ASSETS Current Statement 4 1 2 3 Net Admitted December 31 Nonadmitted Assets Prior Year Net Assets Assets (Cols. 1-2) Admitted Assets 1. Bonds......7,389,348,597......7,389,348,597...6,412,091,877 2. Stocks: 2.1 Preferred stocks......57,213,392......57,213,392...50,565,744 2.2 Common stocks......238,123,354......238,123,354...220,584,244 3. Mortgage loans on real estate: 3.1 First liens......269,530,584...909,399...268,621,185...62,784,737 3.2 Other than first liens......146,700,805......146,700,805...71,466,941 4. Real estate: 4.1 Properties occupied by the company (less $...0 encumbrances)............0... 4.2 Properties held for the production of income (less $...0 encumbrances)......499...499...0... 4.3 Properties held for sale (less $...0 encumbrances)............0... 5. Cash ($...5,260,161), cash equivalents ($...-) and short-term investments ($...54,840,097)......60,100,258......60,100,258...89,856,769 6. Contract loans (including $...0 premium notes)......260,846......260,846...251,169 7. Derivatives......9,989,247......9,989,247...22,636,289 8. Other invested assets......275,209,698......275,209,698...284,483,641 9. Receivables for securities......2,969,472......2,969,472...14,843,371 10. Securities lending reinvested collateral assets............0... 11. Aggregate write-ins for invested assets......0...0...0...0 12. Subtotals, cash and invested assets (Lines 1 to 11)......8,449,446,752...909,898...8,448,536,854...7,229,564,782 13. Title plants less $...0 charged off (for Title insurers only)............0... 14. Investment income due and accrued......77,776,927......77,776,927...64,622,178 15. Premiums and considerations: 15.1 Uncollected premiums and agents' balances in the course of collection......73,931,203...2,136,461...71,794,742...75,228,292 15.2 Deferred premiums, agents' balances and installments booked but deferred and not yet due (including $...0 earned but unbilled premiums)......151,550......151,550...279,783 15.3 Accrued retrospective premiums............0... 16. Reinsurance: 16.1 Amounts recoverable from reinsurers......4,902,247......4,902,247...3,884,289 16.2 Funds held by or deposited with reinsured companies............0... 16.3 Other amounts receivable under reinsurance contracts......2,120,520......2,120,520...2,013,715 17. Amounts receivable relating to uninsured plans............0... 18.1 Current federal and foreign income tax recoverable and interest thereon......25,391,661......25,391,661...30,065,089 18.2 Net deferred tax asset......76,539,885...47,359,353...29,180,532...27,995,312 19. Guaranty funds receivable or on deposit......1,274,748......1,274,748...1,239,079 20. Electronic data processing equipment and software......6,964,541...5,053,379...1,911,162...2,018,924 21. Furniture and equipment, including health care delivery assets ($...0)......7,866,525...7,866,525...0... 22. Net adjustment in assets and liabilities due to foreign exchange rates............0... 23. Receivables from parent, subsidiaries and affiliates............0...737 24. Health care ($...0) and other amounts receivable............0... 25. Aggregate write-ins for other than invested assets......5,153,432...5,153,432...0...0 26. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 12 through 25)......8,731,519,991...68,479,048...8,663,040,943...7,436,912,180 27. From Separate Accounts, Segregated Accounts and Protected Cell Accounts......150,525,822......150,525,822...146,840,147 28. Total (Lines 26 and 27)......8,882,045,813...68,479,048...8,813,566,765...7,583,752,327 DETAILS OF WRITE-INS 1101.............0... 1102.............0... 1103.............0... 1198. Summary of remaining write-ins for Line 11 from overflow page......0...0...0...0 1199. Totals (Lines 1101 thru 1103 plus 1198) (Line 11 above)......0...0...0...0 2501. Prepaid fees and suspense debits......4,006,438...4,006,438...0... 2502. Other than invested assets nonadmitted......262,383...262,383...0... 2503. Other assets nonadmitted......884,611...884,611...0... 2598. Summary of remaining write-ins for Line 25 from overflow page......0...0...0...0 2599. Totals (Lines 2501 thru 2503 plus 2598) (Line 25 above)......5,153,432...5,153,432...0...0 Q02
LIABILITIES, SURPLUS AND OTHER FUNDS 1 2 Current December 31 Statement Prior Year 1. Aggregate reserve for life contracts $...4,082,294,982 less $...0 included in Line 6.3 (including $...0 Modco Reserve)......4,082,294,982...3,831,576,119 2. Aggregate reserve for accident and health contracts (including $...0 Modco Reserve)......969,733,466...980,486,806 3. Liability for deposit-type contracts (including $...0 Modco Reserve)......1,813,818,709...851,320,944 4. Contract claims: 4.1 Life......51,952,245...51,738,982 4.2 Accident and health......596,914,724...588,221,803 5. Policyholders' dividends $...0 and coupons $...0 due and unpaid......... 6. Provision for policyholders' dividends and coupons payable in following calendar year - estimated amounts: 6.1 Dividends apportioned for payment (including $...0 Modco)......... 6.2 Dividends not yet apportioned (including $...0 Modco)......... 6.3 Coupons and similar benefits (including $...0 Modco)......... 7. Amount provisionally held for deferred dividend policies not included in Line 6......... 8. Premiums and annuity considerations for life and accident and health contracts received in advance less $...0 discount; including $...172,006 accident and health premiums......210,014...191,648 9. Contract liabilities not included elsewhere: 9.1 Surrender values on canceled contracts......... 9.2 Provision for experience rating refunds, including the liability of $...0 accident and health experience rating refunds of which $...0 is for medical loss ratio rebate per the Public Health Service Act......... 9.3 Other amounts payable on reinsurance, including $...413,868 assumed and $...0 ceded......413,868...1,332,822 9.4 Interest Maintenance Reserve......110,690,620...107,660,702 10. Commissions to agents due or accrued - life and annuity contracts $...0, accident and health $...0 and deposit-type contract funds $...0......... 11. Commissions and expense allowances payable on reinsurance assumed......... 12. General expenses due or accrued......34,228,017...45,024,521 13. Transfers to Separate Accounts due or accrued (net) (including $...0 accrued for expense allowances recognized in reserves, net of reinsured allowances)......(75,115)...