| SCPIE HOLDINGS INC ITEM 1A RISK FACTORS The Company’s business involves various risks and uncertainties, some of which are discussed in this section |
| The information discussed below should be considered carefully with the other information contained in this Annual Report on Form 10-K and the other documents and materials filed by the Company with the SEC, as well as news releases and other information publicly disseminated by the Company from time to time |
| The risks and uncertainties described below are not the only ones facing the Company |
| Additional risks and uncertainties not presently known to the Company, or that it currently believes to be immaterial, may also adversely affect the Company’s business |
| Any of the following risks or uncertainties that develop into actual events could have a materially adverse effect on the Company’s business, financial conditions or results of operations |
| Concentration of Business Substantially all of the Company’s direct premiums written are generated from healthcare liability insurance policies issued to physicians and medical groups, healthcare facilities and other providers in the healthcare industry |
| As a result, negative developments in the economic, competitive or regulatory conditions affecting the healthcare liability insurance industry, particularly as such developments might affect medical malpractice insurance for physicians and medical groups, could have a material adverse effect on the Company’s results of operations |
| Almost all of the Company’s 2006 premiums written will be generated in California |
| The revenues and profitability of the Company are therefore subject to prevailing regulatory, economic and other conditions in California, particularly Southern California |
| In addition, approximately 24dtta1prca of premiums written were generated by groups of nine physicians or more |
| The largest group of physicians accounted for 2dtta5prca of total premiums written in 2005 and one program of affiliated groups, accounted for 6dtta9prca of premiums written in 2005 |
| Importance of Brokers In the past few years, brokers have become increasingly important to the Company’s growth |
| During 2005, the Company wrote approximately 37prca of its core healthcare liability business through independent brokers |
| The Company competes with other insurers for this brokerage business |
| To maintain its relationship with independent brokers, the Company must pay competitive commissions, be able to respond to their needs quickly and adequately, and create a consistently high level of policyholder service and satisfaction |
| If a broker finds it preferable to do business with the Company’s competitors, it could be difficult to renew existing business written through such broker or attract new business |
| Uncertainties of Future Expansion From 1996 to 2001, the Company significantly expanded its healthcare liability insurance products into markets outside California |
| This expansion was not successful, and the Company is now “running off” this non-core healthcare liability business |
| At the present time, the Company has one continuing non-California program for physicians and medical groups in Delaware and may consider adding programs on a selective basis in the future |
| The Company cannot predict whether this remaining program will be ultimately successful or whether the 22 ______________________________________________________________________ [47]Table of Contents Company will have the opportunity to add such programs in Delaware or other jurisdictions, and, if so, whether any additional program will be successful |
| Success will depend upon, among other things, the Company’s access to sufficient capital for any future expansion and its ability to accurately underwrite the healthcare risks and adequately price its policies in these other jurisdictions in which the Company does not have current experience |
| Industry Factors Many factors influence the financial results of the healthcare liability insurance industry, several of which are beyond the control of the Company |
| These factors include, among other things, changes in severity and frequency of claims; changes in applicable law and regulatory reform; changes in judicial attitudes toward liability claims; and changes in inflation, interest rates and general economic conditions |
| The availability of healthcare liability insurance, or the industry’s underwriting capacity, is determined principally by the industry’s level of capitalization, historical underwriting results, returns on investment and perceived premium rate adequacy |
| Historically, the financial performance of the healthcare liability insurance industry has tended to fluctuate between a soft insurance market and a hard insurance market |
| In a soft insurance market, competitive conditions could result in premium rates and underwriting terms and conditions that may be below profitable levels |
| For a number of years, the healthcare liability insurance industry in California and nationally has faced a soft insurance market |
| Although the Company believes that the California insurance market is improved, there can be no assurance that this improvement will continue or as to its effect on the Company’s financial condition and results of operations |
| Competition The Company competes with numerous insurance companies in the California market |
