felanders/preprocessed huggingface dataset:
Torchmark is implementing a number of measures to increase its sales of Medicare Supplement business. Torchmark's price increases on these products have not been as great as certain major competitors, which should give Torchmark the opportunity to compete more effectively on the basis of price. Torchmark has also obtained approval in a number of states to sell the "attained-age" product, thereby allowing Torchmark to compete on this basis. Also, Torchmark is continually developing new Medicare Supplement products and markets. One such new product is a group Medicare Supplement product targeted at employees, unions, and associations.
Annuity premium collections rose 33% to $319 million in 1995 over the prior year. Fixed annuity collections of $130 million were up over three times the 1994 collections of $43 million. The increase in fixed annuity collections resulted largely from the entry of the United American agents into annuity markets during the fourth quarter of 1994. These agents work primarily through banks and market annuity products to bank customers. These sales generated $76 million of collections in 1995. Fixed annuity collections declined 7% in 1994 from the prior year. Variable annuity collections declined 4% to $189 million in the 1995 period, after having fallen 8% in 1994. Weaker financial markets in 1994 and early 1995 were thought to have caused the declines in sales of variable annuities. Sales of these products recovered in the second half of 1995. Variable annuity sales rose 45% to $112 million in the second half of 1995 over $77 million in the first half.
Insurance operating margins for annuities as measured by the mean reserve have remained fairly stable throughout the three years examined. Annuity policy charges have increased in each period.
Effective January 1, 1993, Torchmark adopted SFAS 109 and has reported the cumulative effect of that change in the method of accounting for income taxes in the 1993 consolidated statement of operations.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) NOTE 13--NOTES PAYABLE (CONTINUED)
On March 17, 1994, litigation was filed against Liberty, certain officers and present and former directors of Torchmark and KPMG Peat Marwick LLP, independent public accountants of Torchmark and its subsidiaries, in the Circuit Court of Marion County, Alabama (Miles v. Liberty National Life Insurance Company, Civil Action No. CV-94-67). The lawsuit asserted that it was brought on behalf of a class comprised of the shareholders of Torchmark. The complaint alleged a failure to timely and adequately report allegedly material contingent liabilities arising out of insurance policy litigation involving Liberty. Compensatory and punitive damages in an unspecified amount were sought.
On the Effective Date, the Company estimated that payments to administration creditors and holders of allowed priority tax claims, allowed claims of secured creditors, enrollee claims, allowed priority employee claims and allowed convenience claims (the "Excluded Cash claims") would not exceed $10.3 million; however, if required the Reorganization Plan further provides for the payment of up to $16.0 million of such claims. Pursuant to a stipulation, the creditor committees agreed, provided the creditors have received the full amount of minimum cash pursuant to the Reorganization Plan ($77.3 million), to make up to the $5.7 million differential out of cash proceeds from the sales of assets or the settlement of litigation which were transferred to a trust established for the benefit of creditors pursuant to the Distribution Trust Agreement in order to provide for the payment of these claims in excess of $10.3 million. In the event that the Company's exposure to these claims significantly exceeds $16.0 million, this could have a material adverse effect on the viability of the Reorganization Plan and the Company's business and operations. The Company believes that reserves for the Excluded Cash claims will be adequate to satisfy these claims.
Assets held under capital leases at December 31, 1993 and 1992 of $153,000 and $761,000, respectively, (net of $1.6 million and $1.1 million, respectively, of accumulated amortization) are comprised primarily of equipment leases. Amortization expense for capital leases is included in depreciation expense.
Pursuant to the Reorganization Plan, Messrs. Ratican and Froelich ("Senior Management") each received options to purchase up to 277,778 shares of Common Stock at a price of $6.54 per option share. At December 31, 1991, 100% of these options were fully vested. The difference of $905,000 between the option exercise price and market value at date of grant was charged to operations and accrued as a liability during 1991. As of January 1, 1992, the Company entered into employment agreements with Senior Management. Under the terms of these employment agreements, each member of
Leucadia National Corporation (the "Parent") is a holding company whose assets principally consist of the stock of its several direct subsidiaries, cash and other liquid investments. The Parent continuously evaluates the retention and disposition of its existing operations and investigates possible acquisitions of new businesses in order to maximize shareholder value. Accordingly, while the Parent does not have any material arrangement, commitment or understanding with respect thereto (except as disclosed in this Report), further acquisitions, divestitures, investments and changes in capital structure are possible. Its principal sources of funds are its available cash resources, bank borrowings, public financings, repayment of subsidiary advances, funds distributed from its subsidiaries as tax sharing payments, management and other fees, and borrowings and dividends from its regulated and non-regulated subsidiaries. It has no substantial recurring cash requirements other than payment of interest and principal on its debt, tax payments and corporate overhead expenses. As of December 31, 1999, the Company's readily available cash, cash equivalents and marketable securities, excluding those amounts held by its regulated subsidiaries, totaled $390,900,000. Additional sources of liquidity as of December 31, 1999 include $110,600,000 of marketable securities collateralizing letters of credit and $125,600,000 of cash, cash equivalents and marketable securities held by Fidei. In addition, the book value of the principal amount of promissory notes received from Conseco, Inc. upon the 1997 sale of the Colonial Penn Life Group was $250,000,000 at December 31, 1999.
