felanders/preprocessed huggingface dataset:
In December 2003, we entered into a Purchase and Sale Agreement with an unaffiliated third party for the sale of land. In July 2004, a land contract was executed and the transaction closed in escrow subject to the conveyance of certain land by the city to both parties. In May 2005, the settlement of the land contract was completed. The sale of this land resulted in a total gain of approximately $464,000. In accordance with SFAS No. 66 “Accounting for Sales of Real Estate,” we recorded this transaction based on the installment method of accounting. Accordingly, we recorded a gain of $82,000, as of June 30, 2005, which reflects a portion of the total gain allocated proportionately based on the down payment to the total purchase price. The remaining $382,000 will be deferred until the land contract is paid in full, or as principal payments are received. In addition, we received $121,000 in interest income related to the land contract, which has been included in reconciling items. The remaining $162,000 in reconciling items relates to miscellaneous interest income.
Goodwill represents the excess of the purchase price over the fair value of net assets of subsidiaries acquired. As required by SFAS No. 142 “Goodwill and Other Intangible Assets,” we no longer amortize goodwill and, at least annually, we test all existing goodwill for impairment using a fair value approach, on a reporting unit basis. Our annual assessment date for goodwill impairment testing is October 1st. We test for impairment more frequently if events or changes in circumstances indicate that there may be an impairment to goodwill. We carry goodwill on two reporting units within the agency operations segment in the amount of $5.8 million and three reporting units within the specialty risk management operations segment in the amount of $25.0 million. Based on our most recent evaluation of goodwill impairment, we determined that no impairment to goodwill exists.
anticipated termination of two limited duration administrative services and multi-state claims run-off contracts.
Salary and employee benefits increased $4.1 million, or 8.4%, to $52.3 million in 2004, from $48.2 million for the comparable period in 2003. This increase primarily reflects both merit increases and the accrual of anticipated variable compensation, which is directly tied to performance and profitability. These increases were partially offset by a slight reduction in staffing levels.
Shareholders’ equity increased to $177.4 million, or a book value of $6.19 per common share, at December 31, 2005, compared to $167.5 million, or a book value of $5.76 per common share, at December 31, 2004.
As can be seen from the above, various factors are considered when determining appropriate data, assumptions, and methods used to establish the loss reserve estimates for long-tail product lines. These factors may also vary by origin year for given product lines. The derivation of loss development patterns from data and the selection of a tail factor to project ultimate losses from actual loss emergence require considerable judgment, particularly with respect to the extent to which historical loss experience is relied upon to support changes in key reserving assumptions. Examples of the relationship between changes in historical loss experience and key reserving assumptions are provided below.
On occasion, there will be differences between our carried loss reserves and unearned premium reserves and the amount of loss reserves and unearned premium reserves reported by the ceding companies. This is due to the fact that we receive consistent and timely information from ceding companies only with respect to case reserves. For IBNR, we use historical experience and other statistical information, depending on the type of business, to estimate the ultimate loss. We estimate our unearned premium reserve by applying estimated earning patterns to net premiums written for each treaty based upon that treaty's coverage basis (i.e., risks attaching or losses occurring). At December 31, 2015, the case reserves reported to us by our ceding companies were $723 million, compared with the $740 million we recorded. Our policy is to post additional case reserves in addition to the amounts reported by our cedants when our evaluation of the ultimate value of a reported claim is different than the evaluation of that claim by our cedant.
Refer to Note 4 to the Consolidated Financial Statements for information on our fair value measurements.
MEMBERSHIP. Total membership decreased seven percent to approximately 3.5 million members at December 31, 1998, from approximately 3.8 million members at December 31, 1997. The disposition of Utah accounted for 68 percent of the membership decline. California contributed 23 percent of the decline as we continue to emphasize renewing commercial contracts with sufficient price increases to improve gross margin. This decline was consistent with our shift in strategic focus from rapid growth to improved margin performance. The remaining nine percent was attributable to our exit of certain rural counties, where government and commercial premiums were neither sufficient to support the cost of health care nor our profitability requirements. Government membership declined three percent year over year. 1998 commercial membership decreased nine percent from 1997.
Commercial premiums increased 97 percent compared to the prior year. Approximately 92 percent of the total increase related to the FHP acquisition. The remainder of the net increase was due to the following:
NET INVESTMENT INCOME. Net investment income increased approximately $34 million for the year ended December 31, 1997 compared to the prior year. The increase was due primarily to additional investments over the prior year because of the FHP acquisition.
INTEREST EXPENSE. Interest expense increased approximately $63 million for the year ended December 31, 1997 compared to the prior year. The increase was due to increased borrowings on our credit facility to finance the FHP acquisition.
- - The effect of actions by competitors or groups of providers; or
Other income decreased 5.5% to $26.0 million for the year ended December 31, 2000, from $27.5 million in 1999. Other expenses increased 38.6% to $88.7 million for the year ended December 31, 2000 from $64.0 million in 1999. This increase was primarily attributable to the reversal of an expense accrual related to the Company's long term incentive compensation program during the 1999 period.