| The Company’s principal competitors for physicians and medical groups in California consist of three physician-owned mutual or reciprocal insurance companies, several commercial companies and a physicians’ mutual protection trust, which levies assessments primarily on a “claims paid” basis |
| In addition, commercial insurance companies compete for the medical malpractice insurance business of larger medical groups and other healthcare providers |
| Several of these competitors have greater financial resources than the Company |
| Between 1993 and 2002, the Company instituted overall rate increases in order to improve its underwriting results |
| These rate increases were higher than those implemented by most of its competitors |
| As a result, the Company lost some of its policyholders, in part due to its rate increases |
| In 2003, the Company’s rates became more competitive, as its requested rate increase for that year was delayed until the fourth quarter |
| In October 2003, the Company instituted an average 9dtta9prca rate increase for California physicians and medical groups and in January 2005, implemented an additional 6dtta5prca rate increase |
| The Company believes its rates remain generally competitive with those of other companies, after giving effect to these rate increases |
| The effect of any future rate increases on the Company’s ability to retain and expand its healthcare liability insurance business in California is uncertain |
| In addition to pricing, competitive factors may include policyholder dividends, financial stability, breadth and flexibility of coverage and the quality and level of services provided |
| Two of the Company’s physician-owned competitors have recently announced their intention to institute or expand policyholder dividend programs in California |
| The Company considers its AM Best rating to be extremely important to its ability to compete in its core markets |
| The Company’s current rating of B (Fair) with a negative outlook could aversely affect the Company’s ability to attract and retain policyholders in California and Delaware |
| ” Loss and LAE Reserves The reserves for losses and LAE established by the Company are estimates of amounts needed to pay reported and unreported claims and related LAE The estimates are based on assumptions related to the ultimate cost of settling such claims based on facts and interpretation of circumstances then known, predictions of future events, estimates of future trends in claims frequency and severity, judicial theories of liability, legislative activity, reports from ceding reinsurers and other factors |
| However, establishment of appropriate reserves is an inherently uncertain process involving estimates of future losses, and there can be no assurance that currently established reserves will prove adequate in light of subsequent actual experience |
| The inherent uncertainty is greater for healthcare liability reserves where a longer period may elapse before a definite determination of ultimate claim liability is made, and where the judicial, political and regulatory climates are changing |
| Healthcare liability claims and expenses may be paid over a period of 10 or more years, which is longer than most property and casualty claims |
| Trends in losses on long-tail lines of business such as healthcare liability may be slow to appear, and accordingly, the Company’s reaction in terms of modifying underwriting practices and changing premium rates may lag underlying loss trends |
| The core healthcare liability net reserves account for 23 ______________________________________________________________________ [48]Table of Contents dlra256dtta9 million or 66dtta9prca of total net reserves as of December 31, 2005 |
| This portion of the reserves has the most historical experience available for actuarial analysis, and therefore should be the most predictable |
| A subsequent change of 1prca in estimated loss cost trends based on more recent experience would have an effect of approximately dlra5dtta2 million on estimated reserve levels |
| The reserves related to the non-core healthcare liability business present additional problems in determining adequate reserves |
| As the size of these reserves decline and the number of underlying cases decrease, the ultimate losses become more related to specific case results |
| Therefore, unexpected legal results in healthcare liability cases can produce unexpected reserve development |
| This was evident in 2004 as one adverse verdict in a Florida hospital case and an unexpected rise in severe dental claims caused a material upward development of prior years reserves |
| Since some of the remaining cases in the non-core healthcare liability business will ultimately go to trial many years after the event of loss, adverse verdicts or settlements at trial may affect the accuracy of future reserving |
| As of December 31, 2005, non-core healthcare liability reserves accounted for dlra60dtta6 million or 15dtta8prca of total net reserves |
| Outstanding claims have fallen from 739 at December 31, 2003 to 431 at December 31, 2004, and to 229 at December 31, 2005 |
| The following table presents the net assumed reinsurance reserves (including retrospective reserves ceded under the Rosemont Re Treaty of dlra7dtta1 million, dlra12dtta7 million, and dlra36dtta3 million, respectively) by major component as of December 31: 2005 2004 2003 (In Thousands) Lloyd’s Syndicates(1) $ — $ 21cmam922 $ 39cmam091 London based business 24cmam427 18cmam873 23cmam176 Occupational accident business 21cmam780 26cmam561 24cmam460 Excess D&O liability 6cmam375 7cmam375 3cmam778 Bail and immigration bonds ^ 573 ^^(2) 3cmam489 — Other 6cmam039 9cmam588 15cmam853 _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ $ 59cmam194 $ 87cmam808 $ 106cmam358 _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ (1) Syndicates for which the Company provided capital |
