felanders/preprocessed huggingface dataset:
The Financial Services segment's savings business experienced strong growth in 1999. The number of new participants in 1999 was 214,100 compared to 151,300 in 1998 (129,200 in 1997), bringing the total lives under administration to 806,700 in 1999 and 642,500 in 1998.
The Company has a deferred compensation plan providing key executives with the opportunity to participate in an unfunded, deferred compensation program. Under the program, participants may defer base compensation and bonuses, and earn interest on their deferred amounts. The program is not qualified under Section 401 of the Internal Revenue Code. The total of participant deferrals, which is reflected in other liabilities, was $17,367, $16,102, and $13,952 for years ending December 31, 1999, 1998, and 1997, respectively. The participant deferrals earn interest at a rate based on the average ten-year composite government securities rate plus 1.5%. The interest expense related to the plan for the years ending December 31, 1999, 1998, and 1997 were $1,231, $1,185, and $1,019, respectively.
The Company also provides a supplemental executive retirement plan (SERP) to certain key executives. This plan provides key executives with certain benefits upon retirement, disability, or death based upon total compensation. The Company has purchased individual life insurance policies with respect to each employee covered by this plan. The Company is the owner and beneficiary of the insurance contracts. The incremental expense for this plan for 1999, 1998, and 1997 was $3,002, $2,840, and $2,531, respectively. The total liability of $14,608, $11,323, and $8,288 as of December 31, 1999, 1998, and 1997 is included in other liabilities.
The following is a reconciliation between the federal income tax rate and the Company's effective rate:
Excluding the effect of the 1999 and 1997 tax items discussed above, the effective tax rate for 1999 and 1997 was 35.2% and 36.4%.
As of December 31, 2014, the holding company had $136.6 million of cash and investments. In 2015, our insurance subsidiaries may pay us up to $68.1 million in ordinary dividends without prior regulatory approval. Rating agency capital requirements, among other factors, will be considered when determining the actual amount of dividends paid in 2015.
The following table presents the credit rating and fair value of our commercial mortgage-backed securities at December 31, 2014, by deal origination year ($ in thousands):
Gross written premium grew 1.6% during 2014. We implemented rate revisions in various states with an overall rate increase of 6.4% during the year. Excluding the effect of rate changes in California and Florida, our largest states, the overall rate increase was 5.7%. Policies in force at December 31, 2014, declined 4.3% compared with 2013. Gross written premium grew despite the decline in policies in force due to growth in Florida, which has a higher average premium per policy than our other states.
Gross written premium grew 6.8% during 2013. We implemented rate revisions in various states with an overall rate increase of 6.9% during the year. Excluding the effect of rate changes in California and Florida, our largest states, the overall rate increase was 10.7%. Policies in force at December 31, 2013, declined 4.0% compared with 2012. Gross written premium grew
Losses from catastrophes were $2.5 million for the twelve months ended December 31, 2014, compared to $1.8 million for 2013.
The Company had unearned premium reserves of $84,084,870 as of December 31, 1996, and $72,752,532 as of December 31, 1995. These amounts are attributable to the long-term nature of the contracts sold. Such contracts may extend for up to 72 months from date of issue. In addition, the risk of loss to the Company under the contract arises primarily after the underlying manufacturer's warranty expires. For new vehicles, the warranty generally covers 36 months or 36,000 miles. For used vehicles, the applicable warranty period depends on the unexpired portion of the original manufacturer's warranty at the time of purchase of the vehicle. Because the Company has little risk of loss prior to expiration of the underlying manufacturer's warranty, most premium is not recognized as earned until such expiration. Since very little premium is recognized as earned until the expiration of the underlying warranty, most of the premium written in any year is recorded as unearned.
LIABILITIES Unearned premiums $ 84,084,870 $72,752,532 Loss reserves 4,284,304 3,480,334 Accrued liabilities 110,416 117,447 ------------ -----------
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure 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.
For the fiscal year ended May 31, 2006, the Company reported a loss from continuing operations and net loss of $181,000, or $0.03 loss per share (basic and diluted). During the comparable period of the prior fiscal year, the Company reported a loss from continuing operations and net loss of $268,000, or $0.05 loss per share (basic and diluted).
Accrued claims payable at May 31, 2006, 2005 and 2004 comprises approximately $1.1 million, $1.8 million and $1.6 million, respectively, of submitted and approved claims which had not yet been paid, and $1.7 million, $1.9 million and $2.0 million for IBNR claims, respectively. Changes in prior year claims expense were primarily due to changes in utilization patterns and changes in claim submission timeframes by providers. Management considers these changes in claims expenses to be immaterial when compared to the total claims expenses incurred in prior years.
