felanders/preprocessed huggingface dataset:
The Company's actuary provides a range for loss reserves at December 31 each year. At December 31, 2002 the Company's management determined that the net reserve should be $29,804,620. This amount is within, and at the upper end of the range provided by the actuary of $20,503,000 at the current mid reserve estimate and $31,204,000 at the high end. Due to the inherent uncertainty in reserving for accountants' professional liability claims, management believes this is an appropriate reserving policy. It should be noted that any reserve amount selected in the range has a direct effect on the net income of any given year, as well as shareholders' equity and the book value per share of the Company.
During 2002, 2001 and 2000, the Board of Directors declared quarterly dividends of $0.65 per share totaling $803,430, $821,556 and $855,681, respectively. Continuation of quarterly dividend payments is subject to the Board of Directors' continuing evaluation of the Company's level of surplus vis a vis its capacity to accept more business. It is an objective of the Company to build surplus to retain flexibility for any future business expansion.
The result of this process is that twice a year, the actuary has made recommendations of a range of ultimate loss estimate to AMIC's Board of Directors, which for each period has selected ultimate loss estimates that fall within that range. Based on the foregoing practice, the estimated loss ratio has been updated by AMIG Ltd.'s Board of Directors at least once each year.
Reports of Independent Accountants on Financial Statement Schedule ... 35 Schedule I, Investments .............................................. 36 Schedule IV, Reinsurance ............................................. 36
Risk Assessment Strategies, Inc. leases 4,200 square feet of office space in South Windsor, Connecticut.
Income before taxes from the Group disability, life, annuities and DBL segment decreased $.5 million for the year ended December 31, 2010 compared to 2009. The LTD line experienced higher profitability in 2010 which was more than offset by higher death claims experienced by group term life primarily in the first quarter of 2010;
The Company’s Group Disability segment is comprised of Long Term Disability (“LTD”) and Disability Benefits Law (“DBL”). The two “primary” assumptions on which Group Disability reserves are based are: (i) morbidity levels; and (ii) recovery rates. If morbidity levels increase, for example due to an epidemic or a recessionary environment, the Company would increase reserves because there would be more new claims than expected. In regard to the assumed recovery rate, if disabled lives recover more quickly than anticipated then the existing claims reserves would be reduced; if less quickly, the existing claims reserves would be increased. Advancements in medical treatments could affect future recovery, termination, and mortality rates. With respect to LTD only, other assumptions are: (i) changes in market interest rates; (ii) changes in offsets; (iii) advancements in medical treatments; and (iv) cost of living. Changes in market interest rates could change reserve assumptions since the payout period could be as long as 40 years. Changes in offsets such as Social Security benefits, retirement plans and state disability plans also impact reserving. As a result of the forgoing assumptions, it is possible that the historical trend
There were normal fluctuations to the Company's experience factor. The IBNR factors were updated to reflect the current experience. The reserving process used by management was consistent from 2009 to 2010.
Due to its strong capital ratios, broad licensing and excellent asset quality and credit-worthiness, the Insurance Group remains well positioned to increase or diversify its current activities. It is anticipated that future acquisitions or other expansion of operations will be funded internally from existing capital and surplus and parent company liquidity. In the event additional funds are required, it is expected that they would be borrowed or raised in the public or private capital markets to the extent determined to be necessary or desirable. In November 2004, December 2003 and March 2003, the Company borrowed $15.0 million, $12.0 million and $10.0 million, respectively, through pooled trust preferred issuances by unconsolidated subsidiary trusts. In August 2009, the outstanding line of credit was cancelled and converted into an amortizing term loan. At December 31, 2010 the outstanding balance of the term loan was $7.5 million. See Note 14 of the Notes to Consolidated Financial Statements in Item 8 of this report.
stock, increasing its ownership to 63.0%. The Company will consider acquiring additional shares of AMIC stock in the market and/or in private transactions as opportunities arise.
NOTE B - INVESTMENTS The following is a summary of available-for-sale securities at December 31:
The Company participates in mandatory residual market pools in various states. The Company records the results from participation in these pools as reported and records an additional provision in the financial statements for operating periods unreported by the pools.
Wisconsin. We lease office space for various offices and service centers located throughout the U.S. and internationally, including our New York, New York corporate office and our data center in Woodbury, Minnesota. Our leases have terms ranging from month-to-month to twenty-five years. We believe that our owned and leased properties are adequate for our current business operations.
Absent these items, international results improved primarily from continued growth and favorable experience in Latin America. Overall, Assurant Solutions’ international combined ratio was 104.8%. In 2013, we expect this combined ratio to continue to improve primarily from expected profitable growth in Latin America and additional expense initiatives in Europe.