| (2) Additional net liabilities of dlra3dtta9 million representing payment requests made to the Company are included in other liabilities on the Company’s balance sheet |
| These net liabilities are being contested in pending arbitrations |
| ”) Approximately 50prca of the net assumed reinsurance reserves outstanding as of December 31, 2005 are primarily based on actuarial work performed by or for the ceding insurers |
| Since the time required for the ultimate losses to be reported through the world wide reinsurance system may cover several years, unexpected events are more difficult to predict |
| Establishing reserves in the assumed reinsurance area is complicated by the delay in reporting that naturally occurs as information passes through the worldwide reinsurance network |
| In addition, sudden and catastrophic events do occur and further complicate the reserving process |
| Examples of these types of events include the World Trade Center terrorist attack in 2001, the sudden collapse of GoshawK Syndicate 102 in 2003 and the collapse of a large bonding company in 2004 |
| In 2005 a number of London based insureds including various Lloyd’s syndicates increased reserve estimates from 2000 and 2001 policy years |
| The Company believes that its current assumed reinsurance reserve levels are adequate, but they may vary as the Company receives new information from the ceding insurers |
| While the Company believes that its reserves for losses and LAE are adequate, there can be no assurance that the Company’s ultimate losses and LAE will not deviate, perhaps substantially, from the estimates reflected in the Company’s financial statements |
| If the Company’s reserves should prove inadequate, the Company will be required to increase reserves, which could have a material adverse effect on the Company’s financial condition or results of operations |
| Rate Changes in California In September 2002, the Company filed an application with the California Department of Insurance for a rate increase for physicians and medical groups of approximately 15dtta6prca, effective January 1, 2003 |
| A self-styled consumer group objected to this proposed rate increase in November 2002, and requested a hearing on the application |
| The Department granted a hearing pursuant to state procedural rules |
| The hearing commenced on March 11, 2003, before an administrative law judge |
| The administrative law judge rendered her decision for a 9dtta9prca 24 ______________________________________________________________________ [49]Table of Contents increase and the California Insurance Commissioner upheld her ruling |
| The Company implemented the rate increase in the fourth quarter 2003 |
| In September 2003, the Company filed another application for a rate increase of approximately 8dtta9prca, effective January 1, 2004 |
| The consumer group requested a hearing on the application in November 2003 |
| In December 2003, in order to avoid another lengthy and costly hearing, the Company withdrew its application |
| In May 2004, the Company filed for an overall 6dtta5prca rate increase in California, which was again challenged by the same foundation |
| The Insurance Commissioner approved this application in its entirety, without a hearing, and the Insurance Subsidiaries implemented this rate increase on January 1, 2005 |
| The Company has not applied for any California rate changes for 2006 |
| The Company plans to file applications for future rate changes in California that it considers justified by reason of its loss experience |
| The Company may encounter objections and delays in obtaining approval of any requested changes |
| If future rate requests are denied or significantly reduced, or if there are substantial delays in implementing a favorable decision, the Company’s operations could be adversely affected |
| Necessary Capital and Surplus Measures of capital and surplus are used in the casualty insurance industry to evaluate the safety and financial strength of an insurer |
| Recognized guidelines in the Company’s segment are that (i) an insurer should not operate at a ratio of net premiums written to statutory capital and surplus (policyholder surplus) greater than 1 to 1, and (ii) an insurer should not have a ratio of net loss and LAE reserves to policyholder surplus greater than 3 to 1 |
| In recent years the Company has unfavorably exceeded both these measures because of the losses incurred in the non-core healthcare liability insurance and assumed reinsurance business |
| During 2004 and particularly in 2005, the Company has significantly improved its position |
| At December 31, 2005, the Company had a ratio of net premiums written to policyholder surplus of |
| 87 to 1 and a ratio of net loss and LAE reserves to policyholder surplus of 2dtta64 to 1 |
| At these levels, however, the Company may have limited ability to materially expand its core business without exceeding one or both of these ratios |
| Moreover, the Company cannot predict whether this improvement in policyholder surplus will be sufficient to result in an improved rating from AM Best |
