felanders/preprocessed huggingface dataset:
The Company has underwritten the AmTrust Reinsurance segment since July 1, 2007. In addition, certain aspects of this segment are associated with recent acquisitions by AmTrust and while the underlying experience of the book has significant seasoning, the combination of the shorter time frame with which the Company has direct experience with this business and the relative immaturity of certain aspects of this business may result in a greater range of volatility in the reasonably likely variance of our expected loss ratio for all applicable loss years in the segment compared to our Diversified Reinsurance segment.
Annually, the Company makes an assessment as to whether the value of the Company’s goodwill and intangible assets are impaired. Impairment, which can be either partial or full, is based on a fair value analysis by individual reporting unit. During 2016, the Company has written off the goodwill relating to the acquisition of a majority interest in Regulatory Capital, Ltd., trading as Insurance Regulatory Capital or IRC, which was deemed to be permanently impaired. The Company recognized an impairment loss of $1.8 million as a result. No impairment was recorded during the years ended December 31, 2015 and 2014. The Company's net goodwill and intangible assets, after the impairment charge, as at December 31, 2016 were $77.7 million (2015 - $81.9 million).
The following table details the Company's average invested assets and average book yield for the year ended December 31, 2015 compared to the same period in 2014:
Within our Diversified Reinsurance reportable segment, both our US operations and our non-U.S. operations experienced a decrease in net premiums earned for the year ended December 31, 2015 of $83.6 million, or 11.3%, and $25.5 million, or 22.6%, respectively, compared to the same period in 2014, for reasons outlined previously and the impact of a retrocessional quota share agreement effective January 1, 2015 with a highly rated global insurer.
General and Administrative Expenses - General and administrative expenses increased by $0.5 million, or 19.1%, for the year ended December 31, 2015 compared to the same period in 2014. The general and administrative expense ratio has remained flat at 0.2% for both years ended December 31, 2015 and 2014. The overall expense ratio (including commission and other acquisition expenses) was 31.5% and 30.6% for the years ended December 31, 2015 and 2014, respectively.
The Company's AFS fixed maturity investments increased by $463.6 million or 13.2% at December 31, 2016 compared to 2015. The net increase in the fair value of our AFS fixed maturity investments is a combination of (1) net purchases of $1,266.8 million, comprising of primarily asset-backed securities and investment grade corporate bonds and (2) net unrealized gains and amortization of $10.1 million; offset by (3) maturities and calls totaling $657.8 million; and (4) designation of $155.5 million of investment grade corporate bonds as HTM.
The security holdings by sector and financial strength rating of our corporate bond holdings at December 31, 2016 and 2015 were as follows:
The insurance industry continued to be challenged in 2016 as a result of the impact of rate reductions across many lines of business in both insurance and reinsurance, the continuing low interest rate environment and significant political changes in the United Kingdom and the United States. We delivered net income return on equity of 5.4% for 2016 compared to 10.0% for 2015 and a 1.6% growth in diluted book value per share. We achieved this despite an increase in catastrophe losses and mark to market losses from our investment portfolio in 2016.
net proceeds of $241.3 million from the issuance of the 5.625% Preference Shares in September 2016; and
The underlying changes in loss ratios by segment for the twelve months ended December 31, 2016, 2015 and 2014 are shown in the tables below. The total loss ratio represents the calendar year U.S. GAAP loss ratio. The current year adjustments represent catastrophe loss events which reflect net claims and reinstatement premium adjustments.
Gross written premiums decreased by 0.8% in 2016 compared to 2015 due to decreased business written in our property and casualty insurance and marine, aviation and energy insurance business lines. The decrease in gross written premium in 2016 in property and casualty insurance was largely attributable to reductions in our global casualty, U.S. casualty and U.S. environmental business lines offset by growth in our U.S. excess casualty and railroad insurance business lines. The decrease in gross written premiums in marine, aviation and energy insurance is largely due to challenging market conditions in our marine and energy liability, U.S. inland marine, offshore energy, and energy and construction insurance business lines offset by growth in our ocean cargo and aviation insurance business lines. The increase in gross written premiums in financial and professional insurance is largely attributable to growth in our accident and health, credit and political risks, management liability and financial institutions business lines.
We have prepared the following selected financial data as of and for (i) the years ended September 30, 2015, 2014, 2013, 2012, (ii) the period from April 6, 2011 through September 30, 2011 which represents a stub period subsequent to the FGLH Acquisition, and (iii) and the period of January 1, 2011 through April 5, 2011 which represents the period prior to the FGLH Acquisition. For financial statement purposes, FGLH has been identified as the predecessor and FGL as the successor. We have derived the predecessor financial and operating data from the consolidated financial statements of FGLH and the successor financial and operating data from the audited consolidated financial statements of FGL.