During 1999, the Company repurchased 5,182,958 Common Shares for an aggregate cost of $125,481,000. From January 1, 2000 through March 13, 2000, the Company repurchased 1,505,000 Common Shares for an aggregate cost of $32,095,000. As of March 13, 2000, the Company is authorized to repurchase an additional 4,495,000 Common Shares. Such purchases may be made from time to time
As of December 31, 1999, the principal amount of Fidei's Euro denominated outstanding debt, all of which is non-recourse to the Company, was $214,600,000 (213,200,000 Euros). Inasmuch as Fidei's Euro denominated assets will be sold over time and such assets are presently funded with Fidei's Euro denominated debt, the Company has determined not to acquire a currency hedge for Fidei's Euro denominated debt. During 1999, Fidei paid the Company $41,400,000, thereby reducing the Company's net investment in Fidei to $38,129,000 at December 31, 1999.
In 1998, the decrease in earned premium revenues was primarily due to a decline in the number of assigned risk automobile pool contracts acquired due to competition and the depopulation of the assigned risk automobile pools ($24,600,000) and a reduction in certain lines, principally voluntary commercial automobile ($8,500,000), private passenger automobile ($6,000,000), commercial package policies ($4,300,000) and workers' compensation ($3,700,000), due to tighter underwriting standards, reunderwriting and increased competition.
Net investment income decreased 6% when comparing 1997 to 1996. The decrease relates to the decrease in invested assets from a coinsurance agreement. The Company's insurance subsidiary UG entered into a coinsurance agreement with First International Life InsuranceCompany ("FILIC"), an unrelated party, as of September 30, 1996. During 1997, FILIC changed its name to Park Avenue Life Insurance Company ("PALIC"). Under the terms of the agreement, UG ceded to FILIC substantially all of its paid-up life insurance policies. Paid-up life insurance generally refers to non-premium paying life insurance policies. At closing of the transaction, UG received a coinsurance credit of $28,318,000for policy liabilities covered under the agreement. UG transferred assets equal to the credit received. This transfer included policy loans of $2,855,000 associated with policies under the agreement and a net cash transfer of $19,088,000, after deducting the ceding commission due UG of $6,375,000. To provide the cash required to be transferred under the agreement, the Company sold $18,737,000 of fixed maturity investments.
Total liabilities increased slightly in 1997 compared to 1996. However, future policy benefits which represented 81% of total liabilities at December 31, 1997, decreased slightly in 1997.
Policy claims and benefits payable decreased 35% in 1997 compared to 1996. Thereis no single event that caused this item to decrease. Policy claims vary from year to year and therefore, fluctuations in this liability are to be expected and arenot considered unusual by management.
The life segment's earnings decreased $2,071,000 or 26 percent in 1997 compared to 1996. Much of this was attributable to an adjustment to deferred acquisition costs, which resulted in additional amortization of approximately $2,057,000. This adjustment was a result of an acceleration of amortization of prior years' amounts deferred.
The investment portfolio is comprised primarily of fixed maturity securities and equity securities. The Company's investment strategy is to invest principally in long-term, high-quality securities. As of December 31, 1998, 90 percent of the fixed maturity securities were investment grade (as defined by the National Association of Insurance Commissioners "NAIC" -Securities Valuation Office and having NAIC ratings of Class 1 or Class 2), compared to 93 percent at December 31, 1997. The below-investment-grade holdings present opportunities for much higher returns than with other available debt securities. The below-investment-grade holdings purchased are securities that have the potential for upgrade in the near future. Also, the Company minimizes its risk associated with below-investment-grade securities by monitoring credit risk of the issuers and by spreading the exposure amongst several issuers.
The insurance industry is governed by the NAIC, as well as individual state insurance departments. These governing agencies are working on a project to codify insurance statutory accounting practices. Currently, these practices are prescribed in a variety of publications, as well as state laws, regulations, and general administrative rules. The Company expects the State of Iowa to adopt codification by January 1, 2001, and the Company expects the new rules to
The Company is not aware of any other current recommendations by the NAIC or other regulatory authorities in the states in which the Company conducts business that, if or when implemented, would have a material effect on the Company's liquidity, capital resources or operations.
