felanders/preprocessed huggingface dataset:
Total revenues $1,333,672 $1,246,624 $1,202,329 $1,173,476 $1,162,613 ========== ========== ========== ========== ==========
Revenues increased 6.4% to $1,269 million in 1994 and 4.1% to $1,192 million in 1993. Excluding realized investment gains, revenues increased 6.1% in 1994 and 3.5% in 1993. Premiums and considerations (excluding discontinued operations) increased 4.4% in 1994 to $655.3 million and 2.2% in 1993 to $627.6 million. Life premiums and considerations increased 6.3% in 1994 to $256.2 million and 4.4% in 1993 to $241.0 million. The growth in life premiums and considerations is attributable to J-P's successful implementation of its Individual line business plan over the last two years and to increases in Group life contracts in force. The Individual line business plan focuses on improvement in the productivity of J-P's career life agents and on developing new relationships with independent producers. This focus has resulted in growth in premium receipts from traditional products as well as universal life and annuity products exceeding 25% in 1994 and 12% in 1993. Receipts on universal life and most annuity products do not flow through income in the year of receipt but are included in the liability for policyholder contract deposits. Accident and health premiums increased 3.2% in 1994 to $399.1 million and 0.8% in 1993 to $386.6 million. Premium growth for such years was modest due to the Company's emphasis on larger-case self- insured coverages and a moderation in the rate of medical inflation in the most recent two years.
Net investment income, which is included in operating income, grew 4.0% in 1994 to $375.2 million and 2.6% in 1993 to $360.8 million in spite of lower investment yields beginning in 1992 and continuing throughout most of 1994. Such decline is represented by the following table that presents Yield at Cost on bonds and mortgages:
Policy benefits 275,052 260,598 246,803 245,272 243,226 Expenses 69,581 78,501 81,006 78,802 82,841
1994 1993 1992 1991 1990 (In thousands) Premiums and other considerations $451,566 $431,504 $432,154 $434,684 $439,152 Net investment income 44,921 43,396 42,588 40,685 37,884 Other income - 308 358 503 1,311 Total revenues 496,487 475,208 475,100 475,872 478,347
J-P's liquidity requirements are met primarily by cash flows from the operations of J-P Life and other consolidated subsidiaries. The Company has historically posted positive cash flows from operating activities of its Life Insurance and Communications segments. Management believes that its overall sources of liquidity will continue to be sufficient to satisfy its operating requirements.
To protect against the negative impact of interest rate risk, J-P focuses on measuring option-adjusted durations of its assets and manages the risk of mismatch between assets and liabilities. The Company also adjusts interest crediting rates on a frequent basis reflecting the yield of its investment portfolio and assumptions for pricing and profitability.
13. FAIR VALUE OF FINANCIAL INSTRUMENTS: The following table presents the carrying amounts and estimated fair values of the Company's financial instruments at December 31, 1997 and 1996:
As described more fully in Notes 1 and 19 to the financial statements, the Company prepared these financial statements using accounting practices prescribed or permitted by the Insurance Department of the State of Delaware, which practices differ from generally accepted accounting principles. The effects on the financial statements of the variances between the statutory basis of accounting and generally accepted accounting principles, although not reasonably determinable, are presumed to be material.
Net income attributable to HIIQ for 2017 was significantly impacted by the changes in tax law further detailed in Note 11 of Part IV, Item 15, of this Annual Report on Form 10-K.
Net cash used in financing activities during the fiscal year ended December 31, 2017 increased compared to 2016 primarily due to a $3.5 million increase in distributions to member related to estimated federal and state income taxes for HPI and its subsidiary HPIS and an increase in share repurchases of $4.9 million. The increase in distributions to member included $2.8 million that was accrued as of December 31, 2016 and paid in 2017. During the fiscal year ended December 31, 2016, the Company borrowed and made payments on the previous Credit Facility for a net cash outflow of $7.5 million. No borrowings or payments were made under our previous Credit Facility during the fiscal year ended December 31, 2017.
If we were to change any of these judgments or estimates, it could cause a material increase or decrease in the amount of revenue we report in a particular period. For additional information, see “Revenue Recognition” in Part IV, Item 15, Note 1 of this Annual Report.
Total net investment income decreased $2.3 million primarily due to an increase in lower yielding equity securities, and a move toward municipal securities which also provide lower yields, but result in income tax advantaged earnings. In addition, the Company’s investments in limited partnerships in the Corporate segment contributed less investment income in 2005 than in 2004. The decrease in yields was partially offset by an increase in invested assets due to the acquisition of policy blocks in 2005. The annualized return on investments was 5.1% for 2005 versus 6.2% for 2004.