The Registrant’s home office is located at 4 Manhattanville Road, Purchase, New York. Personnel performing services for the Registrant operate in MLIG office space, which occupies certain office space in Pennington, New Jersey through ML&Co. In addition, personnel performing services for the Registrant also operate in office space in Jacksonville, Florida, which is owned by ML&Co.
On December 28, 2007, AUSA completed the acquisition of MLLICNY and its affiliate MLLIC. In accordance with Statement of Financial Accounting Standard (“SFAS”) No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangibles, the acquisition is being accounted for by AUSA using the purchase method of accounting, which requires the assets and liabilities of MLLICNY to be identified and measured at their estimated fair values as of the Acquisition Date. The estimated fair values are subject to adjustment of the initial allocation for a one-year period as more information relative to the fair values as of the Acquisition Date becomes available.
MLLICNY’s investment in collateralized mortgage obligations (“CMO”) and mortgage backed securities (“MBS”) had a carrying value of $13.7 million and $7.1 million at December 31, 2007 and 2006, respectively. At December 31, 2007 and 2006, approximately $8.7 million (or 64%) and $5.2 million (or 74%), respectively, of CMO and MBS holdings were fully collateralized by the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. CMO and MBS securities are structured to allow the investor to determine, within certain limits, the amount of interest rate risk, prepayment risk, and default risk that the investor is willing to
Commercial premiums for the year ended December 31, 1998 increased $8.0 million to $465.6 million as compared to $457.6 million for 1997. The Company's commercial premiums for its core operations increased by $28.9 million to $399.1 million for 1998 as compared to $370.2 million for 1997 primarily due to a 5.5% membership increase. The Company's commercial membership for its core operations of 284,700 members as of December 31, 1998 increased by 10,600 members as a result of increases in California, Indiana and Louisiana. The average commercial premium revenue per member per month ("PMPM") increased 2.2% as compared to 1997.
Health care expenses for the year ended December 31, 1998 were $684.4 million as compared to $630.9 million for 1997. This increase in health care expenses was in part a result of growth in all core operations lines of business and an increase in pharmacy costs reduced by approximately $8.3 million of health care costs applied against the reserve for loss contracts and divestiture costs established in 1998. Although prescription drug costs are expected to continue to rise, this trend was somewhat mitigated by enhanced procedures and controls implemented from June 1998 through September 1998 to promote cost effective use of prescription drug benefits.
Year 2000 - The Company has initiated a Year 2000 readiness program to assess Year 2000 issues relative to its major computing information systems and related business processes. The Company formalized the program in 1997 with an initial focus on the Company's existing core legacy software application systems. The program has been expanded to include a company-wide inventory of desktop systems, networks, telecommunications and other non- information technology systems. In conjunction with the inventory process, the Company is identifying the critical business functions and assessing the related business risks and Year 2000 compliance
Pro forma disclosures required by SFAS No. 123 include the effects of all stock option awards granted by the Company from January 1, 1995 through December 31, 1998. During the initial phase-in period, the effects of applying this Statement for generating pro forma disclosures are not likely to be representative of the effects on pro forma net income for future years, for example, because options may vest over several years and additional awards generally are made each year. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information is as follows for the years ended December 31 (in thousands except for earnings per share information): 1998 1997 1996 -------- -------- -------
In June 2001, TennCare developed new risk-sharing options for its MCOs, including OmniCare-TN. OmniCare-TN entered into its changed contract with TennCare effective July 1, 2001.
Interest and other income decreased $0.2 million (10%) to $2.1 million in the fiscal year ended June 30, 2002 from $2.3 million in the fiscal year ended June 30, 2002.
On May 1, 2000, approximately 28,000 members of the Detroit Medical Center's Medicaid managed care program were transferred to OmniCare-MI. The additional membership generated management fee revenue of $4.0 million and $0.6 million in fiscal 2001 and 2000, respectively.
Interest and other income decreased $1.8 million (44%) to $2.3 million in the fiscal year ended June 30, 2001 from $4.1 million in the fiscal year ended June 30, 2000. Other income for the fiscal year ended June 30, 2000 included a $2.1 million gain recorded on the Company's recovery of its $2.1 million investment in PhilCare following PhilCare's dissolution.
Depreciation and amortization decreased $1.4 million (42%), to $2.0 million in the fiscal year ended June 30, 2001 from $3.4 million in the fiscal year ended June 30, 2000. The Company had previously capitalized costs for internally developed customized software. At June 30, 2001, these costs were fully depreciated and accounted for $1.4 million of fiscal 2001 expense. The Company purchased $3.0 million of property and equipment, the majority of which was not yet placed in service and, therefore, did not have a significant effect on depreciation expense in the fiscal year ended June 30, 2001.