This year, for the first time, we applied for a Standard & Poor's rating and were pleased when
The Company adopted SFAS No. 129, "Disclosure of Information about Capital Structure," effective December 31, 1997. SFAS No. 129 contains disclosure requirements including liquidation preferences of preferred stock, rights and privileges of the outstanding equity securities and the redemption amounts for all issues of capital stocks that are redeemable. SFAS No. 129 did not have a material effect on the Company's Consolidated Financial Statements or Notes to
A reconciliation of income tax expense computed at the applicable Federal tax rate of 34% in 1998 and 35% in 1997 and 1996 to the amount recorded in the Consolidated Financial Statements is as follows.
The ultimate risk of the year 2000 issue is the Company's inability continue as a going concern in the event of major computer system failure. The impact could alter, not only the Company's ability to transact business, but also global financial systems. Even though the Company is confident that these issues will not cause significant internal problems, a danger exists regarding the lack of preparedness of consumers and other institutions, including federal and state government.
Goodwill is tested for impairment using a two-step process. The first step is to determine if there is an impairment based on the estimated fair value of the reporting unit compared to the carrying value of the business unit, and the second step, which is only required if step one yields a business unit carrying value that is greater than the fair value of the business unit, is to determine the amount of the impairment loss, which is equal to the excess carrying value over the implied fair value of the goodwill of the reporting unit giving rise to the goodwill.
The Company’s wholly owned business trust subsidiaries, UNG Trust I and UNG Trust II, are not consolidated pursuant to FIN 46R. These business trust subsidiaries have issued $30.0 million in floating rate capital securities and $0.9 million of floating rate common securities. The sole assets of the business trust subsidiaries are $30.9 million of the Company’s junior subordinated debentures, which have the same terms with respect to maturity, payments and distributions as the floating rate capital securities and the floating rate common securities.
As of December 31, 2008, Fox Paine & Company beneficially owns shares having approximately 88.1% of the Company’s total outstanding voting power. Fox Paine & Company can nominate five of the directors of the Company’s Board of Directors. The Company’s Chairman is a member of Fox Paine & Company. In addition, another director is an employee of Fox Paine & Company. The Company relies on Fox Paine & Company to provide management services and other services related to the operations of the Company. The Company directly reimbursed Fox Paine & Company $0.1 million, $0.3 million, and $0.1 million during 2008, 2007, and 2006, respectively, for expenses incurred in providing management services.
Includes all Wind River Reinsurance expenses other than excise tax related to cessions from U.S. Insurance Companies to Wind River Reinsurance.
The Company's investments are generally managed to match related insurance and policyholder liabilities. The comparison of investment return with insurance or investment product crediting rates establishes an interest spread. Interest crediting rates on adjustable rate policies have been reduced to their guaranteed minimum rates, and as such, cannot be lowered any further. Policy interest crediting rate changes and expense load changes become effective on an individual policy basis on the next policy anniversary. Therefore, it takes a full year from the time the change was determined for the full impact of such change to be realized. If interest rates decline in the future, the Company will not be able to lower rates and both net investment income and net income will be impacted negatively.
The Company’s total investments represented 86% and 85% of the Company’s total assets as of December 31, 2016 and 2015, respectively. Fixed maturities consistently represented a substantial portion, 55% and 58%, respectively, of the total investments during 2016 and 2015. The overall investment mix, as a percentage of total investments, remained fairly consistent when comparing the investments held as of December 31, 2016 and 2015.
Notes receivable represent collateral loans and promissory notes issued by the Company and are reported at their unpaid principal balances, adjusted for valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. The valuation allowance as of December 31, 2016 and 2015 was $0. Interest accruals are analyzed based on the likelihood of repayment. The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.
On September 30, 1998, UG entered into a coinsurance agreement with The Independent Order of Vikings, (IOV) an Illinois fraternal benefit society. Under the terms of the agreement, UG agreed to assume, on a coinsurance basis, 25% of the reserves and liabilities arising from all in-force insurance contracts issued by the IOV to its members. At December 31, 2016, the IOV insurance in-force assumed by UG was $1,442,637, with reserves being held on that amount of $349,149. At December 31, 2015, the IOV insurance in-force assumed by UG was $1,451,366, with reserves being held on that amount of $349,675.
Total revenue for the year ended December 31, 2003 increased 2% to $588.8 million from $576.6 million for the same period in 2002. In 2003, the Company's PBM relationship with the TennCare® program ended. In addition the Company ceased distributing Synagis® in the third quarter of 2003. Without these events, revenue would have increased 20% year over year.
Net cash used in investing activities in 2003 was $1.0 million compared to $33.3 million used in 2002. This decrease reflects approximately $35 million of the Facility used for the cash portion of the purchase price for the Vitality acquisition, partially offset by the repayment in full, in March 2002, of a $2.1 million officer loan.
