Mercury Insurance 2008 Annual Report Download - page 85

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75
(8) Shareholder Dividends and Dividend Restrictions
The following table summarizes shareholder dividends paid in total and per-share:
2008 2007 2006
Total paid 127,011,000$ 113,802,000$ 104,960,000$
Per-share 2.32$ 2.08$ 1.92$
The Insurance Companies are subject to the financial capacity guidelines established by their domiciliary states. The
payment of dividends from statutory unassigned surplus of the Insurance Companies is restricted, subject to certain statutory
limitations. For 2009, the direct insurance subsidiaries of the Company are permitted to pay approximately $136.7 million in
dividends to the Company without the prior approval of the DOI of the states of domicile. The above statutory regulations may
have the effect of indirectly limiting the ability of the Company to pay shareholder dividends. During 2008 and 2007, the
Insurance Companies paid ordinary dividends to the Company of $140.0 million and $127.0 million, respectively.
(9) Supplemental Cash Flow Information
A summary of interest, income taxes paid and net realized gains and losses from sale of investments is as follows:
2008 2007 2006
Interest 5,787$ 8,618$ 8,702$
Income taxes 39,087$ 100,410$ 73,144$
Net realized (losses) gains from sale of investments (18,698)$ 42,553$ 18,549$
(Amounts in thousands)
Year Ended December 31,
In 2007, the Company issued a promissory note of $4.5 million in connection with the acquisition of a 4.25 acre parcel of
land in Brea, California. The note was paid in full in December 2008.
(10) Statutory Balances and Accounting Practices
The Insurance Companies prepare their statutory financial statements in accordance with accounting practices prescribed
or permitted by the various state insurance departments. Prescribed statutory accounting practices primarily include those
published as statements of Statutory Accounting Principles by the NAIC, as well as state laws, regulations, and general
administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. As of
December 31, 2008, there were no material permitted statutory accounting practices utilized by the Insurance Companies.
The following table summarizes the statutory net loss or income and statutory policyholders’ surplus of the Insurance
Companies, as reported to regulatory authorities:
2008 2007 2006
Statutory net income 86,514$ 237,283$ 238,138$
Statutory surplus 1,371,095$ 1,721,827$ 1,579,249$
Year Ended December 31,
(Amounts in thousands)
Statutory net income excluded changes in the fair value of the investment portfolio. As a result of the adoption of SFAS
No. 159 on January 1, 2008 for GAAP purposes, the change in unrealized gains and losses on all investments is recorded as
realized gains and losses on the consolidated statements of operations. During 2008, the Company recognized approximately
$525.7 million of losses related to the change in fair value of the total investment portfolio as a result of the adoption of SFAS No.
159.
The statutory surplus of each of the Insurance Companies exceeded the highest level of minimum required capital.