Net investment and other interest income for the year ended December 31, 1997 increased 2.1% or $80,000 from $3.8 million as of December 31, 1996 to $3.9 million. The Company's cash and investment position increased $8.8 million from December 31, 1996 to December 31, 1997. Approximately one-half of the increase is due to the addition of Universal's $4.2 million portfolio on December 1, 1997. Investment income only includes results for one month of the Universal portfolio. Average yield for the portfolio was down slightly from 6.3% in 1996 to 5.9% in 1997 which is reflective of the lower interest rate environment experienced in 1997.
Net property and casualty premiums earned for the year ended December 31, 1996 decreased $3.2 million, or 31%, to $7.2 million from $10.4 million for the year ended December 31, 1995. This decline is largely due to the suspension of risk-bearing business in the first half of 1995 and would have been significantly greater but for the $5.8 million of premiums the Company was required to assume from the NC Facility (compared to $1.2 million of such premiums assumed in 1995). In 1996, the Company continued to earn premiums on personal lines business written by the Company in the first half of 1995.
Property and casualty policy acquisition costs incurred decreased $2 million, or 53%, to $1.8 million from $3.8 million for the year ended December 31, 1996 compared to the year ended December 31, 1995. This decrease is due to the reduction in net premiums written. The decline would have been greater but for the policy acquisition costs associated with the premiums the Company was required to assume from the NC Facility.
- - Offering costs associated with the two transactions listed above totaled $180,000 leaving the Company with net proceeds of $9.3 million which were used to make a $6.3 million contribution to SCIC and $2.0 million was used to repay a loan to a shareholder. The remaining amounts were used as working capital.
THE SEIBELS BRUCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS For the year ended December 31 (Dollars shown in thousands)
(1) An accumulation of case estimates for losses reported prior to the close of the accounting period. (2) Estimates of incurred-but-not-reported losses based upon past experience and current circumstances. (3) Estimates of allocated, as well as unallocated, loss adjustment expense liabilities by applying percentage factors to the unpaid loss reserves, with such factors determined on a by-line basis from past results of paid loss expenses to paid losses. (4) The deduction of estimated amounts recoverable from salvage, subrogation, and second injury funds. (5) Estimated losses for reinsurance ceded and assumed.
Because only 47 claims remain open as of December 31,1997, the exposure to significant additional development is less than when the claims were less mature. In addition, the likelihood of new claims being asserted for construction liability is lessened by the expiration of statutes of limitations since the last policy expired over ten years ago.
Net income and shareholders' equity of the credit life insurance subsidiary as determined in accordance with statutory accounting practices are as follows for the year ended December 31, is as follows (in thousands):
Commission and service income fell in the first quarter of 1997 as the claims related to flood activity subsided from the very active 1996 storm season. Commission and service income remained fairly constant through the first three quarters of the year and fell during the fourth quarter due to a lack of storm related claims. Premiums earned fell in the second quarter due to lower assumed premiums than in the prior two quarters. Premiums earned increased in both the third and fourth quarters of 1997 as the Company began its voluntary nonstandard program in the fourth quarter of 1997. Net income for the year fell by $1.2 million mainly due to a lack of flood related claims.