Reserves for our various product lines are calculated using experience data where credible. If sufficient experience data is not available, data from other similar blocks may be used. Industry data provides additional benchmarks when historical experience is too limited. Reserve factors may also be adjusted to reflect considerations not reflected in historical experience, such as changes in claims inventory levels, changes in provider negotiated rates or cost savings initiatives, increasing or decreasing medical cost trends, product changes and demographic changes in the underlying insured population.
During the third quarter of fiscal 1996, the Company re-evaluated the restructuring liabilities as originally formulated in fiscal 1995. The re-evaluation resulted in an estimate of $16.7 million less than the original reserve. This excess reserve was offset by an approximately equivalent amount of restructuring costs arising from the Company's decision to restructure its operations in the United Kingdom and acquisition and integration costs associated with the merger of Managed Health Network, Inc. in March 1996. The Company has substantially completed its integration and restructuring of the combined entities as of June 30, 1996.
During fiscal year 1997, the Company expects capital expenditures to approximate $85.8 million, primarily consisting of $78.2 million for the purchase of computer hardware and software systems; $4.1 million for the purchase of furniture and equipment; and $3.5 million for other requirements. Other assets increased over the amount at June 30, 1995, which is primarily due to increases in pharmacy rebates, trade receivables, notes receivable related to IPA sales and the cash surrender value of life insurance policies related to the non-qualified defined benefit pension plans.
The carrying amount of cash and short-term investments is a reasonable estimate of fair value.
The postretirement benefit obligation was determined by application of the terms of the plan using various actuarial assumptions. Health care costs are projected to increase at annual rates of 5% in 2000 and thereafter. A 1% annual increase in these assumed cost trend rates would increase the accumulated postretirement benefit obligation at December 31, 2000 by approximately $5,896 and the service and interest cost components of the net periodic postretirement benefit cost for 2000 by approximately $457. A 1% annual decrease in these assumed cost trends would decrease the accumulated postretirement benefit obligation at December 31, 2000 by approximately $5,312 and the service and interest components of the net periodic postretirement benefit cost by $412. The assumed discount rate used in determining the accumulated postretirement obligation was 7.50% at December 31, 2000 and 7.75% at December 31, 1999.
continue within historical ranges. The Company’s primary sources of cash are written premiums, investment income and proceeds from the sale and maturity of its invested assets. The Company believes that, within each operating company, total invested assets will be sufficient to satisfy all policy liabilities and that cash inflows from investment earnings, future premium receipts and reinsurance collections will be adequate to fund the payment of claims and expenses as needed.
(1) Realized gains on available-for-sale securities recognized in realized investment gains, net on the accompanying consolidated statements of operations.
Items (“ASU 2015-01”). The main objective of ASU 2015-01 is to identify, evaluate, and improve areas of GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2015-01 eliminates from GAAP the concept of extraordinary items. Presently, if an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. The entity also is required to disclose applicable income taxes and either present or disclose earnings-per-share data applicable to the extraordinary item. Although the amendments in ASU 2015-01 will eliminate requirements for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. ASU 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company adopted ASU 2015-01 effective January 1, 2014. Since ASU 2015-01 was a disclosure only update, its adoption did not have a material impact on the Company’s financial condition or results of operations.
The following tables set forth the carrying value, gross unrealized gains, gross unrealized losses and amortized cost of the Company’s investments, aggregated by type and industry, as of December 31, 2014 and December 31, 2013.
A summary of the status of the Company’s stock options at December 31, 2014 and 2013 is as follows:
Our insurance subsidiaries’ loss ratio, which is the ratio of incurred losses and loss expenses to premiums earned, was 69.4% in 2017, compared to 64.5% in 2016. Our insurance subsidiaries’ commercial lines loss ratio increased to 62.0% in 2017, compared to 59.6% in 2016. This increase resulted primarily from the commercial automobile loss ratio increasing to 80.3% in 2017, compared to 78.7% in 2016, and the commercial multi-peril loss ratio increasing to 64.6% in 2017, compared to 54.4% in 2016. The personal lines loss ratio was 75.5% in 2017 compared to 68.5% in 2016. Our insurance subsidiaries experienced unfavorable loss reserve development of approximately $6.6 million during 2017 in their reserves for prior accident years, compared to approximately $3.0 million during 2016. The unfavorable loss reserve development resulted primarily from higher-than-expected severity in the commercial multiple peril, personal automobile liability and commercial automobile lines of business, offset by lower-than-expected severity in the workers’ compensation line of business.