(85,747) 14. Taxes, licenses and fees due or accrued, excluding federal income taxes......1,177,619...3,021,915 15.1 Current federal and foreign income taxes, including $...0 on realized capital gains (losses)......... 15.2 Net deferred tax liability......... 16. Unearned investment income......... 17. Amounts withheld or retained by company as agent or trustee......11,882,612...6,715,041 18. Amounts held for agents' account, including $...4,961,568 agents' credit balances......4,961,568...4,148,534 19. Remittances and items not allocated......41,731,784...54,942,886 20. Net adjustment in assets and liabilities due to foreign exchange rates......... 21. Liability for benefits for employees and agents if not included above......... 22. Borrowed money $...77,000,000 and interest thereon $...343,687......77,343,687...55,342,146 23. Dividends to stockholders declared and unpaid......... 24. Miscellaneous liabilities: 24.01 Asset valuation reserve......57,515,324...69,138,368 24.02 Reinsurance in unauthorized and certified ($...0) companies......... 24.03 Funds held under reinsurance treaties with unauthorized and certified ($...0) reinsurers......... 24.04 Payable to parent, subsidiaries and affiliates......154,500...110,147 24.05 Drafts outstanding......... 24.06 Liability for amounts held under uninsured plans......... 24.07 Funds held under coinsurance......... 24.08 Derivatives......11,643... 24.09 Payable for securities......49,851,238...23,607,434 24.10 Payable for securities lending......... 24.11 Capital notes $...0 and interest thereon $...0......... 25. Aggregate write-ins for liabilities......44,416,596...49,085,324 26. Total liabilities excluding Separate Accounts business (Lines 1 to 25)......7,949,228,101...6,723,580,395 27. From Separate Accounts statement......150,525,822...146,840,147 28. Total liabilities (Lines 26 and 27)......8,099,753,923...6,870,420,542 29. Common capital stock......6,003,113...6,003,113 30. Preferred capital stock......50,000,000...50,000,000 31. Aggregate write-ins for other than special surplus funds......0...0 32. Surplus notes......... 33. Gross paid in and contributed surplus......124,950,189...124,950,189 34. Aggregate write-ins for special surplus funds......718,848...1,035,884 35. Unassigned funds (surplus)......532,140,692...531,342,599 36. Less treasury stock, at cost: 36.1...0.000 shares common (value included in Line 29 $...0)......... 36.2...0.000 shares preferred (value included in Line 30 $...0)......... 37. Surplus (Total Lines 31 + 32 + 33 + 34 + 35-36) (including $...0 in Separate Accounts Statement)......657,809,729...657,328,672 38. Totals of Lines 29, 30 and 37......713,812,842...713,331,785 39. Totals of Lines 28 and 38 (Page 2, Line 28, Col. 3)......8,813,566,765...7,583,752,327 DETAILS OF WRITE-INS 2501. Retained assets program liability to claimants and other miscellaneous liabilities......21,647,084...26,315,812 2502. Liability for pension and postretirement benefits......22,769,512...22,769,512 2503.......... 2598. Summary of remaining write-ins for Line 25 from overflow page......0...0 2599. Totals (Lines 2501 thru 2503 plus 2598) (Line 25 above)......44,416,596...49,085,324 3101.......... 3102.......... 3103.......... 3198. Summary of remaining write-ins for Line 31 from overflow page......0...0 3199. Totals (Lines 3101 thru 3103 plus 3198) (Line 31 above)......0...0 3401. Affortable Care Act 9010 fee assessment......718,848...1,035,884 3402.......... 3403.......... 3498. Summary of remaining write-ins for Line 34 from overflow page......0...0 3499. Totals (Lines 3401 thru 3403 plus 3498) (Line 34 above)......718,848...1,035,884 Q03
SUMMARY OF OPERATIONS 1 2 3 Current Prior Prior Year Ended Year to Year to December 31 1. Premiums and annuity considerations for life and accident and health contracts......1,070,669,940...1,388,242,516...1,787,186,956 2. Considerations for supplementary contracts with life contingencies......625,895...849,383...1,290,993 3. Net investment income......323,210,664...258,452,899...364,764,017 4. Amortization of Interest Maintenance Reserve (IMR)......9,978,221...11,955,726...15,774,923 5. Separate Accounts net gain from operations excluding unrealized gains or losses............ 6. Commissions and expense allowances on reinsurance ceded......2,147,679...2,011,727...2,687,690 7. Reserve adjustments on reinsurance ceded............ 8. Miscellaneous Income: 8.1 Income from fees associated with investment management, administration and contract guarantees from Separate Accounts......799,468...795,726...1,052,187 8.2 Charges and fees for deposit-type contracts............ 8.3 Aggregate write-ins for miscellaneous income......4,513,763...3,901,890...5,368,002 9. Totals (Lines 1 to 8.3)......1,411,945,630...1,666,209,867...2,178,124,768 10. Death benefits......45,873,375...47,836,158...64,484,936 11. Matured endowments (excluding guaranteed annual pure endowments)............ 12. Annuity benefits......60,548,195...41,421,618...53,583,768 13. Disability benefits and benefits under accident and health contracts......409,769,172...408,857,012...539,701,643 14. Coupons, guaranteed annual pure endowments and similar benefits............ 15. Surrender benefits and withdrawals for life contracts......157,229,755...137,245,918...183,150,469 16. Group conversions............ 17. Interest and adjustments on contract or deposit-type contract funds......30,458,585...12,424,415...17,531,695 18. Payments on supplementary contracts with life contingencies......1,886,143...1,396,175...1,874,248 19. Increase in aggregate reserves for life and accident and health contracts......239,965,523...576,577,031...713,330,104 20. Totals (Lines 10 to 19)......945,730,748...1,225,758,327...1,573,656,863 21. Commissions on premiums, annuity considerations and deposit-type contract funds (direct business only)......115,479,329...126,247,991...163,544,583 22. Commissions and expense allowances on reinsurance assumed......1,103,078...1,225,764...1,971,623 23. General insurance expenses......127,024,803...119,665,819...162,897,087 24. Insurance taxes, licenses and fees, excluding federal income taxes......26,276,546...25,084,738...34,512,034 25. Increase in loading on deferred and uncollected premiums......(5,407,803)...(2,187,088)...1,752,272 26. Net transfers to or (from) Separate Accounts net of reinsurance......(3,227)...(3,165)...