Note 3. Insurance Reserves and Policyholder Funds

The following table presents the Company’s reserves for life, accident and health, and property and casualty losses, claims and loss adjustment expenses.

					Amount of Insurance In Force, Net
	2014		2013		2014		2013
Future policy benefits
Life insurance policies:
Ordinary	$	53,555	$	52,915	$	235,856	$	237,694
Mass market		2,475		2,715		3,148		3,504
Individual annuities		130		135		—		—
		56,160		55,765	$	239,004	$	241,198
Accident and health insurance policies		14,685		14,099
		70,845		69,864
Unearned premiums		24,544		27,415
Losses, claims and loss adjustment expenses		66,625		63,018
Other policy liabilities		2,080		2,076
Total insurance reserves and policyholder funds	$	164,094	$	162,373

Annualized premiums for accident and health insurance policies were $88,956 and $91,359 at December 31, 2014 and 2013, 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 future policy benefits 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, (v) 4% for 2010 through 2012 issues, and (vi) 3.5% for 2013 to 2014 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:

	2014			2013
Balance at January 1	$	63,018		$	62,873
Less: Reinsurance receivable on unpaid losses		(14,314	)		(18,743	)
Net balance at January 1		48,704			44,130

Incurred related to:
Current year		104,225			97,904
Prior years		(483	)		(1,657	)
Total incurred		103,742			96,247

Paid related to:
Current year		72,443			66,705
Prior years		27,680			24,968
Total paid		100,123			91,673
Net balance at December 31		52,323			48,704
Plus: Reinsurance receivable on unpaid losses		14,302			14,314
Balance at December 31	$	66,625		$	63,018

Prior years’ development was primarily the result of better than expected development on prior years IBNR reserves for certain lines of business.

Following is a reconciliation of total incurred claims to total insurance benefits and losses incurred:

	2014		2013
Total incurred claims	$	103,742	$	96,247
Cash surrender value and matured endowments		1,574		1,215
Benefit reserve changes		879		2,910
Total insurance benefits and losses incurred	$	106,195	$	100,372