(2) Adjusted for a three-for-two split of the Common Stock distributed on February 7, 1996 to stockholders of record at close of business on January 8, 1996; a ten percent stock dividend distributed June 1995; and a three-for-two split of the Common Stock effected June 1993.
The Company began its workers' compensation insurance operations in 1959 and continues to derive the majority of its revenues from this business. The Company's workers' compensation insurance business has grown through internal expansion, as well as through the acquisition of other workers' compensation insurance companies. In 1989, the Company restructured its workers' compensation insurance operations under a single management group. By consolidating duplicate offices and functions, this management group has increased efficiency and achieved substantial cost savings.
following table presents information for each of the three years in the period ended December 31, 1995 with respect to the Company's core business segments.
Additionally, non-renewing polices have increased in 1995 which has also contributed to the lower premium volume in California. The increase in non-renewing polices occurs as a result of certain premium prices falling below required minimum pricing pursuant to the Company's underwriting standards. The Company expects that the premiums earned in California will continue to decrease, principally due to price competition. For the year ended December 31, 1995, the Company's workers' compensation insurance premiums earned in its mid- western region, consisting primarily of Illinois, accounted for $283 million, or 49% of the Company's total workers' compensation insurance premiums earned. In addition, the Company anticipates price competition to continue in Illinois, where an additional overall average decrease of 13.6% in advisory rates, which workers' compensation insurance companies in Illinois tend to follow, became effective January 1, 1996. Premiums were lower in 1994 as compared to 1993, due primarily to reductions in California workers' compensation manual premium rates which occurred in the last six months of 1993.
The repeal of the minimum rate law on January 1, 1995 has resulted in lower premiums and lower profitability in the Company's California workers' compensation insurance business due to increased price competition. The Company believes that its acquisition of Casualty, with policies written primarily outside of California, has lessened the impact of the repeal of the minimum rate law by providing geographic diversity, which mitigates the impact of economic and regulatory changes within a regional marketplace. See "Item 1. Business -- Regulation -- Insurance Regulation."
The higher provision for loan losses in 1995 as compared to 1994 is consistent with the significant overall growth in average loans receivable. Charge-offs in 1995 as compared to 1994 decreased in the commercial finance operation and remained relatively stable in the real estate lending operation. In 1994 total charge-offs decreased from the prior year due to lower charge-offs in the commercial finance operation, partially offset by higher charge-offs in the real estate lending operation. The commercial finance charge-offs were unusually high in 1993 as the Company charged-off substantially all of the loans from the Company's terminated commercial mortgage banking operation. (These loans had already been provided for in the allowance for possible loan losses in prior years.) Higher charge-offs in the real estate lending operation in 1994 as compared to 1993 are consistent with the significant growth in the real estate loan portfolio in 1994. Overall, total charge-offs have decreased over the three years ended December 31, 1995 and these reductions occurred during a period in which loans receivable increased.
certificates are scheduled to mature in 1997. In December 1995, a commercial paper facility was established as part of the asset securitization program. This facility provides for the issuance of up to $150 million in commercial paper, dependent upon the level of assets within the asset securitization program. This facility, which expires in December 1998, had no amounts outstanding under it as of December 31, 1995. The commercial finance operation's unsecured revolving line of credit is with a syndicated bank group that presently permits borrowings of up to $300 million, of which $185 million was outstanding as of December 31, 1995. This credit line is primarily used to finance assets which are not included in the Company's asset securitization program. This credit line expires August 1998.