(4,232) 27. Aggregate write-ins for deductions......0...0...0 28. Totals (Lines 20 to 27)......1,210,203,474...1,495,792,386...1,938,330,230 29. Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 28)......201,742,156...170,417,481...239,794,538 30. Dividends to policyholders............ 31. Net gain from operations after dividends to policyholders and before federal income taxes (Line 29 minus Line 30)......201,742,156...170,417,481...239,794,538 32. Federal and foreign income taxes incurred (excluding tax on capital gains)......52,676,794...45,293,122...64,724,740 33. Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) (Line 31 minus Line 32)......149,065,362...125,124,359...175,069,798 34. Net realized capital gains (losses) (excluding gains (losses) transferred to the IMR) less capital gains tax of $...13,345,762 (excluding taxes of $...7,004,383 transferred to the IMR)......(54,343,847)...(6,743,322)...(8,125,651) 35. Net income (Line 33 plus Line 34)......94,721,515...118,381,037...166,944,147 CAPITAL AND SURPLUS ACCOUNT 36. Capital and surplus, December 31, prior year......713,331,785...598,382,993...598,382,993 37. Net income (Line 35)......94,721,515...118,381,037...166,944,147 38. Change in net unrealized capital gains (losses) less capital gains tax of $...(20,990,818)......(9,826,557)...(246,537)...(8,040,450) 39. Change in net unrealized foreign exchange capital gain (loss)......(25,772,485)...(1,849,161)...(11,884,943) 40. Change in net deferred income tax......15,362,318...(7,570,121)...(7,224,764) 41. Change in nonadmitted assets......(31,626,780)...(495,633)...(11,584,760) 42. Change in liability for reinsurance in unauthorized and certified companies............ 43. Change in reserve on account of change in valuation basis, (increase) or decrease............ 44. Change in asset valuation reserve......11,623,044...(4,339,778)...(1,638,821) 45. Change in treasury stock............ 46. Surplus (contributed to) withdrawn from Separate Accounts during period............ 47. Other changes in surplus in Separate Accounts Statement............ 48. Change in surplus notes............ 49. Cumulative effect of changes in accounting principles............ 50. Capital changes: 50.1 Paid in............ 50.2 Transferred from surplus (Stock Dividend)............ 50.3 Transferred to surplus............ 51. Surplus adjustment: 51.1 Paid in............ 51.2 Transferred to capital (Stock Dividend)............ 51.3 Transferred from capital............ 51.4 Change in surplus as a result of reinsurance............ 52. Dividends to stockholders......(54,000,000)...(2,000,000)...(2,000,000) 53. Aggregate write-ins for gains and losses in surplus......0...0...(9,621,617) 54. Net change in capital and surplus (Lines 37 through 53)......481,055...101,879,807...114,948,792 55. Capital and surplus as of statement date (Lines 36 + 54)......713,812,840...700,262,800...713,331,785 DETAILS OF WRITE-INS 08.301. Miscellaneous income......4,513,763...3,901,890...5,368,002 08.302............. 08.303............. 08.398. Summary of remaining write-ins for Line 8.3 from overflow page......0...0...0 08.399. Totals (Lines 08.301 thru 08.303 plus 08.398) (Line 8.3 above)......4,513,763...3,901,890...5,368,002 2701............. 2702............. 2703............. 2798. Summary of remaining write-ins for Line 27 from overflow page......0...0...0 2799. Totals (Lines 2701 thru 2703 plus 2798) (Line 27 above)......0...0...0 5301. Affordable Care Act 9010 fee assessment......317,036......1,035,884 5302. Reclassification of Affordable Care Act 9010 fee assessment to special surplus funds......(317,036)......(1,035,884) 5303. Unassigned funds - pension and postretirement benefits............(9,621,617) 5398. Summary of remaining write-ins for Line 53 from overflow page......0...0...0 5399. Totals (Lines 5301 thru 5303 plus 5398) (Line 53 above)......0...0...(9,621,617) Q04
CASH FROM OPERATIONS CASH FLOW 1 2 3 Current Year Prior Year Prior Year Ended to To December 31 1. Premiums collected net of reinsurance......1,080,284,493...1,388,088,717...1,779,924,409 2. Net investment income......263,605,241...182,689,438...261,867,157 3. Miscellaneous income......7,471,548...6,823,969...9,209,989 4. Total (Lines 1 through 3)......1,351,361,282...1,577,602,124...2,051,001,555 5. Benefit and loss related payments......687,219,939...625,695,007...832,405,812 6. Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts......(3,222)...(3,161)...(4,224) 7. Commissions, expenses paid and aggregate write-ins for deductions......275,921,328...273,986,197...362,488,588 8. Dividends paid to policyholders............ 9. Federal and foreign income taxes paid (recovered) net of $...0 tax on capital gains (losses)......61,104,551...43,040,149...65,410,390 10. Total (Lines 5 through 9)......1,024,242,596...942,718,192...1,260,300,566 11. Net cash from operations (Line 4 minus Line 10)......327,118,686...634,883,932...790,700,989 CASH FROM INVESTMENTS 12. Proceeds from investments sold, matured or repaid: 12.1 Bonds......2,054,631,279...2,328,571,234...2,953,292,410 12.2 Stocks......63,013,478...115,338,405...124,462,878 12.3 Mortgage loans......30,409,274...32,046,695...56,044,081 12.4 Real estate............ 12.5 Other invested assets......36,713,716...40,838,939...69,763,218 12.6 Net gains or (losses) on cash, cash equivalents and short-term investments......(5,891,134)...463,027...10,946 12.7 Miscellaneous proceeds......42,111,006...70,497,847...72,966,923 12.8 Total investment proceeds (Lines 12.1 to 12.7)......2,220,987,619...2,587,756,147...3,276,540,456 13. Cost of investments acquired (long-term only): 13.1 Bonds......3,028,488,974...3,506,381,294...4,200,727,015 13.2 Stocks......115,128,438...211,744,406...225,631,908 13.3 Mortgage loans......308,585,762...78,163,860...120,542,633 13.4 Real estate............ 13.5 Other invested assets......27,178,438...141,136,657...187,201,683 13.6 Miscellaneous applications.........11,579,986...72,934,320 13.7 Total investments acquired (Lines 13.1 to 13.6)......3,479,381,612...3,949,006,203...4,807,037,559 14. Net increase or (decrease) in contract loans and premium notes......9,677...2,078...13,886 15. Net cash from investments (Line 12.8 minus Line 13.7 and Line 14)......(1,258,403,670)...(1,361,252,134)...(1,530,510,989) 16. Cash provided (applied): CASH FROM FINANCING AND MISCELLANEOUS SOURCES 16.1 Surplus notes, capital notes............ 