The Company has arranged for a sublease to OmniCare-MI of all of the Company's leased premises in Detroit, Michigan, commencing November 1, 2002 and expiring at the end of the lease in May 2005. This arrangement will cost the Company approximately $40,000 per month through the remainder of the lease.
The Financial Accounting Standards Board ("FASB") has issued two new accounting standards which may be applicable in the future to the Company. One of these is Statement of Financial
on the upper income groups) began offering a plan in Argentina that was designed for this group that was popularly received. When the economic crises occurred, the middle class was severely impacted and CICA experienced a decrease in new business and an increase in surrenders. Since that time, management has refocused the marketing organizations in this area on the high net worth individuals that have historically been the core group of insureds. During 2003, surrenders declined. Management is optimistic that in future years production will increase from this area as the economy recovers. Also during 2003, Venezuela's economy was dramatically disrupted as the export of oil was halted. This event caused the volume of new business from that country to drop significantly during the year. Management is optimistic that once this situation is resolved, the volume of new business received from that market should return to previous levels. Total premium income from the international market amounted to $51,972,440 during 2003, compared to $48,575,523 in 2002 and $44,397,043 in 2001. (See Note 9 of the "Notes to Consolidated Financial Statements" for an analysis of the results of the International Life segment.)
Death benefits decreased 3.1% from $6,599,914 in 2002 to $6,398,627 in 2003. Death benefits were $5,613,782 in 2001. An improvement in the mortality experience accounted for the 2003 results. The 2002 increase was primarily due to the impact of the above-discussed acquisitions, which increased such expense by $712,052. CICA has historically adhered to an underwriting policy which requires thorough medical examinations on all applicants who are foreign residents, except children, regardless of age or face amount of the policy applied for, including x-rays and electrocardiograms. On all policies of $150,000 or more, inspection reports are required which detail the background, resources and lifestyle of the applicant. We have developed numerous contacts with whom our underwriters can validate information contained in applications, medical or inspection reports. The Company also retains only the first $100,000 of risk and cedes to other reinsurers the excess.
Policy loans comprised 7.9% of invested assets at December 31, 2003 compared to 9.1% at December 31, 2002. These loans, which are secured by the underlying policy values, have yields ranging from 5% to 10% percent and maturities that are related to the maturity or termination of the applicable policies. Management believes that we maintain adequate liquidity despite the uncertain maturities of these loans.
Although mandated average personal automobile premium rates decreased 1.7% in 2005, our average revenue per exposure increased 0.4%. We believe that the relative increase for 2005 as compared to the Commissioner's state mandated average rate resulted primarily from:
Unearned premiums rose due to the increase in direct written premiums. The total amount of a policy's premium is recorded as written premium on the first day on which the policy is effective; however, the policy's premium is earned ratably over the ensuing year. Accrued agents' profit sharing liability increased $78,328, or 71.6%, due to the combination of increased premiums and improved underwriting results as compared to the prior year.
Changes in interest rates would result in unrealized gains or losses in the market value of the fixed maturity and preferred stock portfolio due to differences between current market rates and the stated rates for these investments. The following table summarizes our interest rate risk, based on the results of the sensitivity analysis at December 31, 2005. The table also reflects the changes in market value and stockholders' equity that would be attributable to realized investment gains (losses) that we would recognize under the equity method of accounting with respect to the change in the net asset value of the mutual funds in which we own 20% or more of the shares outstanding. See "Critical Accounting Policies - Investments and Other-than-Temporary Impairments."
Reinsurance activity with CAR for fiscal years 2005, 2004 and 2003 follows:
We have made loans to insurance agencies with which Commerce transacts business on a regular basis. At December 31, 2005, five loans with an aggregate outstanding principal balance of $1,812 were collateralized by the assets of the agencies. At December 31, 2004, six loans with an aggregate outstanding balance of $2,081 were collateralized by the assets of the agencies. There were no loans to insurance agencies collateralized solely by real estate in 2005 and 2004. At December 31, 2003, ten loans with an aggregate outstanding balance of $2,537 were collateralized by the assets of the agencies and one loan with an outstanding balance of $281 was collateralized by real estate as the primary collateral and the assets of the agency as second collateral.
Non-deferred operating expenses, including expenses related to servicing the products and policyholders offered by the Company, consisting of various maintenance and overhead-type expenses, including pension and other benefit costs.
As of December 31, 2010, $44,454 thousand of net operating and capital loss carryover benefits were included in the deferred tax asset. Of this amount, $27,560 thousand related to $78,743 thousand of federal net operating losses are scheduled to expire in 2022, 2023, 2024 and 2025. An additional $16,894 thousand related to $48,269 thousand of federal capital losses are scheduled to expire in 2014 and 2015. As of December 31, 2010, a full valuation allowance was carried against the capital loss carryforwards after consideration of available capital deferred tax liabilities and tax planning actions.