Net income was $22.9 million or $1.60 per share, diluted, for the year ended December 31, 2004, an increase of $4.3 million compared to net income of $18.6 million, or $1.30 per share, diluted, for the year ended December 31, 2003. The Company's income before taxes increased $4.9 million to $33.6 million for the year ended December 31, 2004 from $28.7 million for 2003.
The nature and quality of insurance company investments must comply with all applicable statutes and regulations, which have been promulgated primarily for the protection of policyholders. Of the aggregate carrying value of the Insurance Group's investment assets,
Generally, reasons for increases in gross premiums written between years are similar to those for net premiums written. In 2003 over 2002, ceded premiums written and earned were lower primarily due to less property quota share retrocession coverage purchased in 2003 as compared to 2002 and to a reduction in ceded premiums resulting from certain domestic contracts in the specialty casualty area wherein a portion of premiums assumed under those agreements was retroceded to non-affiliates. In 2002, ceded premiums written and earned increased over 2001. Such increase was largely caused by the higher cost of reinsurance coverage and additional coverage purchased (including catastrophe coverage) in 2002 over the prior year offset, in part, by a reduction in ceded premiums written resulting from such domestic contracts in the specialty casualty area wherein a portion of premiums assumed under those agreements were retroceded to non-affiliates.
The significant increase in assets in 2003 as compared to 2002 is primarily due to significant operating cash flows in 2003 and, to a lesser extent, the impact of foreign exchange on investments held, as the U.S. dollar weakened during the year compared to currencies in which the investments were held.
In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 148, 'Accounting for Stock-Based Compensation -- Transition and Disclosure, an amendment of SFAS No. 123,' to provide alternative methods (in addition to the prospective method already provided in SFAS No. 123) of transition for a voluntary change to the recognition provisions of SFAS No. 123, as well as to amend certain of its disclosure requirements as reflected in the table below.
7. NET INCOME PER COMMON SHARE (CONTINUED) appropriate, to reflect a 3-for-2 split of the common stock in the form of a 50% stock dividend, paid in July 2001.
The weighted average fair value of each option grant is estimated on the date of grant using the 'Binomial Option Price Model' with the following weighted average assumptions used for grants in 2003, 2002 and 2001, respectively: expected volatility of 20.0% for each grant; risk-free interest rates of 3.6%, 3.6%, and 4.4%; and expected lives of six years for each grant. An increasing dividend schedule is used in the binomial model based on historical experience.
(4) Results for 2002 include pre-tax net losses and loss adjustment expenses of $100 million (representing $55 million, $30 million and $15 million from Domestic operations, International-Europe operations and International-Other operations, respectively) related to the fourth quarter increase in net loss reserves in certain casualty lines (see Note 5 of Notes to Consolidated Financial Statements).
Consolidated expenses increased by $8,174,000 (32%) for the year ended December 31, 1997 compared to the year ended December 31, 1996, of which $2,381,000 is attributable to the inclusion of MOMED in 1997. The additional increase results primarily from policy acquisition costs associated with new business, along with the other costs associated with the Company's current business strategy. This strategy calls for the Company to continue investigating potential acquisition opportunities and the possibility of expansion into additional markets.
Financial Markets During 2008, there has been significant turmoil in the U.S. and international financial markets, which is likely to persist into 2009. The ability to borrow funds or raise additional capital has become limited as there has been reduced liquidity in the capital markets. These events have impacted us in several ways.
Included in the loss reserve movement is a $1.6 million amortized gain relating to the loss portfolio transfer from Motors. At December 31, 2008, the actuarial estimate for loss and loss expenses reserves for the loss portfolio transfer from Motors was $3.6 million less than the original estimate. This favorable development on the release of a property reserve will be amortized over the settlement period. The total favorable development was $3.6 million and the remaining $2 million is recorded as a deferred gain in the accompanying balance sheet.
Collateral arrangements with ceding insurers may subject our assets to security interests or require that a portion of our assets be pledged to, or otherwise held by, third parties. Both our trust accounts and letter of credit are fully collateralized by assets held in custodial accounts. Although the investment income derived from our assets while held in trust accrues to our benefit, the investment of these assets is governed by the terms of the letter of credit facilities or the investment regulations of the state or territory of domicile of the ceding insurer, which may be more restrictive than the investment regulations applicable to us under Bermuda law. The restrictions may result in lower investment yields on these assets, which may adversely affect our profitability.
We do not believe that inflation has had a material effect on our consolidated results of operations. The effects of inflation are considered implicitly in pricing. Loss reserves are established to recognize likely loss settlements at the date payment is made. Those reserves inherently recognize the effects of inflation. The actual effects of inflation on our results cannot be accurately known, however, until claims are ultimately resolved.