16.2 Capital and paid in surplus, less treasury stock............ 16.3 Borrowed funds......18,922,229...(3,079,312)...(4,105,750) 16.4 Net deposits on deposit-type contracts and other insurance liabilities......951,290,223...802,411,408...802,189,398 16.5 Dividends to stockholders......54,000,000...84,000,000...84,000,000 16.6 Other cash provided (applied)......(14,683,979)...(32,883,981)...(13,934,605) 17. Net cash from financing and miscellaneous sources (Lines 16.1 through 16.4 minus Line 16.5 plus Line 16.6)......901,528,473...682,448,115...700,149,043 RECONCILIATION OF CASH, CASH UIVALENTS AND SHORT-TERM INVESTMENTS 18. Net change in cash, cash equivalents and short-term investments (Line 11 plus Line 15 plus Line 17)......(29,756,511)...(43,920,087)...(39,660,957) 19. Cash, cash equivalents and short-term investments: 19.1 Beginning of year......89,856,769...129,517,726...129,517,726 19.2 End of period (Line 18 plus Line 19.1)......60,100,258...85,597,639...89,856,769 Note: Supplemental disclosures of cash flow information for non-cash transactions: 20.0001............ Q05
EXHIBIT 1 DIRECT PREMIUMS AND DEPOSIT-TYPE CONTRACTS 1 2 3 Current Year Prior Year Prior Year To To Ended December 31 1. Industrial life............ 2. Ordinary life insurance......2,927,355...3,393,075...4,901,812 3. Ordinary individual annuities......298,261,228...527,996,654...652,989,686 4. Credit life (group and individual)............ 5. Group life insurance......316,492,121...328,169,219...436,837,716 6. Group annuities......102,285,183...169,817,294...202,769,817 7. A&H - group......568,923,297...578,021,976...774,148,183 8. A&H - credit (group and individual)............ 9. A&H - other......107,301...121,535...154,518 10. Aggregate of all other lines of business......0...0...0 11. Subtotal......1,288,996,485...1,607,519,753...2,071,801,732 12. Deposit-type contracts......950,281,250...500,000,000...500,000,000 13. Total......2,239,277,735...2,107,519,753...2,571,801,732 DETAILS OF WRITE-INS 1001............. 1002............. 1003............. 1098. Summary of remaining write-ins for Line 10 from overflow page......0...0...0 1099. Total (Lines 1001 thru 1003 plus 1098) (Line 10 above)......0...0...0 Q06
NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Accounting Practices The accompanying financial statements of (the Company ) have been prepared in conformity with statutory accounting practices ( SAP ) as set forth in the National Association of Insurance Commissioners ( NAIC ) Accounting Practices and Procedures manuals and the NAIC Annual Statement Instructions manuals and with accounting practices prescribed by the State of Illinois. State of September 30, December 31, Net Income Domicile 2015 2014 (1) RSL State Basis (Page 4, Line 35, Columns 1 & 3) Illinois $ 94,721,515 $ 166,944,147 (2) State Prescribed Practices that increase/(decrease) NAIC SAP: e.g., Depreciation of fixed assets - - (3) State Permitted Practices that increase/(decrease) NAIC SAP: e.g., Depreciation, home office property - - (4) NAIC SAP (1-2-3=4) $ 94,721,515 $ 166,944,147 Surplus (5) RSL State Basis (Page 3, Line 38, Columns 1 & 2) $ 713,812,842 $ 713,331,785 (6) State Prescribed Practices that increase/(decrease) NAIC SAP: e.g., Goodwill, net - - e.g., Fixed Assets, net - - (7) State Permitted Practices that increase/(decrease) NAIC SAP: e.g., Home office Property - - (8) NAIC SAP (5-6-7=8) $ 713,812,842 $ 713,331,785 B. Use of Estimates in the Preparation of the Financial Statements The preparation of financial statements in conformity with SAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. SAP also requires disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. C. Accounting Policy Ordinary life insurance premiums are recognized as income over the premium-paying period of the related policies. Group life and accident and health premiums are earned ratably over the terms of the related insurance and reinsurance contracts or policies. Considerations for annuity and supplementary contracts with mortality or morbidity risk are recognized as revenue when received. Funds received from deposit-type contracts, annuity and supplementary contracts without mortality or morbidity risk, are recorded as an addition to policy reserves and are not recognized as revenue. Expenses incurred in connection with acquiring new insurance business, including acquisition costs such as sales commissions, are charged to operations as incurred. In addition, the Company uses the following accounting policies: (1) Short-term investments are stated at amortized cost. (2) Bonds not backed by other loans are stated at amortized cost using the interest method, except for those in reserve class six, which are stated at the lower of amortized cost or market value. (3) Common stocks are stated at market value, except common stocks of affiliated companies, which are valued as stated in item (7) of this Note 1(C) and Note 10 below. (4) Preferred stocks are stated at cost, except for those in reserve classes four through six which are stated at the lower of cost or market value. (5) Mortgage loans on real estate are stated at amortized cost using the interest method. (6) Loan-backed securities are stated at either amortized cost or the lower of amortized cost or fair market value using the interest method; significant changes in estimated cash flows from the original purchase assumptions are accounted for using the prospective method. (7) The Company owns 100% of the common stock of First Reliance Standard Life Insurance Company ( FRSLIC ). The Company's carrying value of the stock is equal to the statutory capital and surplus of FRSLIC. (8) The Company has certain ownership interests in limited partnerships and limited liability companies. The Company carries these interests based on the underlying audited GAAP equity of the investee. (9) The Company's derivative instruments that do not meet the criteria to qualify for hedge accounting are accounted for at fair value and the related changes in fair values during the holding period are recorded as unrealized gains and losses. (10) The Company considers anticipated investment income in its review of reserves for potential premium deficiencies. Q07