We also measure, manage and monitor market risk associated with our general account investments, both those backing insurance liabilities and those supporting surplus. This process involves Corporate Portfolio Management and Goodwin Capital Advisers, Inc. (“Goodwin”), the Hartford-based asset management affiliate of PNX. These organizations work together, make recommendations and report results to our Investment Policy Committee, chaired by the Chief Investment Officer. Please refer to the sections that follow, including “Debt Securities Held in General Account,” for more information on our investment risk exposures. We regularly refine our policies and procedures to appropriately balance market risk exposure and expected return.
If, instead, at December 31, 2010 we had reprojected EGPs using a 100 basis points higher separate account return assumption (after fund fees and mortality and expense charges) for both the variable annuity and variable life businesses and used our current best estimate assumptions for all other assumptions, the estimated decrease to amortization and increase to net income would have been approximately $2,945 thousand, before taxes.
Due to the uncertainty of the timing of future cash flows associated with our unrecognized tax benefits at December 31, 2010, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, no unrecognized tax benefits have been excluded from this table. See Note 10 to our financial statements under “Item 8: Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information on unrecognized tax benefits.
Net title service revenues consist of gross title insurance premiums less underwriting fees paid to the underwriter. Fees to underwriters represent the portion of gross title insurance premiums paid by our underwritten title companies to CTIC, pursuant to the terms of the Issuing Agency Agreement.
and other administrative expenses we incur. These reimbursements are executed within the guidelines of various management agreements among us and our subsidiaries. Our underwritten title company and our ancillary companies collect premiums and fees and pay underwriting fees and operating expenses. These companies are restricted only to the extent of maintaining minimum levels of working capital and net worth, but are not restricted by state regulations or banking authorities in their ability to pay dividends and make distributions.
Financing. We entered into the following note payable agreements in connections with the following purchases:
We received net proceeds of approximately 	$8.4 million in connection with our initial public offering 	on February 12, 1999. The underwriters exercised an option 	for over allotment to purchase an additional 165,000 shares at 	$5.45 per share on March 31, 1999, which resulted in net 	proceeds in the amount of $804,000.
In January 2000, we purchased 100% of the stock 	of Bancserv, Inc., a California corporation located in Yorba 	Linda, California. Bancserv, Inc. is a document company 	providing outsource services to the real estate and banking 	industry through a national network of qualified notaries 	public. The purchase
Interest and investment income, including realized gains (losses), consist of the following:
Based upon our current and historical pre-tax earnings, management believes it is more likely than not that the Company will realize the benefit of its existing net deferred tax assets. Management believes the existing net deductible temporary differences, after considering the valuation allowance, will reverse during periods in which we generate net taxable income. However, there can be no assurance that we will generate any earnings or any specific level of continuing earnings in future years. Certain tax planning or other strategies could be implemented, if necessary, to supplement income from operations to fully realize recorded tax benefits. The valuation allowance of $540,000 in 2001 and $529,000 in 2000 relates to National, whose net operating losses are restricted as to their availability and Santa Barbara Title (“SBT”).
The following table sets forth options outstanding and exercisable by price range as of December 31, 2001:
In conducting its operations, we routinely hold customers’ assets in trust, pending completion of real estate transactions. Such amounts are maintained in segregated bank accounts and have not been included in the accompanying consolidated balance sheets. We have a contingent liability relating to proper disposition of these balances for its customers, which amounted to $283.8 million and $91.6 million at December 31, 2001 and 2000, respectively.
The Specialty Commercial Segment reported a net loss ratio of 65.5% for the year ended December 31, 2014 as compared to 69.8% for the same period during 2013. The gross loss ratio before reinsurance was 65.7% for the year ended December 31, 2014 as compared to 68.5% for the same period in 2013. The lower gross and net loss ratio included $3.7 million of unfavorable prior year loss reserve development for the year ended December 31, 2014 as compared to $13.4 million of unfavorable prior year loss reserve development for the same period during 2013. The Specialty Commercial Segment reported $1.0 million in net catastrophe losses for the year ended December 31, 2014 as compared to $1.6 million for the same period of 2013. The Specialty Commercial Segment reported a net expense ratio of 25.6% for the year ended December 31, 2014 as compared to 26.6% reported for the same period the prior year. The decrease in the net expense ratio is due primarily to the effect of increased net earned premium on fixed operating expenses and the increased ceding commission on quota share reinsurance agreements discussed above.
Medical costs for the year ended December 31, 2002 increased 40.5% reflecting the growth in our membership.
Our subsidiaries are required to maintain minimum capital requirements prescribed by various regulatory authorities in each of the states in which we operate. As of December 31, 2003, our subsidiaries had aggregate statutory capital and surplus of $64.7 million, compared with the required minimum aggregate statutory capital and surplus requirements of $30.9 million.
