Insurance Operations FINA 4356
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Date Created: 09/19/15
D r 4 US M Supplement 39 Page1 01852 GEICO General Insurance Company Ultimate Parent Berkshire Hathaway Inc GEICO GENERAL INSURANCE COMPANY Chevy Chase Maryland United States One GEICO Plaza Washington District of Columbia United States 200760001 Web wwwgeicocom Tel 8008413000 Fax 301 986 3225 AMB 01852 NAIC 35882 Ultimate Parent 58334 FEIN 751588101 BEST39S RATING Based on our opinion of the company39s Financial Strength and relationship with an affiliated reinsurer which reinsures virtually all of the company39s business the company is assigned the Best39s Rating of is affiliated reinsurer Government Employees Insurance Company which is Ai t Superior The company is assigned the Financial Size Category of Class XV which is the Financial Size Category of is affiliated reinsurer RATING RATIONALE The following text is derived from the report of Government Employees Group Rating Rationale The rating re ecs the group39s superior financial strength strong operating performance brand name recognition and market position as one of the top five personal automobile writers in the United States These strengths are partially offset by significant stockholder dividend paymens to is parent high investment leverage as well as exposure to potential regulatory issues in several of its larger states The rating outlook is based on the group39s superior financial strength consistent track record of profitability and considerable market presence The group39s strong operating results re ect a considerable underwriting expense advantage which is driven by is direct distribution business model and is favorable loss experience over the previous fiveyear period The group39s overall returns also have benefited from a steadily increasing stream of investment income in recent years When combined with is capital gains the group has generated substantial capital over the previous fiveyear period which has supported steady growth in net premiums written and enabled it to declare substantial dividends Furthermore the group maintains a strategic advantage due to is leadership position in the government and military employee market as well as an excellent reputation for providing quality service The group also bene s from a strategic alliance with an unaffiliated insurer as well as is ownership of an independent agency that provides it with the ability to supplement is automobile products with homeowner coverage without assuming the corresponding catastrophe risk The rating also recognizes the considerable financial resources available from is intermediate parent GEICO Corporation and the financial strength of its ultimate parent Berkshire Hathaway Inc whose financial profile includes approximately 121 billion of stockholders39 equity minimal debt and a long history of strong profitability The group39s negative rating factors include significant stockholder dividend paymens to its parent over the previous fiveyear period In 2006 these dividend paymens totaled 27 billion and resulted in a moderate decline in surplus as well as risk adjusted capitalization The group also maintains high investment leverage derived from is significant allocation of invested assets to unaffiliated common stock However the group39s strong riskadjusted capitalization and historic success in managing the portfolio partially mitigate this risk In addition the group maintains a modest geographic concentration that exposes it to legislative changes and judicial decisions as its top five states account for approximately onehalf of its direct premiums written However this risk is largely mitigated by the group39s geographic spread throughout the rest of the country and management39s proven ability to quickly adapt to changing market conditions The rating applies to Government Employees Insurance Company GEICO and is three affiliated companies and is based on the consolidation of these companies Best39s Rating Ar Outlook Stable Copyright 2008 AM Best Company All Rights Reserved 0 uction and distribution ofAM Best data to third parties is strictly prohibited without express written consent Visit the AM Best website at D r quot r 1 v Us 01852 GEICO General Insurance Company M Supplement FIVE YEAR RATING HISTORY 060503 Best39s Rating Ai tr Ai tr Ai tr Ai tr Ai tr Ai tr KEY FINANCIAL INDICATORS Statutory Data 000 Direct Net Premiums Premiums Written Written 3 486761 3907524 4164259 4 555646 4810586 3659393 3790846 Statutory Data 000 Total Net Admitted Income Asses 5221 128317 4232 125939 4884 138080 5951 151062 5805 153862 4383 162776 3332 