Income before income taxes increased $2.9 million from 1999 to 2000. This increase in profits is due primarily to (i) a $10.5 million decrease in death benefits, net of reserves for policy benefits released on traditional death benefits, offset by (ii) a $4.6 million decrease in deferred policy acquisition costs resulting from revisions made to the Company's estimate of future gross profits from its interest-sensitive life and annuity products in both 2000 and 1999. In addition, amortization expense of cost of business acquired assets increased $2.9 million on a closed block of annuity business in 2000 due to higher levels of surrenders in 2000. This increased amortization expense was partially offset by a $1.0 million increase in surrender charge revenue on this same block of business.
The increase in investment income related to the Company's mortgage loan portfolio is due to an increase in the average mortgage loan balance from $218.1 million in 1999 to $246.2 million in 2000. This increase was offset by a decrease in the average yield of the portfolio from 1999 to 2000.
The American Institute of Certified Public Accountants ("AICPA") recently issued Statement of Position No. 01-05 ("SOP 01-05") "Amendments to Specific AICPA Pronouncements for Changes Related to the NAIC Codification." SOP 01-05 amends SOP 94-5 "Disclosures of Certain Matters in the Financial Statements of Insurance Enterprises" in response to the completion of the codification of statutory accounting principles. SOP 01-05 requires the disclosure of prescribed or permitted statutory accounting practice and the related effect on statutory surplus of using an accounting practice that differs from either state prescribed statutory accounting practices or NAIC codified statutory accounting principles. These disclosures are required beginning with financial statements issued for fiscal years ending after December 15, 2001. The Company has adopted the disclosure requirements of SOP 01-05 in its December 31, 2001 consolidated financial statements.
On April 13, 2000, the Company funded an unsecured loan to OmniCare-MI evidenced by a surplus note of $7.7 million to enable OmniCare-MI to meet its minimum statutory requirement for net worth and working capital. The loan consisted of $4.0 million in cash and conversion of $3.7 million of management fees owed to the Company. Pursuant to the terms of the surplus note, interest and principal payments required approval by the Michigan Office of Financial and Insurance Services and were repayable only from any statutory surplus earnings of OmniCare-MI. Note interest was payable annually and forfeited if not then paid. Interest income of $0.9 million and $1.1 million on that and a similar earlier surplus note was forfeited for fiscal years 2002 and 2001, respectively. The note principal had no stated maturity or repayment date. The surplus notes were subordinated to all other claimants of OmniCare-MI. Based on an analysis of OmniCare-MI's projected cash flows, the Company recorded impairment losses on the valuation of the surplus notes which resulted in bad debt expense of $6.9 million for the year ended June 30, 2001. On July 29, 2002, claims of all creditors holding surplus notes from OmniCare-MI were permanently disallowed by the State circuit court order, which approved OmniCare-MI's amended rehabilitation plan.
- - the State of Tennessee agreed to pay OmniCare-TN up to $7.5 million as necessary to meet its statutory net worth requirement as of June 30, 2002.
Accounts receivable decreased by $0.3 million at June 30, 2004 compared to June 30, 2003, primarily due to the elimination of the pharmacy rebate program and reduction in reinsurance receivables.
Deputy Managers E. Bart W. Belser V. Cachin A.-L. Chenaud W. Eschmann M. Grossmann G. A. Gubler
Assistant Managers R. Aeberli K. Aerni G. Bassin E. Bosshardt E. Burnens G. E. Geiser J. J. Hagedorn R. Hedinger G. Huguenin
The aggregate underwriting result is a profit only by virtue of another gratifying surplus in the Life branch; the favour­ able balance in the profit and loss account for the year derives to an increased extent from the financial sector, i. e. from our investment income. In Fire insurance the premium growth is somewhat less than in the previous year. This branch again closes with a deficit almost equal to that of last year. The adverse result is due primarily to the numerous and heavy industrial Fire losses and other large claims, especially in the United States of America, Australia, Great Britain, Germany, Swit­ zerland and Belgium. The urgent need for an adjustment
of premium rates to the loss experience, coupled with more effective fire prevention and fire-fighting measures, is now being met in various countries. — In Hail insurance a slight profit accrues despite losses in Italy and Switzerland. — Burglary insurance shows a gratifying increase in business and a satisfactory result, although the experience in some non-European countries was disappointing. In the Miscel­ laneous branches (Machinery, Water Damage, Plate Glass and Livestock) we have a deficit to record, deriving chiefly from Machinery insurance in the U. S. A. The severe winter of last year also gave rise to considerable Water Damage claims.