NOTES TO FINANCIAL STATEMENTS (11) Unpaid claims and claim adjustment expenses include an amount determined from individual case estimates and loss reports and an amount, based on past experience, for losses incurred but not reported. Such liabilities are necessarily based on assumptions and estimates, and while management believes the amount is adequate, the ultimate liability may be in excess of or less than the amount provided. The methods for making such estimates and for establishing the resulting liability is continually reviewed and any adjustments are reflected in the period determined. (12) The Company has not modified its capitalization policy from the prior period. (13) Not applicable. The amounts reported in this statement that pertain to the entire business of the Company include, as appropriate, the activity of the Company s separate account business. The Company elected to use rounding in the preparation of this statement. 2. ACCOUNTING CHANGES AND CORRECTIONS OF ERRORS A. The Company has not made any material changes in its accounting policies during the nine months ended September 30, 2015. No material errors occurred, or were required to be corrected, in the financial statements for the nine months ended September 30, 2015. 3. BUSINESS COMBINATIONS AND GOODWILL Not applicable. 4. DISCONTINUED OPERATIONS Not applicable. 5. INVESTMENTS A. Mortgage Loans (1) During 2015, the Company acquired commercial other mortgage loans with a maximum and minimum lending rate of 16.00% and 2.45%, respectively. (2) The maximum percentage of any one loan to the value of security at the time of the loan was 93%. (3) Not applicable. (4) Age Analysis of Mortgage Loans Residential Commercial Farm Insured All Other Insured All Other Mezzanine Total a. Current Year 1. Recorded Investments (All) (a) Current $ - $ - $ - $ - $ 268,621,185 $ 146,700,805 $ 415,321,990 (b) 30-59 Days past due - - - - - - - (c) 60-89 Days past due - - - - - - - (d) 90-179 Days past due - - - - - - - (e) 180+ Days past due - - - - - - - 2. Accruing interest 90-179 days past due (a) Recorded investment - - - - - - - (b) Interest accrued - - - - - - - 3. Accruing interest 180+ days past due (a) Recorded investment - - - - - - - (b) Interest accrued - - - - - - 4. Interest reduced (a) Recorded investment - - - - - - - (b) Number of loans - - - - - - (c) Percent reduced 0% 0% 0% 0% 0% 0% 0% Q07.1
NOTES TO FINANCIAL STATEMENTS Residential Commercial Farm Insured All Other Insured All Other Mezzanine Total b. Prior Year 1. Recorded Investments (All) (a) Current $ - $ - $ - $ - $ 65,753,637 $ 71,466,941 $ 137,220,578 (b) 30-59 Days past due - - - - - - - (c) 60-89 Days past due - - - - - - - (d) 90-179 Days past due - - - - - - - (e) 180+ Days past due - - - - - - - Accruing interest 90-179 2. days past due (a) Recorded investment - - - - - - - (b) Interest accrued - - - - - - - Accruing interest 180+ days 3. past due (a) Recorded investment - - - - - - - (b) Interest accrued - - - - - - - 4. Interest reduced (a) Recorded investment - - - - - - - (b) Number of loans - - - - - - - (c) Percent reduced 0% 0% 0% 0% 0% 0% 0% (5-7) Not applicable. (8) The Company recognizes interest income on its impaired loans upon receipt. Cash receipts are recorded on the day the payments are received by the Company. B-C. Not applicable. D. Loan-Backed Securities (1) Prepayment assumptions for single class and multi-class mortgage-backed and asset-backed securities were obtained from broker-dealer survey values or internal estimates. These assumptions are consistent with the current interest rate environment. The prospective adjustment method is used to value all securities. (2) Not applicable. (3) The Company did not experience any other-than-temporary impairments based on the Company's intent to sell or inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis. Other-than-temporary impairments classified on the basis that the present value of cash flows expected to be collected is less than the amortized cost basis of the security are presented in the table below (1) (2) (3) (4) (5) (6) (7) of Carrying Value Present Value Financial Before of Carrying Value Statement Current Period Projected Recognized After Fair Where CUSIP OTTI Cash Flows OTTI OTTI Value Reported 040104EK3 $ 1,252,222 $ 1,250,357 $ (1,865) $ 1,250,357 $ 1,250,357 3/31/2015 05366VAA6 918,084 903,331 (14,753) 903,331 830,006 3/31/2015 05543DBQ6 1,628,099 1,560,185 (67,915) 1,560,185 1,560,185 3/31/2015 05946X2E2 4,998,365 4,958,028 (40,337) 4,958,028 5,441,269 3/31/2015 05949CEZ5 3,229,310 3,225,100 (4,210) 3,225,100 3,225,100 3/31/2015 126671M78 1,276,021 1,181,229 (94,792) 1,181,229 1,140,021 3/31/2015 12667F6D2 350,320 329,757 (20,562) 329,757 329,757 3/31/2015 12667GQC0 5,794,459 5,793,587 (872) 5,793,587 6,007,137 3/31/2015 126694AF5 2,653,153 2,625,472 (27,680) 2,625,472 2,625,472 3/31/2015 17307GL30 1,025,320 1,010,739 (14,581) 1,010,739 1,010,739 3/31/2015 18976GAF3 6,867,555 6,854,575 (12,980) 6,854,575 7,622,307 3/31/2015 3622E8AX3 849,711 763,758 (85,953) 763,758 763,758 3/31/2015 3622ELAZ9 387,497 374,668 (12,829) 374,668 370,881 3/31/2015 3622EUAC0 1,864,337 1,801,178 (63,159) 1,801,178 1,774,506 3/31/2015 3622EUAE6 1,525,326 1,488,566 (36,760) 1,488,566 1,488,566 3/31/2015 362334MZ4 583,177 542,677 (40,500) 542,677 536,986 3/31/2015 362334QE7 2,847,280 2,780,425 (66,855) 2,780,425 2,640,116 3/31/2015 43709YAB5 1,932,739 1,886,846 (45,892) 1,886,846 1,888,903 3/31/2015 55265KV55 141,712 135,648 (6,063) 135,648 138,243 3/31/2015 61744CPN0 212,225 87,269 (124,956) 87,269 70,995 3/31/2015 61749WAJ6 798,900 796,515 (2,385) 796,515 796,515 3/31/2015 70556MAB8 1,453,967 1,374,615 (79,352) 1,374,615 1,374,615 3/31/2015 74928XDE8 717,121 712,030 (5,091) 712,030 712,030 3/31/2015 Q07.2
