.
Consolidation. In February 2015, the FASB issued ASU 2015-02, authoritative guidance regarding consolidation of reporting entities. The new guidance focuses on the required evaluation of whether certain legal entities should be consolidated. This guidance is effective for annual and interim reporting periods beginning after December 15, 2015. Based upon this guidance, the Company has determined that the separate segregated accounts associated with Mt. Logan Re should not be consolidated. The Company implemented the guidance effective January 1, 2016.
Income tax expense decreased from $10.9 million in 1999 to zero in 2000. Income tax expense in 1999 primarily represents a charge to earnings to establish a deferred tax asset valuation allowance that was equal to the entire balance of the Company's net deferred tax assets. The Company recorded no income tax expense or benefit in 2000 due to the valuation allowance against its deferred tax assets. This valuation allowance was established due to uncertainty about whether the deferred tax assets will be realized in the future, primarily due to operating losses incurred by the Company in 1998, 1999 and 2000 and the existence of significant net operating loss carry-forwards. See Note 9 to the accompanying financial statements for more information.
In December 1999, the United States Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements." SAB 101 provides guidance on applying generally accepted accounting principles to revenue recognition issues in financial statements. SAB 101 was effective for the Company beginning in the fourth quarter of the year ending December 31, 2000. The adoption of SAB 101 had no significant effect on the Company's financial statements.
Deferred policy acquisition costs decreased 21% in 2002 compared to 2001. Deferred policy acquisition costs, which vary with, and are primarily related to producing new business, are referred to as ("DAC"). DAC consists primarily of commissions and certain costs of policy issuance and underwriting, net of fees charged to the policy in excess of ultimate fees charged. To the extent these costs are recoverable from future profits, the Company defers these costs and amortizes them with interest in relation to the present value of expected gross profits from the contracts, discounted using the interest rate credited by the policy. The Company had $69,000 in policy acquisition costs deferred, $55,000 in interest accretion and $769,432 in amortization in 2002, and had $167,000 in policy acquisition costs deferred, $76,000 in interest accretion and $1,083,577 in amortization in 2001.
Total shareholders' equity, end of year $ 48,322,867 $ 44,773,614 $ 46,714,433 ============ ============= ============
J. POLICY AND CONTRACT CLAIMS - Policy and contract claims include provisions for reported claims in process of settlement, valued in accordance with the terms of the policies and contracts, as well as provisions for claims incurred and unreported based on prior experience of the Company. Incurred but not reported claims were $908,006 and $900,894 as of December 31, 2002 and 2001, respectively.
U. USE OF ESTIMATES - In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
In April 2001, UTG completed the purchase of 559,440 shares of UTG common stock from Larry E. Ryherd and family pursuant to the Ryherd Purchase Agreement in exchange for cash and a five-year promissory note of UTG in the principal amount of $3,527,494. During 2002, UTG made a principal reduction of $705,499 on the Ryherd note. Subsequent to year-end 2002 an additional principal reduction of $705,499 was made on the Ryherd note.
Unrealized holding gains during period $ 1,222,583 $ (427,904) $ 794,679 Less: reclassification adjustment for gains realized in net income (340,341) (221,222) 119,119 ---------------- ----------------- --------------- Net unrealized gains 882,242 (308,785) 573,457 ---------------- ----------------- --------------- Other comprehensive income $ 882,242 $ (308,785) $ 573,457 ================ ================= ===============
Estimated fair values were derived from the durations of the Company’s annuity account balances. While these estimated fair values generally provide an indication of how sensitive the fair values of the Company’s annuity account balances are to changes in interest rates, they do not represent management’s view of future market changes, and actual market results may differ from these estimates.
The amortized cost and estimated market value of fixed maturities at December 31, 2004, by expected maturity, are shown below. Expected maturities are derived from rates of prepayment that may differ from actual rates of prepayment.
At December 31, 2004 and 2003, the Company had bonds which were rated less than investment grade of $38.4 million and $33.4 million, respectively, having an amortized cost of $35.4 million and $31.8 million, respectively. Approximately $80.5 million of bonds are not publicly traded.
The Company's effective income tax rate varied from the maximum federal income tax rate as follows:
The Annuities segment manufactures, sells, and supports fixed annuity products. These products are primarily sold through stockbrokers, but are also sold through financial institutions and the Life Marketing segment’s sales force.
INVESTMENT INCOME The Company utilizes a conservative investment philosophy. No equities, derivatives or nontraditional securities are held in the Company's investment portfolio, substantially all of which is investment grade. Net investment income was $45.9 million in 2001 compared to $50.3 million in 2000 and $63.1 million in 1999. Average invested assets decreased 8.0% in 2001 from the prior year and 14.6% in 2000 compared to an increase of 0.4% in 1999. The decreases in 2001 and 2000 were primarily due to the sale of investments to cover incurred loss costs, the acquisitions of property and equipment and the payment of dividends to shareholders. The payoff of the $67.5 million bank loan also contributed to the 2000 decrease. The average annual pre-tax yield on invested assets was 5.1% in 2001, 5.2% in 2000 and 5.5% in 1999. The average annual after-tax yield on invested assets was 4.5% in 2001, 4.6% in 2000 and 4.3% in 1999.
Unpaid Losses & Loss Adjustment Expenses. The Company is required to estimate its liability for loss and loss adjustment expenses. The estimated liability for unpaid losses and loss adjustment expenses recorded on the Company's balance sheet at the end of any given period should be adequate to cover all future payments required to be made on account of insured events that occurred on or before the balance sheet date. However, because the future cannot be predicted with certainty, the actual future payments are usually different from the previously recorded estimates, and sometimes the differences may be material. These differences are included in the Company's results of operations in the future periods in which they become known.
Homeowner and Earthquake Lines in Runoff and All Other. The underwriting loss for the homeowner and earthquake lines increased by $74.9 million in 2001 compared to 2000 due to greater losses and loss adjustment expenses. See Notes 9 and 15. The $10.4 million decrease in the underwriting loss in 2000 compared to 1999 was primarily attributable to a $6.75 million charge taken in the second quarter of 1999 in connection with a settlement reached in April 1999 with the CDOI.
The principal reasons for the decrease in net income were a non-recurring adjustment in the accrual for estimated due premiums, a strengthening of claim reserves and significantly higher legal and administrative fees associated with proposed transactions involving the acquisition of the Registrant's stock.
Notwithstanding this adjustment, Arista's gross premiums increased from approximately $24.2 million in 1993 to $26.2 million in 1994, an 8.1% change.
At present, management considers Arista's statutory capital and surplus of approximately $6.4 million at December 31, 1995 sufficient to support its current annual premium level, as well as providing capacity for additional annual premiums of approximately $12.0 million pursuant to an infusion of $3.0 million through a surplus note transaction (See Note 4 to the accompanying Consolidated Financial Statements).