Interest Income ancLfnvestments In line with the expansion in the underwriting sector and the growth in capital and free reserves, the interest-bearing assets have risen from Sw. frs. 2,120 million to Sw. frs. 2,282 million. The interest income has increased from Sw. frs. 74.7 million to Sw. frs. 79.3 million, of which Sw. frs. 27.0 mil­ lion have been required to cover interest on the actuarial reserve for life policies. The composition of our invest­ ments may be seen from the following table: Securities and Loans Sw. frs. Sw. frs.
Provision for doubtful accounts decreased as a percentage of revenues to 7.4% for the year ended December 31, 1999 from 8.4% for the year ended December 31, 1998. In fiscal year 1998, a majority of our facilities converted their computer information systems which hampered their business office billing functions. Some facilities did not timely bill accounts and our allowance for bad debt increased in 1998. During 1999, we began to recover from the conversions and focus more on collections of accounts receivable.
Certificate of need laws may prohibit or limit any future expansion by us in states with these laws.
Other assets consist of the following: (000's Omitted) As of December 31, 1996 1995 Property and equipment at cost: Home office properties (including land of $1,067 and $352)...... $ 17,605 3,643 Furniture and equipment................ 5,015 3,711 Automobiles............................. 196 99 22,816 7,453 Less accumulated depreciation......... 5,987 3,650 16,829 3,803 Goodwill.............................. 11,942 - Less accumulated amortization........... 298 - 11,644 - Other.................................. 3,824 781 $ 32,297 4,584 4. Reinsurance: _______________ The company reinsures portions of insurance it writes. The maximum amount of risk retained by the company on any one life is $150,000. A summary of reinsurance data follows (000's Omitted): For the Ceded to Year Ended Gross Other Net December 31, Descriptions Amount Companies Amount
In conjunction with the acquisition of FBG, the company issued warrants to purchase 663,708 shares of its common stock. These warrants are exercisable at $16.42 per share of common stock and expire on April 2, 2002. In addition to the above, the company assumed warrants previously issued by FBG to purchase a total of 270,689 shares of its common stock. Prior to December 31, 1996, 260,305 warrants have been exercised. The remaining 10,384 warrants have exercise prices ranging from $1.346 to $3.7198. 9. Stockholders' Rights Plan: _____________________________ On June 30, 1994, the company's Board of Directors voted to repeal the 1988 Stockholders' Rights Plan and set the close of business on July 22, 1994 as the record date for the payment of the one cent per share redemption price. Stockholders of record were paid on August 8, 1994, in full redemption of the rights under the plan. The total amount to redeem the Rights was $101,432. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 10. Other Revenue: __________________ Effective December 1, 1989, the company entered into a coinsurance agreement with Employers Reassurance Corporation (ERC) which reinsured 90% of the risk on the company's block of SPWL policies written prior to 1989. The agreement provides that ERC assumes 90% of all risks associated with each policy in the block. These policies continue to be administered by American. In return, American receives an administrative allowance of $31.50 per policy per year. The total allowance received in 1996, 1995 and 1994 was $113,384, $121,780 and 129,972, respectively. Other revenue for the year ended December 31, 1996 includes override commissions of $1,483,019 attributable to the marketing efforts of AIMCORand TIM, $413,064 of rental income received by FBL and $131,313 of advertising revenues received by RBCP. 11. Income Taxes: _________________ The provision for income taxes charged to operations was as follows:
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ALCO, Inc. and its subsidiaries as of December 31, 2014 and 2013 and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
10,336,000 shares issued and outstanding at December 31, 2014 and 2013
In May 2014, the FASB issued ASU 2014-09, “Revenue from contracts with Customers (Topic 606)”. This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-
On April 7, 2014, the Company’s subsidiary, Chang An Consultants Ltd., declared dividends of HK$2,790,000, or $357,692. The Company has paid 40% of the dividends or $143,077 to the non-controlling shareholders.
The Company provided a bank guarantee of $5,540.81 in respect of an insurance policy to a client in August 2012. The guarantee is callable upon the client’s defaults in payment of the deferred calls and supplementary calls under the insurance policy.
The Company's headquarters are located in Green Bay, Wisconsin, in a 400,000 square foot office building owned by the Company and used by both of its business segments. The property is pledged as collateral to the Company's commercial lender pursuant to a mortgage that continues until January 1, 2004. The Company also leases property at approximately 40 locations throughout the United States primarily for its field sales and provider network offices.