All Company-issued checks are drawn on two disbursement accounts, one for pharmacy claims payments and one for remaining accounts payable. Checks are presented for payment daily to the disbursement accounts and are automatically funded by a transfer from our main concentration account. If there are sufficient available balances in the concentration account, funds are automatically transferred to the disbursement accounts to cover the presentments. If there are not sufficient available balances in the concentration account we must borrow from the Facility that day. An authorized officer of the Company transmits a notice to HFG with the requested amount by noon. Within an hour HFG wires the requested amount as available funds to the concentration account, which amount is then automatically transferred the same day to the disbursement accounts to cover the presentments.
On March 1, 2004 the Company reached a tentative settlement with E. David Corvese, the founder and a former officer and director of the Company under which the Company would pay Mr. Corvese $950 and either extend the term of its existing lease or purchase the real property at which one of the Company's facilities is located, the value of which would be determined by a certified real estate appraiser. Mr. Corvese sued the Company in Delaware Chancery Court seeking indemnification of $2.4 million he paid to settle certain claims and charges of the federal government and State of Tennessee and a declaration that he is not obligated to repay the Company for legal fees, costs and expenses previously advanced by the Company to him to defend those claims and charges. The Company answered the complaint denying that Mr. Corvese is entitled to indemnification and seeking repayment of the advanced fees, costs and expenses. However, after considering the substantial costs of proceeding with this litigation and the significant management time and attention that would be required, the Company believes that a settlement at this time would be in the Company's and its stockholders' best interest. The settlement was reached after the balance sheet date but prior to the issuance of the financial statements. Accordingly, the Company recorded a pre-tax charge of $950 at December 31, 2003.
Sources of Funds A wholly-owned subsidiary, Great American Holding Corporation ("GAHC"), has a revolving credit agreement with several banks under which it can borrow up to $300 million. The credit line converts to a four-year term loan with scheduled principal payments to begin in March 1997. Borrowings under the credit line are made by GAHC and are advanced to AFC. The line is guaranteed by AFC and secured by 50% of the stock of Great American Insurance Company ("GAI"). Borrowings, repayments and interest payments on the line are included in "net advances from (to) affiliates" in the following table. At December 31, 1994, GAHC had borrowings of $160 million outstanding under the agreement.
AFC often extends the maturities of its long-term debt through exchange offers which strengthen AFC's capital structure and enable it to utilize the cash savings for other corporate purposes. In April 1994, AFC issued $203.8 million of 9-3/4% Debentures due April 20, 2004 in exchange for a portion of its publicly traded debentures. A cash premium of $6.5 million on the debentures exchanged is included in Extraordinary Items in the Statement of Operations. AFC also redeemed at par all 13-1/2% Debentures not tendered in the exchange for approximately $63.2 million in cash.
Fixed income investment funds are generally invested in securities with short-term and intermediate-term maturities with an objective of maximizing interest and dividend yields. This practice allows additional flexibility in reacting to market conditions.
Policies in force for the Company's two major programs were as follows:
An extension of the additional coverage from National Indemnity Company was purchased effective January 23, 1995 for a total premium of approximately $7.8 million. This coverage begins at a limit of $200 million and decreases in increments ranging from $25 million to $35 million on the 1st and the 16th
Premiums earned and underwriting results for the Company's two major programs were as follows:
As mentioned previously, the Company no longer writes new homeowners or condominium policies or earthquake coverage endorsements as ordered by the DOI. The Company continues to write new Personal Excess Liability Policies. Additionally, the Company will continue to renew existing homeowner and condominium policies without earthquake through July, 1997. Due to the Company's intent to exit the homeowners' market, policies in force for homeowners and the other programs combined decreased 11.3% in 1994 compared to an increase of 7.0% in 1993.
Underwriting results for these programs are subject to variability caused by weather-related claims and by infrequent disasters. Excluding earthquake related claims and expenses, the earthquake reinsurance reinstatement and the Proposition 103 rollback, the underwriting profit (loss) for
DECEMBER 31, ------------------------------ 1994 1993 ---- ---- (Amounts in thousands) Investments: Fixed maturities, held-to-maturity at amortized cost (fair value, 1993 $1,289,895) $ - $1,177,565 Fixed maturities - available-for- sale, at fair value, 1994 and lower of aggregate amortized cost or aggregate fair value, 1993 (amortized cost, 1994 $1,002,831; aggregate fair value, 1993 $277,866) 941,406 244,451 Equity securities, at fair value (cost, 1994 $539; 1993 $539) 768 539 ---------- ---------- Total investments - Note 2 942,174 1,422,555 Cash and cash equivalents 249,834 17,894 Accrued investment income 19,631 28,247 Premiums receivable 90,236 87,241 Income taxes receivable 74,064 1,396 Deferred income taxes - Note 4 276,570 40,905 Deferred policy acquisition costs - Note 3 14,776 15,712 Furniture, equipment and leasehold improvements; at cost less accumulated depreciation, 1994 $42,171; 1993 $35,414 13,307 17,409 Other assets 22,218 13,311 ---------- ----------
Loss and loss adjustment expenses have been reduced by reinsurance ceded totaling $76,815,000, $3,700,000, and $1,333,000 for 1994, 1993 and 1992, respectively.