Nearly all of our revenues are generated by premiums consisting of fixed monthly payments per member. These premiums are fixed by contract, and we are obligated during the contract periods to provide healthcare services as established by the state governments. We use a large portion of our revenues to pay the costs of healthcare services delivered to our customers. If premiums do not increase when expenses related to medical services rise, our earnings will be affected negatively. In addition, our actual medical services costs may exceed our estimates, which would cause our health benefits ratio, or our expenses related to medical services as a percentage of premium revenues, to increase and our profits to decline. In addition, it is possible for a state to increase the rates payable to the hospitals without granting a corresponding increase in premiums to us. If this were to occur in one or more of the states in which we operate, our profitability would be harmed.
Failure to Achieve Timely Profitability in Any Business Would Negatively Affect Our Results of Operations.
The Company and its consolidated subsidiaries own and lease offices in various locations primarily in the United States. None of these properties is material to the Company's business. At December 31, 1994, the Company and its consolidated subsidiaries employed approximately 9,075 persons in approximately 440 offices.
Total stockholders' equity was $99.1 million at December 31, 1995, a 27.8% increase for the year. This increase is due to the Company's return to profitability following the loss in 1994 as well as increases in the value of the investment portfolio.
In this section, we review the consolidated financial condition of the Company at December 31, 2010, 2009 and 2008 and the consolidated results of operations for the periods ended December 31, 2010, 2009 and 2008. Please read this discussion in conjunction with the accompanying consolidated financial statements and notes.
The reconciliation of income taxes computed at the federal statutory income tax rate to total income taxes for the years ended December 31, 2010, 2009 and 2008 is as follows:
Amortization of deferred policy acquisition costs was $30,214 in 2010, $30,308 in 2009 and $40,564 in 2008. Amortization of deferred policy acquisition costs are primarily costs associated with a seasoned block of business written between 1988 and 1990. Amortization expense per year may vary in relation to lapses or surrenders of the existing block of business.
Taxes other than on income were $1,343,869 in 2010, $1,328,062 in 2009 and $1,458,629 for 2008. The increase in 2010 was primarily due to an underestimation of the premium tax accrual at December 31, 2009. The decrease for 2009 is primarily due to a decrease in premium taxes on fewer premiums collected.
¹ Presented on a diluted basis. In 1997, the Company adopted Statement of Financial Accounting Standards (SFAS) 128 “Earnings Per Share,” and, as a result, restated prior periods per share amounts, if applicable.
TPG leases its home office in San Francisco, California, which consists of approximately 99,928 square feet of office space. The San Francisco lease expires on December 31, 2004. In addition, TPG leases space for 34 PMI field offices. Such field office leases cover an average of approximately 4,300 square feet and have terms of not more than five years. During 1997, PMI established its Certificate Priority Center, which is located in Dallas, Texas. The CPC consists of approximately 17,563 square feet of office space.
During the three year period ended December 31, 2000, the Company experienced modest membership expansion. While membership in certain products continues to grow, other products have decreased when compared to 1999. The Company has achieved its overall size by continually expanding its product lines which include point-of-service, small group, indemnity health, hybrid products and group term-life and through expansion into new geographic markets. Premium rates during this time have remained at or near competitive levels for the Company's marketplace. During 2000, the Company's consolidated operating margin showed improvement over 1999. The Company achieved 2000's results, in part, by implementing product price increases and reducing or eliminating membership in products or effectively terminating groups that had the potential for continued unprofitability. The Company anticipates that it will continue to increase premium rates during 2001. This is a forward-looking statement. See "Forward-Looking Information" above for a description of those risk factors.
The four key areas of Administration Simplification are: 1) Transactions and Code Sets, 2) Unique Identifiers, 3) Security, and 4) Privacy. HHS has published final regulations on Transactions and Code Sets and Privacy and expects final regulations for Unique Identifiers and Security in 2001. These rules will apply to insurers, health maintenance organizations, providers and ERISA plans and will effect the business operations of these entities.
Statutory deposits, consisting principally of municipal bonds and treasury notes held in custodial accounts by state regulatory agencies, are classified as held-to-maturity. These securities are stated at amortized cost.
The Company has an incentive compensation plan whereby managers receive bonuses based upon the annual operating results of the Company. During 2000 and 1999, incentive compensation expense was approximately $6,956,000 and $4,200,000, respectively, which was paid to employees in February 2001 and 2000, respectively. During 1998, $800,000 was earned and recognized as expense. In addition, certain individuals receive a cash bonus based upon the achievement of certain measurable criteria other than the annual operating results of the Company. These bonus amounts are not significant.
The balance of the decline in 1996, 1995 and 1994 premium and policy charges is related to the unlocking, for current and future experience, of unearned premium. Unearned premium essentially represents the excess first year charges in the policy. With the advice and assistance of our consulting actuaries, each year the Company reviews its current experience rates for mortality, credited interest spreads, lapse rates, surrender fees and the like, and adjusts its amortization of deferred acquisition costs and unearned premium to the appropriate levels for both the current experience and anticipated future experience. This is an ongoing refinement process.