(a) Discontinued operations include the operations of Newco/UWS through September 25, 1998, the spin-off distribution date. Continuing operations includes interest on debt assumed by Newco/UWS through September 11, 1998, the spin-off effective date. (b) Includes operations of Old AMS since December 3, 1996, the date of acquisition.
The health loss ratio, excluding nonrecurring items, was 80.4% for 1999, compared to 76.7% for 1998. The increase in the health loss ratio was due to reserve strengthening charges recorded in 1999 and adverse medical cost trends. The Company reported a health loss ratio of 78.6% in the fourth quarter of 1999. The life loss ratio increased to 39.2% for the year ended December 31, 1999, compared to 31.5% for 1998. The life loss ratio tends to fluctuate from period to period. The Company experienced higher than usual life claims experience during certain months in 1999, which caused the year-end life loss ratio to be above historical trends.
The Company's insurance subsidiaries operate in states that require certain levels of regulatory capital and surplus and may restrict dividends to their parent companies. Based upon the financial statements of the Company's insurance subsidiaries as of December 31, 2000, as filed with the insurance regulators, no dividends may be paid by these subsidiaries without prior regulatory approval prior to December 2001, at which time the aggregate amount available without regulatory approval is $7.3 million.
- - Regulatory factors, including delays in regulatory approvals of rate increases and policy forms; regulatory action resulting from market conduct activity and general administrative compliance with state and federal laws; restrictions on the ability of the Company's subsidiaries to transfer funds to the Company or its other subsidiaries in the form of cash dividends, loans or advances without prior approval or notification; the granting and revoking of licenses to transact business; the amount and type of investments that the Company may hold; minimum reserve and surplus requirements; and risk-based capital requirements.
The differences between taxes computed at the federal statutory rate and recorded income taxes attributable to continuing operations are as follows:
Net Premiums Earned. Our net premiums earned have historically been generated primarily in California and Nevada. In California, we have reduced our premium rates by 62.5% from September 2003 through December 31, 2008, including a decline of 38.5% since January 1, 2006 based on our internal actuarial analysis of current and anticipated loss cost trends. This compared with the recommendation of the California Commissioner of Insurance (California Commissioner) of a 45.0% rate decline since January 1, 2006. In November 2007, the California Commissioner recommended that there be no overall change in pure premium rates for policies written on or after January 1, 2008. This was the first recommendation of no rate decrease by the California Commissioner since the adoption of the benefit reforms of 2003 and 2004. In May 2008, the California Commissioner announced that stability in the workers’ compensation insurance marketplace had eliminated the need for an interim pure premium rate advisory. In October 2008, in response to a recommendation by the California Workers’ Compensation Insurance Rating Bureau (WCIRB) to increase advisory rates by 16.0%, the California Commissioner approved a 5.0% average increase in advisory pure premium rates.
The amortized cost and fair value of fixed maturity investments at December 31, 2008 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Effective February 5, 2007, pursuant to an approved plan of reorganization, EIG converted from a mutual insurance holding company to a Nevada stock company and completed an initial public offering (IPO) of its common stock. All policyholder membership interests in EIG were extinguished on that date, and EIG’s name changed to Employers Holdings, Inc. (see Note 3).
Premiums are billed and collected according to policy terms, predominantly in the form of installments during the policy period. Premiums are earned pro rata over the terms of the policies. Billed premiums applicable to the unexpired terms of policies in-force are recorded in the accompanying consolidated balance sheets as a liability for unearned premiums.
Property and equipment are stated at cost less accumulated depreciation (see Note 7). Expenditures for maintenance and repairs are charged against operations as incurred.
The following table presents the gross carrying value, accumulated amortization and net carrying value for the Company’s intangible assets, by major class, as of December 31, 2008:
The following is a discussion and analysis of CNA Surety Corporation (“CNA Surety” or “Company”) and its subsidiaries’ operating results, liquidity and capital resources, and financial condition. The most significant risk and uncertainties impacting the operating performance and financial condition of the Company are discussed in Item 1A, Risk Factors of this Form 10-K. This discussion should be read in conjunction with the Consolidated Financial Statements of CNA Surety and Notes thereto.
Reported claims are in various stages of the settlement process. Due to the nature of surety, which is the relationship among three parties whereby the surety guarantees the performance of the principal to a third party (the obligee), the investigation of claims and the establishment of case estimates on claim files can be a complex process that can occur over a period of time depending on the type of bond(s) and the facts and circumstances involving the particular bond(s), the claim(s) and the principal. Case reserves are typically established after a claim is filed and an investigation and analysis has been conducted as to the validity of the claim, the principal’s response to the claim and the principal’s financial viability. To the extent it is determined that there are no bona fide defenses to the claim and the principal is unwilling or financially unable to resolve the claim, a case estimate is established on the claim file for the amount the Company estimates it will have to pay to honor its obligations under the provisions of the bond(s).