The Company has a homeowners excess of loss reinsurance treaty with General Reinsurance Corporation. In this excess treaty, the reinsurer's limit is $650,000 in excess of the Company's retention of $300,000 per risk, subject to a maximum reinsurer's limit of $1,300,000 per occurrence.
This reinsurance program was renewed for the period from July 1, 1994 through June 30, 1995, with amended terms, for a total annual premium of approxi-
In 1992, the Homeowners line experienced an underwriting profit despite losses incurred of approximately $2.1 million related to the 1991 Oakland, California fire.
The Company owns its principal executive offices in Lawrenceville, New Jersey, which has 53,220 square feet of office space. In addition, it leases its offices in Houston, Texas and has operating leases for its regional offices. The Company has terminated the lease for its Woodland Hills, California office and has relocated the claim operations staff to a new Woodland Hills location with a six-month lease, continuing month to month thereafter. Leased properties have been sublet in Nashville, Tennessee and New Orleans, Louisiana. The Company has extended buyout offers for leased properties in Brookfield, Wisconsin, Dallas, Texas, Denver, Colorado, Des Moines, Iowa and San Antonio, Texas. Brokers have been engaged to attempt to sublet leased properties in Brookfield, Wisconsin, Des Moines, Iowa, Raleigh, North Carolina and Sacramento, California. The lease on the Company's claim office in Missoula, Montana can be terminated with ninety-days notice.
Underwriting Expenses. Underwriting expenses for 2001, 2000 and 1999 were $227.2 million, $134.5 million and $130.1 million, respectively. The underwriting expense ratios for 2001, 2000 and 1999 were 45.8%, 34.6% and 40.0% respectively. The increase in 2001 compared to 2000 is primarily related to the write-off of $49.6 million of deferred acquisition costs that were determined to be unrecoverable. In addition, a $5.0 million provision was established for uncollectible premiums related to a large commercial automobile (livery) program. The decline in the 2000 underwriting expense ratio, compared to the 1999 expense ratio, of 5.4 points to 34.6%, resulted from expense savings initiatives instituted in 1999, principally reducing systems out-sourcing costs by $5.1 million and reducing salary and benefits by $3.5 million. Additionally, lower fixed costs were spread over higher premium volume in 2000.
The Company obtained permission from the Texas, Wisconsin and California insurance departments to discount its loss and loss adjustment expense reserves by 5% in connection with the preparation of the 2001 annual statutory statements for the Company's insurance subsidiaries domiciled in those states. Without this permitted statutory accounting for loss and loss adjustment expense reserves, the Company's principal insurance subsidiaries, Highlands Insurance Company, Northwestern National Casualty Company and Pacific National Insurance Company, would have reported negative surplus at December 31, 2001. The above table reflects the permitted discounting.
In the late 2019, we began investing in options to hedge our interest rate risks on our FIA product. Options typically do not qualify for hedge accounting; therefore, we chose not to use hedge accounting for the related options that we currently have. We value our derivatives at fair market value with the offset being recorded on our income statement as a realized gain or (loss).
6. The net realized gains on investments increased to $2.6 million over prior year due to sale of securities for profit and yield pick-ups. Gross gain retained by American Life was $5.1 million which was offset by the unrealized gains on our investment portfolio held for the reinsurer of $2.9 million. The terms of the contracts with the third-party reinsurers provide that unrealized gains on the portfolios accrue to the third-party reinsurers. We account for these unrealized gains by recording equivalent realized losses in the net realized gains on investments. Accordingly, the unrealized gains on the assets held by American Life on behalf of the third-party reinsurers were offset by recording an embedded derivative loss of $2.9 million in net realized gains on investments. If prices of investments recover, the unrealized losses of the third-party reinsurers may be reduced; therefore, the associated embedded derivative gain recognized by us, would be reduced accordingly.
Amortization of deferred gain on reinsurance: The decrease was due to the indemnity coinsurance converted by a third-party reinsurer to assumptive reinsurance of approximately $305,600 and approximately $2.6 million for the years ended December 31, 2020 and 2019, respectively. Under assumptive reinsurance we no longer have a legal obligation for policies subject to such agreement that became assumptive with the reinsurer. This decrease was offset by the amortization of the ceding commission deferred from the reinsurance agreements with other reinsurers which were not in effect in 2019.