The Woodland Hills facility, with approximately 410,000 square feet, is leased pursuant to two leases, the earlier of which expires in December 2001 with respect to 300,000 square feet. The Company has a right to renew each of such leases. The aggregate rent for the two leases for 1999 was approximately $11.1 million. The Company's principal executive offices are located in the Woodland Hills facility, as are much of the Company's California HMO operations.
The information required by this Item is set forth in the Company's Annual Report to Stockholders on pages 15 through 23, and is incorporated herein by reference and made a part hereof.
At December 31, 2012, the Company had $13,321,000 of restricted cash at Risk Solutions. This amount is directly offset by corresponding liabilities for Premium and Claim Funds Payable of $13,321,000. This asset, in part, represents the premium that is remitted by the insureds and is collected by Risk Solutions on behalf of the insurance carriers they represent. Each month the premium is remitted to the insurance carriers by Risk Solutions. Until such remittance is made the collected premium is carried as an asset on the balance sheet with a corresponding payable to each insurance carrier. In addition to the premium being held at Risk Solutions, Risk Solutions is in possession of cash to pay claims. The cash is deposited by each insurance carrier into a bank account that Risk Solutions can access to reimburse claims in a timely manner. The cash is used by Risk Solutions to pay claims on behalf of the insurance carriers they represent.
Since November 2002, AMIC has been affiliated with Independence Holding Company ("IHC"), which owned 78.6% of AMIC's stock as of December 31, 2012. The senior management of IHC provides direction to the Company through a service agreement between the Company and IHC. IHC has also entered into reinsurance treaties through its wholly owned subsidiaries, Standard Security Life Insurance Company of New York (“Standard Security Life”) and Madison National Life Insurance Company, Inc. (“Madison National Life”), whereby the Company assumes reinsurance premiums from the following lines of business: medical stop-loss, New York statutory disability (“DBL”), short-term medical, long-term disability (“LTD”) and group major medical.
The Company's intangible assets with definite lives, consisting of broker/third party relationships and marketing agreements, are amortized over the expected life of the assets (see Note 3 of Notes to Consolidated Financial Statements).
In April 2011, the FASB issued guidance that amends existing standards with regards to transfers of financial assets under repurchase and other agreements that entitle and obligate the transferor to repurchase or redeem the assets prior to maturity. Specifically, with respect to assessing effective control in such agreements, the criteria that the transferor must have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even upon the transferee's default, has been eliminated; as has the corresponding criterion calling for the transferor to have obtained cash or other sufficient collateral to purchase replacement assets from a third party, which was required to demonstrate such ability. This guidance was effective for the first interim or annual period beginning after December 15, 2011. The adoption of this guidance, effective January 1, 2012, did not have a material effect on the Company’s consolidated financial statements.
twelve months ended December 31, 2012 and 2011 was $0 and $3.02 per share, respectively. The assumptions set forth in the table below were used to value the stock options granted during the twelve months ended December 31, 2012 and 2011:
(i)Includes the dilutive effects of outstanding options and warrants to acquire Common Shares.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
Folksamerica reported comprehensive net income of $106.3 million for 2002, consisting of $75.2 million of comprehensive net income from investment results, a net underwriting gain of $3.9 million and $27.2 million from the recognition of net deferred credits. Folksamerica reported a comprehensive net loss of $25.5 million for 2001, which consisted of a net underwriting loss of $86.4 million, offset by $33.2 million in comprehensive net income from investment results and $27.7 million from the recognition of net deferred credits. Folksamerica reported comprehensive net income of $24.4 million for 2000, which consisted of $64.7 million in comprehensive net income from investment results and $19.3 million from the recognition of net deferred credits, offset by a net underwriting loss of $59.6 million.
after-tax comprehensive net income from its other operations for the years ended December 31, 2002, 2001 and 2000 follows:
The income tax provision related to pretax earnings for 2002, 2001 and 2000 represents an effective tax rate of 9.8%, 41.9% and 12.0%, respectively. White Mountains' effective tax rate for 2002 and 2000 was lower than the U.S. statuory rate of 35% primarily from income generated in jurisdictions other than the United States. White Mountains' effective tax rate for 2001 (resulting from a net loss reported during the period) was greater than the U.S. statutory rate of 35% primarily as a result of the effects of deferred credit amortization.
In July and August of 2002, White Mountains received federal tax refunds totalling $166.7 million representing accelerated recoveries of carryback losses from 2001 under the Job Creation and Worker Assistance Act of 2002 (the "Economic Stimulus Bill").
In December 2001, White Mountains filed a "shelf" registration statement with the SEC for offerings of up to $1.0 billion of various types of debt and preferred equity securities. To date, White Mountains has not offered any securities for sale pursuant to this shelf registration.
During 2001, the Company repurchased and retired 6,000 Common Shares for $1.9 million in cash.
