Policy Liabilities

12 Months Ended

Dec. 31, 2011

Note 4:

Policy Liabilities

Various assumptions used to determine the future policy benefit reserves of life insurance include the following: a) valuation interest rates from 4% to 9% per year; b) mortality assumptions are from the 1955 to 1960, 1965 to 1970, 1975 to 1980 and 2001 Select and Ultimate mortality tables; and c) withdrawals are based primarily on actual historical termination rates.

The following table presents information on changes in the liability for life, accident and health and property policy and contract claims for the years ended December 31, 2011, 2010 and 2009.

	For the Years Ended December 31,
	2011			2010			2009
	(In thousands)

Policy claims payable at January 1	$	10,540			10,222			9,318
Less: reinsurance recoverable		1,188			2,455			2,706
Net balance at January 1		9,352			7,767			6,612
Acquisition of ICIC, gross and net		-			-			6
Add claims incurred, related to:
Current year		24,996			26,043			25,077
Prior years		(1,565	)		(1,187	)		(556	)
		23,431			24,856			24,521
Deduct claims paid, related to:
Current year		18,004			18,072			18,386
Prior years		5,930			5,199			4,986
		23,934			23,271			23,372
Net balance December 31		8,849			9,352			7,767
Plus: reinsurance recoverable		1,171			1,188			2,455
Policy claims payable, December 31	$	10,020			10,540			10,222

The Company experienced favorable development related to SPLIC of $1.4 million in 2011. We have performed a review and have refined our incurred but not reported calculation. This method is anticipated to provide us with a more refined view of the claims development process.

The favorable development in 2010 of $1,187,000 was primarily related to the release of higher claim reserves and longer claim lags indicated following Hurricane's Katrina and Rita and the relocation of insured lives. The claims related to these events have stabilized and the higher claim reserves are no longer deemed necessary.

- Definition

Tabular disclosure of the activity in the reserve for settling insured claims and expenses incurred in the claims settlement process for the period. The estimated liability includes the amount of money that will be required for future payments of (a) claims that have been reported to the insurer, (b) claims related to insured events that have occurred but that have not been reported to the insurer as of the date the liability is estimated, and (c) claim adjustment expenses. Claim adjustment expenses include costs incurred in the claim settlement process such as legal fees; outside adjuster fees; and costs to record, process, and adjust claims.

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