AMCP » Topics » Guaranty Fund Assessments

This excerpt taken from the AMCP 10-Q filed Aug 8, 2008.
Guaranty Fund Assessments— Most states have guaranty fund laws under which insurers doing business in the state are required to fund policyholder liabilities of insolvent insurance companies.  Generally, assessments are levied by guaranty associations within the state, up to prescribed limits, on all insurers doing business in that state on the basis of the proportionate share of the premiums written by insurers doing business in that state in the lines of business in which the impaired, insolvent or failed insurer is engaged.  The Company accrues a liability for estimated assessments as direct premiums are written and defers these costs and recognizes them as an expense as the related premiums are earned.  The Company is continually notified of assessments from various states relating to insolvencies in that particular state; however, the Company estimates the potential future assessment in the absence of an actual assessment.  Guaranty fund assessment expenses were $0.1 million and ($1.0) million for the three months ended June 30, 2008 and 2007, respectively, and $0.6 million and ($0.5) million for the six months ended June 30, 2008 and 2007, respectively.  The Company has deferred approximately $0.7 million and $1.0 million as of June 30, 2008 and December 31, 2007 related to guaranty fund assessments, which is included in deferred policy acquisition costs.  Additionally, guarantee fund receivable assets of $1.5 million as of June 30, 2008 and December 31, 2007 are included in other assets, as they can be used as a credit against future premium taxes owed.  Maximum contributions required by law in any one state in which we offer insurance vary between 0.2% and 2.0% of direct premiums written.
 
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This excerpt taken from the AMCP 10-Q filed May 7, 2008.
Guaranty Fund Assessments— Most states have guaranty fund laws under which insurers doing business in the state are required to fund policyholder liabilities of insolvent insurance companies.  Generally, assessments are levied by guaranty associations within the state, up to prescribed limits, on all insurers doing business in that state on the basis of the proportionate share of the premiums written by insurers doing business in that state in the lines of business in which the impaired, insolvent or failed insurer is engaged.  The Company accrues a liability for estimated assessments as direct premiums are written and defers these costs and recognizes them as an expense as the related premiums are earned.  The Company is continually notified of assessments from various states relating to insolvencies in that particular state; however, the Company estimates the potential future assessment in the absence of an actual assessment.  Guaranty fund assessment expenses were $0.5 million for the three months ended March 31, 2008 and 2007.  The Company has deferred approximately $1.0 million as of March 31, 2008 and December 31, 2007 related to guaranty fund assessments, which is included in deferred policy acquisition costs.  Additionally, guarantee fund receivable assets of $1.5 million as of March 31, 2008 and December 31, 2007 are included in other assets, as they can be used as a credit against future premium taxes owed.  Maximum contributions required by law in any one state in which we offer insurance vary between 0.2% and 2.0% of direct premiums written.
 
 
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These excerpts taken from the AMCP 10-K filed Mar 6, 2008.
Guaranty Fund Assessments— Most states have guaranty fund laws under which insurers doing business in the state are required to fund policyholder liabilities of insolvent insurance companies.  Generally, assessments are levied by guaranty associations within the state, up to prescribed limits, on all insurers doing business in that state on the basis of the proportionate share of the premiums written by insurers doing business in that state in the lines of business in which the impaired, insolvent or failed insurer is engaged.  The Company accrues a liability for estimated assessments as direct premiums are written and defers these costs and recognizes them as an expense as the related premiums are earned.  The Company is continually notified of assessments from various states relating to insolvencies in that particular state; however, the Company estimates the potential future assessment in the absence of an actual assessment.  Guaranty fund assessment expenses were ($1.6) million, $1.5 million and $4.0 million for the years ended December 31, 2007, 2006 and 2005, respectively.  The Company has deferred approximately $1.0 million and $1.2 million as of December 31, 2007 and 2006, respectively, related to guaranty fund assessments, which is included in deferred policy acquisition costs.  Additionally, guarantee fund receivable assets of $1.5 million and $2.4 million as of December 31, 2007 and 2006, respectively, are included in other assets, as they can be used as a credit against future premium taxes owed.  Maximum contributions required by law in any one state in which we offer insurance vary between 0.2% and 2.0% of direct premiums written.
 
Guaranty Fund
Assessments
— Most states have guaranty fund laws under which insurers
doing business in the state are required to fund policyholder liabilities of
insolvent insurance companies.  Generally, assessments are levied by
guaranty associations within the state, up to prescribed limits, on all insurers
doing business in that state on the basis of the proportionate share of the
premiums written by insurers doing business in that state in the lines of
business in which the impaired, insolvent or failed insurer is
engaged.  The Company accrues a liability for estimated assessments as
direct premiums are written and defers these costs and recognizes them as an
expense as the related premiums are earned.  The Company is
continually notified of assessments from various states relating to insolvencies
in that particular state; however, the Company estimates the potential future
assessment in the absence of an actual assessment.  Guaranty fund
assessment expenses were ($1.6) million, $1.5 million and $4.0 million for the
years ended December 31, 2007, 2006 and 2005, respectively.  The
Company has deferred approximately $1.0 million and $1.2 million as of December
31, 2007 and 2006, respectively, related to guaranty fund assessments, which is
included in deferred policy acquisition costs.  Additionally,
guarantee fund receivable assets of $1.5 million and $2.4 million as of December
31, 2007 and 2006, respectively, are included in other assets, as they can be
used as a credit against future premium taxes owed.  Maximum
contributions required by law in any one state in which we offer insurance vary
between 0.2% and 2.0% of direct premiums written.

 

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