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13) Statutory Financial Information and Dividend Limitations
 12 Months Ended
Dec. 31, 2013
Notes  
13) Statutory Financial Information and Dividend Limitations

 

13)    Statutory Financial Information and Dividend Limitations

 

 

The Company’s insurance subsidiaries prepare their statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile. Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners (“NAIC”), as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed.

 

All states require domiciled insurance companies to prepare statutory-basis financial statements in conformity with the NAIC Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable insurance commissioner and/or director. Statutory accounting practices differ from GAAP primarily since they require charging policy acquisition and certain sales inducement costs to expense as incurred, establishing life insurance reserves based on different actuarial assumptions, and valuing certain investments and establishing deferred taxes on a different basis.

 

Statutory net income and capital and surplus of the Company’s insurance subsidiaries, determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities are as follows:

 

 

 

Net Income

 

Capital and Surplus

 

2013

 

2012

 

2011

 

2013

 

2012

Amounts by insurance subsidiary:

 

 

 

 

 

 

 

 

 

Security National Life Insurance    Company

  $ 1,283,311

 

  $  391,533

 

  $    (34,795)

 

  $ 29,597,289

 

  $ 29,828,732

 

 

 

 

 

 

 

 

 

 

Memorial Insurance Company of    America

             237

 

            159

 

         (1,994)

 

      1,083,237

 

      1,084,067

 

 

 

 

 

 

 

 

 

 

Southern Security Life Insurance    Company, Inc.

           1,288

 

            184

 

             971

 

      1,586,832

 

      1,583,524

 

 

 

 

 

 

 

 

 

 

Trans-Western Life Insurance    Company

           1,906

 

         2,113

 

                 -

 

         497,878

 

         495,972

 

 

 

 

 

 

 

 

 

 

Total

  $ 1,286,742

 

  $  393,989

 

  $    (35,818)

 

  $ 32,765,236

 

  $ 32,992,295

 

 

The Utah, Arkansas, Mississippi and Texas Insurance Departments impose minimum risk-based capital requirements (“RBC”) that were developed by the NAIC on insurance enterprises. The formulas for determining the RBC specify various factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio (the “Ratio”) of the enterprise’s regulatory total adjusted capital, as defined by the NAIC, to its authorized control level, as defined by the NAIC. Enterprises below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The life insurance subsidiaries have a combined weighted Ratio that is greater than the first level of regulatory action as of December 31, 2013.

 

Generally, the net assets of the life insurance subsidiaries available for transfer to the Company are limited to the amounts of the life insurance subsidiaries net assets, as determined in accordance with statutory accounting practices, which were $32,765,236 at December 31, 2013, exceed minimum statutory capital requirements; however, payments of such amounts as dividends are subject to approval by regulatory authorities.