Annuity, death and other benefits decreased slightly in both 1996 and 1995. This expense line is a combination of several expenses with death claims, annuity benefits and surrender benefits comprising the most significant portion of the total line. In 1996 each of these expenses declined slightly, whereas in 1995 death claims actually rose slightly. A significant increase or decrease in death claims in any given year can have a marked impact on the
(f) to the production of new business, have been deferred. Deferred policy acquisition costs applicable to non- universal life policies are being amortized over the premium-paying period of the related policies in a manner that will charge each year's operations in direct proportion to the estimated receipt of premium revenue over the life of the policies. Premium revenue estimates are made using the same interest, mortality and withdrawal assumptions as are used for computing liabilities for future policy benefits. Acquisition costs relating to universal life policies are being amortized at a constant rate based on the present value of the estimated gross profit amounts expected to be realized over the life of the policies. Deferred policy acquisition costs are adjusted to reflect the impact of unrealized gains and losses on fixed maturity securities available for sale.
Insurance Commissioner's approval if the dividend is equal to or less than the greater of: (a) 10% of the Company's surplus as to policyholder's derived from realized net operating profits on its business and net realized capital gains; or (b) the Company's entire net operating profits and realized net capital gains derived during the immediately preceding calendar year, if the Company will have surplus as to policyholders equal to or exceeding 115% of the minimum required statutory surplus as to policyholders after the dividend is declared and paid. As a result of such restrictions, the maximum dividend payable by the Company during 1997 without prior approval is approximately $1,022,183.
700,000. — Dividends. 193,750. — to Directors and Management. 115,516.95 Balance carried to next year's account.
Due by other Companies and Sundry Debtors . . . . . 7,080,966 49 Accrued interest . . 703,836 20 i i
On March 2, 2001, the Board of Directors of State Auto Financial declared a quarterly cash dividend of $0.03 per common share, payable on March 30, 2001, to shareholders of record on March 15, 2001. This is the 39th consecutive cash dividend declared by State Auto Financial's Board since State Auto Financial had its initial public offering of common stock on June 28, 1991. State Auto Financial has increased cash dividends to shareholders for eight consecutive years.
more costly or difficult than anticipated; integrating the acquired business without material disruption to existing operations may prove to be more difficult than anticipated; anticipated cost savings may not be fully realized (or not realized within the anticipated time frame) or additional or unexpected costs may be incurred; and retaining key employees of the acquired business may prove to be more difficult than anticipated. In addition, other companies in the insurance industry have similar acquisition strategies. There can be no assurance that any future acquisitions will be successfully integrated into the Company's operations, that competition for acquisitions will not intensify or that the Company will be able to complete such acquisitions on acceptable terms and conditions. In addition, the costs of unsuccessful acquisition efforts may adversely affect the Company's financial performance.
Information regarding the funded status and net periodic pension benefit for the Company's participation in the defined benefit pension plan is as follows:
In addition to pension benefits, the Company provides certain health care and life insurance benefits for its eligible retired employees. Substantially all of the Company's employees may become eligible for these benefits if they retire between age 55 and 65 with 15 years or more of service or if they retire at age 65 or later with 5 years or more of service.
The Company has stock option plans for certain directors and key employees. The nonemployee directors' plan provides each nonemployee director an option to purchase 1,500 shares of common stock following each annual meeting of the shareholders at an option price equal to the fair market value at the last business day prior to the annual meeting. The Company has reserved 300,000 shares of common stock under this plan. These options are exercisable at issuance to 10 years from date of grant. The key employee's plan provides that qualified stock options
A description of the major plants and properties owned and operated by Celite and Harborlite is set forth below. All of the following properties are owned, with the exception of Plant #1 at Quincy, Washington, the headquarters offices at Santa Barbara and Lompoc, California, the Nanterre, France, Santiago, Chile and Izmir, Turkey offices and the plant at Wissembourg, France, which are leased.
The information required by this Item 8 is incorporated by reference from pages 30 through 46 of Alleghany's Annual Report to Stockholders for the year 1998, filed as Exhibit 13 hereto.
Terra Nova's gross written premiums totalled $246.2 million in 1999 compared to $302.2 million in 1998. The decrease in premium writings reflects Terra Nova's exit from marine hull and energy business in December 1998 and lower premium rates on most classes of business in which it participates. Marine writings were down $21.7 million on last year. Property and casualty writings were down $34.3 million on last year due in part to management's decision to write a portfolio of business through the Company's corporate syndicate at Lloyd's.
