JP and most subsidiaries utilize space and personnel of JP Life. JP Life owns its home office consisting of a 20-story building and an adjacent 17-story building in downtown Greensboro, NC. These buildings house insurance operations and provide space for commercial leasing. JP Life also owns a supply and printing facility, a parking deck and a computer center, all located on nearby properties. JP Life leases office space in Lexington, KY for operation of the KCL business assumed.
Management's discussion and analysis of financial condition and results of operations for the three years ended December 31, 1999 analyzes the results of operations, consolidated financial condition, liquidity and capital resources of Jefferson-Pilot Corporation and consolidated subsidiaries (collectively referred to as JP or Company). The discussion should be read in conjunction with the Consolidated Financial Statements and Notes. All dollar amounts are in millions except per share amounts. All references to Notes are to Notes to the Consolidated Financial Statements.
Total AIP benefits and expenses increased 3.0% in 1999 and decreased 1.4% in 1998 primarily in relation to average policyholder fund balances. Policy benefits as a percentage of average policyholder fund balances were 5.4%, 5.2% and 5.7% in 1999, 1998 and 1997. The decline in 1998, as well as the decline in premiums in 1998,
Average AIP assets increased 1.6% in 1999 and 4.2% in 1998. AIP posted returns on average assets of 1.01% in 1999, 1.09% in 1998 and 1.02% in 1997. The 1999 decline is primarily attributable to reserve corrections and true-up adjustments to assumptions used in amortizing deferred acquisition costs. The combined earnings of the broker-dealer and related entities, which are included in the segment results, were $4.4, $3.9 and $1.2 for 1999,1998 and 1997.
The ratio of capital to assets has declined, primarily due to assets acquired through purchases of insurance entities for cash. Stockholders' equity declined $462 in 1999 and increased $53 in 1998 due to changes in values of available for sale securities. Additionally, $183 in 1999 and $33 in 1998 was utilized to purchase common shares outstanding.
To meet the parent company's dividend payments, debt servicing obligations and other expenses, internal dividends are received from subsidiaries. Total cash dividends paid by subsidiaries were $279 in 1999, $235 in 1998 and $391 in 1997. JP Life and AH Life were the primary sources of these dividends. The Company's life insurance subsidiaries are subject to laws in the states of domicile that limit the amount of dividends that can be paid without the prior approval of the respective State's Insurance Commissioner. Approximately 78% of the amount of dividends planned from life subsidiaries for 2000 will require regulatory approval, based on the timing of those payments. The Company has no reason to believe that such approval will be withheld.
Reinsurance receivables include amounts related to paid benefits and estimated amounts related to unpaid policy and contract claims, future policy benefits and policyholder contract deposits. The cost of reinsurance is accounted for over the terms of the underlying reinsured policies using assumptions consistent with those used to account for the policies. JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
The following table sets forth the computation of net income per share and net income per share assuming dilution:
The Company routinely monitors correlation between hedged items and hedging instruments. In the event a hedge relationship is terminated or loses correlation, any related hedging instrument that remained would be marked to market through income. If the hedging instrument is terminated, any gain or loss is deferred and amortized over the remaining life of the hedged asset or liability.
trust from which future benefits will be paid. The Company accrues the cost of providing postretirement benefits other than pensions during the employees' active service period. The non-pension postretirement expense was $1 in 1999, 1998 and 1997.
AH Life reinsured 100% of the Periodic Payment Annuities (PPA), COLI and Affiliated credit insurance business written prior to their acquisition in 1995 with affiliates of Household International, Inc. on a coinsurance basis. Balances are settled monthly, and AH Life is compensated by the reinsurers for administrative services related to the reinsured business. In 1996, AH Life recaptured a portion of the PPA reinsurance. The amount due from reinsurers in the consolidated balance sheets includes $1,080 and $1,057 due from the Household affiliates at December 31, 1999 and 1998.