Facultative net premiums written increased 16.5% to $953.3 million for the year ended December 31, 1999, from $818.0 million for the same period in 1998. This increase was partially due to a change in the Company's facultative retrocessional program to retain more of this business. Net facultative premiums written changes included: (i) an 18.5% increase in DICO facultative net premiums written to $561.3 million for the year ended December 31, 1999, from $473.8 million for the same period in 1998; (ii) a 12.3% increase in RiskPartners' facultative net premiums written to $347.2 million for 1999, from $309.1 million for 1998; and (iii) a 27.6% increase in International Operations' facultative net premiums written to $44.8 million for 1999, from $35.1 million for 1998.
Under Chapter 11, actions to enforce certain claims against the Company are stayed if the claims arose, or are based on, events that occurred on or before the filing date. The ultimate terms of settlement of these claims will be determined in accordance with a plan of reorganization which requires the approval of the impaired prepetition creditors and stockholders and confirmation by the Bankruptcy Court. Other liabilities may arise or be subject to compromise as a result of rejection of executory contracts, including leases, or the Bankruptcy Court's resolution of claims for contingencies and other disputed amounts. The ultimate resolution of such liabilities, all of which are subject to compromise, will be part of a plan of reorganization. Until a plan of reorganization is confirmed by the Bankruptcy Court, only such payments on prepetition liabilities that are approved by the Bankruptcy Court will be made. There is no assurance that a plan of reorganization will be proposed, approved or confirmed by the Bankruptcy Court.
As a result of our Chapter 11 filing, distributions on the Trust Preferred Securities (and interest on the related Senior Subordinated Notes) payable semi-annually, in arrears, on June 1 and December 1 of each year, commencing June 1, 1998 have been suspended. We have continued to accrue interest at a rate of 10.75% per annum compounded semi-annually. The Trust Preferred Securities and interest are
past two years, the Insurance Company has permitted the duration gap between its assets and liabilities to rise during a period in which it expected relatively stable interest rates and, most importantly, in which its liabilities were largely protected by significant annuity surrender charges. This strategy benefited the Company by allowing it to realize enhanced yield from longer duration assets. The Insurance Company has determined that the prospect of rising rates and declining surrender charges now necessitate a reduction in the duration mismatch, as well as increased management of extension risk in its investment portfolio. The Company has developed a two-step duration reduction strategy, which involves the sale of certain longer duration assets that were purchased at prices below current market prices and reinvestment in shorter duration assets. Since December 31, 2004, the Company has completed in excess of $750 million of long duration sales and $750 million of shorter duration reinvestments, as measured by proceeds. The Company estimates that it has now substantially completed its portfolio rebalancing target. The Company also anticipates that the lower level of income generated by its rebalanced portfolio will be more than offset by the gains on the sale of its longer term assets and by the income from the US Treasury strips it is consolidating [See “Item 7 Management Discussion and Analysis-Principal Protected Notes”].
YEAR ENDED DECEMBER 31, ----------------------------------------------- 1995 1994 1993 1992 1991 ----------------------------------------------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) INCOME DATA: Total revenues..............$ 71,427 $ 61,504 $ 65,444 $ 67,304 $ 67,440 ======= ======= ======= ======= ======= Income applicable to common shares from continuing operations......$ 6,172 $ 2,396 $ 4,041 $ 3,010 $ 3,993 ======= ======= ======= ======= ======= BALANCE SHEET DATA:
The above table has been restated to reflect (i) Zimmerman as discontinued operations as described in Note 2 of Notes to Consolidated Financial Statements and (ii) the adoption of Statement of Financial Accounting Standards No. 113 "Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts" in 1993.
During 1995, the Company repurchased 664,181 shares of common stock at a cost of $2.3 million under its stock and warrant repurchase program. Through December 31, 1995, 4,260,432 shares of common stock have been repurchased under this program at an aggregate cost of approximately $10.9 million, and 404,491 share purchase warrants were repurchased at an aggregate cost of approximately $.1 million. The Company may purchase additional shares of common stock and warrants in the open market or otherwise from time to time. Total corporate liquidity (cash, cash equivalents, resale agreements and marketable securities) amounted to $12.4 million at December 31, 1995. At the present time, the Company is not in need of any additional long-term financing.
Capital Resources ----------------- Due to its superior capital ratios, broad licensing and excellent asset quality and credit-worthiness, the Insurance Group remains well positioned to increase or diversify its current activities, and to raise additional capital in the public or private markets to the extent determined to be necessary or desirable, in order to pursue acquisition opportunities or otherwise expand its operations.
