Generally, the Company's cash needs are met through cash provided from operating activities, which totaled approximately $6.7 million during the year ended December 31, 1999 and $12.1 million in the preceding year. During the last quarter of 1999 and the first quarter of 2000, however, operating activities generated negative cash flows due primarily to decreases in LMG revenue (see discussion below). Such negative cash flows may continue through early 2000. Cash and investments on hand are expected to be sufficient to cover any shortfalls during this period. The Company's future cash flows available to fund operations will depend primarily on the level of sales of annuity and life insurance products by LMG and upon the Company's ability to control expenses.
LMG marketing allowances and commission revenue, combined, increased approximately $1.1 million, or 3.0%, during 1999 compared to 1998 due to the continued shift in product mix to products which yielded higher marketing allowances and commission income, such as life insurance products. The increase in life insurance premium placed inforce, reached $10.9 million in 1999, up 60.6% from $6.8 million in 1998. This increase was offset by the effect of a decrease in overall premium placed inforce for the Carriers of approximately $37.0 million, or 2.3%, due primarily to reduced sales of fixed annuities during the second half of the year. This decrease is attributable primarily to the poor performance of bond investments underlying the annuities' crediting rates and to lower than anticipated market acceptance of the VisionMark II(TM) annuity, which was introduced in 1999 to replace the original VisionMark(TM). LMG marketing allowances and commission revenue, combined, increased approximately $20.4 million, or 115.1%, in 1998 compared to 1997 due primarily to increases in the volume of sales by LMG's distribution network for the Carriers. Premium placed inforce for the Carriers totaled $1.6 billion in 1998, an increase of 112.6% from 1997. Also contributing to the increase from 1997 to 1998 was the shift in product mix to products which yielded higher marketing allowances and commission income.
Although the Company markets and administers several annuity and life insurance products on behalf of the Carriers, LMG's revenues are derived primarily from sales and administration of annuity products. During 1999, 1998, and 1997, 56.2%, 70.6%, and 52.4% of the Company's total consolidated revenues resulted from LMG sales of the VisionMark(TM) annuity, respectively. However, during the fourth quarter of 1999, 17.8% of the Company's total revenues resulted from sales of the SelectMark(TM) annuity, offered through Transamerica. This shift from the VisionMark(TM) annuity and the VisionMark II(TM) annuity, to the SelectMark(TM) annuity is attributable primarily to market acceptance of the SelectMark(TM) product and is expected to continue for the foreseeable future.
Professional fees decreased approximately $749,000, or 33.3%, in 1999 from 1998 and increased approximately $1.8 million, or 400.8%, in 1998 from 1997, due primarily to expenses associated with a $1.1 million settlement of litigation in 1998. Excluding the cost of this settlement, professional fees increased by approximately $355,000 in 1999 from 1998 and increased approximately $695,000 in 1998 from 1997 due primarily to increased consulting fees related to various information systems projects.
Interest rate risk is the price sensitivity of a fixed income security to changes in interest rates. The following table provides information about the Company's fixed income investments, which are sensitive to changes in interest rates. Listed below are cash flows from principal amounts and related weighted average
The Company currently sponsors two stock-based compensation plans, which are described below. Options were first granted under both plans during 1998. Under both plans, the exercise price of each option equals the estimated fair market value of the underlying common stock on the date of grant, as estimated by management (see Note 1) and as discounted for lack of marketability, except for incentive stock options granted to 10% shareholders where the exercise price equals 110% of the estimated fair market value. Both plans are administered by committees, which are appointed by the Company's Board of Directors.
During the first quarter of 2000, the Company granted 2,120,247 options to producers under the Producer Option Plan and 2,146,800 options to employees under the Employee Option Plan.