felanders/preprocessed huggingface dataset:
Total life insurance in force grew 7.5% to $9.6 billion at December 31, 1997 from $9 billion at December 31, 1996. Growth was slowed by lower term life insurance sales.
Annual dividends payable on the currently outstanding 6.75% Series preferred stock are approximately $1.6 million. In accordance with the terms of the 6.75% Series preferred stock, the Company may pay dividends thereon by issuing additional shares of such stock for any quarter ending on or prior to September 30, 1998. In 1997, the Company paid dividends in the form of 148,402 shares of 6.75% Series preferred stock.
Effective May 13, 1997, the Board of Directors approved a stock repurchase program to acquire shares of Company common stock on the open market. The Company completed the program during the second quarter of 1997, repurchasing and cancelling 150,000 shares at an average cost of $16.52 per share.
The issuance of SARs and restricted stock under the Incentive Plan reduces the number of options available for future issuance. No restricted shares were awarded in 1997. During 1996 and 1995, 1,355 and 3,458 shares of restricted stock were awarded at $17.25 and $15.50 per share, re-spectively. At December 31, 1997, 3,167 restricted shares were outstanding. The following table shows SAR activity for the years ended December 31, 1997, 1996 and 1995:
The valuation allowance for deferred income tax assets at the beginning of the years ended December 31, 1997 and December 31, 1996 was $0. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period that those temporary differences become deductible. Management considers primarily the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment and believes it is more likely than not the Company will realize the benefits of these deductible differences at December 31, 1997.
Insurance written for 2001 also included approximately $4.7 billion ($1.9 billion in the fourth quarter) attributable to structured bulk transactions. For the comparable periods of 2000, there was no insurance written attributable to these transactions. Structured bulk transactions involve insuring a group of loans where the insured loans have individual loan level coverage and frequently include an aggregate stop-loss limit applied to the entire group of insured loans. The bulk market can be divided into three broad segments: the Prime segment (fully underwritten loans, high credit scores, low LTVs), the Alternative - A segment (generally high credit score, low LTV loans that have been underwritten with reduced documentation), and the Sub-prime segment (higher risk loans with lower credit scores). The Company does not participate in the Sub-prime segment of the market.
The effective tax rate for 2000 was 30.3% compared to 30.5% in 1999. For the fourth quarter of 2000, the effective tax rate was 29.6%. The lower fourth quarter rate was primarily the result of a higher percentage of pre-tax income being generated from tax-preferred securities.
New OFHEO risk-based capital rules for Fannie Mae and Freddie Mac could severely limit the ability of Triad to compete with "AAA" rated private mortgage insurers. The ultimate effect of the new rules on Triad and the mortgage insurance industry in general is not known at this time and will not be known until Fannie Mae and Freddie Mac determine their requirements under the rules.
Accordingly, actual results may differ from those set forth in the forward-looking statements. Attention is also directed to other risk factors set forth in documents filed by the Company with the Securities and Exchange Commission.
Additional paid-in capital increased primarily as a result of the 2006 Rights Offering, see “Capital Transactions - Rights Offerings” for detailed discussion. Restricted stock and the restricted stock units granted under the 2005 Long-Term Incentive Compensation Plan also contributed to the increase.
Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2005 and 2004
In June 1998, the FASB issued FAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, as amended and interpreted by FAS No. 137, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES--Deferral of the Effective Date of FASB Statement 133, FAS No.138, ACCOUNTING FOR CERTAIN DERIVATIVE INSTRUMENTS AND CERTAIN HEDGING ACTIVITIES--an Amendment of FAS No. 133, and certain FAS No. 133 implementation issues. This standard, as amended, requires companies to record all derivatives on the balance sheet as either assets or liabilities and measure those instruments at fair value. The manner in which companies are to record gains or losses resulting from changes in the fair values of those derivatives depends on the use of the derivative and whether it qualifies for hedge accounting. FAS No. 133 was effective for the Company's financial statements beginning January 1, 2001.
On occasion, the Company sells call options written on underlying securities that are carried at fair value. Changes in the fair value of these options are recorded in net realized capital gains or losses.
As part of the regular analysis of DAC/VOBA, at the end of third quarter of 2002, the Company unlocked its long-term rate of return assumptions. The Company reset long-term assumptions for the separate account returns to 9.0% (gross before fund management fees and mortality and expense and other policy charges), as of December 31, 2002, reflecting a blended return of equity and other sub-accounts. The initial unlocking adjustment in 2002 was primarily driven by the sustained downturn in the equity markets and revised expectations for future returns. During 2002, the Company recorded an acceleration of DAC/VOBA amortization totaling $45.6 million before tax, or $29.7 million, net of $15.9 million of federal income tax benefit.