The following table shows the carrying value of our investments by investment category and cash and cash equivalents, and the percentage of each to total invested assets as of December 31, 2020 and 2019. Increases in fixed maturity securities primarily resulted from the sale of our new MYGA and FIA products during 2020. Most of the investments as of December 31, 2020 are held as collateral for our reinsurers.
Reflecting the quality of securities maintained by us, 81.1% and 96.7% of all fixed maturity securities were investment grade as of December 31, 2020 and 2019, respectively.
We discuss below certain non-GAAP financial measures that our management uses, in conjunction with GAAP financial measures, as an integral part of managing our business and to, among other things:
The following table presents the amortized cost and gross unrealized losses for fixed maturities where the estimated fair value had declined and remained below amortized cost by less than 20%, or 20% or more for December 31, 2002:
Net cash provided by the Company's operating activities (reflecting principally: (i) premiums and contract charges collected less (ii) benefits paid on life insurance and annuity products plus (iii) income collected on invested assets less (iv) commissions and other general expenses paid) was approximately $26.8 million, $104.1 million and $71.7 million in fiscal 2002, 2001 and 2000, respectively. Net cash used in the Company's investing activities (principally reflecting investments purchased less investments called, redeemed or sold) was approximately $684.6 million, $815.4 million and $288.5 million in fiscal 2002, 2001 and 2000, respectively.
risk. The Company's exposure to equity price risk and foreign exchange risk is not significant. The Company has no direct commodity risk.
Capital expenditures during fiscal 2002 were approximately $29,000. As of December 31, 2002, the Company had no outstanding commitments for significant capital expenditures.
Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control and many of which are subject to change. These uncertainties and contingencies could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. Whether or not actual results differ
The stores from our Retail Business discontinued operations received commissions from insurance companies for their services. Prior to July 1, 2009, neither we nor the stores served as an insurance company and therefore we did not assume underwriting risks; however, as discussed above, effective July 1, 2009, we acquired a 100% equity interest in KICO.
Other operating expenses. Other operating expenses include the corporate expenses of our holding company, Kingstone Companies, Inc. These expenses include executive employment costs, legal, auditing and consulting fees, occupancy costs related to our corporate office and other costs directly associated with being a public company.
Net cash provided by operating activities was $1,199,000 in 2009. Net cash used in operations was $753,000 in 2008. The increase in cash flow in 2009 was primarily a result of additional operating cash flows provided through the acquisition of KICO on July 1, 2009.
The inability to obtain a financial strength rating from A.M. Best, or a downgrade in any such rating obtained, may have a material adverse effect on our competitive position, the marketability of our product offerings, and our liquidity, operating results and financial condition.
Our future success will depend, in part, upon the efforts of Barry Goldstein, our President and Chief Executive Officer, and John Reiersen, President and Chief Executive Officer of KICO. The loss of Messrs. Goldstein and/or Reiersen or other key personnel could prevent us from fully implementing our business strategies and could materially and adversely affect our business, financial condition and results of operations. As we continue to grow, we will need to recruit and retain additional qualified management personnel, but we may not be able to do so. Our ability to recruit and retain such personnel will depend upon a number of factors, such as our results of operations and prospects and the level of competition then prevailing in the market for qualified personnel.
The reporting units of the Company for which goodwill has been allocated include Mutual Funds, Retirement Plans and Individual Life.
At December 31, 2012 and 2011, notional amounts pertaining to derivatives utilized to manage interest rate risk totaled $18.0 billion and $13.6 billion, respectively ($17.8 billion and $13.3 billion, respectively, related to investments and $0.2 billion and $0.3 billion, respectively, related liabilities). The fair value of these derivatives was $(251) and $(237) as of December 31, 2012 and 2011, respectively.
Excludes certain non-GMIB living benefits of $0.4 billion of account value and $0.0 billion of NAR.
In 2018 & beyond, $2.5 billion of the $5.6 billion is associated with account value that is eligible in 2021.
As of December 31, 2012 and 2011, the Company’s total credit default swaps that provide credit protection on European issuers had a notional amount of $270 and $441, respectively, and a fair value of $(1) and $17, respectively. Included in those notional amounts as of December 31, 2012 and 2011were $270 and $250, respectively, on credit default swaps referencing single name corporate and financial European issuers, of which $23 and $88, respectively, related to the higher risk countries. The maturity dates of the credit defaults swaps are primarily consistent with the hedged bonds. Also included are credit default swaps with a notional amount of $191 as of December 31, 2011 which reference a standard basket of European corporate and financial issuers. For further information on the use of the Company’s credit derivatives and counterparty credit quality, see Derivative Instruments within the Credit Risk section in this MD&A.