The source of revenues for the Company are premiums written on nonstandard personal auto risks, net investment income from the investment portfolio of the Company, net realized gains from the sale of investments, fee income from insurance agency operations and gains from a reinsurance transaction entered into in 2001.
In certain circumstances, Section 382 of the Internal Revenue Code may apply to materially limit the amount of the Company’s taxable income that may be offset in a tax year by the Company’s net operating losses carried forward from prior years (the “§ 382 Limitation”). The annual § 382 Limitation generally is an amount equal to the value of the Company (immediately before an “ownership change”) multiplied by the long-term tax-exempt rate for the month in which the change occurs (e.g., 4.58% if the ownership change occurred in April 2003). This annual limitation would apply to all years to which the net operating losses can be carried forward.
With regard to long term liquidity, the average duration of the investment portfolio is approximately 1.2 years. The fair value of the fixed maturity portfolio at December 31, 2003 was $2,962,335 above amortized cost, before taxes. Unrealized losses were not material at December 31, 2003. (See Note 2 of Notes to the Consolidated Financial Statements.) Various insurance departments of states in which the Company operates require the deposit of funds to protect policyholders within those states. At December 31, 2003 and 2002, the balance on deposit for the benefit of such policyholders totaled $11,902,432 and $14,185,018, respectively.
Deferred Federal income taxes is comprised of the taxes on the unrealized gains of the bonds available for sale. The unrealized gains have been recorded net of taxes in “Accumulated other comprehensive income.”
In assessing the realization of its deferred tax assets, management considers whether it is more likely than not that a portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon management’s consideration of expected reversal of deferred tax liabilities and projected future taxable income and FASB statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”, management believes it is appropriate to continue to fully reserve the deferred tax assets as of December 31, 2003.
During the first quarter 2006 Merrill Lynch Life liquidated its trading portfolio.
Merrill Lynch Life and Merrill Lynch & Co. are parties to a “keepwell” agreement. This agreement obligates Merrill Lynch & Co. to maintain a level of capital in Merrill Lynch Life in excess of minimum regulatory requirements.
Total investments increased to $162.7 million at December 31, 1998 from $148.9 million at December 31, 1997. The increase was primarily due to amounts invested from positive cash flows generated from operations and increases in market values of fixed income securities.
Interest Rate Risk Interest rate risk is the risk that the Company will incur economic losses due to adverse changes in interest rates, as the Company invests substantial funds in interest-sensitive assets.
The NAIC has a standard for assessing the solvency of insurance companies, which is referred to as risk-based capital ("RBC"). The requirement consists of a formula for determining each insurer's RBC and a model law specifying regulatory actions if an insurer's RBC falls below specified levels. The RBC formula for life insurance companies establishes capital requirements relating to insurance, business, asset and interest rate risks. At December 31, 1998, RBC for the Company was significantly above levels that would require regulatory actions.
The Corporation presently believes that it will resolve the Year 2000 issue in a timely manner. Year 2000 costs are expensed as incurred, therefore the majority of expenses related to this project have been incurred as of December 31, 1998. The Corporation estimates that approximately $125 million in costs will be incurred between the years of 1995 and 2000. These amounts include costs directly related to fixing Year 2000 issues, such as modifying software and hiring Year 2000 solution providers. These amounts also include costs to replace certain non-compliant systems which would not have been otherwise replaced. A portion of these costs will be incurred by the Company on a pro rata basis of usage of the computer-related systems and non-IT, as compared to the usage of all entities which share these services with the Corporation. These amounts are not expected to be material to the results of operations of the Company.
Shareholder's Equity Common stock, $100 par value, 30,000 shares authorized, 25,000 issued and outstanding 2,500 2,500 Additional capital paid-in 116,750 116,750 Retained income 34,622 27,952
Total shareholder's equity $ 159,778 $ 151,334 $ 142,161 ========= ========= =========
Fair values The amortized cost, gross unrealized gains and losses, and fair value for fixed income securities are as follows:
1998 1997 1996 ---- ---- ---- Statutory federal income tax rate 35.0% 35.0% 35.0% Other .7 .3 .1 ----- ----- ----- Effective income tax rate 35.7% 35.3% 35.1% ===== ===== =====
/s/ Dean M. Way - ------------------- Dean M. Way Director March 30, 1999
Our sales and financial results over the last several years have been affected by demographic, industry and market trends. The baby boom generation has begun to enter its prime savings years. Americans generally have begun to rely less on defined benefit retirement plans, social security and other government programs to meet their postretirement financial needs. Product preferences have shifted between fixed and variable options depending on market and economic conditions. Our balanced product portfolio including universal life, variable life and variable annuity products is well positioned to meet this shifting demand.