At December 31, 2018 and 2017, our treasury stock consisted of 3,002,588 and 72,465 shares of Class A common stock and Class B common stock, respectively.
* The period from May 12, 1998 (date of incorporation) to December 31, 1998.
A portion of the costs of acquiring new business, such as commissions, certain internal expenses related to our policy issuance and underwriting departments and some variable selling expenses are capitalized. The resulting deferred acquisition costs asset is amortized over future periods based on our expectations as to the emergence of future gross profits from the underlying contracts. These costs are dependent on the structure, size and type of business written. For certain products, we may retrospectively adjust our amortization when we revise our estimate of current or future gross profits to be realized. The effects of this adjustment are reflected in earnings in the period in which we revise our estimate. Operating expenses consist of salary and salary related expenses, legal and professional fees, rent and office expenses, travel and entertainment, directors' expenses, insurance and other similar expenses, except to the extent capitalized in deferred acquisition costs.
At December 31, 2001, there were seven securities with fair values that traded continuously at less than 80% of amortized cost for at least six months or 90% of amortized cost for at least 12 months. The total unrealized loss on these securities amounted to $1.0 million and the largest unrealized loss position was $0.4 million.
Net earnings of our insurance companies increased to $74.4 million for 2003 from $68.2 million for 2002 due to continued favorable underwriting results on increased premium volume and despite an after-tax loss of $18.7 million due to a commutation. We expect growth in earnings of this segment to continue in 2004.
The decrease in other operating income to $7.0 million during 2002 from $17.5 million in 2001 was principally due to the disposition or closure of certain operations during 2001 and the resultant gains totaling $8.2 million from certain of those dispositions. Net earnings of other operations decreased to $3.1 million in 2002 from $7.1 million in 2001 for the same reasons. Period to period comparisons may vary substantially depending on other operating investments or dispositions thereof in any given period.
We believe that our operating cash flows, investments, bank facility and shelf registration on file with the United States Securities and Exchange Commission will provide sufficient sources of liquidity and capital to meet our operating and capital needs for the foreseeable future.
the availability of borrowings and letters of credit under our credit facilities;
the ability of our technology resources, including information systems and security, to perform as anticipated such as with respect to preventing material information technology failures or third-party infiltrations or hacking resulting in consequences adverse to Chubb or its customers or partners;
Total pre-tax and after-tax catastrophe losses, including reinstatement premiums, were $1,187 million (4.1 percentage points of the combined ratio) and $966 million, respectively, compared with $1,626 million (5.9 percentage points of the combined ratio) and $1,354 million, respectively, in 2018. Refer to the Consolidated Operating Results section for additional information on our catastrophe losses.
Total pre-tax and after-tax favorable prior period development were $792 million (2.7 percentage points of the combined ratio) and $624 million, respectively, compared with $896 million (3.3 percentage points of the combined ratio) and $706 million, respectively, in 2018. Pre-tax favorable prior period development in 2018 included favorable reinsurance settlements of $205 million related to legacy run-off exposures.
UnitedHealthcare. During 2020, we expanded benefit coverage in areas such as COVID-19 care and testing, telemedicine, and pharmacy benefits; provided customers assistance in the form of co-pay waivers and premium forgiveness; offered additional enrollment opportunities to those who previously declined employer-sponsored offerings; extended certain premium payment terms for customers experiencing financial hardship; simplified administrative practices; and accelerated payments to care providers, all with the aim of assisting our customers, care providers, members and communities in addressing the COVID-19 crisis. Temporary care deferrals significantly impacted UnitedHealthcare’s results of operations for the year ended December 31, 2020. The impact of temporary care deferrals was offset by COVID-19 related care and testing, the significant financial assistance we provided our customers, rebate requirements and broader economic impacts. Enrollment in our commercial products declined primarily due to employer actions in response to the pandemic.
The following represents a summary of select 2020 year-over-year operating comparisons to 2019.
•Consolidated revenues increased by 6%, UnitedHealthcare revenues increased 4% and Optum revenues grew 21%.
Total revenues increased as each segment reported revenue growth. Earnings from operations increased due to growth at OptumHealth and OptumInsight.
Revenue and earnings at OptumHealth increased primarily due to organic growth and acquisitions in risk-based care delivery. Reduced care volumes in fee-for-service arrangements as a result of COVID-19 partially offset the increases in revenues and earnings. OptumHealth served approximately 98 million people as of December 31, 2020 compared to 96 million people as of December 31, 2019.