Beginning in April 2001, the Company entered into reverse dollar repurchase agreement ("dollar rolls") and reverse repurchase agreement transactions to increase its return on investments and improve liquidity. These transactions involve a sale of securities and an agreement to repurchase substantially the same securities as
Based on our operating plan, we expect that our available cash, cash equivalents and investments, cash from our operations and cash available under our credit facility will be sufficient to finance our operations, the planned acquisition of SummaCare, Inc. and capital expenditures for at least 12 months from the date of this filing.
If a State Fails to Renew its Federal Waiver Application for Mandated Medicaid Enrollment into Managed Care or Such Application is Denied, Our Membership in That State Will Likely Decrease.
In February 2005, the Bush Administration called for changes in Medicaid that would cut payments for prescription drugs and give states new power to reduce or reconfigure benefits. Any reduction or reconfiguration of state funding could adversely affect our growth, operations and financial performance.
In December 2004, the Financial Accounting Standards Board issued SFAS No. 123 (revised 2004), “Share Based Payment,” which would require all companies to measure compensation cost for all share-based payments, including employee stock options, at fair value. This statement is effective for public companies for interim or annual periods beginning after June 15, 2005. We are currently evaluating the effect that the adoption of this Statement will have on our financial position and results of operations. We believe, however, that our adoption of this standard will adversely affect our operating results in future periods.
Growth in the Number of Medicaid-Eligible Persons May be Countercyclical, Which Could Cause Our Operating Results to Suffer When General Economic Conditions are Improving.
The business of recovering subrogation and other claims for healthcare payors is subject to a wide variety of external factors. Prominent among these are factors that would materially change the healthcare payment, fault-based liability or workers' compensation systems. Examples of these factors include, but are not limited to, 1) the non-availability of recovery from such sources as property and casualty and workers' compensation coverages, 2) law changes that limit the use of or access to claims and medical records, or 3) the ability of healthcare payors to recover related claims and audit medical records. Because the Company's profitability depends in large measure upon obtaining and using claims data and medical records, the non-availability or decrease in their availability could have a material adverse effect on the Company.
Moreover, because the Company's revenues are derived from the recovery of the costs of medical treatment, material changes in such costs will tend to affect the Company's backlog or its rate of backlog growth, as well as its revenue or its rate of revenue growth. The healthcare industry, and particularly the business of healthcare payors, is subject to various external factors that may have the effect of significantly altering the costs of healthcare and the environment for the sale or delivery of medical claims recovery and cost containment services. The Company is unable to predict which of these factors, if any, could have a potentially material impact on healthcare payors and through them, the healthcare recovery and cost containment industry.
The Directors' Plan provides for the grant of options to purchase the Company's Common Stock to each non-employee director of the Company. Options under the Directors' Plan are exercisable at 100% of the market value of the Company's Common Stock on the date of grant. Pursuant to the Directors' Plan, each eligible director is to be granted on the date he or she first becomes a director an option to purchase 10,000 shares of Common Stock, and each eligible director is to be granted on the date of each annual meeting of stockholders of the Company beginning in 1998 an option to purchase 2,000 shares of Common Stock, for so long as shares are available under the Directors' Plan, but not after March 31, 2002. Terms of options granted under this plan commence on the date of grant and expire on the tenth anniversary of the grant date. Each option is to become exercisable when vested. Pursuant to individual option agreements under the Directors' Plan, options granted under the Directors' Plan vest ratably over a three-year period, provided that the optionee must be a non-employee director of the Company on each such anniversary in order for options to vest on such date. At December 31, 2001, 150,000 shares of Common Stock were reserved for issuance under the Directors' Plan, including 58,000 shares available for future award.
(1)Includes the results of MemberHealth after its acquisition on September 21, 2007.
(1)These obligations include contractual interest and the table reflects scheduled maturities for contractual obligations existing as of December 31, 2010.
In 2007, our wholly-owned subsidiary, The Pyramid Life Insurance Company issued $60.0 million of surplus notes payable to our parent company, which bear interest at an average fixed rate of 7.5%. The Notes are repayable beginning March 29, 2009 provided that capital and surplus are sufficient to maintain risk-based capital levels of 450% or greater in the immediate prior year end. At December 31, 2010, Pyramid's risk-based capital ratio was below 450%, and therefore no payments of principal or interest have been made or accrued to date.