In September 2005, the Accounting Standards Executive Committee, or AcSEC, of the American Institute of Certified Public Accountants, or AICPA, issued Statement of Position 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts, or SOP 05-1. SOP 05-1 provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in Statement of Financial Accounting Standards No. 97, or SFAS No. 97. The SOP defines an internal replacement as a modification in product benefits, features, rights, or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. This SOP is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. We will adopt SOP 05-1 on January 1, 2007. We are currently assessing the impact of SOP 05-1 on our financial position and results of operations.
Other-Than-Temporary Impairments: FASB Staff Position Nos. FAS 115-1 and FAS 124-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, or FSP 115-1, is effective for reporting periods beginning after December 15, 2005. Earlier application is permitted. FSP 115-1 provides guidance as to the determination of other-than-temporarily impaired securities and requires certain financial disclosures with respect to unrealized losses. These accounting and disclosure requirements largely codify our existing practices as to other-than-temporarily impaired securities and thus, does not have a material effect on our financial statements.
the purpose of assessing potential future impairments of goodwill. We recognized $102 thousand in goodwill amortization during 2001 prior to our adoption of SFAS 142.
Total net unrealized losses on debt securities were $20.1 million (unrealized losses of $44.2 million less unrealized gains of $24.1 million).
Net realized investment gains improved to a gain of $768 thousand in 2003 from a loss of $16,167 thousand in 2002 due primarily to lower debt security impairments and higher transaction gains on both debt and equity securities.
Liabilities for the Company’s individual term life insurance policies include amounts for unpaid claims and future policy benefits. Liabilities for unpaid claims include estimates of amounts to fully settle known reported claims as well as claims related to insured events that the Company estimates have been incurred but have not yet been reported. Liabilities for future policy benefits are calculated by estimating the present value of future policy benefits to be paid to or on behalf of policyholders less the estimated present value of future net premiums. The methods used in determining the liability for unpaid claims and future policy benefits are standard actuarial methods recognized by the American Academy of Actuaries. For the tabular reserves, discount rates are based on the Company’s earned investment yield and the mortality tables used are standard industry tables modified to reflect the Company’s actual experience when appropriate. Future policy benefits are computed at amounts that, with additions from estimated premiums to be received and with interest on such reserves compounded annually at certain assumed rates, are expected to be sufficient to meet the Company’s policy obligations at their maturities or in the event of an insured’s death. Changes in or deviations from the assumptions used for mortality, expected future premiums and interest can significantly affect the Company’s reserve levels and related future operations and, as such, provisions for adverse deviation are built into the long-tailed liability assumptions.
During 2002, other-than-temporary impairments on ABS were primarily driven by collateral deterioration associated with securities backed by aircraft lease receivables and high yield debt. Impairments recognized on corporate fixed maturities were concentrated in the technology and communications sector and were primarily driven by weakening economic conditions and operating fundamentals in the sector. During 2002, there were 3 securities for which a significant (e.g. $15 or greater) other-than-temporary impairment was recorded which are discussed in more detail below.
The Company has established investment credit policies that focus on the credit quality of obligors and counterparties, limit credit concentrations, encourage diversification and require frequent creditworthiness reviews. Investment activity, including setting of policy and defining acceptable risk levels, is subject to regular review and approval by senior management and by the Finance Committee of The Hartford’s Board of Directors.
supporting the fixed liabilities are monitored and managed within rigorous duration guidelines using scenario simulation techniques, and are evaluated on an annual basis, in compliance with regulatory requirements.
The following table summarizes Hartford Life Insurance Company’s significant United States member companies’ financial ratings from the major independent rating organizations as of February 25, 2005:
For further information on other contingencies, see Note 11 of Notes to Consolidated Financial Statements
The Company’s principal executive office is located in Irvine, California in approximately 13,000 square feet of leased space. The lease expires in January 2020. The Company leases approximately 81 branch offices in 43 states, which range in size from 200 square feet up to 59,000 square feet. The lease terms for the branch offices range from monthly to 10 years and expire at various dates through 2028. The Company owns a 32,000 square foot building located in Milwaukie, Oregon. The Company believes that its facilities are adequate for its current needs and that suitable additional space will be available as required.
In 1993 the Company changed its method of accounting for certain investments in debt and equity securities. See Note 1 of the Notes to Consolidated Financial Statements included in Item 8.
coverage. Generally, reinsurance coverage for property risks is on excess of loss, per risk basis. Liability coverages are generally reinsured on a quota share basis in excess of CNA's retained risk. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability.
Investment gains of $1,135.2, $322.4 and $1,020.7 and losses of $369.0, $760.3 and $161.6 were realized on securities available for sale for the years ended December 31, 1995, 1994 and 1993, respectively.