At December 31, 2006, the range of reasonable loss reserve estimates, net of reinsurance receivables, calculated by the independent actuarial firm and adopted by management was from $247 million to $353 million. Ranges of reasonable loss reserve estimates are not calculated for the sub-lines of business. Management believes that the range calculated over total reserves provides the most meaningful information due to the importance of correlation of losses between the sub-lines of business related to the impact of general economic conditions.
In November 2005, the FASB issued FSP No. 115-1 and No. 124-1, “The Meaning of Other-than-Temporary Impairment and its Application to Certain Investments” (“FSP 115-1 and 124-1”), as applicable to debt and equity securities that are within the scope of SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS 115”) and equity securities that are accounted for using the cost method specified in APB
Gross premiums earned in the surety bond program decreased 42% and 23% in 2002 and 2003, respectively. The decreases are primarily due to stricter underwriting policies and a reduction in the number of appointed agents that produce this business as NAICO focuses on improving underwriting profitability in this program. Net premiums earned in the surety bond program decreased 20% and 18% in 2002 and 2003, respectively. NAICO elected not to renew its construction surety bond excess of loss reinsurance effective April 1, 2003 due to the decreased premium volume in this program and to the current market for this reinsurance.
Indirect underwriting expenses were 5.7%, 5.8% and 6.5% of total direct written and assumed premiums in 2001, 2002 and 2003, respectively. Indirect expenses include general overhead and administrative costs associated with the acquisition of new and renewal business, some of which is relatively fixed in nature, thus, the percentage of such expenses to direct written and assumed premiums will vary depending on Chandler USA's overall premium volume. Commissions received from reinsurers as a percentage of ceded reinsurance premiums were 29.2%, 30.8% and 28.0% in 2001, 2002 and 2003, respectively.
Federal Income Tax Expense. Federal income tax expense increased $3.5 million to $5.0 million in 1995 from $1.4 million in 1994. Federal income tax expense was 34.2% of income before federal income tax expense in 1995 compared to 29.1% in 1994. The increase in the Company's effective federal income tax rate was primarily attributable to the increase in income before federal income tax expense, certain expenses related to the Reorganization and reductions in tax exempt interest income in 1995.
The Company purchases reinsurance in part to mitigate the effect of large or unusual losses and loss expense activity. As a condition of writing business in certain states, the Company participates in a number of mandatory pools and the Company may incur losses to the extent such pools experience deficits in the future.
The Company believes its immediate cash needs will not require the sale of long term fixed maturities, although it may sell certain of these securities from time to time.
Net earned premium revenues of the Company decreased by approximately $15.2 million, or 15.8%, in 1997 and increased by approximately $1.8 million and $5.2 million in 1996 and 1995 respectively (1.9% and 5.8% in 1996 and 1995, respectively). In 1997, the decline in earned premium revenues was primarily due to the depopulation of the assigned risk pools ($9.5 million) and a reduction in certain commercial lines, principally voluntary commercial automobile ($3.1 million) and workers' compensation ($2.6 million) due to competition, reunderwriting and repricing. In addition, earned premium revenues were reduced in 1997 by $1.7 million to record premiums due under retrospectively rated reinsurance contracts written for 1995 and prior accident years. The Company re-estimated the premium due based upon its current estimate of loss ratios for 1995 and prior accident years. Partially offsetting these reductions was an increase in certain voluntary personal lines, principally private passenger automobile and homeowners.
The ordinary life category increased 16.9% in 2006, benefiting from the sale of WAYS, the innovative life insurance product we introduced in January 2006. Unlike traditional life insurance, WAYS allows a policyholder to convert a portion of the life insurance coverage to medical, nursing care, or fixed annuity benefits at retirement age. We remain very pleased with the initial response to WAYS, which accounted for approximately 8% of new sales in 2006.
The following table presents a distribution of unrealized losses by magnitude as of December 31, 2006.
The following table presents a summary of treasury stock activity during the years ended December 31.
formula as well as numerous initiatives covering insurance products, investments, and other actuarial and accounting matters. We believe that we will continue to maintain a strong RBC ratio and statutory capital and surplus position in future periods.
The following table summarizes the amounts included in accumulated other comprehensive income as of December 31, 2006.
The Company leases approximately 283,000 square feet of office and warehouse space at various locations throughout the United States for its other business units and staff functions. In addition, the Company leases approximately 400 claim offices, or 1,665,000 square feet, at various locations throughout the United States. Two offices are leased in Canada. These leases are generally short-term to medium-term leases of standard commercial office space.