We performed our annual goodwill assessment for our individual reporting units as of October 1, 2010. Based on this "Step 1" assessment, we determined, that our estimated fair value of our Part D reporting unit was in excess of its carrying value by 42% and that our estimated fair value of our Senior Managed Care reporting unit was in excess of its carrying value by 10%. The fair value for our Traditional reporting unit was below its GAAP equity based on our analysis for the purpose of goodwill recoverability. We do not have any goodwill recorded in our Traditional reporting unit, however, this deficiency could indicate DAC recoverability or premium deficiency issues. These are both tested separately on an annual basis and for 2010, the tests of both demonstrated sufficiency. We had reduced the goodwill for that segment to zero at December 31, 2008 as a result of 2008 annual test of recoverability. During the 2008 test, we concluded that the decline in value of the traditional reporting unit was due to decreasing sales outlooks and the lapsation of Medicare supplement policies. As a result, we performed a "Step 2" analysis of the Traditional reporting unit to determine the amount of impairment. The allocation of the fair value of the Traditional reporting unit to its respective assets and liabilities as of October 1, 2008 indicated an implied level of goodwill of $0. Therefore, at December 31, 2008, we recorded an impairment charge of $3.9 million to eliminate all of the goodwill for the Traditional reporting unit.
We continuously review our subprime holdings stressing multiple variables, such as cash flows, prepayment speeds, default rates and loss severity, and comparing current base case loss expectations to the loss required to incur a principal loss, or breakpoint. We expect delinquency and loss rates in the subprime mortgage sector to continue to increase in the near term but at a decreasing rate. Those
Low-Income Cost Sharing Subsidy-For qualifying LIS members of our Medicare Advantage Health Benefit Plans with Part D benefits, CMS will reimburse the Plans for all or a portion of the LIS member's deductible, coinsurance and co-payment amounts above the out of pocket threshold for low income beneficiaries. Low-income cost sharing subsidies are paid by CMS prospectively as a fixed
Depreciation and amortization expense increased $59.5 million, or 115.5%, to $64.7 million in 1997 from $5.2 million in 1996. This includes $59.0 million in write-offs for goodwill impairment. The goodwill impairment resulted from the Company's determination that the recoverability of goodwill should be determined through discounted projections of future flows instead of undiscounted cash flows, utilizing an economic rate of return that would be customary for evaluating the present value of future cash flows of current dental benefit company transactions. Depreciation expense increased $600,000 due to additional office furniture, equipment, and leasehold improvements and capital expenditures at DHMI. Depreciation expense in 1998 is expected to be slightly higher due to the addition of leasehold improvements, and computer and phone equipment.
Under applicable insurance laws of most states in which the Company conducts business, the Company's subsidiary operating in the particular state is required to maintain a minimum level of net worth and reserves. In general, minimum capital requirements are more stringent for insurance companies, such as UniLife. The Company may be required from time to time to invest funds in one or more of its subsidiaries to meet regulatory capital requirements. Applicable laws generally limit the ability of the Company's subsidiaries to pay dividends to the extent that required regulatory capital would be impaired, and dividend payments are further restricted under the Credit Facility.
The proposed settlement is subject to the notification of the class members, a fairness hearing and approval by the court.
Our principal executive office is located in Agoura Hills, California and is subject to a lease that expires in 2003. We have one other office lease in Denver, Colorado. In order to reduce the potential risk to the lessor, a provision in our Denver office lease states that it is a month-to-month tenancy until such time as the Plan of Reorganization is effective, which is termed the conversion date. For the purpose of calculating an estimate of the minimum lease payments we assumed a conversion date of July 1, 2002. However, there is no assurance that a Plan of Reorganization will be approved or confirmed by the Bankruptcy Court. From and after the conversion date, this lease will be converted to a tenancy for a thirty-six month term.
Net investment income, excluding realized investment gains, decreased $1.1 million or 58.7% to $0.8 million for the year ended December 31, 2001 compared to the same period in 2000. The decrease in investment income was due to a decrease in the average assets available for investment in 2001 as opposed
Year ended December 31, 2000 as compared to year ended December 31, 1999
Underwriting manager income was $14.0 million for the year ended December 31, 2000, as compared to zero for the year ended December 31, 1999. The underwriting manager income in 2000 is a reimbursement from the liquidating companies to SNIS pursuant to the UMA effective January 1, 2000. See "Business-Underwriting Manager Agreement and Claims Services Agreement".
During the year ended December 31, 2001, net cash used by operating activities was $9.3 million as opposed to cash provided of $7.6 million in the year ended December 31, 2000. The $16.9 million increase in cash used is primarily due to $9.3 million of cash used in 2001 that was the result of the continued funding of operations and reorganization costs without the offset of any significant revenues that generate cash. In addition, SNIS received $10.5 million of consideration in 2000 from the CDI pursuant to the Global Settlement Agreement in September 2000. See "Business-Global Settlement Agreement." SNTL also received $1.9 million in 2000 from the liquidating companies as a result of the CCIC/CCCC merger termination. See "Business-California Insurance Department Seizure and Conservation." At December 31, 2001, we had total cash and cash equivalents of $12.3 million. Reorganization costs for the year ended December 31, 2001 and 2000 consisted primarily of professional fees. Cash paid for reorganization items totaled $1.8 million and $2.1 million for the year ended December 31, 2001 and 2000, respectively.