Included in the Company’s equity securities, trading portfolio are certain investments in European sovereign debt totaling $378. These investments do not include any holdings in GIIPS nations. These assets support the U.K. variable annuity business and, therefore, changes in the fair value of these investments are reflected in the corresponding policyholder liabilities. The Company’s indirect exposure to these holdings is through any guarantees issued on the underlying variable annuity policies.
Core Revenue is a supplemental measure of our performance and includes Renewal Commissions, Renewal Royalty Fees, New Business Commissions, New Business Royalty Fees, and Agency Fees. We believe that Core Revenue is an appropriate measure of operating performance because it summarizes all of our revenues from sales of individual insurance policies.
During the years ended December 31, 2019 and 2018, an aggregate of 1.4 million and 261 thousand LLC Units, respectively, were redeemed by the Pre-IPO LLC Members for newly-issued shares of Class A common stock. In connection with these redemptions, we received 1.4 million and 261 thousand LLC Units, which resulted in an increase in the tax basis of our investment in GF subject to the provisions of the Tax Receivable Agreement. We recognized a liability for the TRA Payments due to the Pre-IPO LLC Members, representing 85% of the aggregate tax benefits we expect to realize from the tax basis increases related to the redemptions of LLC Units, after concluding it was probable that such TRA Payments would be paid based on our estimates of future taxable income. As of December 31, 2019 and 2018, the total amount of TRA Payments due to the Pre-IPO LLC Members under the Tax Receivable Agreement was $13.4 million and $1.7 million, respectively, of which $9 thousand and $9 thousand, respectively, was current and included in Accounts payables and accrued expenses on the Consolidated Balance Sheet.
Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to GSHD's stockholders for their vote or approval, except as otherwise required by applicable law, by agreement, or by GSHD's certificate of incorporation.
On March 6, 2020, the Company refinanced its $13.0 million revolving credit facility and $40.0 million term note payable to a $25.0 million revolving credit facility and $80.0 million term note payable to finance general corporate
General and Administrative--General and administrative costs and expenses were $15.4 million, or 6.3% of sales, for 1999 as compared to $9.5 million, or 6.8% of sales, for 1998. The increase in costs and expenses was primarily due to the costs of operating the Lyon's restaruant chain, although these costs and expenses decreased as a percentage of sales due to efficiencies obtained through combining the Lyon's restaurant operations with the Company's other operations.
For the year ended December 31, 2002 we recorded income tax expense of $15.6 million, or an effective tax rate of 38.0%. This compares to $9.1 million, or an effective tax rate of 41.5%, for the year ended December 31, 2001. Our effective tax rate decreased year over year due to our investment in tax-advantaged securities and our implementation of state tax saving strategies during 2002.
In May 2002, we entered into a $25 million revolving line of credit facility with LaSalle Bank N.A. The line of credit has a term of one year and has interest rates based on prime, floating and LIBOR rates. We granted a security interest in the common stock of our subsidiaries. The facility includes financial covenants, including requirements of minimum EBITDA and minimum tangible net worth. We are required to obtain LaSalle's consent of any proposed acquisition that would result in a violation of any of the covenants contained in the line of credit. As of December 31, 2002, we were in compliance with all covenants and no funds had been drawn on the facility.
COMPLIANCE WITH NEW GOVERNMENT REGULATIONS MAY REQUIRE US TO MAKE SIGNIFICANT EXPENDITURES.
We compete for members principally on the basis of size and quality of provider network, benefits provided and quality of service. We compete with numerous types of competitors, including other health plans and traditional state Medicaid programs that reimburse providers as care is provided. Subject to limited exceptions by federally approved state applications, the federal government requires that there be choices for Medicaid recipients among managed care programs. Voluntary programs and mandated competition may limit our ability to increase our market share.
We maintain liability insurance, subject to limits and deductibles, for claims that could result from providing or failing to provide managed care and related services. These claims could be substantial. We
believe that our present insurance coverage and reserves are adequate to cover currently estimated exposures. We cannot assure you that we will be able to obtain adequate insurance coverage in the future at acceptable costs or that we will not incur significant liabilities in excess of policy limits.
The Company sells variable and fixed annuities, universal life insurance, variable life insurance and term life insurance primarily through affiliated and unaffiliated distributors in New Jersey and New York only.
Market Risk” below. For actuarial assumptions, historical experience on which to base predictions about future sources of volatility is limited due to the fact this block of business is relatively new. In the third quarter of 2013, updates to lapse rate assumptions drove the most significant changes to these reserves. Other factors may also drive variability in the change in reserves, particularly during the third quarter when assumption updates are performed. As noted above, however, the impact on our results of operations of changes in these assumptions can be offsetting and we are unable to predict their movement or offsetting impact over time.
Our effective tax rate is based on income, non-taxable and non-deductible items, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate. Inherent in determining our annual tax rate are judgments regarding business plans, planning opportunities and expectations about future outcomes.
