Mercury Insurance 2015 Annual Report Download - page 84

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72
5. Fixed Assets
The following table presents the components of fixed assets:
December 31,
2015 2014
(Amounts in thousands)
Land $ 26,770 $ 26,770
Buildings and improvements 132,529 131,174
Furniture and equipment 109,802 107,288
Capitalized software 178,113 162,065
Leasehold improvements 9,109 8,991
456,323 436,288
Less accumulated depreciation and amortization (299,192)(277,312)
Fixed assets, net $ 157,131 $ 158,976
Depreciation expense, including amortization of leasehold improvements, was $20.5 million, $22.1 million, and $24.6
million during 2015, 2014, and 2013, respectively.
6. Deferred Policy Acquisition Costs
Deferred policy acquisition costs were as follows:
December 31,
2015 2014 2013
(Amounts in thousands)
Balance, beginning of year $ 197,202 $ 194,466 $ 185,910
Policy acquisition costs deferred 543,791 528,944 514,073
Amortization (539,231)(526,208)(505,517)
Balance, end of year $ 201,762 $ 197,202 $ 194,466
7. Notes Payable
Notes payable consists of the following:
December 31,
Lender Interest Rate Expiration 2015 2014
(Amounts in thousands)
Secured credit facility Bank of America LIBOR plus 40 basis points December 3, 2017 $ 120,000 $ 120,000
Secured loan Union Bank LIBOR plus 40 basis points December 3, 2017 20,000 20,000
Unsecured credit facility Bank of America and Union Bank (1) December 3, 2019 150,000 150,000
Total $ 290,000 $ 290,000
__________
(1) On July 2, 2013, the Company entered into an unsecured $200 million five-year revolving credit facility. The interest rate
on borrowings under the credit facility is based on the Company's debt to total capital ratio and ranges from LIBOR plus
112.5 basis points when the ratio is under 15% to LIBOR plus 162.5 basis points when the ratio is above 25%. Commitment
fees for the undrawn portions of the credit facility range from 12.5 basis points when the ratio is under 15% to 22.5 basis
points when the ratio is above 25%. Debt to capital ratio is expressed as a percentage of (i) consolidated debt to (ii)
consolidated shareholders' equity plus consolidated debt. Effective December 3, 2014, the Company extended the maturity
date of the unsecured credit facility from June 30, 2018 to December 3, 2019, and expanded the borrowing capacity from
$200 million to $250 million. In 2015 and 2014, the interest rate was LIBOR plus 112.5 basis points on the $150 million
of borrowings and 12.5 basis points on the undrawn portion of the credit facility. The interest rate was approximately 1.53%
at December 31, 2015.