- - Overall premium growth is primarily attributable to: continued marketing efforts relating to commercial auto, commercial package, and specialty lines products, along with the continued development of the Company's Preferred Agent Program, initiated in 1996, wherein business relationships are formed with brokers specializing in certain of the Company's business niches thereby increasing the distribution of the Company's niche products; the increase of the Company's proprietary field organization to a total of 100 professionals, production underwriters and customer service representatives.
The statutory capital and surplus of PIC as of December 31, 1997 and 1996 was $30,091,000 and $21,732,000, respectively. Statutory net income of PIC for the years ended December 31, 1997, 1996 and 1995 was $5,494,000, $3,629,000, and $3,587,000, respectively.
The composition of deferred tax assets and liabilities and the related tax effects as of December 31, 1997 and 1996 are as follows (in thousands):
The following table summarizes the differences between the Company's effective tax rate for financial statement purposes and the Federal statutory rate (dollars in thousands):
Elimination of $0.6 million of reserves on a professional liability excess of loss contracts, based on data received from the client and a reassessment in connection with our quarterly reserve analysis.
At December 31, 2011, deferred acquisition costs (net of retrocession) decreased by $18.7 million, or 21.4%, compared to December 31, 2010. These decreases were primarily due to the commutation of a Florida homeowners’ contract during the year. To a lesser extent, the decrease was a result of a new retroceded contract relating to Florida homeowners’ insurance entered during the year. We evaluate the recoverability of deferred acquisition costs by determining if the sum of future earned premiums and anticipated investment income is greater than the expected future claims and expenses. If a loss is probable on the unexpired portion of policies in force, a premium deficiency loss is recognized. As of December 31, 2011, we believe that the deferred acquisition costs were fully recoverable and no premium deficiency loss was recorded.
Although we are not subject to any significant legal prohibitions on the payment of dividends, Greenlight Re and GRIL are each subject to regulatory minimum capital requirements and regulatory constraints that affect its ability to pay dividends to us. In addition, any dividend payment would have to be approved by the relevant regulatory authorities prior to payment. As of December 31, 2011, Greenlight Re and GRIL both exceeded the regulatory minimum capital requirements.
We have entered into a service agreement with a specialist service provider for the provision of administration and support in developing and maintaining business relationships, reviewing and recommending programs and managing risks relating to certain specialty lines of business. The specialist service provider does not have any authority to bind us to any reinsurance contracts. Under the terms of the agreement, we have committed to quarterly payments to the specialist service provider. If the agreement is terminated, we are obligated to make minimum payments for another two years to ensure that any contracts to which we are bound are adequately administered by the specialist service provider. The minimum payments are included in the above table under specialist service agreement and in Note 14 to the accompanying consolidated financial statements.
In September 1991, the Company sold $55 million 91/2% Convertible Subordinated Debentures (the "Debentures"). During the fiscal year ended March 31, 1996, the Company prepaid, without penalty, $28.9 million principal amount of Debentures, leaving $22.1 million outstanding. Annual interest payments of approximately $2.1 million are required under the Debentures outstanding as of March 31, 1996. Debt issuance costs of approximately $3.6 million arising from the sale of Debentures are being amortized over the six year term, with applicable amounts of costs amortized as prepayments of debt are made. At March 31, 1996, a balance of $356,681 in debt issuance costs remain to be amortized through September 1997.
During the year ended March 31, 1996 loss from operations of IAP decreased $20,140 to $47,595, net of income tax benefit of $28,716, from $67,735, net of income tax benefit of $0 for the year ended March 31, 1995. During the year ended March 31, 1996, revenues from the Inventory Assistance Program increased by $377,504 to $379,667, reflecting 2,771 cars financed, from $2,163, reflecting 24 cars financed, during the year ended March 31, 1995. These increases reflected the operation of IAP during the full year ended March 31, 1996 as opposed to a single month of the year ended March 31, 1995, and the growth and development of the IAP program during the year ended March 31, 1996.
During the year ended March 31, 1995, operating earnings (excluding provision for credit losses) decreased to $2,750,932, as compared with $3,404,138 during the year ended March 31, 1994. The decrease in operating earnings resulted from an increase in general and administrative expenses which was only partially offset by an increase in revenues from automobile financing and viatical settlements. General and administrative expenses increased to $6,645,623 during the year ended March 31, 1995, from $3,004,490 during the year ended March 31, 1994. The increase was primarily attributable to the increased salary costs of approximately $1.1 million associated with the expansion of AutoLend, and certain legal costs associated with entry into a new business which were only partially offset by reduced advertising expenditures resulting from the Company's decreased marketing efforts for its viatical settlements business.