165867 Leverage Pretax ROR NA Inv NPW m w 00 XX XX Period Ending 2003 2004 2005 2006 2007 092007 092008 Period Ending 2003 2004 2005 2006 2007 092007 092008 Profitability Inv Period Comb Yield Ending Rati0 2003 4 5 2004 4 1 2005 4 8 2006 5 1 2007 5 3 5Yr Avg 48 092007 XX 092008 XX Copyright 2008 AM Best Company All Rights Reserved Pretax Operating Income 4 927 4 81 4 6 073 7 1 71 7 7 48 5858 4157 Policy holders39 S lgplus 5 7 642 5 6 095 65 290 7 0 699 7 6 429 75181 79796 0 uction and distribution ofAM Best data to third parties is strictly prohibited without express written consent Visit the AM Best website at Liquidity 7 Overall Oper Liq Cash ow 1816 9910 1803 999 1897 7558 1880 9999 1987 7138 1858 6818 1927 4339 Page 2 D r 4 US M Supplement 39 Page 3 01852 GEICO General Insurance Company Data reflected within all tables of this report has been compiled from the companyfiled statutory statement Within several financial tables of this report this company is compared against the Private Passenger Automobile Composite BUSINESS REVIEW The following text is derived from the report of Government Employees Group The Government Employees Group is a leading provider of personal automobile insurance written on behalf of government employees and military personnel In addition the group is a national personal automobile insurance carrier with modest geographic concentration along the Eastern Seaboard of the United States In business is marketed and distributed primarily by direct response methods in which customers apply for coverage directly to the company over the phone through e mail or via the internet Most business is processed directly from is regional offices in Macon Georgia Fredericksburg Virginia Virginia Beach Virginia Woodbury New York Dallas Texas San Diego California and Lakeland Florida Branch offices are maintained in Honolulu Hawaii Coralville Iowa Tucson Arizona and Buffalo New York The group also utilizes some general field representatives commissioned agenm The property casualty insurance group writes business in four companies Government Employees Insurance Company GEICO the lead company which generates 30 of the group39s property casualty direct premiums written writes preferred personal lines coverages for government employees and military personnel In fully reinsured subsidiary GEICO General Insurance Company which generates 41 of the group39s direct premiums writes preferred automobile insurance for insureds who are not government employees or military personnel In companion carrier GEICO Indemnity Company which generates 24 of the group39s direct premiums writes standard automobile and motorcycle insurance GEICO Indemnity39s reinsured subsidiary GEICO Casualty Company which generates 5 of the group39s direct premiums writes nonstandard automobile insurance coverages Government Employees Group39s policyholders39 are offered homeowner insurance by Travelers through a Maryland independent insurance agency Insurance Counselors Inc which is owned by GEICO The independent agent also has the capability to offer homeowner producm from a number of other carriers This allows Government Employees Group to focus on growing its core personal automobile insurance business while at the same time offering its customers a homeowner product The group reentered the state of New Jersey in August 2004 and began writing private passenger auto business Changes by the New Jersey Legislature and the Department of Insurance helped to improve the competitive environment and make this return possible New Jersey currently ranks as the group39s third largest state in terms of direct premiums written Direct Premium Writings By Product Lines Direct Premiums written at the last year end totaled 000 4810586 and were distributed as follows Priv Pass Auto Liab 2915893 Auto Physical 1 894687 All Other 6 Major 2007 Direct Premium Writings By State 000 New York 1191262 248 Florida 810355 168 California 331072 69 Maryland 312753 65 Virginia 231225 48 40 otherjurisdictions 1933920 402 FINANCIAL PERFORMANCE The following text is derived from the report of Government Employees Group Overall Earnings The group has produced strong operating earnings as evidenced by its fiveyear pretax return on revenue ROR and total return on equity ROE which compare favorably to the private passenger automobile industry composite Operating returns have been primarily driven by increasing underwriting earnings over the previous fiveyear period The improvement in the group39s underwriting resulm has been attributable to rate adequacy and favorable loss frequency trends for most coverages The group39s net investment income