| In addition, the Company could experience unexpected losses and loss reserve increases similar to those experienced in recent years that would negatively impact these ratios and the Company’s overall financial strength |
| The Company may need to raise additional capital through financings to improve its financial position |
| Any equity or debt financing, if available at all, may not be available on terms that are favorable to the Company |
| In the case of equity financings, dilution to the Company’s stockholders could result, and in any case securities may have rights preferences and privileges that are senior to those of the Company’s current stockholders |
| If the Company’s need for capital arises because of significant losses, the occurrence of these losses may make it more difficult to raise capital |
| If the Company cannot obtain adequate capital on favorable terms or at all, its business, operating results and financial condition could be adversely affected |
| Liquidity The Company’s investment portfolio primarily consists of readily marketable fixed income securities |
| In addition, the Company holds a significant cash and short-term investment position as of December 31, 2005 |
| Should cash needs of the Company, primarily loss reserve payments, require the unplanned sale of a portion of the fixed income portfolio when the portfolios carrying value is in excess of current market rates, losses on security sales could impact the Company’s earnings in the period of sale |
| Changes in Healthcare Significant attention has recently been focused on reforming the healthcare system at both the federal and state levels |
| A broad range of healthcare reform and patients’ rights measures have been suggested, and public discussion of such measures will likely continue in the future |
| Proposals have included, among others, spending limits, price controls, limits on increases in insurance premiums, limits on the liability of doctors and hospitals for tort claims, increased tort liabilities for managed care organizations and changes in the healthcare insurance system |
| The Company cannot predict which, if any, reform proposals will be adopted, when they may be adopted or what impact they may have on the Company |
| While some of these proposals could be beneficial to the Company, the adoption of others could have a material adverse effect on the Company’s financial condition or results of operations |
| In addition to regulatory and legislative efforts, there have been significant market-driven changes in the healthcare environment |
| In recent years, a number of factors related to the emergence of “managed care” have negatively impacted or threatened to impact the medical practice and economic independence of physicians |
| Physicians have found it more difficult to conduct a traditional fee for service practice and many have been driven to join or contractually affiliate with managed care organizations, healthcare delivery systems or practice management organizations |
| This consolidation could result in the elimination or significant decrease in the role of the physician and the medical group from the medical professional liability purchasing decision |
| In addition, the consolidation could reduce primary medical 25 ______________________________________________________________________ [50]Table of Contents malpractice insurance premiums paid by healthcare systems, as larger healthcare systems generally retain more risk by accepting higher deductibles and self-insured retentions or form their own captive insurance companies |
| Importance of AM Best Rating AM Best ratings are an increasingly important factor in establishing the competitive position of insurance companies |
| The rating reflects AM Best’s opinion of an insurance company’s financial strength, operating performance and ability to meet its obligations to policyholders |
| Prior to 2002, each of the Insurance Subsidiaries held an A (Excellent) rating from AM Best |
| This is the same rating held by most of the Company’s principal competitors in the healthcare liability insurance market in California |
| On February 21, 2002, AM Best reduced the Insurance Subsidiaries’ rating to B++ (Very Good) and further reduced the Insurance Subsidiaries’ rating to B+ (Very Good) on October 7, 2002 and to B (Fair) with a negative outlook on November 14, 2003 |
| This puts the Insurance Subsidiaries at a competitive disadvantage with its principal California competitors |
| The Insurance Subsidiaries rely heavily on their longstanding policyholder relations and reputation in California, and compete principally on this basis in the California market |
| The Insurance Subsidiaries have not currently experienced a significant loss of business because of this AM Best rating; however, competitors could use their rating advantage to attract some of the Insurance Subsidiaries’ policyholders |
| If the Insurance Subsidiaries’ AM Best rating were to be further reduced, this could have a material adverse effect on the Insurance Subsidiaries’ ability to continue to write policies in some segments of the market |
| Ceded Reinsurance The amount and cost of reinsurance available to companies specializing in medical professional liability insurance are subject, in large part, to prevailing market conditions beyond the control of the Company |
| The Company’s ability to provide professional liability insurance at competitive premium rates and coverage limits on a continuing basis will depend in part upon its ability to secure adequate reinsurance in amounts and at rates that are commercially reasonable |