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
The ACA included an annual, nondeductible insurance industry tax (Health Insurance Industry Tax) to be levied proportionally across the insurance industry for risk-based health insurance products. After a moratorium in 2019, the industry wide amount of the Health Insurance Industry Tax for 2020, which was primarily borne by the customer, was $15.5 billion, of which the Company’s portion was approximately $3.0 billion. The Health Insurance Industry Tax was permanently repealed by Congress, effective January 1, 2021.
the fair value measurement in its entirety. The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.
•Inputs other than quoted prices observable for the asset/liability (e.g., interest rates, yield curves, implied volatilities, credit spreads); and
The following table sets forth the location, approximate square footage and primary use of each of the principal properties we occupied at December 31, 2012:
During the years ended December 31, 2010, 2011 and 2012, amortization expense related to intangible assets totaled $1.1 million, $2.0 million and $1.6 million, respectively. Amortization expense for the year ended December 31, 2011 includes an impairment charge of $0.3 million related to certain acquired intangible assets.
The following table summarizes stock-based compensation expense by operating function for the years ended December 31, 2010, 2011 and 2012 (in thousands):
“Capital Lease Obligation” means a payment obligation under a lease classified as a capital lease pursuant to FASB Statement of Financial Accounting Standards No. 13, “Accounting for Leases,” (November 1976), as may be modified or supplemented.
as certain industry information and bureau analysis, and are multiplied by the total amount of premiums earned to calculate ultimate losses.
Acquisitions. On October 31, 1995, the Company issued approximately 2.7 million shares of its common stock in exchange for all of the outstanding common stock of CII Financial, Inc., and subsidiaries ("CII"). In addition, all outstanding CII options were converted into options to purchase up to approximately 540,000 shares of the Company's common stock. The merger has been accounted for as a pooling of interests and, accordingly, the Company's consolidated financial statements have been restated to include the accounts and operations of CII for all periods prior to the merger.
Earnings Per Share. Earnings per common share for the years ended December 31, 1995, 1994 and 1993 have been calculated using the weighted average number of common shares outstanding of 17,414,000, 15,678,000, and 14,939,000, respectively. Earnings per share have been restated for all periods presented to reflect the merger of CII accounted for as a pooling of interests.
Concentration of Credit Risk. The Company's financial instruments that are exposed to credit risk consist primarily of investments and accounts receivable. The Company maintains cash and cash equivalents, and short- and long-term investments with various financial institutions. These financial institutions are located in many different geographies, and company policy is designed to limit exposure with any one institution. As part of its cash management process, the Company performs periodic evaluations of the relative credit standing of these financial institutions.
In December 1993, the Company obtained a $14,000,000 loan from Bank of America, Nevada. This loan is secured by a deed of trust, assignment of rents and leases, and a security agreement and fixture filing covering the Company's administrative headquarters complex and underlying real property.
Below is a table showing the effect on stockholders’ equity if all the preferred convertible shares and convertible notes were converted as of year ended December 31, 2018. Conversions of the preferred stock and notes occurred on June 18, 2019 and are therefore reflected in the balance sheet as of December 31, 2019 included in Item 8 of this report.
On November 7, 2019 American Life closed a second reinsurance agreement with a third party insurance company to cede the remaining 5% of the MYGA product and 95% of the FIA product to a third party reinsurer through December 31, 2019, at which time the FIA product steps down to 30% ceded as of January 1, 2020. See Note 10. Reinsurance to our Consolidated Financial Statements for further discussion.
Increase in benefit reserves: The change in benefit reserves was a result of the commutation of certain business as of July 31, 2018. The additional reserves in 2019 were attributed to several policies that were not included in the reinsurance transaction in 2018. The MYGA product does not carry reserves as the premium was reclassified as a liability on the balance sheet on a GAAP basis.
At December 31, 2019, the Company had cash and cash equivalents totaling $43,716,205. We believe that our existing cash and cash equivalents will be sufficient to fund the anticipated operating expenses and capital transaction expenditures for the foreseeable future.
capital” and compares this level to adjusted statutory capital that includes capital and surplus as reported under statutory accounting principles, plus certain investment reserves. Should the ratio of adjusted statutory capital to control level RBC fall below 200%, a series of remedial actions by the affected company would be required. As of December 31, 2019 and 2018, the RBC ratio was 840% and 5,480%, respectively.
(f) Future Policy Benefits/Unearned Premiums-General insurance and level term credit life insurance policy liabilities represent unearned premium reserves developed by application of monthly pro-rata factors to premiums in force. Disability/accident & health and decreasing term credit life insurance policy liabilities are calculated primarily on a sum-of-the-years-digits method. Mortgage guaranty unearned premium reserves are calculated primarily on a pro-rata basis. Ordinary life policy liabilities are determined on a level premium method and take into account mortality and withdrawal rates based principally on anticipated company experience; assumed interest rates range from 3.0% to 6.0%.