The relatively low loss ratio in each of the last three years reflected the favorable loss experience which we believe resulted from our disciplined underwriting in recent years. Results in all three years benefited from favorable prior year loss development. For more information on prior year loss development, see “Property and Casualty Insurance-Loss Reserves, Prior Year Loss Development.” The loss ratio was higher in 2010 compared to 2009 due primarily to a higher impact of catastrophes, offset in part by a modest decrease in the current accident year loss ratio excluding catastrophes. The amount of favorable prior year loss development was slightly lower in 2010 compared with 2009. The loss ratio was lower in 2009 compared to 2008 due to a lower impact from catastrophes, offset in part by a lower amount of favorable prior year loss development and a slight increase in the current accident year loss ratio excluding catastrophes.
Our actuaries and claim personnel perform periodic analyses of our asbestos related exposures. The analyses during 2008, 2009 and 2010 noted no developments that would indicate the need to change our estimate of ultimate liabilities related to asbestos claims.
The following table presents the number of policyholders for whom we have open asbestos case reserves and the related net loss reserves at December 31, 2010 as well as the net losses paid during 2010 by component.
We experienced favorable development of about $110 million in the aggregate in the personal and commercial property classes, primarily related to the 2008 and 2009 accident years. The severity and frequency of late developing property claims that emerged during 2010 were lower than expected. Because the incidence of large property losses is subject to a considerable element of fortuity, reserve estimates for these claims are based on an analysis of past loss experience on average over a period of years. As a result, the favorable development in 2010 was recognized, but this factor had a relatively modest effect on our determination of carried property loss reserves at December 31, 2010.
Corporate and other produced a loss before taxes of $220 million in 2010 compared with losses of $238 million and $214 million in 2009 and 2008, respectively. The lower loss in 2010 compared to 2009 was primarily due to higher investment income, which included a $20 million special dividend received during 2010 on an equity security investment, partially offset by the impact of lower yields. The higher loss in 2009 compared to 2008 was due to higher interest expense and lower investment income. The higher interest expense was primarily due to an increase in average debt outstanding in 2009 as a result of the issuance of additional debt during 2008. The lower investment income in 2009 was primarily the result of a decrease in the average yield on short term investments. The higher interest expense in 2009 compared with 2008 was not offset by an increase in investment income as the proceeds from the issuance of the debt were used to repurchase Chubb’s common stock.
Net Earned Premiums. Net earned premiums for the year ended December 31, 2010 increased by $19,981, or 3.8%, to $551,950 from $531,969 for the comparable 2009 period. The 2010 increase was primarily due to the factors that increased direct written premiums combined with decreases in earned premiums ceded to CAR, and partially offset by decreases in earned premiums assumed from CAR. Earned premiums assumed from and ceded to CAR decreased as a result of the phase-out of the CAR personal automobile reinsurance pool, which was fully replaced by an assigned risk plan, the MAIP, beginning with personal automobile policy effective dates after March 31, 2009.
ASC 320, Investments-Debt and Equity Securities requires entities to separate an OTTI of a debt security into two components when there are credit related losses associated with the impaired debt security for which the Company asserts that it does not have the intent to sell the security, and it is more likely than not that it will not be required to sell the security before recovery of its cost basis. Under ASC 320, the amount of the OTTI related to a credit loss is recognized in earnings, and the amount of the OTTI related to other factors is recorded as a component of other comprehensive income (loss). In instances where no credit loss exists but it is more likely than not that the Company will have to sell the debt security prior to the anticipated recovery, the decline in market value below amortized cost is recognized as an OTTI in earnings. In periods after the recognition of an OTTI on debt securities, the Company accounts for such securities as if they had been purchased on the measurement date of the OTTI at an amortized cost basis equal to the previous amortized cost basis
The Company had no amounts outstanding on its credit facility at December 31, 2011 and 2010. The credit facility commitment fee included in interest expenses was computed at a rate of 0.25% on the $30,000 commitment at December 31, 2011 and 2010.
•States and political subdivisions: overall credit quality, including assessments of market sectors and the level and variability of sources of payment such as general obligation, revenue or lease; credit support such as insurance, state or local economic and political base, prefunded and escrowed to maturity covenants.
All unadjusted estimates of fair value for our fixed maturities priced by the pricing services as described above are included in the amounts disclosed in Level 2.
Assets. Shareholders' Liability . . . . . . . . ... . 22,500,000 — Real Estate ... . Mortgages . . . . . . . . ... . .... „ 25,100,288.80 Government and other Securities ... . . ... , 86,898,920.20 Life and other funds deposited with ceding Companies . , 86,663,752.46 Bank Balances , 8,517,704.01 Cash in hand . . . . . . . . . . . . . . . . „ 57,328.11 209,737,993 58 Due by other Companies and Sundry Debtors . . . 4 ... ... 53,153,136 67
At December 31, 1996, the Registrant's $149.2 million investment portfolio reflected after-tax appreciation of $2.3 million above its cost basis.