The Company writes directors and officers and other professional liability coverage for community banks and credit unions and, therefore, could potentially be exposed to liability for errors made by these institutions relating to the year 2000 conversion. To minimize its risk, in October 1997, the Company began including year
Net premiums earned decreased from 1996 to 1995 and increased when comparing 1995 to 1994 by 7.8% and 5.9%, respectively. The decrease experienced in 1996 was attributable to the aforementioned factors effecting direct premiums written. The 1995 increase in earned premiums was attributable to the increases in premiums written due to an expansion of First Central Insurance's markets.
declines in the market value of First Central Insurance's debt securities classified as held-to-maturity at December 31, 1995 did not effect First Central Insurance's carrying value of such securities, since First Central Insurance had the ability and the intent to hold these investments to maturity, at which time their full face value was expected to be received at no loss to First Central Insurance. Temporary fluctuations in the market value of available-for-sale securities are reflected in shareholders' equity as unrealized holding gains or losses net of applicable deferred income taxes; however, any decline in the value of the security below its cost considered to be "other than temporary" is accounted for as a realized loss. Once an investment is written down to reflect an other than temporary decline, the write-down establishes a new cost basis for the security.
First Central Insurance's loss ratio on its automobile liability line of insurance increased to 137.9% in 1996 from 80.7% in 1995 and 77.8% in 1994, primarily due to adverse underwriting experience and lack of a rate increase since December 1993 in the private passenger portion of the automobile liability line of business.
First Central had gross deferred tax assets of approximately $9,153,000 and $7,115,000 and gross deferred tax liabilities of approximately $2,175,000 and $2,650,000 as of December 31, 1996 and 1995, respectively. A $4,028,000 valuation allowance has been established with respect to the gross deferred tax asset at December 31, 1996. Management believes that it is more likely than not that the deferred tax asset may not be fully realized due to the uncertainties with respect to First Central's future profitability. A valuation allowance was not required at December 31, 1995.
Real estate information services revenue (consisting of revenue from Pinnacle Data and PinTax) increased from $23.5 million in 1997 to $36.0 million in 1998, an increase of $12.5 million or 53.2%. Approximately $8.6 million of the increase was the result of PinTax, which was acquired in September 1997. PinTax increased fee income in 1998 from new and existing customers. The remainder of the increase was the result of higher flood zone determination volumes from existing and new customers. The Company's overall price level for its real estate information services did not materially change in 1998.
Loss and LAE was $6.5 million in 1997 (34.0% of net premiums earned) and $5.4 million in 1998 (34.9% of net premiums earned), a decrease of $1.1 million or 16.5%. The decrease was primarily due to a decrease in earned premiums and the average size of claims. The average loss per claim reported decreased from $7,693 in 1997 to $5,898 in 1998.
The dollar amounts referred to in this section comparing operating results for the year ended December 31, 1996 with December 31, 1997 are approximate amounts stated in millions and are based on the financial statements included elsewhere in this Report, which amounts are stated in thousands. All percentages referred to in this section comparing operating results for the year ended December 31, 1996 with December 31, 1997 are approximate percentages and are based only on dollar amounts set forth in the financial statements contained elsewhere in this Report, which amounts are stated in thousands.
There is no public securities market for certain investments held by the Company. As of December 31, 1998, such investments were two limited partnership interests with an original cost of $222,220. One limited partnership interest with a cost basis of $100,000 was sold in January 1999 for $110,000. See "Certain Relationships and Related Transactions."
GPIC also maintains a reserve for return premiums which is based upon GPIC's historical experience. As is prevalent in the lender-placed insurance industry, a substantial amount of GPIC's net premiums written are refunded to policyholders. The amount of such refunds can be affected by, among other things, inaccurate or untimely data submitted by customers, which GPIC uses as a basis for recording written premiums or the loss of customers. No assurance can be given that the reserve for return premiums will be adequate to cover actual refunded premiums paid by GPIC in the future. See, "Business -- Insurance Operations."
Net Investment Income. Net investment income decreased by 3.0% to $297.0 million in 2013 compared with net investment income of $306.1 million in 2012. Net pre-tax investment income as a percentage of average invested assets was 3.6% in 2013 compared to 3.7% in 2012. The declines were primarily due to lower reinvestment rates for the fixed maturities portfolio.
Premiums. Gross written premiums increased by 18.3% to $1,240.8 million in 2013 compared to $1,049.2 million in 2012. This increase was primarily driven by California workers’ compensation, crop and non-standard auto business. Net written premiums increased by 24.2% to $597.7 million in 2013 compared to $481.2 million in 2012. The larger increase in net written premiums compared to gross written premiums is mainly due to less use of reinsurance, particularly on the crop business. Premiums earned increased 19.5% to $572.3 million in 2013 compared to $479.0 million in 2012. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.
