The adverse loss reserve development in 1986 through 1993 is primarily attributable to business other than the Company's core southeastern business. Run-off on the claims of the previously mentioned workers' compensation and general liability exposures in Florida and California created substantial losses for the Company for the past 10 years. However, as a result of the previously mentioned reserve strengthening in the fourth quarter of 1994, the years ended December 31, 1996 and 1995 were not significantly impacted.
The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles (GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Policy acquisition costs attributable to property and casualty operations represent that portion of the cost of writing business that varies with and is primarily related to the production of business. Such costs are deferred and charged against income as the premiums are earned. The deferral of policy acquisition costs is subject to the application of recoverability tests to each primary line or source of business based on past and anticipated underwriting results. The deferred policy acquisition costs that are not recoverable from future policy revenues are expensed. The Company considers anticipated investment income in determining whether premium deficiencies exist.
Other interest income includes interest received on reinsurance balances withheld, agents' balances receivable, and balances due from the South Carolina Reinsurance Facility. Other income for 1995 includes a gain from the settlement of a case previously in litigation. Other income for 1994 includes a $0.6 million gain on the sale of a subsidiary.
Non-redeemable preferred stocks 166 - (7) 159 Common stocks 56 167 (5) 218
A reconciliation between GAAP net income (loss) and statutory net income (loss) of the property and casualty insurance subsidiaries is as follows for the year ended December 31 (in thousands):
Shares under options outstanding, beginning of year 861,175 51,150 64,175 Granted under 1987 Plan - 300,000 - Granted under 1996 Plan 1,473,800 555,000 - Exercised during year - (20,000) - Canceled or expired during year (6,300) (24,975) (13,025)
Also included in the 1996 Plan are provisions for the granting of incentive stock and restricted stock. While there were no grants of incentive stock during 1996 or 1995, 113,116 shares of restricted stock were granted in 1996. Of that amount, 8,702 shares were issued in 1996 and 104,414 shares are to be issued in 1997 when the restrictions lapse.
Accumulated postretirement benefit obligation: Active employees $ (37) $ (71) Current retirees (511) (522) Total (548) (593) Fair value of assets - - Accumulated postretirement benefit obligation in excess of fair value of assets (548) (593) Unrecognized transition obligation 502 593 Unrecognized net gain (53) (102)
Identifiable assets by business segments or combined segments represent assets directly identified with those operations and an allocable share of jointly used assets. For the year ended December 31, (in thousands):
The Company's property and casualty insurance run-off operations are involved in several types of reinsurance arrangements. Ceding reinsurance programs include quota share, pro-rata surplus and excess of loss. In its servicing carrier operation, premiums are ceded entirely to the applicable state's reinsurance facility.
A non-employee Director of the Company is also a member of the Board of Directors of Policy Management Systems Corporation ("PMSC"), which provided services to the Company prior to September 30, 1996. The Company paid data processing charges of $0.9 million in 1996 ($1.8 million in 1995 and $3.4 million in 1994.)