Gross premiums written for short-term health insurance programs were $10.2 million in 1996 compared to $10.9 million in 1995. The decline was principally impacted by the Registrant's decision to discontinue as a reinsurer of a trip- travel program that represented $6.3 million of gross premiums written in 1995, when it was unable to negotiate satisfactory renewal terms. That decline was largely offset with increased participation in short-term health programs managed and underwritten by the Registrant's International Group Services division of Brooks-Shettle Company, a consolidated subsidiary, and participation late in 1996 on short-term programs managed and underwritten by its Hinchcliff International division.
Pleasure marine gross premiums written for 1994 were $3.6 million compared to $4.4 million in 1993. That decline was expected because of the rate increases and the continued movement away from coastal exposures. Prior to 1994, underwriting results were adversely impacted by catastrophes that included Hurricanes Bob and Andrew and a few other coastal storms.
Our corporate offices are located at 204 Woodhew Drive in Waco, Texas. We own two buildings on adjacent lots at this location and our offices occupy both buildings, which together total 24,000 square feet. One building was built in 1985 and the other in 1986.
Interest Income and Expense - Interest and other income increased $540,340 from $834,050 in fiscal 2011 to $1,374,390 in fiscal 2012. Interest and other income decreased $659,414, from $1,493,464 in fiscal 2010 to $834,050 in fiscal 2011. The increase in interest and other income in fiscal 2012 was primarily a result of $809,218 of gains on sales of Investments in Policies. These gains were offset by a slight decrease in interest income as there was a lower amount of cash available for investment. Interest and other income in fiscal 2011 corresponded to lower interest rates on lower amounts of cash available for investment, as well as reduced gains from maturities on owned policies. Interest expense was $5,694, $1,505 and $46,988 in fiscal 2012, 2011 and 2010, respectively. Interest expense in fiscal 2010 related primarily to the long-term debt financing on our property, which was retired on April 28, 2009. There were gains from our investment in the life settlements trust in fiscal 2011 and 2010, resulting in gains of $143,554 and $222,186, respectively.
We used $14,920,716 in financing activities in fiscal 2012, versus $19,375,650 in 2011 and $14,003,685 in fiscal 2010. Financing activities in 2012 and 2011 were solely for dividends. We paid dividends of $13,224,612 in fiscal 2010, and we retired our long-term debt at a cost of $779,073.
Taiwan reserves decreased in 1997 due to the higher lapses and slower growth.
A controllership function has been established in each operation and is responsible for day-to-day management of operating risk including compliance with Company control policies.
Financial and extensive resources have been dedicated to modifying existing software and to converting to new software. However, there can be no assurances that Manulife Financial's systems, nor those of other companies on which Manulife Financial relies, will be fully converted on a timely basis and therefore that all adverse effect on the Company due to the Year 2000 risk will be avoided. Manulife Financial is presently consulting with vendors, customers, subsidiaries, third-parties and other businesses with which it deals to ensure that no material aspect of its, or the Company's, operations will be hindered by the Year 2000 risk.
Proceeds from sale of equity securities during 1997 were $10,586 (1996 $25,505; 1995 $6,500). Gross gains of $NIL and gross losses of $NIL were realized on those sales (1996 $NIL and $140; 1995 $785 and $113 respectively).
a) The Company has an outstanding surplus debenture in the amount of $8,500 plus interest at 6.7% issued on December 31, 1995 to ManUSA which matures on December 31, 2005. Payments of principal and interest cannot be made without prior approval of the Insurance Commissioner of the State of Michigan and the Company's Board of Directors, and to the extent the Company has sufficient unassigned surplus on a statutory basis available for such payment.
The Company markets traditional life insurance products in Taiwan through its Taiwanese Branch. The carrying amount of net assets located in Taiwan as at December 31, 1997 and 1996 was $6,006 and $15,080 respectively.
InMarch 1999, the Company collected $11.9 million of the $17.3 million of recorded income taxes recoverable. The remaining balance is expected to be received during 1999.
Direct written premiums were reduced by specific reinsurance cessions (1996), the 50 percent quota-share reinsurance agreement for the Company's Florida workers' compensation business (1996), and the 65 percent quota-share reinsurance agreement (effective October 1, 1996), with another reinsurer for certain non-Florida business. The 65 percent quota-share reinsurance agreement was reduced to 60 percent effective January 1, 1997 and was cancelled on a run-off basis on December 31, 1997.
Due to the cessation of its operations, RISCORP does not believe it has any material third-party relationships that present significant Year 2000 risks. The Company has requested confirmation from the financial institutions with which it maintains accounts that such institutions are Year 2000 compliant.
Based on its limited operations, the Company believes its most reasonably likely worst case scenario Year 2000 problem would be a temporary inability to access its accounts with financial institutions if such institutions' systems are not Year 2000 compliant. Because the Company does not expect that the Year 2000 will have a material adverse effect on the Company, it has determined that it is unnecessary to develop a contingency plan.
