GVHR » Topics » 2006 Reinsurance Contract Loss, net

These excerpts taken from the GVHR 10-K filed Mar 17, 2008.

2006 Reinsurance Contract Loss, net

        During the second quarter of 2006, the Company recorded a $4,650 loss on a reinsurance contract related to its 2006 workers' compensation program. The Company determined that, as a result of the liquidation proceeding related to the Bermuda reinsurance company responsible for covering the layer of its workers' compensation claims between $500 and $2,000 per occurrence and the related termination of its reinsurance contract, a loss of $4,650 should be recorded as of June 30, 2006, which represented the entire premium paid for coverage in 2006. The $4,650 loss was recorded within

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GEVITY HR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in $000's, except share and per share data)

5. WORKERS' COMPENSATION RECEIVABLE/RESERVES (Continued)

operating expenses. During the third quarter of 2006, the Company received a cash payment of $3,000 pursuant to a court-approved settlement, which also called for the admission in the liquidation proceeding of an unsecured claim against the reinsurer in the amount of $2,200. The settlement is without prejudice to any claims Gevity may have against third parties relating to the reinsurer's liquidation. The $3,000 recovery was recorded in the third quarter of 2006 within operating expenses. The Company is actively pursuing additional recovery. Future amounts recovered, if any, will be recognized in income when realization is assured beyond a reasonable doubt. In light of the liquidation proceeding, during the second quarter of 2006 the Company secured comparable coverage for the layer of claims between $500 and $2,000 from AIG retroactively effective to January 1, 2006. The cost of the replacement coverage for 2006 (approximately $4,800), was included in cost of services for the year ended December 31, 2006 and replaced the cost incurred from the original policy.

2006 Reinsurance Contract Loss, net





        During the second quarter of 2006, the Company recorded a $4,650 loss on a reinsurance contract related to its 2006 workers' compensation program. The Company
determined that, as a result of the liquidation proceeding related to the Bermuda reinsurance company responsible for covering the layer of its workers' compensation claims between $500 and $2,000 per
occurrence and the related termination of its reinsurance contract, a loss of $4,650 should be recorded as of June 30, 2006, which represented the entire premium paid for coverage in 2006. The
$4,650 loss was recorded within



F-19








GEVITY HR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in $000's, except share and per share data)




5. WORKERS' COMPENSATION RECEIVABLE/RESERVES (Continued)



operating
expenses. During the third quarter of 2006, the Company received a cash payment of $3,000 pursuant to a court-approved settlement, which also called for the admission in the liquidation
proceeding of an unsecured claim against the reinsurer in the amount of $2,200. The settlement is without prejudice to any claims Gevity may have against third parties relating to the reinsurer's
liquidation. The $3,000 recovery was recorded in the third quarter of 2006 within operating expenses. The Company is actively pursuing additional recovery. Future amounts recovered, if any, will be
recognized in income when realization is assured beyond a reasonable doubt. In light of the liquidation proceeding, during the second quarter of 2006 the Company secured comparable coverage for the
layer of claims between $500 and $2,000 from AIG retroactively effective to January 1, 2006. The cost of the replacement coverage for 2006 (approximately $4,800), was included in cost of
services for the year ended December 31, 2006 and replaced the cost incurred from the original policy.



This excerpt taken from the GVHR 10-K filed Mar 16, 2007.
2006 Reinsurance Contract Loss, net
 
During the second quarter of 2006, the Company recorded a $4,650 loss on a reinsurance contract related to its 2006 workers’ compensation program. The Company determined that, as a result of the liquidation proceeding related to the Bermuda reinsurance company responsible for covering the layer of its workers’ compensation claims between $500 and $2,000 per occurrence and the related termination of its reinsurance contract, a loss of $4,650 should be recorded as of June 30, 2006, which represented the entire premium paid for coverage in 2006. The $4,650 loss was recorded within operating expenses. During the third quarter of 2006, the Company received a cash payment of $3,000 pursuant to a court-approved settlement, which also called for the admission in the liquidation proceeding of an unsecured claim against the reinsurer in the amount of $2,200. The settlement is without prejudice to any claims Gevity may have against third parties relating to the reinsurer’s liquidation. The $3,000 recovery was recorded in the third quarter of 2006 within operating expenses. The Company is actively pursuing additional recovery. Future amounts recovered, if any, will be recognized in income when realization is assured beyond a reasonable doubt. In light of the liquidation proceeding, during the second quarter of 2006 the Company secured comparable coverage for the layer of claims between $500 and $2,000 from AIG retroactively effective to January 1, 2006. The cost of the replacement coverage for 2006 (approximately $4,800), has been included in cost of services for the year ended December 31, 2006 and replaces the cost incurred from the original policy.


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Table of Contents

 
7.   PROPERTY AND EQUIPMENT
 
At December 31, 2006 and 2005, property and equipment consisted of the following:
 
                 
    December 31,
    December 31,
 
    2006     2005  
 
Leasehold improvements
  $ 4,963     $ 2,603  
Furniture and fixtures
    2,403       3,570  
Vehicles
    11        
Equipment
    2,487       2,345  
Computer hardware and software
    43,992       37,879  
Construction in progress
    8,431       6,715  
                 
Total property and equipment
    62,287       53,112  
Less accumulated depreciation
    (38,440 )     (39,302 )
                 
    $ 23,847     $ 13,810  
                 
 
For the years ended December 31, 2006, 2005, and 2004, depreciation expense was $4,238, $4,995, and $6,554, respectively.
 
8.   INTANGIBLE ASSETS
 
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