On August 10, 1995, to take advantage of favorable interest rate spreads, CNA established a commercial paper program borrowing $500 from investors to replace a like amount of bank financing. The weighted average yield on commercial paper at December 31, 1995 was 6.1%. The commercial paper borrowings are classified as long-term debt as $500 of the committed Bank Facility will support the commercial paper program. Standard and Poor's and Moody's issued short-term debt ratings of A2 and P2, respectively, for CNA's commercial paper program.
In addition, Casualty and Pacific Indemnity have entered into an agreement (the "Casualty-Pacific Agreement") which sets forth the parties' agreement with respect to the means for allocating among themselves responsibility for payments arising out of the Fibreboard insurance policies whether or not the Global Settlement or the Trilateral Agreement is finally approved. Under the Casualty-Pacific Agreement, Casualty and Pacific Indemnity have agreed to pay 64.71% and 35.29%, respectively, of the $1,525 to be used to satisfy the claims of future claimants, plus certain expenses. The $1,525 has already
Lorillard's principal products are marketed under the brand names of Newport, Kent and True with substantially all of its sales in the United States.
The Company performs a quarterly analysis of its investment portfolio to determine if declines in market value are other-than-temporary. Further information regarding its detailed analysis and factors considered in establishing an other-than-temporary impairment on an investment is discussed within Note 5 - Investments, to the consolidated financial statements.
On April 21, 2016, KFSI completed the acquisition of Argo Management Group LLC (“Argo”). Argo’s primary business is to act as the Managing Member of Argo Holdings Fund I, LLC, an investment fund in which the Company has committed to invest $0.5 million. The managing member of Argo, Mr. John T. Fitzgerald, was appointed as President and Chief Executive Officer of KFSI on September 5, 2018 and has served on its board of directors since April 21, 2016. As of December 31, 2020, the Company has invested $0.3 million in Argo.
On August 20, 2019, the Company entered into a $7.0 million Loan Agreement and a related Commercial Note (collectively, the “Loan Agreement”) with Hancock Bank, a trade name for Whitney Bank (n/k/a Hancock Whitney Bank) (the “Lender”). The Loan Agreement provided for a non-revolving line of credit of $7.0 million.
As of December 31, 2020, Fundamental Global Investors, LLC, a privately owned investment management company, and its affiliates, or FGI, beneficially owned approximately 61% of our outstanding shares of common stock. D. Kyle Cerminara, Chairman of our Board of Directors, serves as Chief Executive Officer, Co-Founder and Partner of FGI.
All assets of our investment company subsidiary have been included in the Company’s consolidated balance sheet as of December 31, 2020 as listed in the table below. The Fund reported no liabilities as of either date presented. The assets of the Fund may only be used to settle its obligations. The Company’s maximum exposure to loss as a result of its involvement with the Fund is $5.0 million as of December 31, 2020.
As of December 31, 2020, the only awards outstanding were restricted stock units issued under both of the 2014 and 2018 Plans.
The following table summarizes RSU activity for the years ended December 31, 2020 and 2019.
Net income per share on a diluted basis, which reflects the two-for-one stock split effective on October 28, 1997, increased 52.1% to $1.26 for 1997 compared to $0.83 per share for 1996. Operating earnings per share were $1.26 for 1997 compared to $0.84 for 1996, an increase of 50.3%. Operating earnings exclude net realized investment gains of approximately $34,000 in 1997 and net realized investment losses of approximately $162,000 in 1996.
The Company intends to invest the proceeds of the note offering in accordance with its investment policy. To date, the Company's investments have emphasized tax-preferred securities. Because of restrictions imposed under federal income tax laws, investment by the Company of proceeds of the note offering must be made principally in taxable securities. Through investment of a portion of the net proceeds of the note offering, the Company plans to increase its investments in higher yielding non-investment grade securities to approximately 10% of its consolidated portfolio, up from approximately 3% at December 31, 1997.
The following table sets forth for each period indicated the volume and gross dollar amount of insurance claims received and fees recognized for each of the Company's two principal accounts receivable management services.
On December 28, 1999, the Company executed a $500,000 recourse factoring agreement which may be terminated by either party with ten days notice. The agreement is secured by all of the Company's non-factored accounts receivable and is personally guaranteed by Peter Seaman, Chairman and CEO and Ken Culver, Vice President and Chief Financial Officer. Other significant terms of the factoring agreement include recourse for invoices remaining unpaid at 90 days, interest at prime plus 2.5%, and a factoring fee of 1% of the face value of each invoice.