A summary of the status of the Corporation's stock options as of December 31, 2001, 2000 and 1999, and changes in outstanding options during the years then ended follows:
In December 1999, a class action lawsuit was filed against one of the Company's mortgage guaranty insurance subsidiaries in the Federal District Court for the Southern District of Georgia. The suit alleges that the subsidiary provided pool insurance and other services to mortgage lenders at preferential, below market prices in return for mortgage insurance business, and that such practices violated the Real Estate Settlement Procedures Act. The Court ruled in favor of a summary judgement motion filed by the Company's subsidiary and dismissed the lawsuit. The class plaintiffs have appealed and the appeal is currently before the U.S. Court of Appeals for the Eleventh Circuit. The ultimate outcome of this litigation is unknown at the present time. Accordingly, no provision for any liability, including the additional cost of defense, has been included in the Company's financial statements.
In consequence of a considerable production of new business and a falling off in cancellations, both sums insured and premiums reveal a gratifying increase in the Life Account. The mortality figures were influenced by war losses. The results, although not so favourable as in the previous year, were none the less satisfactory.
Life DepL. Premiums for Retrocession Mathematical Reserve on Annuities retroceded Commission, less Retrocession . . Surrenders, less Retrocession . . . Losses paid, less Retrocession . Annuities paid, less Retrocession Premium Reserve, less Retrocession Annuity Fund, less Retrocession . Reserve for Unsettled Claims, less Retrocession ....... Management Expenses . . . . Taxes Depreciation of Investments . . . . Balance
Assets. Shareholders' Liability Real Estate . . . . . . . . . ... 7,750,000.— Mortgages , 23,980,748.64 Government and other Securities ^ 228,895,134. 62 Life and other funds deposited with ceding Companies . , 457,828,815. 82 Bank Balances 30,771,728.97 Cash in hand
Certain mortgage-backed securities are subject to significant prepayment risk. This is due to the fact that in periods of declining interest rates, mortgages may be repaid more rapidly than scheduled, as individuals refinance higher rate mortgages to take advantage of the lower current rates. As a result, holders of mortgage-backed securities may receive large prepayments on their investments which they are unable to reinvest at an interest rate comparable to the rate on the prepaying mortgages. Mortgage-b acked pass-through securities and sequential classes, which comprised 23.4% and 21.6% of the carrying value of the company's mortgage-backed securities as of December 31, 1995 and December 31, 1994, respectively, are sensitive to this prepayment risk. A portion of the company's mortgage-backed securities portfolio consists of planned amortization class ("PAC"), targeted amortization class ("TAC") and accretion directed class ("AD") instruments. These securities are designed to amortize in a more predictable manner by shifting the primary risk of prepayment to investors in other tranches (support classes) of the mortgage-backed security. PAC, TAC and ADsecurities comprised 74.6% and 76.8% of the carrying value of the company's mortgage-backed securities as of December 31, 1995 and December 31, 1994, respectively.
Glencoe was incorporated in 1996 as a wholly owned subsidiary of RenaissanceRe. Glencoe provides primary catastrophe exposed property coverage on an excess and surplus lines basis, and is eligible to write business in 29 states. During 2000, Glencoe wrote $5.3 million of primary insurance premium, compared to $5.0 million in 1999.
We also own Nobel, a Texas-domiciled insurance company. Following a 1998 fourth quarter after-tax charge of $40.1 million, Nobel disposed of its business lines in 1999. Nobel continues to be a licensed insurer in all 50 states, although there can be no assurance that these licenses can be retained.
(1) Includes the results of Pyramid Life since its acquisition on March 31, 2003.
The following table reflects income from each of our segments (1) and contains a reconciliation to reported net income:
The components of the revenues and results within the segment are as follows:
Revenues. Both direct and ceded premium for the Specialty Health Insurance segment increased approximately $132.2 million in connection with the PharmaCare Re reinsurance agreement discussed above. Net premiums increased by $0.3 million, or less than 1%, compared to 2004. Canadian business accounted for approximately 43% of the net premiums of this segment for 2005 and 40% of the net premiums for 2004. The stronger Canadian dollar and increased sales in Canada generated an increase in premiums of approximately $5.0 million, which was offset by reductions of $3.1 million in our U.S. fixed benefit accident and sickness line, $1.0 million in our long term care line and $0.5 million in our major medical and other lines.