NOTES TO FINANCIAL STATEMENTS (1) (2) (3) (4) (5) (6) (7) of Carrying Value Present Value Financial Before of Carrying Value Statement Current Period Projected Recognized After Fair Where CUSIP OTTI Cash Flows OTTI OTTI Value Reported 84751PLM9 1,002,752 965,369 (37,383) 965,369 862,658 3/31/2015 9393362J1 498,463 471,569 (26,893) 471,569 438,551 3/31/2015 93934FAD4 4,775,793 4,744,533 (31,260) 4,744,533 4,654,687 3/31/2015 94984JAF8 184,832 178,436 (6,396) 178,436 178,436 3/31/2015 00191PAB9 3,654,018 3,538,599 (115,419) 3,538,599 3,538,599 6/30/2015 05366VAA6 814,382 787,101 (27,281) 787,101 787,101 6/30/2015 05543DBQ6 1,642,487 1,576,645 (65,842) 1,576,645 1,576,645 6/30/2015 05949CEZ5 2,823,924 2,817,776 (6,148) 2,817,776 2,817,776 6/30/2015 05968KAM6 6,138,545 6,117,717 (20,829) 6,117,717 5,832,942 6/30/2015 12667F6D2 297,367 282,069 (15,299) 282,069 282,069 6/30/2015 126694AF5 2,235,491 2,224,929 (10,562) 2,224,929 2,224,929 6/30/2015 161631AG1 567,447 321,494 (245,953) 321,494 321,494 6/30/2015 17307GL30 1,000,602 996,392 (4,210) 996,392 996,392 6/30/2015 20173WAJ7 14,006,848 6,240,000 (7,766,848) 6,240,000 6,240,000 6/30/2015 32027NLK5 812,108 714,891 (97,217) 714,891 714,891 6/30/2015 32051G3A1 3,980,410 3,970,675 (9,735) 3,970,675 3,970,675 6/30/2015 3622E8AX3 763,758 735,506 (28,252) 735,506 728,921 6/30/2015 3622ELAZ9 374,668 370,881 (3,787) 370,881 383,126 6/30/2015 3622EUAC0 1,777,181 1,736,923 (40,259) 1,736,923 1,718,627 6/30/2015 3622EUAE6 1,465,494 1,414,756 (50,738) 1,414,756 1,414,756 6/30/2015 362334MZ4 542,677 528,338 (14,339) 528,338 514,660 6/30/2015 3623417S2 12,106,394 12,034,879 (71,515) 12,034,879 12,034,879 6/30/2015 40431KAE0 942,056 940,176 (1,881) 940,176 914,425 6/30/2015 43709YAB5 1,874,818 1,785,930 (88,888) 1,785,930 1,787,877 6/30/2015 52522QAE2 3,956,947 3,897,703 (59,244) 3,897,703 3,897,703 6/30/2015 52522WAG4 2,232,925 2,222,063 (10,862) 2,222,063 2,222,063 6/30/2015 54251UAC0 6,649,776 6,581,809 (67,967) 6,581,809 6,363,196 6/30/2015 55265KV55 43,546 41,180 (2,367) 41,180 41,180 6/30/2015 61749JAS5 1,009,320 982,795 (26,526) 982,795 980,727 6/30/2015 61750YAB5 2,251,714 2,170,158 (81,556) 2,170,158 2,440,507 6/30/2015 70556MAB8 1,940,639 1,562,063 (378,576) 1,562,063 1,562,063 6/30/2015 74931NAL2 5,587,553 5,536,129 (51,423) 5,536,129 4,706,614 6/30/2015 84751PLM9 955,830 934,107 (21,722) 934,107 840,062 6/30/2015 9393362J1 453,173 411,895 (41,278) 411,895 375,206 6/30/2015 93934FAD4 4,567,355 4,547,649 (19,706) 4,547,649 4,613,267 6/30/2015 00191PAB9 3,681,775 3,329,411 (352,364) 3,329,411 3,312,274 9/30/2015 05366VAA6 710,039 705,120 (4,919) 705,120 705,120 9/30/2015 05543DBQ6 1,655,834 1,512,859 (142,975) 1,512,859 1,512,859 9/30/2015 05946X2E2 4,369,206 4,362,072 (7,134) 4,362,072 4,671,128 9/30/2015 05949CEZ5 2,503,048 2,493,206 (9,842) 2,493,206 2,493,206 9/30/2015 05968KAM6 6,564,519 6,090,653 (473,866) 6,090,653 5,661,637 9/30/2015 12667F6D2 258,664 257,767 (897) 257,767 257,767 9/30/2015 126694AF5 1,962,111 1,942,505 (19,606) 1,942,505 1,942,505 9/30/2015 17307GL30 991,035 976,418 (14,617) 976,418 976,418 9/30/2015 20173WAJ7 3,925,909 3,262,864 (663,045) 3,262,864 2,908,000 9/30/2015 32051G3A1 3,765,684 3,724,083 (41,601) 3,724,083 3,724,083 9/30/2015 3622E8AX3 735,506 708,269 (27,237) 708,269 708,217 9/30/2015 3622ELAZ9 370,881 362,593 (8,287) 362,593 362,593 9/30/2015 3622EUAC0 1,718,141 1,702,037 (16,105) 1,702,037 1,657,651 9/30/2015 3622EUAE6 1,396,919 1,364,467 (32,452) 1,364,467 1,364,467 9/30/2015 362334MZ4 528,338 507,576 (20,763) 507,576 499,309 9/30/2015 362334QE7 2,780,425 2,774,180 (6,246) 2,774,180 2,612,313 9/30/2015 3623417S2 11,171,343 11,155,051 (16,293) 11,155,051 11,155,051 9/30/2015 40431KAE0 927,284 916,759 (10,525) 916,759 886,896 9/30/2015 43709YAB5 1,769,467 1,506,168 (263,299) 1,506,168 1,108,261 9/30/2015 52522QAE2 3,756,731 3,678,263 (78,468) 3,678,263 3,678,263 9/30/2015 54251UAC0 6,521,649 6,466,835 (54,814) 6,466,835 6,275,474 9/30/2015 55265KV55 38,237 1 (38,236) 1 1 9/30/2015 61744CPN0 77,001 63,720 (13,280) 63,720 48,374 9/30/2015 61749JAS5 952,036 939,737 (12,299) 939,737 922,023 9/30/2015 61749WAJ6 770,289 744,346 (25,943) 744,346 744,346 9/30/2015 61750YAB5 2,130,475 2,081,835 (48,640) 2,081,835 2,224,093 9/30/2015 Q07.3
NOTES TO FINANCIAL STATEMENTS (1) (2) (3) (4) (5) (6) (7) of Carrying Value Present Value Financial Before of Carrying Value Statement Current Period Projected Recognized After Fair Where CUSIP OTTI Cash Flows OTTI OTTI Value Reported 84751PLM9 928,469 921,982 (6,486) 921,982 907,532 9/30/2015 9393362J1 395,971 359,239 (36,732) 359,239 313,728 9/30/2015 94984JAF8 132,361 124,117 (8,244) 124,117 124,117 9/30/2015 004421CT8 307,223 297,493 (9,730) 297,493 297,493 9/30/2015 05955EAN3 690,345 343,992 (346,353) 343,992 331,033 9/30/2015 12628KAA0 1,749,282 1,735,032 (14,250) 1,735,032 1,735,032 9/30/2015 12628LAJ9 2,787,112 2,758,926 (28,186) 2,758,926 2,758,926 9/30/2015 161546JM9 702,523 675,903 (26,621) 675,903 675,903 9/30/2015 74928DAX3 2,694,849 2,562,650 (132,198) 2,562,650 2,545,806 9/30/2015 75970QAD2 1,740,062 1,731,179 (8,883) 1,731,179 1,687,892 9/30/2015 761119AS5 3,185,325 3,143,353 (41,972) 3,143,353 3,114,350 9/30/2015 863579B31 13,206,079 13,129,946 (76,133) 13,129,946 13,129,946 9/30/2015 32051GZS7 7,011,378 6,979,444 (31,935) 6,979,444 6,945,311 9/30/2015 $ 238,801,719 $ 225,211,737 $ (13,589,982) $ 225,211,737 $ 223,555,563 (4) The gross unrealized losses and fair value of loan-backed securities aggregated by the length of time the individual securities have been in a continuous temporarily impaired position are as follows: a. The aggregate amount of unrealized losses: 1. Less than 12 Months $ (70,766,069) 2. 12 Months or Longer $ (9,092,665) b. The aggregate related fair value of securities with unrealized losses: 1. Less than 12 Months $ 1,701,543,372 2. 12 Months or Longer $ 139,654,831 (5) Declines in the fair value of investments that are considered in the judgment of management to be other than temporary are reported as realized losses. Management evaluates, among other things, the financial position and prospects of the issuer, conditions in the issuer's industry and geographical area, liquidity of the investment, changes in the amount or timing of expected future cash flows from the investment and recent changes in the credit ratings of the issuer by a ratings agency to determine if and when a decline in the fair value of an investment below amortized cost is other than temporary. The length of time and extent to which the fair value of the investment is lower than its amortized cost, the Company's ability and intent to retain the investment to allow for anticipated recovery in the investment's fair value and whether the Company has made a decision to sell the investment are other factors also considered. E. Not applicable. F. The Company had real estate held for the production of income with a book/adjusted carrying value of $499 at September 30, 2015, and December 31, 2014, respectively. During 2015, the Company did not recognize other than temporary impairment losses due to declines in the fair value below the book value of this property. G. Not applicable. Q07.4
