Management believes that the Company's methods of estimating the liabilities for insurance reserves provided appropriate levels of reserves at December 31, 2006. Changes in the Company's reserve estimates are recorded through a charge or credit to its earnings.
Net Investment Income. Net investment income increased $766,000 to $3,267,000 for fiscal 2006, compared to $2,501,000 for fiscal 2005 due to higher yields and an increase in invested assets. The return on investments of the Company was 5.4% for fiscal 2006 and 4.76% for the comparable period in 2005.
Management assessed the effectiveness of AMIC's internal control over financial reporting as of December 31, 2006. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control -Integrated Framework. Based on our assessment we concluded that, as of December 31, 2006, AMIC's internal control over financial reporting is effective.
closing. The value of the EDH Derivative will be evaluated each quarter and the corresponding changes in fair value will be reflected in the Consolidated Statements of Operations. If the EDH Agreement is extended to December 31, 2016, subject to satisfaction of certain further conditions as to premium volume and profitability, EDH would be entitled to up to an additional $5,000,000 depending on the value of the IHC Stock as of December 31, 2016. In addition, EDH could be entitled to a $1,000,000 bonus on December 31, 2013 subject to satisfaction of certain conditions as to premium volume and profitability.
Substantially all of the unrealized losses at December 31, 2006 and 2005 relate to investment grade securities and are attributable to changes in market interest rates subsequent to purchase. The Company reviews its investments regularly and monitors its investments for impairments. A total of 31 securities were in a continuous unrealized loss position for less than 12 months and 54 securities for 12 months or longer as of December 2006. A total of 52 securities were in a continuous unrealized loss position for less than 12 months and 21 securities for 12
Major categories of net investment income for years 2006, 2005 and 2004 are summarized as follows:
Until April 2002, the Company (then known as SoftNet Systems, Inc.) was an Internet service provider. Due to difficult and deteriorating conditions in that market, the Company discontinued this business. In December 2000, the Company's board of directors approved a plan to discontinue the operations of its subsidiary, ISP Channel, Inc., which had provided cable-based Internet access and related services, and the operations of another subsidiary, Aerzone Corporation, which provided Internet and related services at airports. In April 2002, the Company, ceased operations of its remaining operating subsidiary, Intelligent Communications, Inc., following the disposition of its key assets. The operating results of these discontinued operations have been segregated from continuing operations and are reported as a gain or loss from discontinued operations on the consolidated statements of operations. Although it is difficult to predict the final results, the gain or loss on disposition from discontinued operations includes management's estimates of costs to wind down the business and costs to settle its outstanding liabilities. The actual results could differ from these estimates. The net liabilities associated with discontinued operations are reflected in net liabilities associated with discontinued operations in the accompanying consolidated balance sheets.
As a result of the December 31, 1999 sale of MTC to Global Information Distribution GmbH ("GID"), the Company discontinued operations of MTC. The Company has no remaining reserve for MTC at December 31, 2006.
The Federal income tax provision (benefit) for the periods ending December 31, 2006, 2005 and 2004 include income tax provisions of $792,000, $1,861,000 and $3,155,000, respectively, for the utilization of the Company's Federal net operating loss carryforwards (NOLs). The Company recorded deferred tax benefits on discontinued operations of $29,000, $31,000 and 0 for the periods ending December 31, 2006, 2005 and 2004, which were included in Gain (loss) on Disposition of Discontinued Operations, net of tax, in the Statement of Operations.