Net premiums written for the year ended December 31, 1996 increased 56% to $192.3 million, compared to $123.3 million for the same period in 1995. The increase in net premiums written was principally attributable to the reasons described above for the
Net Income. The Company realized a net profit of $20.5 million for the year ended December 31, 1996 compared with a net profit of $6.2 million for the comparable 1995 period because of the factors discussed above.
quarter of 1995. The 1994 expense amount includes $0.9 million of interest and amortization on a senior term loan and certain subordinated debentures which were outstanding prior to the Senior Notes issuance on March 17, 1994, $6.4 million of interest and amortization on Chartwell's Senior Notes and a one-time cash conversion incentive payment of $0.8 million associated with certain refinancing transactions completed concurrently with Chartwell's issuance of the Senior Notes, as discussed under "--Liquidity and Capital Resources" below (the Senior Notes issuance and the use of proceeds thereof and the foregoing transactions being herein collectively referred to as the "1994 refinancing"), offset by $0.7 million of savings from the interest rate swap.
Dollars at the rate of 1.7125 per (pound)1, the rate in effect on December 31, 1996.
The First Union Loans have six-year terms and the First Union Revolver has a five-year term but may be extended for one year with the consent of First Union. Term Loans A-1 and A-2 require repayment of principal starting in year 3, $6.0 million; year 4, $7.5 million; year 5, $7.5 million and year 6, $9.0 million. Term Loan B requires repayment of principal starting in year 3, $4.5 million; year 4, $5.5 million; year 5, $5.5 million and year 6, $6.7 million. Borrowings under the First Union Revolver are available at any time prior to maturity, subject to minimum funding amounts. Both the First Union Loans and the First Union Revolver will bear interest at a rate selected by the Company equal to either (1) the base rate (as defined below) or (2) London Interbank Offered Rate ("LIBOR") plus a margin (the "Margin"). The amount of the Margin will depend on the higher of the
Change in option value of indexed products and market value adjustments on total return strategy annuities.
Early Extinguishment of Debt. In September, 2005, holders of our $185.0 million aggregate original principal amount of OCEANs exercised their conversion rights which resulted in our issuance of 1.7 million shares of common stock and a cash payment of $203 million, including a $12.7 million prepayment premium. The prepayment premium and a write-off of $6.4 million of remaining unamortized debt issuance costs have been reported as early extinguishment of debt expense in the consolidated statement of income.
The deferred tax asset valuation allowance was reduced $4.7 million in 2005 and $16.4 million in 2004 as a result of the realization of capital loss carryforwards.
For the protection products segment, there were no significant changes in our estimated EGMs in 2003, 2004 or 2005. For the accumulation products segment, there were no significant changes in our estimated EGMs in 2003 or 2005; however, we updated our EGM assumptions in 2004 which resulted in increased DAC, VOBA and deferred sales inducements amortization expense of $8.2 million.
We have developed an asset/liability management approach with separate investment portfolios for major product lines such as traditional life, universal life, indexed life, traditional annuities, indexed annuities, variable annuities and funding agreements. Investment strategies have been established based on the specific characteristics of each product line. The portfolio investment strategies establish asset duration, quality and other guidelines. Analytical systems are utilized to establish an optimal asset mix for each line of business. We seek to manage the asset/liability mismatch and the associated interest rate risk through active management of the investment portfolio. Financial, actuarial, investment, product development and product marketing professionals work together throughout the product development, introduction and management phases to jointly develop and implement product features, initial and renewal crediting strategies, and investment strategies based on extensive modeling of a variety of factors under a number of interest rate scenarios.
Subsequent to the RMA and Rain and Hail actions, the operations of the Agricultural Segment were discontinued and AGIC was placed in rehabilitation by the District Court of Lancaster County, Nebraska. In rehabilitation, AGIC and its subsidiaries ceased to be under the control of the Company and are not included as consolidated subsidiaries of the Company at December 31, 2002. As the Company’s equity interest in AGIC and its subsidiaries is negative, the Company reflects its investment in AGIC and its subsidiaries at zero as the Company is no longer responsible for AGIC’s net liabilities. The Company does not expect to be impacted by the discontinued operations of the Agricultural Segment in the future.
Even if the Company is able to meet these objectives, management believes it is unlikely the Company will be able to make its interest payments on the Preferred Securities which have been deferred until no later than September 30, 2007.
While the Company has ceased writing its Property and Casualty Segment business, its operating results will continue to be significantly impacted by the runoff of the Property and Casualty Segment. Significant factors that may impact future results include the adequacy of the Company’s estimate of loss and loss adjustment expense reserves, the recoverability of the Company’s reinsurance recoverables and the recoverability of certain reinsurance recoverables of previously owned subsidiaries for which the Company is contingently liable, the ability to meet the cash flow needs of AIC and operating expenses. See “Off-Balance Sheet Arrangements” and “Liquidity and Capital Resources.”