The table below summarizes the impact on equity, net of tax, from changes in estimates of net unpaid loss and settlement expense:
Debt securities are classified as available-for-sale (AFS) and reported at fair value as determined by management based upon quoted market prices or a recognized pricing service at the reporting date for those or similar investments. Changes in unrealized investment gains or losses on our AFS investments, net of applicable income taxes, are reflected directly in equity as a component of comprehensive earnings (loss) and, accordingly, have no effect on net earnings (loss). Equity securities are carried at fair value with subsequent changes in fair value recorded in net earnings effective January 1, 2019. Prior to January 1, 2019, the accounting for subsequent changes in fair value of equity securities was consistent with the treatment of AFS unrealized gains and losses. Investment income is recognized when earned, and capital gains and losses are recognized when investments are sold, or other-than-temporarily impaired.
ICC Holdings, Inc. secured a loan with American Bank & Trust in March 2017 in the amount of $3,500,000 and used the proceeds to repay ICC for the money borrowed by the ESOP. The term of the loan is five years bearing interest at 3.65% and the Company pledged stock and $1.0 million of marketable assets as collateral for the loan. The total balance of debt agreements at year end 2019 and 2018 was $3,475,088 and $3,484,606, respectively.
A compensation expense charge is booked monthly during each year for the shares commited to be allocated to participants that year, determined with reference to the fair market value of our stock at the time the commitment to allocate the shares is accrued and recognized. For the year ended December 31, 2019, we recognized compensation expense of $324,041 related to 23,437 shares of our common stock that were committed to be released to participants’ accounts for the year ended December 31, 2019. Of the 23,437 shares committed to be released, 1,991 shares were committed on December 31, 2019 and had no impact on the weighted average common shares outstanding for the year ended December 31, 2019. For the year ended December 31, 2018, we recognized compensation expense of $355,836 related to 23,437 shares of our common stock that were committed to be released to participants’ accounts for the year ended December 31, 2018. Of the 23,437 shares committed to be released, 1,867 shares were committed on December 31, 2018 and had no impact on the weighted average common shares outstanding for the year ended December 31, 2018. The fair value of the unearned ESOP shares as of December 31, 2019 and December 31, 2018 was $3,962,789 and $4,158,955, respectively.
The Company is party to numerous claims, losses, and litigation matters that arise in the normal course of business. Many of such claims, losses, or litigation matters involve claims under policies that the Company underwrites as an insurer. Management believes that the resolution of these claims and losses will not have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.
As of December 31, 2010, the Company’s balance sheet reflects total current assets of $9,249,143, which increased by $1,496,181 (or 19%) as compared to $7,752,962 as of December 31, 2009. Total current liabilities as of December 31, 2010 were $1,409,294, which increased by $494,225 (or 54%) as compared to $915,069 as of December 31, 2009. The increase of total current assets was mainly due to increases of cash and cash equivalents and fiduciary asset which partially offset by a decrease of commission receivable. The increase of total current liabilities was mainly due to increases of trade accounts payable, other payable, accrued expenses, and income tax payable which partially offset by a decrease of claim payable and amount due to directors.
The Company's effective tax rate for 2010 and 2009 was 20.08% and 17.36%, respectively. The provisions for income taxes for 2010 and 2009 are summarized as follows:
Room 501 and 502, Bank of America Tower, Hong Kong (Hong Kong Office)
Management’s Discussion and Analysis of Results of Operations and Financial Condition.
Our income tax expense was $6.4 million in 2013, compared to $4.8 million in 2012. Our effective tax rate for 2013 was 19.5%, compared to 17.1% for 2012. The change in effective tax rates is primarily due to tax-exempt interest income representing a smaller proportion of income before income tax expense in 2013 compared to 2012.
We estimated the timing of the amounts for the net liability for unpaid losses and loss expenses of our insurance subsidiaries based on historical experience and expectations of future payment patterns. We have shown the liability net of reinsurance recoverable on unpaid losses and loss expenses to reflect expected future cash flows related to such liability. Assumed amounts from the underwriting pool with Donegal Mutual represent a substantial portion of our insurance subsidiaries’ gross liability for unpaid losses and loss expenses, and ceded amounts to the underwriting pool represent a substantial portion of our insurance subsidiaries’ reinsurance recoverable on unpaid losses and loss expenses. We include cash settlements of Atlantic States’ assumed liability from the pool in our monthly settlements of pooled activity. In these monthly settlements, we net amounts ceded to and assumed from the pool. Although Donegal Mutual and Atlantic States do not anticipate any further changes in the pool participation levels in the foreseeable future, any such change would be prospective in nature and therefore would not impact the timing of expected payments for Atlantic States’ proportionate liability for pooled losses occurring in periods prior to the effective date of such change.
On January 1, 2014, we issued an additional 16,964 shares at a price of $12.58 per share under this plan.