The Company’s liability for future policy benefits is primarily comprised of liabilities for guarantee benefits related to certain nontraditional long-duration life and annuity contracts, which are discussed more fully in Note 7. These reserves represent reserves for the guaranteed minimum death and optional living benefit features on our variable annuity products. The optional living benefits are primarily accounted for as embedded derivatives, with fair values calculated as the present value of future expected benefit payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. For additional information regarding the valuation of these optional living benefit features, see Note 10 to the Financial Statements.
The Risk Based Capital, or RBC, ratio is a primary measure of the capital adequacy of the Company. RBC is calculated based on statutory financial statements and risk formulas consistent with NAIC, practices. RBC considers, among other things, risks related to the type and quality of the invested assets, insurance-related risks associated with an insurer’s products and liabilities, interest rate risks and general business risks.
The principal sources of the Company’s liquidity are certain annuity considerations, investment and fee income, investment maturities, 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. As discussed above, in March 2010, the Company ceased offering its existing variable annuity products to new investors upon the launch of a new product line by certain affiliates. Therefore, the Company expects to continue to see the overall level of cash flows decrease going forward as the book of business runs off.
Investment in NIBs, When the Company holds NIBs, it accounts for its investment in NIBs at the initial investment value increased for interest income and decreased for cash receipts received by the Company. At the time of transfer or purchase of an investment in NIBs, we estimate the future expected cash flows and determine the effective interest rate based on these estimated cash flows and our initial investment. Based on this effective interest rate, the Company calculates accretable income, which is recorded as interest income on investment in NIBs in the statement of operations. Our current projections are based off of various assumptions that are subject to uncertainties and contingencies including, but not limited to, the amount and timing of projected net cash receipts, expected maturity events, counter party performance risk, changes to applicable regulation of the investment, shortage of funds needed to maintain the asset until maturity, changes in discount rates, life expectancy estimates and their relation to premiums, interest, and other costs incurred, among other items. These uncertainties and contingencies are difficult to predict and are subject to future events that may impact our estimates and interest income. As a result, actual results could differ significantly from these projections. Therefore, subsequent to the purchase and on a regular basis, these future estimated cash flows are evaluated for changes. If the determination is made that the future estimated cash flows should be adjusted to the point of a material change in revenue, a revised effective yield is calculated prospectively based on the current amortized cost of the investment, including accrued accretion.
The Company does not take possession or control of the policies. The owners of the life settlements or life insurance policies (the “Owners” or “the Holders”) acquire such policies at a discount to their face value. On settlement, the Company receives the net insurance benefit after all borrowings, interest and expenses have been paid by the Owners out of the settlement proceeds.
Our reportable insurance segments are personal insurance and commercial insurance. These insurance segments are managed separately from each other due to the differences in the types of customers they serve, products they provide or services they offer. Investment operations is also a reportable segment. As previously reported, we have exited our specialty business, which has resulted in the elimination of our specialty insurance segment. As a result, effective January 1, 2019, the specialty insurance business is no longer a reportable segment as it no longer is material to our results and is disclosed as "specialty run-off." See “Personal and Commercial Insurance” in Item 1 of this Form 10-K for more information about our insurance segments.
Losses and loss expenses for a calendar year represent the combined estimated ultimate liability for claims occurring in the current calendar year along with any change in the estimated ultimate liability for claims occurring in prior years. The following table sets forth the provision for losses and loss expenses for those claims occurring in the current and prior years, along with the GAAP loss and LAE ratio for the years ended December 31, 2019 and 2018:
The following table sets forth the credit ratings of our municipal securities based on ratings by nationally recognized rating agencies at December 31, 2019:
significant outflows of cash are payments of claims, commissions, premium taxes, operating expenses, income taxes, dividends, interest and principal payments on debt and investment purchases. The cash outflows may vary due to uncertainties regarding settlement of large losses or catastrophe events. As a result, we continually monitor our investment and reinsurance programs to ensure they are appropriately structured to enable the insurance subsidiaries to meet anticipated short and long-term cash requirements without the need to sell investments to meet fluctuations in claim payments.
The following table sets forth the statutory leverage ratios for our insurance subsidiaries at December 31, 2019 and 2018:
At December 31, 2019, the tax benefit of the net operating loss (“NOL”) carryforward was $12.1 million. The NOL carryforwards do not begin to expire until 2032 and will not fully expire until 2038.