The Holding Company pays the Trustee an annual fee of $50,000. The Holding Company also provides the Trustee with minor management and administrative services, the cost of which is not considered material and, therefore, is not included in these financial statements. In addition, the Holding Company reimburses the Trustee for all reasonable out-of-pocket expenses it incurs in the performance of its duties under the Trust Agreement. However, the Holding Company is not required to reimburse the Trust or Trustee for the expense of mailing to the Custodian any proxy and other materials received by the Trustee from persons other than the Holding Company, including mailings with respect to any Beneficiary Consent Matter. The Holding Company paid to the Trustee $29,385, $71,539 and $15,938 for out-of-pocket expenses for the years ended December 31, 2009, 2008 and 2007, respectively.
The consolidated net loss for the year 1999 was $37,567 ($0.01 per share). For the year
The 2001 Financial Statements and the Company's Independent Auditors' Report on pages 28 through 45 of the Company's 2001 Annual Report are incorporated herein by reference, as is the unaudited information set forth in the Notes to the Financial Statements under the caption "Quarterly Results of Operations (Unaudited)" on pages 44 through 45.
Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured business and consistent with the terms of the underlying reinsurance contract.
Other income represents primarily brokerage and commission related income from our personal automobile line of business and agency operations. The commission income from our personal automobile line of business is made up of ceded commission income and fee income for administration and claims handling services. The income associated with ceded commission and fee income is recognized over the respective terms of the contracts. The fees associated with the administrative services is recognized upfront upon policy inception. Commission income from our agency operations are recognized upfront upon policy inception.
On July 1, 2016, the 30% property quota-share treaty expired on a cut-off basis, which means as of that date the Company will retain 30% of its unearned premiums and losses. The reinsurers will remain liable for 30% of the paid losses occurring during the term of the treaty, until the treaty is commuted.
The liability for loss and LAE reserves is determined on an individual-case basis for all claims reported. The liability also includes amounts for unallocated expenses, anticipated future claim development and incurred but not yet reported (“IBNR”).
The following tables provide incurred losses and allocated loss adjustment expenses (“ALAE”) as well as cumulative paid claims and ALAE, net of reinsurance, for the prior ten accident years for our largest lines of business, homeowners’’. In addition, as of the most recent reporting period, the total of IBNR reserves plus expected development on reported claims and the cumulative number of reported claims are presented (in thousands, except severity). The information about incurred and paid claims development for the years ended December 31, 2007 to December 31, 2015 is presented as supplementary information.
The Company also operates an asset accumulation business that focuses primarily on offering fixed annuities to individuals. Deposits from the Company's asset accumulation business consist of new annuity sales, which are recorded as liabilities rather than as premiums. Revenues from the Company's asset accumulation business are primarily comprised of investment income earned on the funds under management. The profitability of asset accumulation products is primarily dependent on the spread achieved between the return on investments and the interest credited to annuity holders. The Company is disciplined in setting the crediting rates offered on its asset accumulation products in an effort to achieve its targeted interest rate spreads on these products, and is willing to accept lower levels of sales on these products when market conditions make these targeted spreads more difficult to achieve.
Deposits from the Company's asset accumulation products were $133.1 million in 2004 as compared to $100.6 million in 2003. These deposits consist of new annuity sales, which are recorded as liabilities rather than as premiums. The Company continued to maintain its discipline in setting the crediting rates offered on its asset accumulation products, since the interest rate spreads available on these products remained below average throughout 2003 and 2004. The increase in deposits from the Company's asset accumulation products in 2004 was primarily due to an increase in the number of independent agents and marketing companies distributing the Company's annuity products.
years as to which management believes a sufficient level of historical loss experience exists. For more recent years for which this level of experience does not exist, management utilizes the Bornhuetter-Ferguson expected loss method to establish loss reserves. Under this method, in addition to historical loss experience, the Company also takes into account an expected loss ratio based on information determined during the initial pricing of the business, including, among other factors, rate increases and changes in terms and conditions.
(d) The selling costs ratio is computed as selling expenses divided by health plan services premium revenues.
Membership in our Medicaid programs increased by 10,000 members at December 31, 2006 compared to December 31, 2005, primarily due to enrollment increases in Healthy Families and Healthy Kids programs in California.
Medicare Risk premiums increased by $730.3 million, or 46%, for the year ended December 31, 2006 as compared to the same period in 2005, primarily due to the premiums paid to us by CMS for the members participating in the new Medicare Part D prescription drug program effective January 1, 2006 and favorable Medicare risk factor adjustments in our Arizona, California, Connecticut, Oregon and New York plans totaling $92.0 million in the year ended December 31, 2006 (see “-Health Plan Services Costs” for detail regarding the increase in capitation expense related to the Medicare rate adjustment). Of this amount, $51.9 million, $37.0 million and $3.1 million were for the 2006, 2005 and 2004 payment years, respectively.
increase in health care services provided under a new option year in the TRICARE contract, Option Period 4, which began April 1, 2007 and growing family counseling business with the Department of Defense. In addition, 2007 includes $36.5 million favorable settlement with the Federal Government regarding prior Option Period 1 health care cost targets.