We have two classes of common stock, which we refer to as Class A common stock and Class B common stock. Our Class A common stock is entitled to be paid cash dividends that are at least 10% higher than the cash we pay on our Class B common stock. Accordingly, we use the two-class method for the computation of earnings per common share. The two-class method is an earnings allocation formula that determines earnings per share separately for each class of common stock based on dividends declared and an allocation of remaining undistributed earnings using a participation percentage reflecting the dividend rights of each class.
The steep and sustained decline in the equity markets in 2002 changed the amount and timing of variable annuity EGP and resulted in the acceleration of DAC amortization, often called "DAC unlocking" on variable annuities. Declines in equity market performance reduce future or expected fee income and may increase the exposure to GMDB policy benefits. Such events generally reduce EGP, which may in turn require further DAC unlocking of the variable annuity DAC asset. Future volatility in the equity markets of similar or greater magnitude may result in disproportionate changes in the amortization of DAC.
- - As the Company continues to receive Premiums and deposits, investment of these increased cash flows in available high quality securities with acceptable yields will be a focus.
Total investments were $4.20 billion at December 31, 2002 compared to $3.23 billion at December 31, 2001. The increase was due to positive cash flows generated from operations and financing activities and unrealized gains on fixed income securities.
The Unrealized net capital gains on fixed income securities at December 31, 2002 were $453.1 million, an increase of $236.9 million or 109.6% since December 31, 2001. Unrealized losses were primarily concentrated in the corporate fixed income portfolio.
Separate Accounts assets and liabilities decreased 10.9% to $537.2 million at December 31, 2002 from $602.7 million at December 31, 2001. The decrease was primarily attributable to declines in account values due to poor equity market performance partially offset by additional deposits from new sales and transfers from the fixed account fund to variable Separate Accounts funds.
The Company's insurance financial strength was rated Aa2, AA+, and A+ by Moody's, Standard & Poor's and A.M. Best, respectively, at December 31, 2002.
The Company is subject to changing social, economic and regulatory conditions. State and federal regulatory initiatives and proceedings have varied and have included efforts to remove barriers preventing banks from engaging in the securities and insurance businesses, to change tax laws affecting the taxation of insurance companies and the tax treatment of insurance products which may impact the relative desirability of various personal investment products, and to expand overall regulation. The ultimate changes and eventual effects, if any, of these initiatives are uncertain.
Some life insurance companies have recently suffered significant reductions in capital due to losses, and will have to improve their capital adequacy ratios to support their business or divest a portion of their business. We have not experienced any capital reductions and do not anticipate this trend will affect us. We did reduce capital on a regulatory basis by approximately $20 million when we acquired Security Plan; however, we maintain more than adequate levels of capital.
A formal contract was signed in the first quarter of 2006 and is expected to close in mid-2006. The remaining 30% of the accident and health business will continue to be ceded under the existing coinsurance agreements.
Invested assets increased to $484,811,000 at December 31, 2005 from $475,802,000 at December 31, 2004. Invested assets grew by 1.9%, after retiring our $30 million outstanding term loan in April. Fixed maturities are categorized into two classifications: fixed maturities held-to-maturity, which are valued at amortized cost, and fixed maturities available-for-sale which are valued at fair value.
As part of our growth and acquisition strategy, we are currently in negotiations with several affiliated and non-affiliated parties and expect to complete a number of material insurance asset transactions throughout the course of 2020. We have acquired seven insurance agencies, including both affiliated and unaffiliated companies.
On August 17, 2020, the Company entered into a Stock Purchase Agreement with UIS Agency LLC whereby the Company shall purchase the business and certain assets noted within the Purchase Agreement (the “UIS Acquisition”) for a total purchase price of $883,334. The purchase price was paid with a cash payment of $601,696, $200,000 in shares of the Company’s common stock and an earn-out payment. Three cash installment payments totaling $500,000 were due on September 30, 2020, October 31, 2020 and December 31, 2020. Earn-out payment is dependent on the Net Product Line Revenues being equal to or greater than $450,000 for the measurement period. The balance of the earn-out liability as of December 31, 2020 was $81,638 and is included in long term debt on the balance sheet.
The Company filed a Form 424(b)(4) on February 8, 2021 to offer 1,800,000 shares of common stock and accompanying Series A warrants at a public offering price of $6.00 per share and accompanying Series A warrant for aggregate gross proceeds of $10,800,000 prior to deducting underwriting discounts, commissions, and other offering expenses.
The spread of the coronavirus (COVID-19) outbreak in the United States has resulted in economic uncertainties which may negatively impact the Company’s business operations. While the disruption is expected to be temporary, there is uncertainty surrounding the duration and extent of the impact. Currently the Company has not seen any material financial impact as a result of the coronavirus outbreak. However, management is actively monitoring the global situation on its financial condition, liquidity, operations, industry and workforce.
Results of Operations - Year Ended May 31, 2002 Compared to the Year Ended May 31, 2001.
