The income statement data for the years ended December 31, 2015, 2014 and 2013 and the balance sheet data as of December 31, 2015 and 2014 are derived from our audited financial statements included elsewhere in this report. The income statement data for the years ended December 31, 2012 and 2011 and the balance sheet data as of December 31, 2013, 2012 and 2011 are derived from our audited financial statements that are not included in this report.
Ceding fees are fees we receive in the Program Services segment in exchange for providing access to the U.S. property and casualty insurance market and are based on the gross premiums we write on behalf of our GA and capacity provider clients. We earn ceding fees in a manner consistent with the recognition of the gross earned premium on the underlying insurance policies, generally on a pro-rata basis over the terms of the policies reinsured. Typically, the reinsured policies have a term of one year. Minimum capacity fees, which are determined based on the shortfall, if any, between the program’s contractual annual premium minimum and the amount of premium that we estimate will be written in the contract year, are earned over the contract year. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation-Principal Revenue and Expense Items-Minimum ceding fees.” Ceding commissions earned on Lender Services business are not included as ceding fees. CUNA Mutual’s ceding commission is included as a partial offset to commission expense.
Our Lender Services segment generates premiums primarily from providing collateral protection insurance, or CPI, to our credit union, bank and specialty finance company clients. Lenders purchase CPI to provide coverage for automobiles or other vehicles of borrowers who do not uphold their obligation to insure the collateral underlying the loan. Our lender clients pay us directly for CPI and then add the cost of CPI to the borrower’s loan. Our CPI business is fully vertically integrated: we manage all aspects of the CPI business cycle, including sales and marketing, policy issuance, policy administration, underwriting and claims handling.
We currently have a significant program with Nephila under which we granted Nephila the exclusive right to utilize the Company as issuing carrier for U.S. catastrophe exposed property insurance during 2015 and 2016. Nephila is a hedge fund with approximately $11 billion in assets under management that participates in the market for catastrophe exposed property business. The timing and actual amount of gross premiums written for Nephila will impact the timing and amount of ceding fees earned each period under this program. See “-Principal Revenue and Expense Items-Minimum ceding fees.” For the year ended December 31, 2015, ceding fees earned for this program were $14.2 million, comprised of premium related fees of $3.2 million and capacity fees of $11.0 million. This program began writing in the second quarter of 2014 and ceding fees were $0.5 million in 2014.
information regarding the judgments and uncertainties surrounding our estimated reserves for loss and LAE can be found in “Business-Loss Reserves” in Item 1 of this report.
Minimum ceding fees earned are based on estimates of annual premiums to be written for those programs that are subject to a minimum premium levels and related ceding fees. These estimates are based upon various assumptions made regarding the production plans for the underlying program. These assumptions are reviewed by management and the amount of annual premiums expected to be written are re-estimated each quarter. As actual premiums emerge and revisions are made to earlier estimates, minimum ceding fees are earned or reversed and are reflected in current operations.
Other income. Other income decreased by $2.8 million, from $4.4 million for the year ended December 31, 2014 to $1.6 million for the year ended December 31, 2015. This decrease is primarily related to termination of a tenant lease in November 2014.
Ceding fees. Ceding fees increased by $12.8 million, or 39.0%, from $32.9 million for the year ended December 31, 2013 to $45.7 million for the year ended December 31, 2014, primarily due to an increase in Program Services gross earned premium from $563.0 million for the year ended December 31, 2013 to $815.2 million for the year ended December 31, 2014 related to improvement from two sources. First, one significant program experienced growth in 2014. Second, another significant program was added in mid-2013 and generated a full year of earned premium in 2014.
Net cash from financing activities decreased $94.3 million for the year ended December 31, 2015 compared to the year ended December 31, 2014. The decrease is primarily due to proceeds of $97 million received from the private placement in 2014. Other activity impacting cashflows was a decrease in dividends paid of $10.5 million, $14.4 million stock repurchase in 2015 and $6.8 million subordinated debenture repurchase in 2014.
The Company has three statutory business trusts that were formed between 2002 and 2004, for the sole purpose of issuing $44.5 million of trust preferred securities in private offering transactions. The trusts used the proceeds from these offerings, together with the equity proceeds received upon their initial formation from TBA, an indirect wholly-owned subsidiary of State National, to purchase variable-rate subordinated debentures issued by TBA. All voting securities of the trusts are owned by TBA, and the debentures are the sole assets of the trusts. The trusts meet the obligations of the trust preferred securities with the interest and principal paid on the debentures. These trusts’ interest