The effective income tax rate increased from 2006 to 2007 primarily due to the establishment of a valuation allowance in 2007 against deferred tax assets for net operating loss carryforwards and tax credits of a particular business unit potentially impacted by the McCoy class action lawsuit, and nondeductible class action lawsuit expenses incurred in 2007. The effective income tax rate decreased from 2005 to 2006 primarily due to tax benefits associated with the sale of a subsidiary that formerly held our Pennsylvania health plan and certain of its affiliates. We recognized an approximate $32 million tax benefit related to this sale during 2006. Also during 2006 our state tax rate decreased primarily as a result of beneficial tax elections and an increased proportion of income earned by subsidiaries that are assessed premium rather than income tax.
We received $497 million net proceeds under our bridge and term loan agreements in June 2006 of which $465 million was used to redeem our Senior Notes in August 2006 and settle our Swap Contracts in September 2006. See “-Capital Structure-Bridge Loan Agreement and-Term Loan Credit Agreement” below.
undischarged, uninsured judgments in the amount of $50 million or more against our Company; or
The “cumulative redundancy (deficiency)” represents the aggregate change in the estimates over all prior years. For example, the 2005 liability has developed a $14,968,000 redundancy which has been reflected in income in subsequent years as the reserves were re-estimated.
CNA released and discharged AMIC Ltd. from any claims or liabilities whatsoever under, arising out of, or in any way related to past Reinsurance Treaties;
The 2009 Reinsurance Treaties were void as though they never existed.
The following tables show the fair value of the Company’s investments in accordance with FASB ASC 820, “Fair Value Measurements and Disclosures” as of December 31, 2009 and 2008.
The following is a reconciliation of the beginning and ending balance of investments using significant unobservable inputs (Level 3) for the year ended December 31, 2009.
There have been no material changes to any of our valuation techniques from what was used as of December 31, 2008. Since the fair value of a financial instrument is an estimate of what a willing buyer would
The combination of other underwriting expenses incurred and the amortization of deferred policy acquisition costs reflected increases of $769,000, $3,360,000 and $634,000 in 1995, 1994 and 1993, respectively. The increase in 1995 was the result of increased amortization of acquisition costs stemming from the growth in earned premiums. The increase in 1994 was principally the result of a higher level of expenses associated with increased premium volume coupled with an increase in amortization of acquisition costs stemming from growth in earned premiums. The increase in 1993 stemmed largely from a decrease in the level of acquisition costs deferred.
The Company, as well as the property and casualty insurance industry, in general, is affected by inflation. With respect to losses, the Company's claim severity is affected by the impact of inflation on the cost of automobile repair parts, medical costs and lost wages. The costs of adjusting claims and other underwriting expenses have also been adversely affected by inflationary pressures on salaries and employee benefits. The Company receives rate increases based in part upon its experience as well as the industry's experience. Accordingly, premium increases generally follow the rate of inflation.
(1) Excludes the credit of $7,905,000 to common stockholders' equity (or $1.06 of book value per common share) that would be recorded upon termination of the guarantee of Zimmerman's indebtedness by a subsidiary of the Company (see Note 10 of Notes to Consolidated Financial Statements).
Other income increased $.9 million from 1995 to 1996 resulting from: an increase of $.6 million in reinsurance recoveries at Madison Life; an increase at Standard Life in stop- loss fee income earned of $.4 million; $.8 million of administrative fee income received from International Benefits Administrators L.L.C., a third party administrator majority-owned
The NJ DOBI may grant an insurer relief, by written notification, from writing new PPA pursuant to the take-all-comers provisions of FAIRA described previously, if a showing finds that the insurer's premium to surplus ("leverage") ratio exceeds 3 to 1. Motor Club's present applicable leverage ratio for the twelve months ended December 31, 1996 is 3.31 to 1. Motor Club has not received any notifications from the NJ DOBI nor made any requests of the NJ DOBI in this regard.
(2) These non-recurring charges were incurred in connection with the Registrant's tenancy at its former office building and its subsequent relocation.
Losses and loss expenses incurred increased $8,411,000 or 41% in 1996 as compared to 1995 and increased $5,451,000 or 36% in 1995 as compared to 1994.
In 1996, the Registrant recorded $359,000 in lease termination charges on its former headquarters location in Newark, New Jersey, which consists of: (1) $132,000 for the termination of the lease; and (2) $227,000 for the charge-off of leasehold improvements on this facility. See Item 2 - Properties and Note P in the Notes for further information.