The underwriting loss from the Company’s Agricultural Segment was approximately $-0- and $87.3 million for the year ended December 31, 2003 and 2002, respectively. The underwriting earnings or loss for the MPCI business was generally comprised of the FCIC profit share net of the amounts ceded to private reinsurers, expenses in excess of MPCI reimbursements from the FCIC, and amortization expense for non-competition agreements. Additionally, MPCI underwriting results included any adjustments to prior year MPCI results.
At December 31, 2003, approximately 85% of the Company’s Off-Balance Sheet Obligations were rated A- (Excellent) or better by A.M. Best or Lloyd’s Syndicates.
The Company's operating revenues are dependent on overall levels of real estate activity, which are influenced by a number of factors including interest rates, access to capital, housing starts, housing resales and the general state of the economy. In addition, the Company's revenues are affected by the Company's sales and marketing efforts, its acquisition program and its strategic decisions based on the rate structure and claims environment in particular markets.
Both the change in reserve estimate and the change from discounting to not discounting reserves were contemplated by the Company as a result of the shift in the business that now reflects a higher amount of refinance transactions and an increase in frequency of housing resales.
Salaries and Employee Benefits. Personnel related expenses are a significant portion of total operating expenses in the title insurance industry. These expenses require management through the often rapidly changing conditions in the real estate economy. Salaries and employee benefits increased 8.8% in 1997 compared to 1996. This increase was largely tied to higher business volumes, which necessitated increased staffing levels to meet customer service demands, incentive increases and normal merit raises. The expense ratio improved in 1997 to 90.4% from 91.0% in 1996. Salaries and employee benefits increased 18.2% in 1996 over 1995, and the 1996 expense ratio decreased to 91.0% from 92.5% in 1995. In the fourth quarter of 1994, in response to a severe fall in order counts, a special staff and salary reduction program was implemented that lasted through the second quarter of 1995. On a same store basis, the Company reduced its overall headcount by approximately 24% from its peak level. Additionally, the Company effected salary reductions of up to 10% for a period of approximately six months. Operating revenue net of agents' commissions improved on a per employee basis to $105,000 in 1997 from $99,000 in 1996 and $87,000 in 1995.
Net premiums earned increased by 20.6% to $346.7 million in 1998 from $287.5 million in 1997. Medical malpractice net premiums earned increased by 28.2% to $197.5 million in 1998 from $154.1 million in 1997. International net premiums earned increased 6.5% to $136.2 million from $127.9 million due to increased premiums from Unionamerica's interest in a Lloyd's underwriting syndicate and other net premiums earned increased 136.4% to $13.0 million from $5.5 million. The effect of one time premiums, such as prior acts coverage for new insureds, contributed to the increase in medical malpractice premium growth in 1998. During 1998, medical malpractice premiums earned included $35.8 million in such one time premiums, an increase of $28.8 million from 1997.
NET INCOME PER SHARE. Diluted net income per common and common equivalent share decreased to $1.77 in 1997 from $2.22 in 1996. Included in the 1997 amount is a reduction of $.46 per share for the expenses, net of tax, incurred in connection with the Unionamerica acquisition. Also included is a gain of $.07 in 1997 versus a loss of $.03 in 1996 related to net realized gains and losses on investments, net of tax, as well as an extraordinary loss of $.04 in 1997 and a loss from discontinued operations of $.28 in 1996. Diluted weighted average shares and equivalents outstanding increased due to the Company's stock offering in September and October 1996.
MMI Companies, Inc. (MMI) is a specialty company that offers insurance products and risk management and consulting services primarily to the healthcare industry. MMI writes its medical malpractice liability insurance and property and casualty insurance and reinsurance through its principal subsidiaries, American Continental Insurance Company (ACIC) and Unionamerica Insurance Company Limited (Unionamerica). MMI provides its products and services in all 50 states and in Europe. Information on MMI's operations by reportable segment is included in Note 13.
In 1998, the Accounting Standards Board Executive Committee (AcSEC) issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use". SOP 98-1 requires specific accounting treatment for internal use software which is effective for 1999. MMI does not expect that SOP 98-1 will have a material effect on consolidated operating results or financial position.
At December 31, 1998, investments with a fair value of $11,567,000 were on deposit to meet domestic statutory requirements.
Fixed maturities of the international segment of $273,200,000 in 1998 and $251,900,000 in 1997 were held in a trust fund required by virtue of status as an accredited reinsurer in a number of United States jurisdictions.
MMI expects adequate future taxable income to realize the deferred tax asset. Accordingly, no valuation reserve is considered necessary.
Shares available for grant exclude LTIP shares. Other information regarding options outstanding and exercisable as of December 31, 1998 is as follows:
12. EMPLOYEE BENEFIT PLANS (CONTINUED) The following table is a summary of activity for the Plan (in thousands):
The following is a discussion of changes in the consolidated results of our operations for the years ended December 31, 2001, 2000, and 1999.
