Interest income from premium finance contracts increased to $2.5 million in 1996 from $1.6 million in 1995 and $0.9 million in 1994. Such increases are substantially attributable to increases in the amounts of premiums financed. During 1996 premiums financed increased 66% to $51.7 million versus $31.1 million in 1995 and $19.2 million in 1994.
Commissions paid to independent insurance agents represent the Company's most significant policy acquisition cost. The Company's trend of reducing this cost continued in 1996, evidenced by the fact that agents' commissions, as a percentage of premiums earned decreased to 11.8% in 1996 from 14.1% in 1995 and 17.3% in 1994. Such decreases relate primarily to the expansion of TITAN Auto's DRC operations which are not subject to commission expense. The Company anticipates this trend to continue as more direct response centers commence operations.
The Company's insurance subsidiaries are subject to state insurance laws that restrict their ability to pay dividends. In 1997 Holdings could receive up to approximately $8.0 million in dividends without regulatory approval. Based on the current working capital of Holdings, management anticipates the payment of the dividends available without regulatory approval from the insurance companies to help meets its current liquidity needs, including its debt service obligations under the credit facility.
equity until realized. Fixed maturities categorized as held to maturity are carried at amortized cost without recognition of gains or losses that are deemed to be temporary because Holdings has both the intent and ability to hold these investments until they mature. All equity securities are available for sale and marked to market. Realized gains and losses on investments are credited/charged to income and are determined on a "first-in, first-out" basis.
Mortgage notes receivable and premium finance contracts are carried at unpaid balances. Management, considering current information and events regarding the borrowers' ability to repay their obligations, considers a loan to be impaired when it is probable that Holdings will be unable to collect all amounts due according to the original contractual terms of the note agreement. When a loan, in management's judgment, becomes impaired, interest income is subsequently recognized only to the extent of cash payments received.
Holdings accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in Holdings' financial statements or federal tax returns. In estimating future tax consequences, Holdings generally considers all expected future events other than enactments of changes in the tax laws or rates.
The excess of cost over net assets purchased relating to business acquisitions are being amortized on a straight-line basis over periods ranging from 7 to 25 years and the amounts capitalized relative to non-competition agreements are being amortized on a straight-line basis over their respective terms. The carrying value of goodwill and non-competition agreements is periodically reviewed by Holdings and based on this review no material impairment exists at December 31, 1996.