| In general, the Company’s reinsurance agreements are for a one year term |
| Although the Company anticipates that it will continue to be able to obtain such reinsurance on reasonable terms, there can be no assurance that this will be the case |
| In the past few years, the Company experienced a number of large paid losses under its healthcare liability insurance policies that were in excess of the limits of insurance retained by the Company and thus were borne by the reinsurers |
| The Company is subject to a credit risk with respect to its reinsurers because reinsurance does not relieve the Company of liability to its insureds for the risks ceded to reinsurers |
| Although the Company places its reinsurance with reinsurers it believes to be financially stable, a significant reinsurer’s inability to make payment under the terms of a reinsurance treaty could have a material adverse effect on the Company |
| Rosemont Re, with which the Company had the largest receivable balance at December 31, 2005, incurred substantial unexpected losses during 2005 as a result of hurricanes Katrina, Rita and Wilma |
| Rosemont Re has ceased writing any new business and is in run-off |
| Under the Company’s reinsurance arrangement with Rosemont Re, Rosemont Re assets approximately equal to the estimated liabilities are currently held in trust to satisfy the liabilities |
| If the liabilities increased materially in the future, the Company would have to look to Rosemont’s Re’s general assets to satisfy any liabilities not covered by the trust assets |
| ” Highlands Insurance Group Contingent Liability The Company is obligated to assume certain policy obligations of Highlands Insurance Company (Highlands) in the event Highlands is declared insolvent by a court of competent jurisdiction and is unable to pay these obligations |
| The coverages principally involve workers’ compensation, commercial automobile and general liability |
| Highlands currently is under the jurisdiction of the Texas District Court which appointed the Texas Insurance Commissioner as a permanent Receiver of Highlands in November 2003 |
| The Receiver continues to resolve Highlands claim liabilities and otherwise conduct its business as part of his efforts to rehabilitate Highlands |
| At December 31, 2005, Highlands had established case loss reserves of dlra7dtta3 million, net of reinsurance, for the subject policies |
| Based on a limited review of the exposures remaining, the Company estimates that IBNR losses are dlra3dtta8 million, for a total loss and LAE reserve of dlra11dtta1 million |
| This estimate is not based on a full reserve analysis of the exposures and is not recorded in the Company’s reserves |
| If Highlands is declared insolvent and liquidated by court order, the Company would likely be required to assume Highlands’ remaining obligations under the subject policies |
| The court order appointing the Receiver expressly provided that it did not constitute a finding of Highlands insolvency |
| On December 30, 2005, the Receiver filed a financial report for Highlands as of November 30, 2005 |
| In the report, the Receiver filed a financial report for Highlands as of November 30, 2005 |
| In the report, the Receiver listed total assets of dlra354dtta2 million and total liabilities of dlra324dtta6 million, not including any IBNR reserves, which are currently under review by an independent actuarial firm, nor any anticipated investment income associated with reserves |
| 26 ______________________________________________________________________ [51]Table of Contents Bail and Immigration Bond Proceedings The Company’s Insurance Subsidiary, AHI, was a reinsurer during 2001 and 2002 under separate reinsurance agreements with Highlands and two other primary insurers covering bail and immigration bond programs administered by a single bonding company |
| During 2004, the bonding company failed and the primary insurers have made claims against AHI that are now part of active arbitration proceedings |
| The Company believes that its liability could amount to a potential loss of approximately dlra10dtta0 million |
| The Company’s best estimate of dlra6dtta5 million is recorded in the financial statements |
| ” At least one of the primary insurers has not yet asserted all losses under the program, and the amount of the potential liability could be greater than presently estimated |
| Holding Company Structure—Limitation on Dividends SCPIE Holdings is an insurance holding company whose assets consist of all of the outstanding capital stock of SCPIE Indemnity, which in turn owns all of the outstanding capital stock of AHI and AHSIC As an insurance holding company, SCPIE Holdings’ ability to meet its obligations and to pay dividends, if any, may depend upon the receipt of sufficient funds from SCPIE Indemnity |
| The payment of dividends to SCPIE Holdings by SCPIE Indemnity is subject to general limitations imposed by California insurance laws |
| See “Business—Regulation—Regulation of Dividends from Insurance Subsidiaries” and “Note 6 to Consolidated Financial Statements |
| ” Anti-Takeover Provisions SCPIE Holdings’ amended and restated certificate of incorporation and amended and restated bylaws include provisions that may delay, defer or prevent a takeover attempt that stockholders may consider to be in their best interests |