has also gradually increased in recent years due to higher investment yields and continued invested asset growth following a decline in net investment income in the beginning of the period The group39s fiveyear total returns have compared favorably to the industry composite due to solid capital gains on is equity portfolio and to a lesser extent on its bond portfolio PROFITABILITY ANALYSIS Copyright 2008 AM Best Company All Rights Reserved 0 uction and distribution ofAM Best data to third parties is strictly prohibited without express written consent Visit the AM Best website at D r p US M Supplement 39 Page 4 01852 GEICO General Insurance Company Company Industry Composite Pretax Return Pretax Return Period ROR on Comb Oper ROR on Comb Oper Ending PHS Ratio Ratio PHS Ratio Ratio 2003 91 119 248 938 884 2004 74 147 222 906 857 2005 80 147 196 913 857 2006 88 161 235 901 846 2007 79 125 145 944 885 5Yr Avg 00 82 140 207 920 865 092007 XX XX XX XX XX 092008 XX XX XX XX XX Underwriting Income The group has produced favorable underwriting resuls as evidenced by is fiveyear average combined ratio which is lower than the private passenger automobile industry composite Underwriting resuls are driven by a below average expense structure partially offset by an above average pure loss ratio attributable to is personal automobile liability loss experience The group39s favorable underwriting expense ratio is derived from is cost efficient direct marketing approach advanced use of technology and economies of scale which are tempered somewhat by its extensive advertising budget Underwriting resuls have been on an improving trend for most of the previous fiveyear period which was driven by a declining pure loss ratio that was partially offset by an increasing underwriting expense ratio Most recently the group39s combined ratio has trended modestly upwards due to a slightly higher loss and loss adjustment expense LAE ratio and underwriting expense ratio The group39s improved pure loss experience over the period was driven by rate adequacy and decreasing claim frequencies in most coverages Claim severities continued to increase moderately for many coverages with automobile physical damage coverages increasing slightly faster than previous years While there has been no formal change to the group39s underwriting criteria risks are reviewed more thoroughly with fewer exceptions granted from is current guidelines In addition staff training has been increased to insure overall compliance with the guidelines and improved allocation to the appropriate rating tier based on the characteristics of the risk The most recent increase in loss and LAE ratio was reflective private passenger automobile rate decreases in a number of states due to increased price competition in these markes The increase in the underwriting expense ratio was reflective of stepped up advertising and greater expenses related to benefis Investment Income The group maintains a high quality and well diversified investment portfolio that consiss primarily of shortterm investmens common stocks longterm bonds an cash The overall bond portfolio is primarily allocated to US Treasury government agency corporate and taxexempt municipal bonds The group significantly increased is allocation to shortterm investmens during 2003 while decreasing its holdings in longterm bonds until interest rates become more favorable Following a moderate decline earlier inthe previous fiveyear period the group39s net investment income has increased in recent years due to higher investment yields and growth in invested asses The increase in investment yield was reflective of higher market interest rates while the growth in invested asses was attributable to the group39s strong operating cash flows from profitable operations The decline in net investment income earlier in the period was reflective of lower investment yields that were partially mitigated by strong invested asset growth The group39s fiveyear net investment yield has lagged the private passenger automobile industry composite due in large part to is significant allocation of invested asset to equities shortterm investments and cash However the fiveyear total return on invested asses has significantly outpaced industry composite norms due to solid capital gains on is equity portfolio and to a lesser extent on its bond portfolio The group has most recently reported modest capital losses due to unfavorable equity market conditions following solid capital gains due to favorable equity market conditions for most of the period INVESTMENT INCOME ANALYSIS 000 Copyright 2008 AM Best Company All Rights Reserved 0 