Net income was approximately $1,282,000 and $1,318,000 for 2013 and 2012, respectively. This slight decrease in net income is primarily the result of an increase in premium revenue of approximately $6,210,000, to $86,363,000 in 2013 from $80,153,000 in 2012, offset by an increase in healthcare services expense of approximately $4,026,000, to $67,762,000 in 2013 from $63,736,000 in 2012. This increase in gross margin of approximately $2,184,000 was offset by an increase in insurance expenses of $2,179,000, to $16,789,000 in 2013 from $14,610,000 in 2012. Our ratio of insurance expense to total premium revenue (“insurance expense ratio”) increased to 19.4% in 2013 from 18.2% in 2012.
In 2013, we paid approximately $46,000 of our outstanding mortgage balance and repaid approximately $137,000 related to the capital lease that we executed in December 2010. We sold $1 million of institutional preferred shares and approximately $97,000 of Class A and Class B common shares. Also during 2013, we repurchased redeemable common shares of $264,000 from provider shareholders. In addition, we paid dividends to our institutional preferred shareholders and our common shareholders totaling approximately $392,000 in 2013.
In August 2014, we renewed an annually renewable agreement with a commercial bank for a $1,000,000 working capital line of credit. Interest is payable at a variable rate of LIBOR plus 2.50%. The Company did not have any interest expense for the line of credit in 2014, 2013 or 2012. As of December 31, 2014 and 2013, there was no amount outstanding on this line of credit. In addition, we had an irrevocable letter of credit in the amount of $10,000, with an interest payable rate of prime rate plus 6.00%. The letter of credit expired in December 2014 and was not renewed.
DCP Holding Company (the “Company”) is the parent holding company of three wholly-owned subsidiaries which include Dental Care Plus, Inc., an Ohio corporation, Insurance Associates Plus, Inc., an Ohio corporation, and Adenta, Inc., a Kentucky corporation. The Company is primarily owned and controlled by dentists who participate in one or more of the networks that offers Dental Care Plus products. The Company is also partially owned by retired dentists, Company board members, non-dentist individuals and employees who hold voting redeemable common shares and by institutional investors that hold non-voting redeemable preferred shares. The Company primarily offers to employer groups of all sizes dental health maintenance organization (“HMO”), participating provider organization (“PPO”) and indemnity benefit plans and vision benefit plans. As of December 31, 2014, we had approximately 307,000 members in our dental benefits plans and approximately 28,900 members in our vision benefit plans. We had 2,808 dentists participating in our dental HMO network and 3,047 dentists participating in our dental PPO network at this time. The Company has a network leasing agreement with a national dental network management company that has one of the largest networks of dentists under contract in the United States. With this network leasing agreement, the Company’s dental PPO members have access to approximately 2,500 additional dentists in the Company’s operating territory and approximately 42,700 additional dentists throughout the United States. The Company also has a network leasing arrangement with a national dental administration company for the dental PPO plans that it offered on the Ohio exchange in 2014. With this network leasing arrangement, exchange members have access to approximately 1,600 dentists in Ohio.
The Plans also provide for the directors and key employees to receive share awards based on the book value of the Redeemable Common Shares and to elect to defer receiving such amounts until termination of board membership or employment and vesting requirements are met. If a director or key employee does not elect to defer receiving his or her share awards, the individual will receive Class B Redeemable Common Shares upon vesting. If the share awards are deferred, these deferred amounts will be paid in cash at redemption. An individual director’s award vests 100% at the end of each year if the director meets certain attendance requirements. The key employee awards vest 10%, 20%, 30% and 40% at the end of each respective year in a four-year period following the grant date. There are no performance criteria associated with the vesting of the awards for key employees and the only requirement for vesting is that the individual is an employee of the Company at the end of the vesting year in question. There were approximately 145 and 165 of these non-vested awards outstanding at December 31, 2014 and 2013, respectively. The number of awards expected to vest approximates the total non-vested awards outstanding.
The following is a summary of activity of non-vested awards for the years ended December 31, 2014 and 2013:
Participating providers along with Company directors and employees have the option to purchase one or more voting Class B Redeemable Common Shares of the Company, when offered. Non-dentist individuals are eligible to purchase Class C voting redeemable common shares, when offered. The maximum percentage of Class C Common Shares outstanding at any time as a proportion of all voting Common Shares is 40%. The book value of a common share was approximately $997 and $894 at December 31, 2014 and 2013, respectively. In 2014, 2013 and 2012, the Board declared a per share cash dividend for all Class A, Class B and Class C redeemable common shares in the amounts of $35.77, $32.60 and $21.00, respectively.
The Company leases space in its building to unrelated parties under non-cancelable leases. Income recorded by the Company under non-cancelable leases amounted to approximately $62,000, $62,000, and $68,000 for the years ended December 31, 2014, 2013 and 2012. Such amounts are recorded as other income in the accompanying consolidated statements of comprehensive income. As of December 31, 2014, the Company has approximately $62,000 of future minimum annual lease income under non-cancelable leases in 2015.