In connection with this non-cash transaction, HPHI assumed approximately $40.0 million in working capital deficit of the acquired businesses, $5.0 million of which was offset by a long-term convertible subordinated note that was converted to common stock on April 12, 2002 in connection with the restructuring of our credit facilities as described above. In addition, at the closing of the sale to HPHI, the Company issued 709,757 shares of the Company's common stock to offset an additional $5.0 million of the assumed deficit. An additional 101,969 shares were issued as penalty shares pursuant to the terms of the letter agreement settling certain post closing disputes. The purchase agreement contains customary representations, warranties, and cross indemnity provisions.
We evaluate the collectibility of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer's inability to meet its financial obligations to us, we record a specific reserve for bad debts against amounts due to reduce the net recognized receivable to the amount we reasonably believe will be collected. For all other customers, we recognize reserves for bad debts based on past write-off history, average percentage of receivables written off historically and the length of time the receivables are past due. To the extent historical credit experience is not indicative of future performance or other assumptions used by management do not prevail, loss experience could differ significantly, resulting in either higher or lower future provision for losses.
Regulation in the healthcare industry is constantly evolving. We are unable to predict what additional government regulations affecting our business may be enacted in the future. Our business may be adversely affected if we fail: (1) to comply with existing laws and regulations, (2) to obtain necessary licenses and government approvals or (3) to adapt to new or modified regulatory requirements. Proposals for healthcare legislative reforms are regularly considered at the federal and state levels. Currently, the United States Congress is considering a patient's bill of rights which could impact our business by making managed care less attractive to employers or by introducing government regulation which could have the effect of discouraging employer-provided health care coverage. We are unable to predict whether or not such legislation will become law and if so, what impact it may have.
The financial statements and notes appear on pages 28-49 in the Annual Report to the Stockholders for the year ended December 31, 2002 and are incorporated herein by reference. See Part IV, Item 14.
In November 1994, voters sent a message to Congress that they did not want a drastic overhaul of the health care system. It now appears that no major federal health care reform will take place in 1995. However, incremental changes are more probable than major changes and it is more likely this will be on the state level than federal. The federal government has already enacted a series of health care mandates which has resulted in cost shifting from the federal government to state government and the private sector. The Company cannot predict the ultimate timing or effect of such legislative efforts, and no assurance can be given that any such efforts will not have a material adverse effect on the Company's business and results of operations.
In October 1994, the FASB issued SFAS 119, "Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments". This statement requires disclosure about derivative financial instruments and amends existing requirements of SFAS Nos. 105 and 107. SFAS 119 is effective for financial statements issued for fiscal years ending after December 15, 1995, for entities with less than $150 million in total assets.
For 1994 and 1993, the Company has reclassified certain claims related expenses from "Other operating expenses" to "Benefits, claims, losses and settlement expenses". Management believes this results in a more accurate presentation.
As discussed in note 1, Summary of Business and Significant Accounting Policies, the Company adopted SFAS 115 as of January 1, 1994. In conjunction with the adoption of SFAS 115, the Company has classified fixed maturities of $13,468,956, at amortized cost, as held to maturity and fixed maturities of $67,409,309, at fair value, as available for sale at December 31, 1994. In accordance with SFAS 115, prior-year financial statements have not been restated to reflect the change in accounting principle.
Central leases furniture, fixtures and certain data processing equipment under agreements classified as operating leases, which expire at various dates through 1997.
The net loss ratio is calculated as incurred losses and LAE divided by net premiums earned, each determined in accordance with GAAP. The net expense ratio is calculated as total underwriting expenses offset by agency fee income divided by net premiums earned, each determined in accordance with GAAP. Net combined ratio is calculated as the sum of the net loss ratio and the net expense ratio.
Gross premiums written for the Standard Commercial Segment were $81.9 million for the year ended December 31, 2015, which was $2.8 million, or 3%, less than the $84.7 million reported for the same period in 2014. The decrease in gross premium was primarily due to lower premium production in our Workers Compensation operating unit due to a renewal rights agreement which ceded 100% of the unearned premium effective July 1, 2015. Net premiums written were $71.1 million for the year ended December 31, 2015 as compared to $76.9 million reported for the same period in 2014. The lower net premiums written were primarily due to the workers compensation renewal rights agreement.
Our Personal Segment reported a pre-tax loss of $0.9 million for the year ended December 31, 2015 as compared to pre-tax income of $1.2 million for the same period of 2014. The pre-tax loss was the result of increased losses and LAE of $25.5 million and increased operating expenses of $1.7 million, partially offset by the increased revenue discussed above.