uction and distribution ofAM Best data to third parties is strictly prohibited without express written consent Visit the AM Best website at D r quot r 1 v Us 01852 GEICO General Insurance Company 092007 092008 5Yr Avg 092007 092008 LongTenn bonds Other Inv Asses T otal Asset Class Governmenm States terr amp poss Corporates Total all bonds M Supplement Net Inv Income 4927 4814 6073 7171 7748 5858 4157 Company Inv Inc Inv Growth Yield 1 208 45 23 41 261 48 181 51 80 53 52 48 XX XX XX XX Company Realized Unrealized Capital Capital Gains Gains 1567 1 444 4 5 1 55 iIndustry Compositei Total Inv Inc Inv Return Growth Yield 59 10 41 41 37 37 48 225 41 55 24 40 53 7 4 43 51 69 41 38 XX XX 27 XX XX INVESTMENT PORTFOLIO ANALYSIS 2007 Inv 152906 of Invested Asses 2007 363 637 1000 393 607 1000 2007 BOND PORTFOLIO ANALYSIS of Total Bonds 563 397 40 1000 llltt Val Avg Class to Stmt Maturity 1 2 Val Yrs 25 05 1000 46 37 1000 22 68 1000 44 20 1000 CAPITALIZATION The following text is derived from the report of Government Employees Group Class Annual Chg 73 21 Struc Secur Secur o of PHS Capital Generation The group has generated moderate surplus growth over the previous fiveyear period reflective of strong operating earnings and capital gains on is equity portfolio which were partially offset by substantial stockholder dividend payments to its parent Total stockholder dividend payments for the previous fiveyear period were approximately 48 billion Copyright 2008 AM Best Company All Rights Reserved 0 uction and distribution ofAM Best data to third parties is strictly prohibited without express written consent Visit the AM Best website at Page 5 D r 4 US M Supplement 39 Page 6 01852 GEICO General Insurance Company which primarily resulted from extraordinary dividend paymens of 27 billion in 2006 and 13 billion in 2003 The group39s surplus has most recently increased moderately driven by solid operating earnings that were partially offset by stockholder dividend payments and modest capital losses The group39s surplus declined in 2006 as an extraordinary stockholder dividend payment more than offset total return for the year The group generated doubledigit surplus growth in 2005 and 2004 which was driven by strong operating earnings and capital gains Despite the payment of the extraordinary dividend in 2003 the group still managed to generate modest surplus growth for the year CAPITAL GENERATION ANALYSIS 000 Source of Surplus Growth Pretax Total Net Operating Inv Contrib Year Income Gains Capital 2003 4927 1567 5300 2004 4814 5700 2005 6073 1 5000 2006 7171 444 2007 7748 4 5Yr Total 30732 2014 6000 092007 5858 5 092008 4157 155 Source of Surplus Growth Other Change PHS Net of in Growth Year T PHS 2003 1153 40 0 1 2004 661 1547 2 7 2005 1877 9195 16 4 2006 2205 5409 8 3 2007 2023 5729 81 5Yr Total 7919 18827 092007 1381 4482 63 092008 945 3367 44 Overall Capitalization Government Employees Group maintains superior capitalization as measured by Best39s Capital Adequacy Ratio BCAR which supports is rating The group39s capital position reflects is moderate underwriting leverage consistently favorable loss reserve development nominal dependence on reinsurance and modest catastrophe exposure which is partially offset by high common stock leverage The group39s riskadjusted capitalization declined in 2006 due to an extraordinary stockholder dividend payment of 27 billion to is parent although riskadjusted capitalization continues to support the rating The group39s capitalization is considerably strengthened by is ultimate parent Berkshire Hathaway Inc with shareholder equity of approximately 121 billion and minimal debt QUALITY OF SURPLUS 000 Copyright 2008 AM Best Company All Rights Reserved 0 uction and distribution ofAM Best data to third parties is strictly prohibited without express written consent Visit the AM Best website at D r 4 US M Supplement 39 Page 7 01852 GEICO General Insurance Company of PHS i Dividend Requiremens 7 Year Cap Stk Un Stock Div to Div to End Contrib assigned holder POI Net Inc Year M g m smus m 2003 57642 791 209 5300 1076 1015 2004 56095 812 188 5700 1184 1347 2005 65290 775 225 2006 70699 715 285 2007 76429 662 338 092007 75181 673 327 092008 79796 634 366 Underwriting Leverage The group maintains moderate underwriting leverage as evidenced by is net underwriting leverage ratio that is comparable to the private passenger automobile industry composite Net underwriting leverage is derived from net premiums written and net liabilities leverage that approximate industry composite norms Gross underwriting leverage compares favorably to industry composite norms due to nominal ceded