The reduction in the minimum pension liability was the result of: (1) an increase in the discount rate used to compute pension plan liabilities to 7.50% at December 31, 1996, from 7.25% at December 31, 1995; and (2) the performance of the Plan assets was in excess of the expected return on these assets. See Note K of the Notes for additional information regarding the Registrant's minimum pension liability.
At December 31, 1996 and 1995, the taxable fixed maturity portfolio consisted of the following types of securities:
We lease offices at approximately 580 locations. The average term for all such leases is approximately 4 years. The leases expire from 2004 to 2016. We believe we will not have any difficulty obtaining renewals of leases as they expire or, alternatively, leasing comparable properties. The aggregate annual rental expense under all office leases was approximately $46,511,000 in 2003.
Based on events that may indicate impairment of title plants and other long-lived assets, and our annual evaluation of goodwill, we estimate and expense any loss in value to our current operations. Amounts expensed in the three years ended December 31, 2003 were immaterial. We use independent appraisers to assist us in determining the fair value of goodwill.
LIQUIDITY AND CAPITAL RESOURCES. Acquisitions during 2003, 2002 and 2001 resulted in additions to goodwill of $13.7 million, $11.7 million and $19.3 million, respectively.
A substantial majority of consolidated cash and investments was held by Stewart Title Guaranty Company (Guaranty) and its subsidiaries. Cash transfers between Guaranty and its subsidiaries and the Company are subject to certain legal restrictions. See Notes 2 and 3 to the consolidated financial statements.
Other Data: Return on average shareholders' equity (4) 3.3% 6.9% 14.6% 13.0% 12.4% Debt to total capitalization ratio (5) 26.2% 24.2% 10.7% 24.2% 16.3% Net premiums written to equity 1.4X 1.4X 1.2X 1.2X 0.8X
(1) The above table includes all interest payments through the expiration of interest rate swaps as discussed in Note 8 to the Company’s consolidated financial statements. At that time the Company may redeem the debt or continue with variable interest payments. All amounts are reflected based on final maturity dates. Variable rate interest obligations are estimated based on current interest rates. As a result of applying current interest rates to the respective LIBOR for each capital trust, the interest rates were 9.6%, 9.3% and 8.8% for American Safety Capital Trust, American Safety Capital Trust II and American Safety Capital Trust III, respectively s of December 31, 2006. These rates are used to calculate the variable interest rate obligations through maturity. Fixed rates include, where applicable, the effects of interest rate derivatives employed to manage such interest rate risk.
December 31, 2005 Loss Loss Adjustment Total On-Going: Case IBNR Case IBNR Case and IBNR Environmental $ 14,141 27,193 2,596 15,716 $ 59,646 Construction 17,992 96,250 4,950 64,165 183,357 Surety (2,181) 134 1,065 711 (271) Programs * 31,232 21,317 34,362 25,499 112,410 ------------------------------------------------------------------------- 61,184 144,894 42,973 106,091 355,142 Run-Off: 17,426 1,772 16,096 3,057 38,351 ------------------------------------------------------------------------- Total $ 78,610 146,666 59,069 109,148 $ 393,493 =========================================================================
Revenue. Total revenue in the Senior Health Division increased $60.6 million, or 26%, from $236.6 million to $297.2 million. Senior health premium increased $50.4 million, or 23%, from $221.0 million to $271.4 million. The increase was due to the acquisition of Universal Fidelity in March 1996 and an increase in new business sales.
The ability of the insurance subsidiaries to pay dividends and make other payments to the Company is subject to state insurance department regulations which generally permit dividends and other payments to be paid for any twelve month period in amounts equal to the greater of (i) net gain from operations in the case of a life insurance company or net income in the case of all other insurance companies for the preceding calendar year or (ii) 10% of surplus as of the preceding December 31st. Any dividends in excess of these levels require the prior approval of the Director or Commissioner of the applicable state insurance department. The amount of dividends that the Company's insurance subsidiaries could pay in 1997 without prior approval is approximately $5.6 million. These liquidity requirements of the holding company have historically been met through dividends from the non-insurance subsidiaries which receive payments primarily from fees charged for administrative and marketing services provided to the Company's insurance subsidiaries and other unaffiliated companies. Dividends from the insurance subsidiaries could be required in the future to meet such liquidity requirements.
In August 1996, the Company borrowed $25.0 million under a term loan agreement with six banks to fund the acquisition of the WNIC block of business and to repay the notes issued as a portion of the acquisition price of UFLIC. Interest is payable quarterly and is based upon either a corporate base rate, LIBOR, or a prime rate plus a margin. The loan bore interest at 6.875% per annum at March 1, 1997, and requires principal payments of $1.25 million per quarter with a final payment on July 31, 2001.
The majority of the Company's fixed maturity investments are classified as "available-for-sale" for purposes of SFAS 115. Impact on the market valuation of securities classified in such a manner is reflected through an adjustment to surplus, but not through income. Since the asset valuations are adjusted in such a manner, while accounting standards do not allow such an adjustment for the Company's insurance liabilities; a subsequent significant move in interest rates could result in a positive or negative impact on the Company's shareholders' equity.
