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Insurance Reserves and Policyholder Funds | 12 Months Ended
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Dec. 31, 2011
Insurance Reserves and Policyholder Funds [Abstract] |
Insurance Reserves and Policyholder Funds |
Note 3. | Insurance Reserves and Policyholder Funds
The following table presents the Company's reserves for life, accident, health and property and casualty losses as well as loss adjustment expenses.
|  |  |  |  |  |  |  | Amount of Insurance In Force |
|  | 2011 |  |  | 2010 |  |  | 2011 |  |  | 2010 |
Future policy benefits |  |  |  |  |  |  |  |  |  |  |  |
Life insurance policies: |  |  |  |  |  |  |  |  |  |  |  |
Ordinary |  | $ | 49,261 |  |  | $ | 48,278 |  |  | $ | 237,966 |  |  | $ | 252,543 |
Mass market |  |  | 3,293 |  |  |  | 3,572 |  |  |  | 4,450 |  |  |  | 4,941 |
Individual annuities |  |  | 186 |  |  |  | 193 |  |  |  | - |  |  |  | - |
|  |  | 52,740 |  |  |  | 52,043 |  |  | $ | 242,416 |  |  | $ | 257,484 |
Accident and health insurance policies |  |  | 10,581 |  |  |  | 8,768 |  |  |  |  |  |  |  |  |
|  |  | 63,321 |  |  |  | 60,811 |  |  |  |  |  |  |  |  |
Unearned premiums |  |  | 23,646 |  |  |  | 21,170 |  |  |  |  |  |  |  |  |
Losses, claims and loss adjustment expenses |  |  | 57,975 |  |  |  | 53,961 |  |  |  |  |  |  |  |  |
Other policy liabilities |  |  | 2,252 |  |  |  | 1,960 |  |  |  |  |  |  |  |  |
Total insurance reserves and policyholder funds |  | $ | 147,194 |  |  | $ | 137,902 |  |  |  |  |  |  |  |  |
Annualized premiums for accident and health insurance policies were $68,783 and $54,026 at December 31, 2011 and 2010, respectively. Future Policy Benefits Liabilities for life insurance future policy benefits are based upon assumed future investment yields, mortality rates, and withdrawal rates after giving effect to possible risks of unexpected claim experience. The assumed mortality and withdrawal rates are based upon the Company's experience. The interest rates assumed for life, accident and health are generally: (i) 2.5% to 5.5% for issues prior to 1977, (ii) 7% graded to 5.5% for 1977 through 1979 issues, (iii) 9% for 1980 through 1987 issues, (iv) 5% to 7% for 1988 through 2009 issues, and (v) 4% for 2010 and 2011 issues. Loss and Claim Reserves Loss and claim reserves represent estimates of projected ultimate losses and are based upon: (a) management's estimate of ultimate liability and claims adjusters' evaluations for unpaid claims reported prior to the close of the accounting period, (b) estimates of incurred but not reported (“IBNR”) claims based on past experience, and (c) estimates of loss adjustment expenses. The estimated liability is periodically reviewed by management and updated, with changes to the estimated liability recorded in the statement of operations in the year in which such changes are known. Activity in the liability for unpaid loss and claim reserves is summarized as follows:
|  | 2011 |  |  | 2010 |
Balance at January 1 |  | $ | 53,961 |  |  | $ | 50,112 |
Less: Reinsurance recoverables |  |  | (14,226 | ) |  |  | (11,489 | )
Net balance at January 1 |  |  | 39,735 |  |  |  | 38,623 |
Incurred related to: |  |  |  |  |  |  |  |
Current year |  |  | 73,980 |  |  |  | 69,779 |
Prior years |  |  | (4,095 | ) |  |  | (6,304 | )
Total incurred |  |  | 69,885 |  |  |  | 63,475 |
Paid related to: |  |  |  |  |  |  |  |
Current year |  |  | 51,316 |  |  |  | 47,749 |
Prior years |  |  | 16,301 |  |  |  | 14,614 |
Total paid |  |  | 67,617 |  |  |  | 62,363 |
Reserves acquired |  |  | 299 |  |  |  | - |
Net balance at December 31 |  |  | 42,302 |  |  |  | 39,735 |
Plus: Reinsurance recoverables |  |  | 15,673 |  |  |  | 14,226 |
Balance at December 31 |  | $ | 57,975 |  |  | $ | 53,961 |
Prior years' development was primarily the result of better than expected development on prior years IBNR reserves for certain lines of business primarily within American Southern. Following is a reconciliation of total incurred claims to total insurance benefits and losses incurred:
|  | 2011 |  |  | 2010 |
Total incurred claims |  | $ | 69,885 |  |  | $ | 63,475 |
Cash surrender value and matured endowments |  |  | 1,400 |  |  |  | 1,509 |
Benefit reserve changes |  |  | 2,329 |  |  |  | 1,870 |
Total insurance benefits and losses incurred |  | $ | 73,614 |  |  | $ | 66,854 |

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