Our Senior Administrative Services segment income improved by $2.1 million, or 19%, compared to 2003. This improvement was primarily a result of the growth in premiums managed. EBITDA for this segment increased $2.2 million, or 17%, compared to 2003.
(5) The obligations on policy related liabilities represent those payments we expect to make on death, disability and health insurance claims and policy surrenders. These projected values contain assumptions for future policy persistency, mortality and morbidity comparable with our historical experience. The distribution of payments for policy and contract claims includes assumptions as to the timing of policyholders reporting claims for prior periods and the amounts of those claims. Actual amounts and timing of both future policy benefits and policy and contract claims may differ significantly from the estimates above. We anticipate that our liabilities for policyholder account balances and reserves for future policy benefits totaling $1.3 billion, along with future net premiums, investment income and recoveries from our reinsurers, will be sufficient to fund future policy benefit payments. In addition, we anticipate that our policy and contract claims liability totaling $130.3 million, along with recoveries from our reinsurers, will be sufficient to fund these claim liability payments.
Unpaid losses and loss adjustment expenses are comprised of case reserves for known claims, incurred but not reported reserves for unknown claims and any potential development for known claims, and reserves for the cost of administration and settlement of both known and unknown claims. Such liabilities are established based on known facts and interpretation of circumstances, including the Company’s experience with similar cases and historical trends involving claim payment patterns, loss payments and pending levels of unpaid claims, as well as court decisions and economic conditions. The effects of inflation are implicitly considered in the reserving process. Establishing appropriate reserves is an inherently uncertain process; the ultimate liability may be in excess of or less than the amount provided. Any increase in the amount of reserves, including reserves for insured events of prior years, could have an adverse effect on the Company’s results for the period in which the adjustments are made. The Company utilizes both its internal actuarial staff and independent consulting actuaries in establishing its reserves. The Company does not discount its loss and loss adjustment expense reserves.
As a result of the Company’s decline in capital and surplus from the World Trade Center losses and losses incurred in healthcare insurance outside California, A. M. Best has reduced the Insurance Subsidiaries ratings below the A- (Excellent) rating. Many ceding companies and companies in assumed reinsurance syndicates are reluctant to deal with insurers whose ratings are below A-, which made it more difficult for the Company to remain in the assumed reinsurance market.
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001 (DOLLARS IN THOUSANDS)
The loss ratio in 2000 was 64.2% as compared to 63.6% in 1999. Significantly lower reinsurance costs were offset by an increase in a limited number of severe losses that occurred in 2000.
In September 2000, the FASB issued Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement No. 125". This statement will not have a material impact on the Company's results of operations
The Company’s annuity policies are simple deferred annuities. The Company does not explicitly establish a claim reserve for its annuities since the liability is already held in the annuity deposit liability.
The net cash flow for 2005 was ($2,863,341) versus operating income of $2,830,130. The difference is primarily due to the purchase of $2,435,698 of the Company’s treasury stock, an increase in fixed and equity securities of approximately $2,765,000, the purchase of fixed assets and leasehold improvements of $516,235 and depreciation expense of $234,632.
Approximately $18.7 million of the bond portfolio is classified as Held to Maturity and is carried on the Balance Sheet at amortized cost. This classification reflects management's ability and intent to hold the bonds until maturity. No adjustments to surplus are made as bond values change.
At December 31, 1999, all of the Company's fixed income securities portfolio was rated investment grade, which is defined by the Company as a security having a National Association of Insurance
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.
rates) will remain constant over time. As a result, these calculations may not fully capture the impact of non-parallel changes in the term structure of interest rates and/or large changes in interest rates.
The Company is dependent upon certain service provided for it by the Corporation including computer-related systems, and systems and equipment that are not typically thought of as computer-
Fair values for fixed income securities are based on quoted market prices where available. Non-quoted securities are valued based on discounted cash flows using current interest rates for similar securities. Short-term investments are highly liquid investments with maturities of less than one year whose carrying value are deemed to approximate fair value. Separate Accounts assets are carried in the consolidated statements of financial position at fair value based on quoted market prices.
The Company is formulating a refinancing plan in conjunction with the above negotiations to address these contingencies and Anchor's current insolvency. Critical components of the plan will likely require the restructuring of debt obligations and the conversion of all, or significant portions, of debt held by affiliated and unaffiliated creditors to Anchor common stock. There can be no assurance that such a plan will be acceptable to all the necessary parties.