Our expenses consist primarily of three types: loss and loss adjustment expenses, policy acquisition costs and general and administrative expenses. In the period ended December 31, 2001, our first period of operations, we also incurred nonrecurring organizational expenses and an expense associated with the issuance of warrants to our founders.
Premiums. Premium income is primarily earned ratably over the term of the insurance policy. We also write certain pro-rata reinsurance policies on a risks attaching basis which are generally earned over a 24 month period, consistent with industry practice. The portion of the premium related to the unexpired portion of the policy at the end of any reporting period is reflected in unearned premium.
The fourth quarter includes approximately $25.0 million of positive development of losses incurred in earlier quarters, including $5.0 million in respect of the European floods. The fourth quarter’s positive development has primarily resulted from the receipt of additional information from ceding companies, including QQS syndicates, which indicated that our reserves were not required to be at the level originally estimated at September 30, 2002. As a new company with a very limited operating history, it is more difficult for us to estimate the reserve for loss and loss adjustment expenses than more established companies.
In addition, as of December 31, 2002, the Company made arrangements with Barclay’s Bank PLC for the provision of an additional evergreen letter of credit facility in favor of certain U.S. ceding companies in an amount of up to $100.0 million. Letters of credit outstanding at December 31, 2002 under this facility were approximately $19.9 million and are secured by cash of approximately $20.3 million. Depending on the level of business written over the next 12 months, the standby letter of credit may need to be extended. Montpelier Re has the ability to provide sufficient unencumbered assets to support the standby letter of credit.
We anticipate that our volume of business will increase significantly in 2003 over that of 2002 based on our experience during the January 2003 renewal period and believe that fiscal year 2003 gross premiums written will be approximately 40-60% greater than those of fiscal year 2002. Specifically, we anticipate our premium increases in 2003 will be as a result of the following factors:
Policy charge revenue decreased $1.6 million (or 9%) to $16.4 million during 2003 as compared to $18.0 million in 2002. The decrease in policy charge revenue is primarily due to a decrease in non-asset based policy charge revenue. Non-asset-based policy charge revenue decreased $1.1 million (or 15%) due to decreases in cost of insurance charges on variable life insurance contracts and deferred policy load amortization. In addition, asset-based policy charge revenue decreased $0.5 million (or 4%) during 2003 as compared to 2002. The decrease in asset-based policy charge revenue is attributable to lower average variable account balances. During the same comparative period, average variable account balances decreased $41.7 million (or 5%).
The increase in interest related gains is primarily attributable to increases in invested asset market valuations resulting from generally lower interest rates and contracting credit spreads during 2003 as compared to 2002.
We have taken significant steps to combat insurance fraud in Florida. We investigate and report suspicious claims and have worked with federal, state and local authorities. During 2004, we adopted underwriting rule restrictions in certain counties with a high level of suspicious claims. At the end of 2004, we removed these restrictions after implementing a rate filing that increased rates for these problematic risks.
We have entered into a new quota share reinsurance agreement for 2005 under which we will be ceding 10% of the premiums on policies written in 2005. As a result, our net combined ratio in 2005 will be less affected by reinsurance.
For the year ended December 31, 2003, our consolidated statement of operations included a charge in the amount of $13.8 million before tax related to two coordinated class actions that alleged, among other things, improper cancellations of our insurance policies and a pending related action. This amount reflected our estimate of the ultimate costs with respect to these actions, which includes the expected class member payments, defense costs and other expenses associated with these lawsuits and the change in the law related to cancellations. See "Item 3. Legal Proceedings."
Income Taxes. Income taxes for the year ended December 31, 2003 were $20.5 million, or 38% of income before income taxes. Our effective tax rate was 38% comprised of 35% Federal income taxes and 3% state income taxes.
The Company has entered into a new quota share reinsurance agreement effective January 1, 2005 with National Union Fire Insurance Company of Pittsburgh, PA, a subsidiary of AIG. The Company has elected to cede 10% of business written during 2005 under this agreement.
Gallagher generally operates in leased premises. Certain of Gallagher’s office space leases have options permitting renewals for additional periods. In addition to minimum fixed rentals, a number of leases contain annual escalation clauses generally related to increases in an inflation index. See Note 17 to the Consolidated Financial Statements of Gallagher’s 2006 Financial Statements, which is incorporated herein by reference, for information with respect to Gallagher’s lease commitments at December 31, 2006.
Gallagher believes the items included above provide meaningful additional information, which may be helpful to investors in assessing certain aspects of Gallagher's operating performance and financial condition that may not be otherwise apparent from GAAP. Industry peers provide similar supplemental information, although they may not use the same or comparable terminology and may not make identical adjustments. This non-GAAP information should be used in addition to, but not as a substitute for, the GAAP information.