Accrued Claims Payable - The accrued claims payable liability represents the estimated ultimate net amounts owed for all behavioral healthcare services provided through the respective balance sheet dates, including estimated amounts for claims incurred but not yet reported (“IBNR”) to the Company. The unpaid claims liability is estimated using an actuarial paid completion factor methodology and other statistical analyses and is continually reviewed and adjusted, if necessary, to reflect any change in the estimated liability. These estimates are subject to the effects of trends in utilization and other factors. However, actual claims incurred could differ from the estimated claims payable amount reported as of May 31, 2003. Although considerable variability is inherent in such estimates, we believe that the unpaid claims liability is adequate.
As of May 31, 2003 and 2002, non-current restricted accounts include $0.3 million of cash held in trust in connection with the Company’s Directors and Officers liability insurance policy. During Fiscal 2003, the Company surrendered one license held by an inactive Michigan subsidiary and, as a result, approximately $100,000 of previously restricted cash was released to the Company.
The Company has one contract to provide behavioral healthcare services to Connecticut members under contract with one HMO. For the fiscal year ended May 31, 2003, this contract represented approximately 9.0%, or $2.9 million, of the Company’s operating revenue compared to 12.7%, or $3.5 million and 3.2%, or $.6 million for the fiscal years ended May 31, 2002 and 2001, respectively. Additionally, this contract provides that the Company, through its contract with this HMO, receives additional funds directly from a state reinsurance program. During the fiscal years ended May 31, 2003 and 2002, the Company filed reinsurance claims totaling approximately $3.0 million and $3.8 million, respectively. Such claims represent cost reimbursements and, as such, are not included in the reported operating revenues and are accounted for as reductions of healthcare operating expenses. As of May 31, 2003 and 2002, respectively, the Company has reported $0.4 million and $0.6 million as accounts receivable-managed care reinsurance contracts, with $3.1 million and $2.0 million reported as accrued reinsurance claims payable, in the accompanying balance sheet. In the event that the Company does not collect the amounts receivable related to reinsurance amounts, the Company could remain liable for the costs of the specific services provided to members that qualify for such reimbursements. The difference between the reinsurance receivable amount and the reinsurance
A summary of options outstanding and exercisable as of May 31, 2003 follows:
Future minimum payments, by year and in the aggregate, under non-cancelable operating leases with initial or remaining terms of one year or more, consist of the following at May 31, 2003:
Includes a $470,000 gain on settlement of the Medi-Cal liability (see Note 16 - “Commitments and Contingencies”).
In May 2017, we submitted an offer to enter into closing agreements with the IRS covering the CICA and CNLIC domestic life insurance business. The toll charges calculated and enumerated in the closing agreements totaled $124,000 and $4,000 for the CICA and CNLIC domestic life insurance businesses, respectively. We expect to file closing agreements with the IRS for the SPLIC and MGLIC life insurance business as well as for the CICA international business and our annuity business in 2018.
that are more expensive policies for our customers and likely negatively impacted our new sales. In addition, Venezuela, which has historically been one of our top markets, has experienced economic and social turmoil, which has negatively impacted our sales in the country, decreasing 10% from 2016 to 2017. Sales from Colombia, Taiwan and Ecuador represented the majority of the new business premium increases.
Policyholder Dividends. Policyholders' dividends decreased 8.1% and 36.7% or $0.5 million and $3.9 million respectively in 2017 and 2016, due to the dividend rate actions taken by us at the end of 2016 to improve our product profitability. The Company issues long duration participating policies to foreign residents that are expected to pay dividends to policyholders based upon actual experience. The life company boards approve any dividends on an annual basis and may change the dividend rates as needed for business purposes. Policyholder dividends are factored into the premiums at the time the product is developed and therefore have no impact on expected profitability.
Other General Expenses. Expenses increased in the current year 30.2% to $18.6 million in 2017 compared to $14.3 million in 2016, due primarily to increased legal, consulting and audit fees, as well as higher salaries, bonuses and related employee benefits paid to top executives. The expenses are allocated by segment, based upon an annual expense study performed by the Company.
Net Investment Income. Net investment income decreased in 2017 as our average invested assets decreased as did the overall portfolio yield by 13 basis points from 2016 as higher yielding securities matured and lower rate securities are purchased in the current interest rate environment.
o Forever Mt. Hope, located in Belleville, Illinois, encompasses approximately 120 acres, of which 63 are developed for current use. This property has recently gone through extensive renovations, including a newly renovated office building and full service funeral home/memorialization facility with approximately 4,300 square feet, and a complete beautification of the property, including new roads, landscaping and signage. A new mausoleum is planned for this site, with construction expected to begin in June 2003.
o Forever Valley View, located in Edwardsville, Illinois, is approximately 30 acres, of which eight are available for future development. This facility has also recently undergone an extensive transformation similar to the one at Forever Mt. Hope. Future plans also call for the development of a new mausoleum.