Total Revenues. Total revenues for 2000 were $8,999,137, a decrease of $1,055,459, or 10% from 1999 revenues. The revenue consisted exclusively of fee, commission and miscellaneous revenue of the WBA companies. The decrease in revenue was primarily due to the non-renewal and cancellation of customer accounts in WBAIS's Concord, California office and Harden-AZ's Arizona office. Total revenues for 1999 were $10,054,596, a decrease of $2,218,471, or 18%, from 1998 revenues of $12,273,067. The decrease in revenue resulted from carrier rate increases and lost business in WBAIS's former Los Angeles office, as well as at its office in Oregon. In February 1999, WBAIS closed the Los Angeles office. Anchor's revenues varied from quarter to quarter as a result of the timing of policy renewals and net new/lost business production, whereas expenses were fairly uniform throughout the year.
On January 12, 2001, Anchor purchased substantially all the assets and business of the telephonic case management and medical bill review units of Novaeon, Inc., a Delaware corporation ("Novaeon") pursuant to an Asset Purchase Agreement, dated effective as of December 28, 2000 (the "Asset Purchase Agreement"), by and between Anchor and Novaeon (the "Purchase"). As more specifically set forth in the Asset Purchase Agreement, Anchor acquired certain assets from Novaeon's Chapter 11 bankruptcy estate as approved by the United States Bankruptcy Court for the Eastern District of Pennsylvania (Bankruptcy No. 00-18821 BIF) for a cash payment of $1,500,000 and delivery of Anchor's contingent promissory note for $3,500,000 (the "Note"). The principal amount of the Note shall be reduced on a dollar for dollar basis in the event the business acquired has revenues during calendar year 2001 of less than $10,000,000, but the principal amount shall not be reduced below $500,000. The Purchase shall be accounted for using the purchase method of accounting.
The Company recorded a valuation allowance against its deferred Federal income tax asset because of the uncertainty of future taxable operating income. The Company does not lose the right to utilization of its net operating loss carry forwards for Federal income tax purposes in the future. In 2002, 2003 and 2004 the Company recorded taxable operating losses. Current expectations are that the Company will record taxable operating income in the future, at which time the reserve for the deferred tax asset will be re-evaluated. As of December 31, 2004 the deferred tax asset remains fully reserved. A reconciliation between income taxes computed at the Federal statutory rates and the provision for income taxes is included in Note 6 of Notes to Consolidated Financial Statements. The Company recognized a current tax benefit of $2,607,796 in 2002 as a result of a carry back of alternative minimum tax losses. A change in the tax law during 2002 extended the carry back period for losses to offset income in earlier periods. As a result, the Company was entitled to a tax refund, which it received in October 2002. The Company recorded deferred tax expense during the first quarter of 2002 due to an increase in the deferred tax asset valuation allowance, as a result of excluding the effects of unrealized gains in the deferred tax asset.
To evaluate the proposals and negotiate with GMSP and Mr. Stallings, the Board appointed a Special Committee of disinterested, independent directors. The Special Committee considered with its financial advisor the alternatives that might be available to the Company, and ultimately the Special Committee concluded that the alternatives most likely to succeed within the short time available would be transactions with GMSP and Mr. Stallings. GMSP’s willingness to invest additional capital in the Company at this critical time was among other things conditioned upon the Company’s agreeing to redeem the Series A Preferred Stock on January 1, 2006.
We currently operate without charge out of space located at 16 Okin Dong Cheongro Gu, Seoul, South Korea, donated by Deukgyun Oh, our sole executive officer and director. This space is sufficient for our foreseeable needs, and as of April 12, 2011 we had not entered into any lease agreements regarding it.
During the fiscal year ended December 31, 2010 we incurred total expenses of $33,302, including $31,834 in general and administrative expenses and $1,468 in interest expenses. During the fiscal year ended December 31, 2009 we incurred total expenses of $58,465, including $58,197 in general and administrative expenses and $268 in taxes, licenses and other expenses. Our general and administrative expenses consisted primarily of fees for audit, legal, transfer agent and edgarization services, all of which are associated with our reporting requirements under applicable securities laws, and fees associated with our search for a suitable candidate for a business combination.
Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 2 of the notes to our audited financial statements. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.
Net income increased by 12% to $22,624,618 for the year ended December 31, 1996, from $20,119,862 for the prior year. Net income per share increased to $2.15 in 1996 as compared to $1.77 in 1995.
The FASB issued SFAS No. 130, "Reporting Comprehensive Income," ("SFAS 130"), in June 1997 which establishes standards for the reporting and presentation of comprehensive income and its components. Comprehensive income encompasses all changes in shareholders' equity, except those arising from transactions with owners, and includes net income, net unrealized capital gains or losses on available for sale securities and foreign currency translation adjustments. SFAS 130 is effective for fiscal years beginning after December 15, 1997, with earlier application permitted. The Company is currently evaluating the presentation alternatives permitted by the statement.