NOTES TO FINANCIAL STATEMENTS H. (1) Restricted Assets (Including Pledged) Gross Restricted (8) Percentage Current Year (6) (7) (9) (10) (1) (2) (3) (4) (5) G/A Total Protected Total Admitted Total Supporting Protected Cell Account Total Current Gross Restricted Restricted General Protected Cell Account Assets from Increase/ Year Restricted to Total Asset Account Cell Account Restricted Supporting Total Prior (Decrease) Admitted to Total Admitted Category (G/A) Activity (a) Assets G/A Activity (b) ( 1Plus 3) Year (5 minus 6) Restricted Assets Assets a. Subject to contractual obligation for which liability is not shown $ - $ - $ - $ - $ - $ - $ - $ - 0.0% 0.0% b. Collateral held under security lending agreements - - - - - - - - 0.0% 0.0% c. Subject to repurchase agreements - - - - - - - - 0.0% 0.0% d. Subject to reverse repurchase agreements - - - - - - - - 0.0% 0.0% e. Subject to dollar repurchase agreements - - - - - - - - 0.0% 0.0% f. Subject to dollar reverse repurchase agreements - - - - - - - - 0.0% 0.0% g. Placed under option contracts - - - - - - - - 0.0% 0.0% h. Letter stock or securities restricted as to sale (excluding - - - - - - - - 0.0% 0.0% i.fhlb capital stock - - - - - - - - 0.0% 0.0% j. On deposit with states 15,151,937 - - - 15,151,937 15,035,961 115,976 15,151,937 0.2% 0.2% k. On deposit with other regulatory bodies - - - - - - - - 0.0% 0.0% l. Pledged collateral to FHLB (including assets backing funding - - - - - - - - 0.0% 0.0% m. Pledged as collateral not captured in other categories 437,520,955 - - - 437,520,955 384,162,843 53,358,112 437,520,955 5.0% 5.0% n. Other restricted assets - - - - - - - - 0.0% 0.0% o. Total Restricted Assets $ 452,672,892 $ - $ - $ - $ 452,672,892 $ 399,198,804 $ 53,474,088 $ 452,672,892 5.1% 5.2% (a) Subset of column 1 (b) Subset of column 3 (2) Detail of Assets Pledged as Collateral Not Captured in Other Categories (Contracts that Share Similar Characteristics, Such as Reinsurance and Derivatives, Are Reported in the Aggregate) Gross Restricted (8) Percentage Current Year (6) (7) (9) (10) (1) (2) (3) (4) (5) G/A Total Protected Total Admitted Total Supporting Protected Cell Account Total Current Gross Restricted Description General Protected Cell Account Assets from Increase/ Year Restricted to Total of Account Cell Account Restricted Supporting Total Prior (Decrease) Admitted to Total Admitted Assets (G/A) Activity (a) Assets G/A Activity (b) ( 1Plus 3) Year (5 minus 6) Restricted Assets Assets Mortgage related securities pledged to RSLT 437,520,955 - - - 437,520,955 384,162,843 53,358,112 437,520,955 5.0% 5.0% Q07.5
NOTES TO FINANCIAL STATEMENTS (3) Not applicable. 6. JOINT VENTURES, PARTNERSHIPS AND LIMITED LIABILITY COMPANIES Not applicable. 7. INVESTMENT INCOME Not applicable. 8. DERIVATIVE INSTRUMENTS A-C. A currency forward is an agreement to buy or sell a foreign currency, in return for U.S. dollars, at an exchange rate agreed upon today, to settle on a specific future date. All of the Company s forward contracts are traded over-the-counter, which exposes the Company to counterparty risk to the extent there are unrealized gains on open positions. To minimize counterparty risk, the Company evaluates all counterparties based on credit ratings and maintains master agreements with netting provisions. An option is an agreement that gives the buyer the right to buy (call option) or sell (put option) a financial instrument at a specified price within a specified time period. The buyer of an option pays a premium to the seller on the settlement date. This premium is the buyer s only cash requirement and represents the maximum amount at risk. The seller (or writer) of an option receives a premium from the buyer on the settlement date. The seller settles changes in the market value daily in cash. The Company is exposed to counterparty risk with respect to any over-the-counter options. An interest rate futures contract is an agreement to buy or sell U.S. Treasury Bonds to settle on a specific future date. All of the Company's futures contracts are exchange traded which minimize counterparty risk. The Company satisfies the initial margin requirements with cash. During 2015, the Company used currency forward contracts to reduce the currency risk inherent in certain bond investments denominated in foreign currencies. The Company also used interest rate futures contracts to reduce interest rate-related risk related to certain bond investments. D. For the nine months ended September 30, 2015, realized gains on derivatives were $10,539,029. The portion of unassigned surplus represented by cumulative net unrealized losses on derivatives totaled $7,573,646 at September 30, 2015. E-F. Not applicable. 9. INCOME TAXES A. The components of the net deferred tax asset/(liability) at September 30, are as follows: 1. September 30, 2015 Ordinary Capital Total (a) Gross Deferred Tax Assets $ 63,360,573 $ 47,278,638 $ 110,639,211 (b) Statutory Valuation Allowance Adjustments - - - (c) Adjusted Gross Deferred Tax Assets (1a-1b) 63,360,573 47,278,638 110,639,211 (d) Deferred Tax Assets Nonadmitted 1,860,881 46,959,796 48,820,677 (e) Subtotal Net Admitted Deferred Tax Asset (1c-1d) 61,499,692 318,842 61,818,534 (f) Deferred Tax Liabilities 32,630,095 7,907 32,638,002 (g) Net Admitted Deferred Tax Asset/(Net Deferred Tax Liability) (1e-1f) $ 28,869,597 $ 310,935 $ 29,180,532 December 31, 2014 Ordinary Capital Total (a) Gross Deferred Tax Assets $ 59,917,727 $ 19,387,034 $ 79,304,761 (b) Statutory Valuation Allowance Adjustments - - - (c) Adjusted Gross Deferred Tax Assets (1a-1b) 59,917,727 19,387,034 79,304,761 (d) Deferred Tax Assets Nonadmitted - 12,191,435 12,191,435 (e) Subtotal Net Admitted Deferred Tax Asset (1c-1d) 59,917,727 7,195,599 67,113,326 (f) Deferred Tax Liabilities 31,922,417 7,195,599 39,118,016 (g) Net Admitted Deferred Tax Asset/(Net Deferred Tax Liability) (1e-1f) $ 27,995,310 $ - $ 27,995,310 Q07.6