Benefits and expenses decreased $72 million. This decrease was primarily driven by a favorable variance of $51 million in DAC amortization and $15 million in interest credited to policyholders’ account balances, which includes DSI amortization. Lower DAC and DSI amortization is mainly related to the impact of the mark-to-market of the living benefit embedded derivative liability and related hedge positions and the impact of changes in the estimated profitability of the business, as discussed above, as well as amounts ceded under the 2012 coinsurance agreement with PAR U in our life products. Also contributing to the decrease were lower policyholders’ benefits of $13 million, including changes in reserves, mainly driven by amounts ceded under the 2012 coinsurance agreement with PAR U in our life products and adjustments to the GMDB and GMIB reserves related to the impact of changes in the estimated profitability of the business, as discussed above.
The principal sources of the Company’s liquidity are premiums and certain annuity considerations, investment and fee income, investment maturities and sales as well as internal borrowings. The principal uses of that liquidity include benefits, claims, and payments to policyholders and contractholders in connection with surrenders, withdrawals and net policy loan activity. Other uses of liquidity include commissions, general and administrative expenses, purchases of investments, and payments in connection with financing activities.
Competition: The property and casualty insurance industry is highly competitive on the basis of both price and service. In recent years there has been a trend in the property and casualty industry toward consolidation which could result in even more competitive pricing. The Company also faces competition from foreign insurance companies captive insurance companies and risk retention groups. In the future, the industry, including the Company, may face increasing insurance underwriting competition from banks and other financial institutions.
The Shelby Insurance Companies (SIC) had migrated its commercial lines, claims, and billing applications to Policy Management Systems Corporation (PMSC) Y2K compliant systems prior to its acquisition in 1999. SIC's personal lines and other miscellaneous internally developed systems renamed to be converted to their Y2K counterpart. The migration effort was completed in October, 1998. Presently, the core insurance processing systems for SIC are Y2K compliant while work remains with respect to miscellaneous in-house developed systems. PMSC will continue to test all systems through 1999.
VESTA INSURANCE GROUP, INC. CONSOLIDATED BALANCE SHEETS (Amounts in thousands except share and per share data)
A reconciliation of Vesta's insurance subsidiaries' reported statutory stockholders' equity to Vesta's consolidated GAAP stockholders' equity is as follows:
Waddell & Reed Asset Management Company, ("WRAMCO"), provides investment advice and services to the Company and its subsidiaries in connection with the management of their respective portfolios pursuant to an Investment Services Agreement. The Company paid $.4 million, $.4 million and $.6 million in fees to WRAMCO pursuant to the Investment Services Agreement in 1996, 1997 and 1998, respectively.
Pro forma information regarding net income and earnings per share is required by FAS 123, and has been determined as if the Company had accounted for its employee stock options under the fair value method of that Statement. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for 1997 and 1998, respectively; risk-free interest rates of 5.75 percent and 5.16 percent; dividend yields of 0.27 and 0.44 percent; volatility factor of the expected market price of the Company's common stock of 38.75 and 44.70; and a weighted-average expected life of the options of ten years for both years.
BNLE leases office space in Sherwood, Arkansas at a rental of $14,400 per year. BNLAC incurs 100% of the rental expense.
For the year ended December 31, 2000, the Company recorded interest income of $0.8 million compared to $1.0 million for the year ended December 31, 1999, a decrease of $0.2 million, primarily due to lower cash balances after the purchase of ADIMA.
On March 23, 2002, Mr. Richard Friedman, the Company's Chairman and Chief Executive Officer, repaid in full a $1.7 million loan from the Company, together with all accrued and unpaid interest thereon. This loan, together with accrued and upaid interest, totaled approximately $2.1 million.
MIM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
The Company is responsible for all covered prescriptions provided to plan members during the contract period. At December 31, 2001 and 2000, certain prescriptions were dispensed to members for whom the related claims had not yet been presented to the Company for payment. Estimates of $124 and $693 at December 31, 2001 and 2000, respectively, for these claims are included in claims payable.
The Company had a $780 note receivable from the Founder outstanding as of December 31, 1999. The note was fully repaid in 2000. Interest income on the notes was $27 and $56 for the years ended December 31, 2000 and 1999, respectively.
investor under Strategic's operating agreement or under the laws of the state of its formation. As a result of this dissolution, the minority interest balance of $1,112 has been reclassified to additional paid in capital.
2002 ........................................................... $ 720 2003 ........................................................... 670 2004 ........................................................... 420 2005 ........................................................... 35 ------ Total minimum lease payments ................................... 1,845 Less: Amount representing interest ............................ 220 ------ Obligations under leases ....................................... 1,625 Less: Current portion of lease obligations .................... 594 ------ $1,031 ======