reinsurance leverage as the group consistently retains nearly 100 of its direct premium writings The group39s underwriting leverage remained constant during 2007 as surplus growth kept pace with moderate growth in net premiums written Underwriting leverage trended upward in 2006 due to the decline in surplus from an extraor stockholder dividend payment of 27 billion and solid growth in net premiums written The growth in net premiums written in recent years was driven by policy growth derived from the group39s intensive advertising campaign and direct sales approach ough the use of call centers as well as the internet A significant portion of the group39s premium growth in recent years can also be attributed to is expansion in New Jersey which has now become its third largest state As a result of is dividend payment policy and ongoing premium growth the group39s underwriting leverage may be elevated relative to is historical position but should continue to be comparable to industry composite norms LEVERAGE ANALYSIS Company Industry Composite NPW to Reserves Net Gross NPW to Reserves Net Gross Year E to PHS m m E to PHS m Lev 2003 12 19 18 09 37 41 2004 1 2 1 9 17 0 9 3 7 4 0 2005 1 1 1 7 16 0 9 3 5 3 8 2006 1 1 1 6 17 0 9 3 5 3 7 2007 1 0 1 5 17 0 9 3 5 3 7 092007 12 XX XX XX XX XX 092008 11 XX XX XX XX XX Current BCAR 2158 PREMIUM COMPOSITION amp GROWTH ANALYSIS Copyright 2008 AM Best Company All Rights Reserved 0 uction and distribution ofAM Best data to third parties is strictly prohibited without express written consent Visit the AM Best website at D r 4 US M Supplement 39 Page 8 01852 GEICO General Insurance Company Per1od DPW GPW Ending 000 Chg 000 Chg 2003 3486761 154 3486885 15 4 2004 3 907 524 121 3 907 383 12 1 2005 4164259 6 6 4164238 6 6 2006 4555646 94 4555606 9 4 2007 4810586 56 4810590 56 5Yr CAGR 98 97 5Yr Change 592 592 092007 3659393 67 3659400 67 092008 3790846 36 3790857 36 Reserve Quality The group maintains a conservative loss reserve position with consistently favorable development reported for the past ten calendar and accident years Reserve development patterns have been favorable for all major lines of business Reserves are predominantly related to the private passenger automobile liability line of business which account for approximately 90 of total reserves The group maintains modest AampE exposure stemming from a limited number of excess commercial umbrella policies generally as a participant in high layers of liability during a short period 1981 through early 1984 The group has established reserves for these commercial umbrella AampE claims reporting 90 million of net reserves including IBNR reserves CEDED REINSURANCE ANALYSIS 000 Company Industry Composite Ceded Business Rein Rec Ceded Business Rein Rec Ceded Reins Retention to PHS Reins to Retention to PHS Reins to Year Total gm PHS 9 gm PHS 2003 36144 626 627 937 216 339 2004 36613 653 653 942 193 303 2005 36353 557 557 944 174 274 2006 36226 512 512 947 163 257 2007 36453 477 477 949 150 241 2007 REINSURANCE RECOVERABLES 000 Paid amp Total Unpaid Unearned Other Reins Losses IBNR Premiums Recovquot Recov US Af liates 1915567 464573 1191460 3571601 US Insurers 13266 23182 36448 PoolsAssociations 4 4 Total ex Us Af ls 13270 23182 36452 Grand Total 1928837 487755 1191 460 3608052 Includes Commissions less Funds Withheld Investment Leverage The group maintains high investment leverage relative to the private passenger automobile industry composite as unaffiliated common stock represents approximately 95 of surplus Nevertheless the high investment leverage is partially mitigated by the group39s historically strong portfolio management as evidenced by is consistent capital gains In addition the portfolio is welldiversi ed with allocations spread across a number of securities and industries The group also maintains a modest amount of noninvestment grade bond holdings which equate to less than 5 of surplus LIQUIDITY The following text is derived from the report of Government Employees Group Copyright 2008 AM Best Company All Rights Reserved 0 uction and distribution ofAM Best data to third parties is strictly prohibited without express written consent Visit the AM Best website at D r 4 US M Supplement 39 Page 9 01852 GEICO General Insurance Company The group maintains sound balance sheet liquidity as nonaffiliated invested asses comfortably exceed overall liabilities Quick current and overall liquidity ratios are in advance of the private passenger automobile industry composite although these measures have declined in recent years due to significant stockholder dividend payments to the groups parent