NOTES TO FINANCIAL STATEMENTS Change Ordinary Capital Total (a) Gross Deferred Tax Assets $ 3,442,846 $ 27,891,604 $ 31,334,450 (b) Statutory Valuation Allowance Adjustments - - - (c) Adjusted Gross Deferred Tax Assets (1a-1b) 3,442,846 27,891,604 31,334,450 (d) Deferred Tax Assets Nonadmitted 1,860,881 34,768,361 36,629,242 (e) Subtotal Net Admitted Deferred Tax Asset (1c-1d) 1,581,965 (6,876,757) (5,294,792) (f) Deferred Tax Liabilities 707,678 (7,187,692) (6,480,014) (g) Net Admitted Deferred Tax Asset/(Net Deferred Tax Liability) (1e-1f) $ 874,287 $ 310,935 $ 1,185,222 2. Admission Calculation Components SSAP No. 101 September 30, 2015 Ordinary Capital Total (a) (b) (c) (d) Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks. $ 28,869,596 $ 310,936 $ 29,180,532 Adjusted Gross Deferred Tax Assets Expected To Be Realized (Excluding The Amount Of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation. (The Lesser of 2(b)1 and 2(b)2 Below) - - - 1. Adjusted Gross Deferred Tax Assets Expected to be realized Following the Balance Sheet. - - - 2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold. XXX XXX 102,408,172 Adjusted Gross Deferred Tax Assets (Excluding The Amount of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities. 32,630,095 7,907 32,638,002 Deferred Tax Assets Admitted as the result of application of SSAP No. 101. Total (2(a) + 2(b) + 2(c)). $ 61,499,691 $ 318,843 $ 61,818,534 December 31, 2014 Ordinary Capital Total (a) (b) (c) (d) Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks. $ 28,611,572 $ - $ 28,611,572 Adjusted Gross Deferred Tax Assets Expected To Be Realized (Excluding The Amount Of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation. (The Lesser of 2(b)1 and 2(b)2 Below) - - - 1. Adjusted Gross Deferred Tax Assets Expected to be realized Following the Balance Sheet. - - - 2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold. XXX XXX 102,497,632 Adjusted Gross Deferred Tax Assets (Excluding The Amount of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities. 31,306,155 7,195,599 38,501,754 Deferred Tax Assets Admitted as the result of application of SSAP No. 101. Total (2(a) + 2(b) + 2(c)). $ 59,917,727 $ 7,195,599 $ 67,113,326 Q07.7
NOTES TO FINANCIAL STATEMENTS Change Ordinary Capital Total (a) (b) (c) (d) Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks. $ 258,024 $ 310,936 $ 568,960 Adjusted Gross Deferred Tax Assets Expected To Be Realized (Excluding The Amount Of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation. (The Lesser of 2(b)1 and 2(b)2 Below) - - - 1. Adjusted Gross Deferred Tax Assets Expected to be realized Following the Balance Sheet. - - - 2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold. XXX XXX (89,460) Adjusted Gross Deferred Tax Assets (Excluding The Amount of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities. 1,323,940 (7,187,692) (5,863,752) Deferred Tax Assets Admitted as the result of application of SSAP No. 101. Total (2(a) + 2(b) + 2(c)). $ 1,581,964 $ (6,876,756) $ (5,294,792) 3. September 30, December 31, 2015 2014 (a) Ratio Percentage Used to Determine Recovery Period And Threshold limitation Amount. 678.095% 649.295% (b) Amount of Adjusted Capital And Surplus Used to Determine Recovery Period And Threshold Limitation In 2(b)2 Above. 842,721,148 683,317,549 Impact of Tax-Planning Strategies September 30, 2015 Ordinary Capital (a) Determination of Adjusted Gross Deferred Tax Assets and Net Admitted Deferred Tax Assets, by Tax Character as Percentage 1. Adjusted Gross DTAs Amount from Note 9A1(c) 63,360,573 47,278,638 2. Percentage Of Adjusted Gross DTAs By Tax Character Attributable To The Impact Of Tax Planning Strategies 0.0% 0.0% 3. Net Admitted Adjusted Gross DTAs Amount From Note 9A1(e) 61,499,692 318,842 4. Percentage Of Net Admitted Adjusted Gross DTAs By Tax Character Admitted Because Of The Impact Of Tax Planning Strategies 0.0% 0.0% (b) Does the Company's tax planning strategies include the use of reinsurance? Yes No X December 31, 2014 Ordinary Capital (a) Determination of Adjusted Gross Deferred Tax Assets and Net Admitted Deferred Tax Assets, by Tax Character as Percentage 1. Adjusted Gross DTAs Amount from Note 9A1(c) 59,917,727 19,387,034 2. Percentage Of Adjusted Gross DTAs By Tax Character Attributable To The Impact Of Tax Planning Strategies 0.0% 0.0% 3. Net Admitted Adjusted Gross DTAs Amount From Note 9A1(e) 59,917,727 7,195,599 4. Percentage Of Net Admitted Adjusted Gross DTAs By Tax Character Admitted Because Of The Impact Of Tax Planning Strategies 0.0% 0.0% (b) Does the Company's tax planning strategies include the use of reinsurance? Yes No X Q07.8
NOTES TO FINANCIAL STATEMENTS Change Ordinary Impact of Tax-Planning Strategies Capital (a) Determination of Adjusted Gross Deferred Tax Assets and Net Admitted Deferred Tax Assets, by Tax Character as Percentage 1. Adjusted Gross DTAs Amount from Note 9A1(c) 3,442,846 27,891,604 2. Percentage Of Adjusted Gross DTAs By Tax Character Attributable To The Impact Of Tax Planning Strategies 0.0% 0.0% 3. Net Admitted Adjusted Gross DTAs Amount From Note 9A1(e) 1,581,965 (6,876,757) 4. Percentage Of Net Admitted Adjusted Gross DTAs By Tax Character Admitted Because Of The Impact Of Tax Planning Strategies 0.0% 0.0% (b) Does the Company's tax planning strategies include the use of reinsurance? Yes No X B. Temporary differences for which a DTL have not been established: Not applicable. C. Current income taxes incurred consist of the following major components: 1. Current Income Tax September 30, December 31, 2015 2014 Change (a) Federal $ 52,676,794 $ 64,724,740 $ (12,047,946) (b) Foreign - - - (c) Subtotal 52,676,794 64,724,740 (12,047,946) (d) Federal income tax on net capital gains 13,345,763 (5,706,531) 19,052,294 (e) Utilization of capital loss carry-forwards - - - (f) Other - - - (g) Federal and foreign income taxes incurred $ 66,022,557 $ 59,018,209 $ 7,004,348 2. Deferred Tax Assets: (a) Ordinary (1) Discounting of unpaid losses $ 10,883,111 $ 11,407,449 $ (524,338) (2) Unearned premium reserve - - - (3) Policyholder reserves - - - (4) Investments 1,290,483 1,018,816 271,667 (5) Deferred acquisition costs 31,622,018 30,322,301 1,299,717 (6) Policyholder dividends accrual - - - (7) Fixed assets 2,304,833 2,094,132 210,701 (8) Compensation and benefits accrual - - - (9) Pension accrual 9,408,504 8,482,729 925,775 (10) Receivables - nonadmitted - - - (11) Net operating loss carry-forward - - - (12) Tax credit carry-forward - - - (13) Other (including items <5% of total ordinary tax assets) 7,851,624 6,592,300 1,259,324 (99) Subtotal 63,360,573 59,917,727 3,442,846 (b) Statutory valuation allowance adjustment - - - (c) Nonadmitted 1,860,881-1,860,881 Q07.9