General - This Annual Report on Form 10-K contains and incorporates by reference forward looking statements within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Reference is made in particular to the discussions set forth under "Item 1. Business" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations". Such statements are based on certain assumptions and current expectations that involve a number of risks and uncertainties, many of which are beyond the Company's control. These risks and uncertainties include limitations on premium levels, greater than anticipated increases in healthcare expenses, loss of contracts with providers and other contracting entities, insolvency of providers and other contracting entities, benefit mandates, variances in anticipated enrollment as a result of competition or other factors, changes to the laws or funding of Medicare and Medicaid programs, and increased regulatory requirements for dividending, minimum capital, reserve and other financial solvency requirements. The effects of the aforementioned risks and uncertainties could have a material adverse impact on the liquidity and capital resources of MHP and the Company. These statements are forward looking and actual results could differ materially from those projected in the forward looking statements, which statements involve risks and uncertainties. In addition, past financial performance is not necessarily a reliable indicator of future performance and investors should not use historical performance to anticipate results or future period trends. Shareholders are also directed to disclosures in this and other documents filed by the Company with the SEC.
The following table summarizes information about stock options outstanding at December 31, 1999:
The Company has measured the total compensation cost of the Restricted Stock awards as the excess of the quoted market price of similar but unrestricted shares of stock at the award date, subject to certain adjustments, over the purchase price, if any, of the Restricted Stock. The quoted market price of shares of the Company's Common Stock at the date of grant was $16.125, and the Restricted Stock was awarded to the Executives at no cost. The total compensation cost of the Restricted Stock grants recognized through December 31, 1998 was $1,764,000.
1999	 1998 	 1997 (Amounts in thousands) 	-------	-------	------- Current: Federal...................... 	$ 		$ (12) State........................	 55	$ 106	 73 	-------	-------	------- 	 55	 106 61 	-------	-------	------- Deferred: Federal...................... State........................	 (55) 	 (106	 (61) 	-------	-------	------- 	 (55)	 (106)	 (61) 	-------	 -------	------- Benefit for income taxes....... 	$ --	 $ --	 $ -- 	=======	=======	=======
Results for 1994 include a $76 million loss on the sale of General Cable securities and a $4 million loss on the anticipated sale of one of the Company's non-insurance businesses. These items were partially offset by a $26 million increase in investment income (excluding $25 million of interest income on the General Cable notes recorded in 1993) and a $10 million decrease in interest on borrowed money.
Investment Income Changes in investment income reflect fluctuations in market rates and changes in average invested assets.
Interest on Borrowed Money Changes in interest expense result from changes in levels of borrowings. The Company has generally financed its borrowings on a long-term basis which has resulted in higher current costs.
1994 compared to 1993 Interest expense decreased by $9.6 million (15%) due primarily to the Company's repurchase of $133 million principal amount of its 11% debentures during the 1993 third quarter.
(1) Represents a mutual fund called the Capital International Fund comprised of numerous securities. The Company does not own individual positions in the securities comprising the Capital International Fund. At December 31, 2002 there were 199 different securities comprising the Capital International Fund.
The following table sets forth an analysis of changes in the reserves for unpaid losses for the years ended December 31, 2002, 2001 and 2000.
As a result of change in estimates of losses incurred in prior years, the provisions for losses incurred in 2002, 2001 and 2000 decreased by $1,347,207, $1,304,766 and $877,045, respectively. The decreases are largely due to the efficiencies realized in the claims payment processes previously discussed and due to the decreasing number of policies in force as a result of fewer Shares outstanding.
The enclosed Statement of Changes in Equity Other Than Capital refers to comprehensive income as Total realized and unrealized income. Items of other comprehensive income included in this statement are referred to as Change in unrealized gains (losses) on investments and Foreign exchange adjustment. A reclassification adjustment to other comprehensive income is made for Gains realized during period included in net income.
NOTE K - STOCK PURCHASE AND OPTION PLANS In accordance with the terms of the 1981 Stock Purchase Plan (1981 Plan), the Company is obligated to repurchase shares issued under the 1981 Plan, at a price equal to 90% of the book value of the shares at the end of the quarter immediately preceding the date of repurchase. No shares were repurchased during 1999, 1998 or 1997. At December 31, 1999 there were 136,229 shares (Class A) and 375,766 shares (Class B) outstanding which are eligible for repurchase by the Company.