The following table sets forth selected financial data and other operating information. The selected financial data have been derived from the consolidated financial statements of Life Re Corporation and Subsidiaries ("Life Re" or the "Company") and should be read in conjunction with the consolidated financial statements and accompanying notes of Life Re and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere herein.
Approximately 30% of Life Re's policy revenues were generated from group accident and health and special risk reinsurance in 1996. This business generally is written on an annual basis through reinsurance facilities which are managed by managing general underwriters. Generally the risks are shared by several reinsurers on a quota share basis.
Net income increased by $19.6 million in 1996 to $54.2 million, or $3.89 per share, compared with $34.6 million, or $2.32 per share, in 1995 and $34.3 million, or $2.21 per share, in 1994. Included in these results were after-tax realized investment gains of $15.9 million and $2.4 million in 1996 and 1995, respectively. In March 1996, Life Re realized a gain of $13.5 million from the sale of its equity investment in Nacolah Holding Corporation ("Nacolah"), parent of The North American Company for Life and Health Insurance (see Note 5 of "Notes to Consolidated Financial Statements"). The Company utilized existing tax net operating loss carryforwards to offset the taxes otherwise payable in connection with the gain, and reversed an existing deferred tax valuation allowance, resulting in a tax benefit of $4.8 million. Net income in 1995 also included an extraordinary charge amounting to $1.0 million, which resulted from the write-off of unamortized loan costs associated with amending and restating the 1992 Credit Agreement (see Note 8 of "Notes to Consolidated Financial Statements").
Dividends paid to common shareholders reflect an annual rate of $.40 per share in 1996 and $.28 per share in 1995; effective in the first quarter of 1997, Life Re increased its annual dividend rate to $.52 per share.
Purchases and sales of fixed maturities increased substantially in 1996 and 1995 due primarily to restructuring of portfolios related to REALIC and the Transactions. The completion of these types of transactions generally produces a cash outlay for acquisitions and a net cash inflow upon reinsurance of insurance in force. During 1996, net cash of $59.7 million was generated by the receipt of cash as consideration for the assumption of insurance liabilities partially offset by the purchase price paid in acquiring companies. Financing cash flows include debt prepayments of $15.0 million in 1996 and $10.0 million in 1994. Withdrawals from annuity and interest sensitive life insurance contracts totaled $74.7 million in 1996 compared to $30.7 million in 1995 due to increased volumes of business resulting from the Transactions and an increase in the related rate of lapsation.
Insurance contracts: Fair values of insurance contracts are not required to be disclosed. The fair values of liabilities under all insurance contracts are taken into consideration in the Company's overall management of interest rate risk, which minimizes exposure to changing interest rates by seeking to match investment cash flows with amounts payable under insurance contracts.
Years Ended December 31, 1996 1995 Revenues $601,518 $490,008 Net income $ 55,988 $ 23,781 Earnings per share $ 4.02 $ 1.59
Also effective July 1, 1996, the Company entered into reinsurance agreements with affiliates of Aon and with Resource Life Insurance Company which provide for the Company to reinsure automobile credit insurance produced through RFC or its predecessor, a substantial portion of which is retroceded by the Company.
Realized gains 3,253 1,006 1,164 Realized losses (194) (464) (164) Writedowns (533) (869) (1,280) Net realized gains (losses) on calls, maturities and writedowns 2,526 (327) (280)