The group39s liquidity position has been augmented by strong operating cash flows over the previous fiveyear period which were driven by premium growth and pro table underwriting resuls The group39s liquidity position is also enhanced by the signi cant financial exibility of is immediate parenL GEICO Corporation as well as is ultimate parent Berkshire Hathaway Inc LIQUIDITY ANALYSIS Company Industry Composite Gross Gros Quick Current Overall Agens Bal Quick Current Overall Agens B2 Year Li Li Li to PHS Li Li Li to PHS quotc 2003 626 1608 1816 590 1247 1495 12 2004 782 1772 1803 655 1273 1510 11 2005 1020 1874 1897 663 1303 1538 10 2006 1164 1863 1880 657 1310 1549 7 2007 1269 1975 1987 570 1300 1542 7 092007 XX 1847 1858 XX XX XX XI 092008 XX 1919 1927 XX XX XX XI CASH FLOW ANALYSIS 000 Company iIndustry Compositei Underw Oper Net Underw Oper Underw Oper Cash Cash Cash Cash Cash Cash Cash Year Fl Fl Flow Flow Flow Flow Flow 2003 6892 10679 30321 999 9910 1167 1195 2004 8002 12227 9620 999 999 1198 1214 2005 86 5326 19673 494 7558 1154 1170 2006 579 6500 19566 9999 9999 1134 1135 2007 4078 10231 6712 9999 7138 1086 1114 092007 5742 9675 12457 999 6818 XX XX 092008 4344 6496 20300 999 4339 XX XX HISTORY GEICO General Insurance Company GEICO General was incorporated on March 27 1978 under the temporary title Equi Gen Insurance Company under the laws of Iowa to act as the vehicle for the transfer of corporate domicile of the Equitable General Insurance Company from Fort Worth Texas to Des Moines Iowa effective December 31 1978 The predecessor company was incorporated under the laws of Texas on May 15 1934 under the title Associated Casualty Company and began business the following day Initially underwriting was restricted to workers39 compensation coverages That company name was changed to Houston Casualty Company on April 9 193539 to Houston Fire and Casualty Insurance Company in 1936 when charter powers were extended to cover the issuance of all forms of insurance contracts other than life39 and to Houston General Insurance Company on December 31 1971 The company again changed is corporate title on June 1 1975 to Equitable General Insurance Company The present name was adopted on September 29 1982 The Equitable General Insurance Company on December 31 1971 absorbed by merger is former parent company Associated Employers Insurance Company Fort Worth Texas MANAGENIENT Complete financial control of GEICO General was acquired on March 31 1982 by Government Employees Insurance Company GEICO Chevy Chase Maryland from the Equitable Life Assurance Society of the United States New York New Copyright 2008 AM Best Company All Rights Reserved 0 uction and distribution ofAM Best data to third parties is strictly prohibited without express written consent Visit the AM Best website at p D r p US M Supplement 01852 GEICO General Insurance Company York The latter company through is holding company subsidiary Equitable Life Holding Corporation acquired direct financial control of this company on December 9 1974 from W R Berkley Corporation New York New York The latter had acquired complete stock ownership two years earlier from Schick Investment Company Los Angeles California a ho ding company affiliate of Frawley Enterprises Inc Los Angeles California Prior to the close of 1971 and for approximately three years Schick Investment had maintained indirect ownership of this company through the former Associated Employers Insurance Company Prior to September 1967 financial control had rested with Growth International Inc a Cleveland Ohio investment finn The latter had acquired its interest in May 1966 through the purchase of Inland Investment Company Fort Worth Texas in which control resided about three years from the estate of the late Kay Kimbell and the Kimbell Milling Company also located in Fort Worth The Kimbell interesm had purchased stock ownership in 1944 from the original sponsor Wesson Oil amp Snowdrift Co Inc GEICO is wholly owned by and the principal subsidiary of GEICO Corporation which as of January 2 1996 became a whollyowned indirect subsidiary of Berkshire Hathaway Inc an insurance holding company which controls the thirtythree property casualty companies and the five lifehealth companies The holding company in turn is owned 33 by Warren E Buffett and family Prior to January 2 1996 GEICO Corporation was a publicly owned holding company traded on the NYSE under the symbol GEC Administration of the affairs of GEICO General since the early 1982 change in financial control is under the direction of the same experienced insurance executives who guide the affairs of Government Employees