At March 20, 2000, the Company had neither identified nor experienced any Year 2000 related problems from its IT or embedded systems (including facsimile machines, photocopiers and elevators), or from third parties with whom it does business. Such third parties include critical suppliers, customers and trading partners. The Company continues to monitor the performance of its systems and third parties with specific reference to the Year 2000 issue.
(j) Prepaid reinsurance premiums: Prepaid reinsurance premiums represent the portion of premiums ceded to reinsurers applicable to the unexpired terms of reinsurance contracts.
(l) Stock-based compensation: The Company has adopted SFAS No.123 "Accounting for Stock-Based Compensation". As allowed under this standard, the Company accounts for stock option grants in accordance with APB Opinion No. 25 "Accounting for Stock Issued to Employees".
The Company's principal products consist of various classes of non-marine property business, non-marine casualty business, and marine and aviation business, written on both an insurance and reinsurance basis. In 1997, 1998 and 1999, the Company received premiums related to reinsurance to close of orphan Lloyd's syndicates. Net earned premiums for the years ended December 31, 1999, 1998 and 1997, were as follows:
The invested assets of the insurance company subsidiaries consist substantially of marketable, investment grade, U.S. government securities, municipal bonds, corporate bonds and collateralized mortgage obligations (“CMOs”). We also invest a portion of the portfolio in certain securities issued by political subdivisions which enable our insurance company subsidiaries to obtain premium tax credits. Investment income is comprised primarily of interest earned on these securities, net of related investment expenses. Realized gains and losses may occur from time to time as changes are made to our holdings to obtain premium tax credits or based upon changes in interest rates or the credit quality of specific securities. During the 2009 fiscal year, we sold securities with unrealized gains to generate taxable income in order to utilize expiring tax NOL carryforwards.
Premiums earned decreased by $14.7 million, or 5%, to $285.9 million for the year ended June 30, 2008, from $300.7 million for the year ended June 30, 2007. This decline was due to the decrease in the number of policies written, which was partially offset by higher average premiums per policy as a result of rate increases taken in a number of states to improve underwriting profitability. The decrease in the policies written was due to the weak economic conditions that impacted our customers, rate increases taken in a number of states to improve underwriting profitability and the closure of 45 poor performing stores between January 2007 and June 30, 2008.
all of its unpaid losses, including case reserves and IBNR reserves, and estimates for the cost to settle the claims. We estimate our IBNR reserves by estimating our ultimate liability for loss and loss adjustment expense reserves first, and then reducing that amount by the amount of cumulative paid claims and by the amount of our case reserves. We rely primarily on historical loss experience in determining reserve levels, on the assumption that historical loss experience provides a good indication of future loss experience. We also consider various other factors, such as inflation, claims settlement patterns, legislative activity and litigation trends. Our actuarial staff continually monitors these estimates on a state and coverage level. We utilize our actuarial staff to determine appropriate reserve levels. As experience develops or new information becomes known, we increase or decrease the level of our reserves in the period in which changes to the estimates are determined. Accordingly, the actual losses and loss adjustment expenses may differ materially from the estimates we have recorded. See “Item 1. Business - Loss and Loss Adjustment Expense Reserves” for additional information.
The net changes in the total valuation allowance for the years ended June 30, 2008 and 2007 were increases of $3.0 million and $6.6 million, respectively. The increases during fiscal years 2008 and 2007 included charges of $11.4 million and $10.0 million, respectively, related to the expiration of certain federal NOL carryforwards due to taxable income for the respective fiscal years being less than the Company’s previous estimates of taxable income.
The following table sets forth the expense components of the Company's combined ratio calculated as a percentage of net premiums earned on the basis of generally accepted accounting principles ("GAAP Combined Ratio") for the three years indicated.
The overall GAAP loss and LAE ratio increase from 94.5% in 1999 to 108.8% in 2000. The GAAP loss and LAE ratio for 2000, exclusive of adverse development of PY losses and LAE and amortization was 79.6%. The results for 2000 reflect increased ultimate loss and LAE ratios utilized as a result of an in-depth actuarial study completed during the third quarter of 1999. However, in addition to maintaining these higher ratios, continued deterioration of business written primarily in years 1999 and prior resulted in reserve charges during 2000 of approximately $157 million.
The adverse development in losses and LAE of $26 million recorded in the Environmental, Excess and Surplus Lines Division was primarily due to increased costs and frequency associated with the settlement of claims, primarily in the general liability line of business.
Cash flow needs at the holding company level primarily include corporate operating expenses and interest payments on outstanding debt for which funding is generally provided through management fees charged to the Company's subsidiaries and, until the end of 1999, the Company's revolving credit facility with a bank group consisting of five banks headed by Deutsche Bank AG, New York Branch ("Deutsche Bank"). The subsidiaries' ability to pay such management fees in the future may be adversely impacted, in the near term, by subsidiary-level liquidity constraints. The insurance subsidiaries, with the exception of Frontier Pacific, are substantially in runoff. As long as the insurance subsidiaries remain in runoff, net premium income, historically a significant source of cash flow, will not be available.