| These provisions include: • a classified Board of Directors; • authorization to issue up to 5cmam000cmam000 shares of preferred stock, par value dlra1dtta00 per share, in one or more series with such rights, obligations, powers and preferences as the Board of Directors may provide; • a limitation which permits only the Board of Directors, the Chairman of the Board or the President of SCPIE Holdings to call a special meeting of stockholders; • a prohibition against stockholders acting by written consent; • provisions prohibiting directors from being removed without cause and only by the affirmative vote of holders of two-thirds of the outstanding shares of voting securities; • provisions allowing the Board of Directors to increase the size of the Board and to fill vacancies and newly created directorships; • provisions that do not permit cumulative voting in the election of directors; and • advance notice procedures for nominating candidates for election to the Board of Directors and for proposing business before a meeting of stockholders |
| The Company is subject to Section 203 of the Delaware general corporation law which, in general, prohibits a publicly held Delaware corporation from engaging in a business combination with an “interested stockholder” for a period of three years following the date the person became an interested stockholder, unless the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner |
| An “interested stockholder” is defined generally as a person who, together with affiliates and associates, owns or within three years prior to the determination of interested stockholder status, did own, 15prca or more of a corporation’s voting stock |
| The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors |
| In addition, state insurance holding company laws applicable to the Company in general provide that no person may acquire control of SCPIE Holdings without the prior approval of appropriate insurance regulatory authorities |
| See “Business—Regulation—Holding Company Regulation |
| ” The Company has also adopted a rights plan that could discourage, delay or prevent an acquisition of the Company that is not approved by the Board of Directors of the Company |
| The rights plan provides for preferred stock purchase rights attached to each share of the Company’s Common Stock, which will cause substantial dilution to a person or group acquiring 20prca or more of the Company’s outstanding stock if the acquisition is not approved by the Company’s Board of Directors |
| 27 ______________________________________________________________________ [52]Table of Contents Fluctuations in Stock Price The market price of the Company’s common stock price could be subject to significant fluctuations and/or may decline |
| Among the factors that could affect the Company’s stock price are: • variations in the Company’s operating results; • actions or announcements by our competitors; • actions by institutional and other stockholders; • general market conditions; and • domestic and international economic factors unrelated to our performance |
| The stock markets in general have recently experienced volatility that has sometimes been unrelated to the operating performance of particular companies |
| These broad market fluctuations may cause the trading price of the Company’s common stock to decline |
| Regulatory and Related Matters Insurance companies are subject to supervision and regulation by the state insurance authority in each state in which they transact business |
| Such supervision and regulation relate to numerous aspects of an insurance company’s business and financial condition, including limitations on lines of business, underwriting limitations, the setting of premium rates, the establishment of standards of solvency, statutory surplus requirements, the licensing of insurers and agents, concentration of investments, levels of reserves, the payment of dividends, transactions with affiliates, changes of control, the approval of policy forms, and periodic examinations of the insurance company’s financial statements and records |
| Such regulation is concerned primarily with the protection of policyholders’ interests rather than stockholders’ interests |
| See “Business—Regulation |
| ” The Risk-Based Capital rules provide for different levels of regulatory attention depending on the amount of a company’s total adjusted capital compared to its various RBC levels |
| At December 31, 2005 each of the Insurance Subsidiaries’ RBC exceeded the threshold requiring the least regulatory attention |
| At December 31, 2005, SCPIE Indemnity exceeded this threshold by dlra85dtta9 million |
| If the Company incurred sustained material losses, the Company could fall below this threshold |
| State regulatory oversight and various proposals at the federal level may in the future adversely affect the Company’s results of operations |
| In recent years, the state insurance regulatory framework has come under increased federal scrutiny, and certain state legislatures have considered or enacted laws that alter and, in many cases, increase state authority to regulate insurance companies and insurance holding company systems |
| Further, the NAIC and state insurance regulators are reexamining existing laws and regulations, which in many states has resulted in the adoption of certain laws that specifically focus on insurance company investments, issues relating to the solvency of insurance companies, RBC guidelines, interpretations of existing laws, the development of new laws and the definition of extraordinary dividends |