Forever Enterprises, Inc., through its subsidiaries, owns and operates combination funeral home and cemetery properties, produces and markets multimedia LifeStories(TM), operates an Internet marketing site and operates life insurance companies that principally issue insurance contracts to fund pre-need funeral contracts. Our life insurance operations are conducted through our wholly-owned life insurance subsidiaries.
Expenses for our cemetery operation include the cost to provide the merchandise or service pertaining to the funeral, burial or LifeStory(TM). Caskets, markers/monuments, professional services and editing services are some of the primary items. Other expenses relate to selling and marketing, such as commissions and advertising, general and administrative operations wages, insurance, supplies, utilities, maintenance wages, equipment and interest. Management's operating plans call for each of these categories to meet certain budgeted ratios as a percentage of revenues. Certain expenses may carry higher ratios in the earlier stages of operation under our plan. Our newly acquired properties' expenses generally are expected to reach normal sustainable levels within 12 to 18 months. - 20 -
Operating income increased $2.7 million in the year ended December 31, 2002 compared to 2001. The change in operating performance was due primarily to increased premium income and commission and expense allowances, offset by higher than expected mortality experiences for the year.
Selling, general and administrative expenses decreased $1.7 million, or 25.0% from $6.8 million for the year ended December 31, 2000, to $5.1 million, in 2001 due to cost reduction efforts and improved operating efficiencies which required fewer resources. As a percentage of revenues, selling, general and administrative costs declined to 68.0% for the year ended December 31, 2001, from 107.2% for the year ended December 31, 2000 due to more efficient deployment of company resources and certain economies of scale.
Goodwill represents the difference between the purchase price paid and the fair value of the net assets acquired in connection with the acquisition of KBL. In accordance with Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," goodwill is tested for impairment on an annual basis. The Company completed the required impairment tests of goodwill and indefinite-lived intangible assets during the second quarter of 2004 and concluded that these assets are not impaired.
In October 2004, the AICPA issued a technical bulletin on financial accounting and reporting issues related to SOP 03-1. Upon adoption of the guidance in the technical bulletin, the Company restated the amount of the cumulative effect of change in accounting principle in the accompanying financial statements from the amount previously reported in earlier quarters ($0.2 million). The previously reported 2004 quarterly financial information has also been restated in Item 8 of this Form 10-K to reflect the implementation of the technical bulletin provisions.
The decrease in pretax income during the year ended December 31, 2004 primarily related to an increase in operating expenses, attributed to the commencement of sales and administration of the Company's universal and variable universal life products.
The financial statements have been restated to reflect a reclassification of bank overdrafts of $4.0 million and $14.4 million as of December 31, 2003 and 2002, respectively.
Net realized investment losses before taxes were $371 million in 2008 compared with net realized gains before taxes of $374 million in 2007 and $245 million in 2006. The net realized losses in 2008 were primarily attributable to other-than-temporary impairment losses on equity securities. The net realized gains in 2007 and 2006 were primarily attributable to gains from investments in limited partnerships.
Net premiums written from specialty insurance, which represented 25% of our premiums written in 2008, decreased by 2% in 2008 and were flat in 2007 compared with the respective prior years. Net premiums written for the classes of business within the specialty insurance segment were as follows:
The decline in premiums in 2008 and 2007 for the professional liability classes of business was due to the highly competitive rate environment, particularly in the directors and officers liability component, and our commitment to maintain underwriting discipline in this environment.
We experienced favorable development of about $170 million in the homeowners and commercial property classes, primarily related to the 2006 and 2007 accident years. The severity of late reported property claims that emerged during 2008 was lower than expected. Because the incidence of such property losses is subject to a considerable element of fortuity, reserve estimates for these classes are based on an analysis of past loss experience on average over a period of years. As a result, the favorable development in 2008 was recognized but had a relatively modest effect on our determination of carried property loss reserves at December 31, 2008.
We experienced favorable development of about $135 million in the run-off of our reinsurance assumed business due primarily to better than expected reported loss activity from cedants.
In our U.S. operations, during 2008, we invested new cash in tax exempt bonds and taxable bonds. The taxable bonds we invested in were corporate bonds while we reduced our holdings of mortgage-backed securities. In 2007, we invested new cash in tax exempt bonds and, to a lesser extent, taxable bonds, equity securities and limited partnerships. The taxable bonds we invested in were corporate bonds and mortgage-backed securities while we reduced our holdings of U.S. Treasury securities. In 2006, we invested new cash in tax exempt bonds and, to a lesser extent, equity securities and limited partnerships, whereas we decreased our holdings of taxable bonds, principally U.S. Treasury securities. Our objective is to achieve the appropriate mix of taxable and tax exempt securities in our portfolio to balance both investment and tax strategies. At December 31, 2008, 69% of our U.S. fixed