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Insurance
12 Months Ended
Dec. 31, 2014
Insurance [Abstract]  
Insurance
Insurance    

Components of insurance claims and policyholder liabilities were as follows:
(dollars in thousands)
 
 
 
 
December 31,
 
2014
 
2013
 
 
 
 
 
Finance receivable related:
 
 
 
 
Unearned premium reserves
 
$
193,710

 
$
151,987

Benefit reserves
 
107,339

 
94,954

Claim reserves
 
28,299

 
25,325

Subtotal
 
329,348

 
272,266

 
 
 
 
 
Non-finance receivable related:
 
 
 
 
Benefit reserves
 
74,639

 
79,352

Claim reserves
 
41,566

 
42,550

Subtotal
 
116,205

 
121,902

 
 
 
 
 
Total
 
$
445,553

 
$
394,168



Our insurance subsidiaries enter into reinsurance agreements with other insurers (including subsidiaries of AIG). Insurance claims and policyholder liabilities included the following amounts assumed from other insurers:
(dollars in thousands)
 
 
 
 
December 31,
 
2014
 
2013
 
 
 
 
 
Non-affiliated insurance companies
 
$
14,853

 
$
16,198

Affiliated insurance companies
 
43,587

 
45,619

Total
 
$
58,440

 
$
61,817



At December 31, 2014 and 2013, reserves related to insurance claims and policyholder liabilities ceded to nonaffiliated insurance companies totaled $22.0 million and $21.7 million, respectively.

Changes in the liability for unpaid claims and loss adjustment expenses, net of reinsurance recoverable:
(dollars in thousands)
 
 
 
 
 
 
At or for the Years Ended December 31,
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
Balance at beginning of period
 
$
46,220

 
$
51,037

 
$
47,369

Additions for losses and loss adjustment expenses incurred to:
 
 
 
 
 
 
Current year
 
64,529

 
58,895

 
59,883

Prior years *
 
(2,541
)
 
(6,028
)
 
(2,193
)
Total
 
61,988

 
52,867

 
57,690

Reductions for losses and loss adjustment expenses paid related to:
 
 
 
 
 
 
Current year
 
(39,359
)
 
(34,591
)
 
(33,956
)
Prior years
 
(20,949
)
 
(23,093
)
 
(20,066
)
Total
 
(60,308
)
 
(57,684
)
 
(54,022
)
Balance at end of period
 
$
47,900

 
$
46,220

 
$
51,037

                                      
*
Reflects a redundancy in the prior years’ net reserves of $2.5 million at December 31, 2014, $6.0 million at December 31, 2013, and $2.2 million at December 31, 2012 primarily resulting from the settlement of claims incurred in prior years for amounts that were less than expected.

Our insurance subsidiaries file financial statements prepared using statutory accounting practices prescribed or permitted by the Indiana Department of Insurance, which is a comprehensive basis of accounting other than U.S. GAAP. The primary differences between statutory accounting practices and U.S. GAAP are that under statutory accounting, policy acquisition costs are expensed as incurred, policyholder liabilities are generally valued using more conservative actuarial assumptions, and certain investment securities are reported at amortized cost. We report our statutory financial information on a historical accounting basis. We are not required and did not apply push-down accounting to the insurance subsidiaries on a statutory basis.

Statutory net income for our insurance companies by type of insurance was as follows:
(dollars in thousands)
 
 
 
 
 
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
Property and casualty
 
$
15,803

 
$
40,616

 
$
18,493

Life and accident and health
 
(2,411
)
 
3,285

 
10,131



Statutory capital and surplus for our insurance companies by type of insurance were as follows:
(dollars in thousands)
 
 
 
 
December 31,
 
2014
 
2013
 
 
 
 
 
Property and casualty
 
$
107,696

 
$
153,710

Life and accident and health
 
171,383

 
184,465



Our insurance companies are also subject to risk-based capital requirements adopted by the Indiana Department of Insurance. Minimum statutory capital and surplus is the risk-based capital level that would trigger regulatory action. At December 31, 2014 and 2013, our insurance subsidiaries’ statutory capital and surplus exceeded the risk-based capital minimum required levels.

State law restricts the amounts our insurance subsidiaries, Merit and Yosemite Insurance Company (“Yosemite”), may pay as dividends without prior notice to, or in some cases approval from, the Indiana Department of Insurance. The maximum amount of dividends that can be paid without prior approval in a 12 month period, measured retrospectively from the date of payment, is the greater of 10% of policyholders’ surplus as of the prior year-end, or the net gain from operations as of the prior year-end. On October 20, 2014, Merit paid an ordinary dividend of $18.0 million to SFC that did not require prior approval, and Yosemite paid an extraordinary dividend of $57.0 million to SFC upon receiving prior approval. Our insurance subsidiaries paid $150.0 million of extraordinary dividends during each of the third quarter of 2013 and the second quarter of 2012 upon receiving prior approval. Effective July 31, 2013, Yosemite paid, as an extraordinary dividend to SFC, 100% of the common stock of its wholly owned subsidiary, CommoLoCo, Inc., in the amount of $57.8 million, upon receiving prior approval.