Insurance Company Olza M Nicely chairman president and chief executive officer serves in the same capacity for the latter named carrier Officers Chairman of the Board President and Chief Executive Officer Olza M Nicely39 Executive Vice President William E Roberts Senior Vice Presidenm Donald R Lyons Robert M Miller39 Group Vice President and Chief Information Officer Iess C Reed39 Vice President and Chief Actuary Warren A Klawitter39 Vice Presidenm James G Brown Shawn A Burklin Michael H Campbell Corporate Financial Reporting Steven W Cunningham John I Geer Jr Richard T Guertin Lily S Hopkins Seth M Ingall John I 1220 Stephen G Kalinsky Richard A Kidd John W McCutcheon James F Nayden Ir Legislative Counsel Nancy L Pierce Dana K Proulx George W Rogers Rynthia M RostBuccine Tama S Ruiz Daniel S Schechter I an C Stewart Joseph R Thomas Edward W Ward III Mary F Zarcone39 Secretary William C E Robinson Treasurer Charles G Schara39 Controller William I McDonald Directors Michael H Campbell John I Geer Ir Seth M Ingall Stephen G Kalinsky Donald R Lyons Robert M Miller Olza M Nicely Nancy L Pierce William E Roberts REGULATORY An examination of the nancial condition was made as of December 31 2004 by the Insurance Department of Maryland The 2007 annual independent audit of the company was conducted by Deloitte amp Touche LLP The annual statement of actuarial opinion is provided by Warren Klawitter FCAS Vice President and Actuary TERRITORY The company is licensed in the District of Columbia and all states REIN SURAN CE PROGRAMS All business is 100 reinsured with the parent company Government Employees Insurance Company BALANCE SHEET 000 Copyright 2008 AM Best Company All Rights Reserved 0 uction and distribution ofAM Best data to third parties is strictly prohibited without express written consent Visit the AM Best website at me Page 10 D r quot r 1 v Us 01852 GEICO General Insurance Company ADMITTED ASSETS on Cash amp shortterm invest Total invested assets Accrued interest All other asses Total asses LIABILITIES amp SURPLUS All other liabilities Total liabilities Capital amp assigned surplus Unassigned surplus Total policyholders39 surplus Total liabilities amp surplus M Supplement 12312007 12312006 2007 55442 58909 360 96439 89727 627 151881 148636 987 1025 1083 07 956 1342 06 153862 151062 1000 12312007 12312006 2007 77434 80362 503 77434 80362 503 50568 50568 329 25861 20132 168 76429 70699 497 153862 151062 1000 SUMMARY OF 2007 OPERATIONS 000 STATEMENT OF INCOME Premiums earned Losses incurred Net underwriting income Net investment income Pretax oper income Realized capital gains Income taxes incurred Net income 12312007 7748 7748 4 1 947 5805 FUNDS PROVIDED FROM OPERATIONS Premiums collected Benefit amp loss related pmm Undrw cash ow Investment income Pretax cash operations Income taxes pd recov Net oper cash ow INTERIM BALANCE SHEET 000 Copyright 2008 AM Best Company All Rights Reserved 0 uction and distribution ofAM Best data to third parties is strictly prohibited without express written consent Visit the AM Best website at 2006 390 594 984 07 09 1000 2006 532 532 335 133 468 1000 12312007 4081 3 4078 7816 11894 1663 10231 Page 11 D r quot r 1 v Us 01852 GEICO General Insurance Company ADMITTED ASSETS Cash amp short term invest Bon Total investments Reinsurance funds Accrued interest All other assets Total asses LIABILITIES amp SURPLUS All other liabilities Total liabilities Capital amp assigned surp Unassigned surplus Policyholders39 surplus Total liabilities amp surplus M Supplement 03312008 109824 55335 165159 4 940 790 166892 03312008 89224 8 9 224 50568 27100 77668 166892 06302008 97698 55290 152988 1274 5157 159418 06302008 691 80691 50568 28159 78727 159418 INTERIM INCOME STATEMENT 000 Period Ended Period Ended 09302008 09302007 Net investment income 4157 5858 Pretax operating income 4157 5858 Realized capital gains 155 5 Income taxes incurred 980 1480 Net income 3332 4383 INTERIM CASH FLOW 000 Period Ended Period Ended 09302008 09302007 Premiums collected 5742 Benefit amp loss related pmm 4 0 Underwriting cash ow 4344 i742 Investment income 4101 5596 Pretax cash operations 8446 1 1338 Income taxes pd recov 1949 1663 Net oper cash ow 6 496 9 675 Copyright 2008 AM Best Company All Rights Reserved 0 uction and distribution ofAM Best data to third parties is strictly prohibited without express written consent Visit the AM Best website at 09302008 116739 47353 164092 1083 693 165867 09302008 86071 86071 50568 29228 79796 165867 Increase D ecrease 1700 1 7 00 149 499 1052 Increase Decrease 1401 3 1397 1495 2893 286 3179 Page 12
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