Effective March 12, 2001, Frontier, has voluntarily agreed with the State of New York that it will not write any new or renewal business until such time as the State of New York gives written notification that it may resume such writings. In addition, the Company has agreed to certain other stipulations requiring prior approval of certain expenditures, incurring debt, as well as changes in reinsurance or compensation arrangements. Also, the Company has agreed to provide financial information including budgets to the State of New York.
Net earned premium revenues of the Empire Group were $228,600,000, $275,000,000 and $326,400,000 for the years ended December 31, 1998, 1997 and 1996, respectively. In 1998, the decrease in earned premium revenues was primarily due to a decline in the number of assigned risk automobile pool contracts acquired due to competition and the depopulation of the assigned risk automobile pools ($24,600,000) and a reduction in certain lines, principally voluntary commercial automobile ($8,500,000), private passenger automobile ($6,000,000), commercial package policies ($4,300,000) and workers' compensation ($3,700,000), due to tighter underwriting standards, reunderwriting and increased competition. In 1997, the decline in earned premium revenues was primarily due to the depopulation of the assigned risk pools ($31,700,000) and a reduction in certain commercial lines, principally voluntary commercial automobile ($10,200,000) and workers' compensation ($8,800,000) due to competition, reunderwriting and repricing. In addition, earned premium revenues were reduced in 1997 by $5,500,000 to record premiums due under retrospectively rated reinsurance contracts written for 1995 and prior accident years. The Empire Group re-estimated the premium due based upon its then current estimate of loss ratios for 1995 and prior accident years. Partially offsetting these reductions was an increase in certain voluntary personal lines, principally private passenger automobile and homeowners.
Crusader generates a significant amount of cash as a result of its holdings of unearned premium reserves, its reserves for loss payments, and its capital and surplus. Crusader's loss and loss adjustment expense payments are the most significant cash flow requirement of the Company. These payments are continually monitored and projected to ensure that the Company has the liquidity to cover these payments without the need to liquidate its investments. Cash and investments (excluding net unrealized gains or losses) at December 31, 2007, were $147,457,231 compared to $147,346,870 at December 31, 2006. Crusader's cash and investments at December 31, 2007, was $143,042,610 or 97% of the total held by the Company, compared to $144,120,695 or 98% of the total held by the Company at December 31, 2006.
* Deposits with superior courts to stay execution of judgment pending appeal of Crusader claims.
AIB markets health insurance in California through non-affiliated insurance companies for individuals and groups. For these services, AIB receives commission based on the premiums that it writes. Commission income for the year ended December 31, 2007, increased $685,723 (42%), compared to the year ended December 31, 2006. The increase is primarily due to the increase in sales of small group medical insurance offered through CIGNA HealthCare. In May 2006, CIGNA HealthCare began offering new small group medical insurance policies in the state of California. Currently, all new CIGNA small group medical insurance policies are written through AIB, and all CIGNA small group medical insurance policyholders are members of AAQHC. The new programs are competitively priced and are being actively marketed. Commission income remained relatively comparable in the year ended December 31, 2006, compared to 2005. Commissions from carriers other than CIGNA for the year ended December 31, 2007, remained relatively comparable to 2006 and 2005.
The buildings which house the headquarters of Harleysville Group and the Mutual Company are leased by the Mutual Company from a subsidiary of Harleysville Group. See "Business- Relationship with the Mutual Company." The Mutual Company charges Harleysville Group for an appropriate portion of the rent under an intercompany allocation agreement. The buildings containing the headquarters of Harleysville Group and the Mutual Company have approximately 220,000 square feet of office space. Harleysville Group also rents office facilities in certain of the states in which it does business.
Gross written premiums decreased 3.7%, or $4.1 million, for the year ended December 31, 1996. Surety and fidelity gross written premiums increased 6.2%, or $5.6 million, reflecting strong growth in the contract surety and insurance agents' and brokers' E&O businesses. Gross written premiums at Universal Surety increased 25.1% to $21.1 million in 1996 due to an increase of $4.1 million in contract surety premiums. Gross written premiums at Western Surety increased 1.9% to $75.1 million in 1996, reflecting strong growth in agents' E&O business, and modest growth in core miscellaneous surety bond business. United Capitol's gross written premiums decreased $9.8 million in 1996 as compared to a full year in 1995.
Net investment gains (losses) were $1.7 million, $(1.7) million and $0.9 million for the years ended December 31, 1996, 1995 and 1994, respectively. Net investment gains on securities held at the parent company level were $0.8 million in 1996, $1.0 million in 1995 and $1.3 million in 1994. Net investment gains