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WARREN FARMERS MUTUAL FIRE
|Board of Directors:|| Edward Barrett
Otto Bowden, Jr.
|Edward Barrett||Vice President|
The Company issues fire and lightning policies in the State of Maine.
Balances at 12/31/04
|Premium Notes||$ 19,200|
The Company issues fire and lightning policies for a three-year period under an assessment plan and requires a promissory note for each policy. The amount of the note is set in the Company’s Bylaws and is always 8% of the insured amount. The Company charges a premium, which is also set in the Bylaws, and is always 10% of the promissory note.
The amount of insurance that the Company may write is limited by the Board of Directors and the Bureau of Insurance. In 2004, the Bureau of Insurance approved an increase from $7,500 to $10,000. The Company does not participate in any type of reinsurance program, however, the amount of risk retained by the Company is in compliance with the State of Maine’s prescribed percentage of surplus and outstanding notes.
The following financial statements show the results of the Company’s operations for the year ending December 31, 2004 as determined by this examination.
DECEMBER 31, 2004
|Cash and Certificates of Deposits (Note 1)||$ 66,745|
|Stocks (Note 2)||97,485|
|Total Assets||$ 164,230|
|Liabilities and Surplus|
|Unearned Premium Reserve||$ 338|
|Total Liabilities||$ 338|
|Surplus as Regards to Policyholders||$ 163,892|
|Total Liabilities and Surplus||$ 164,230|
STATEMENT OF INCOME
DECEMBER 31, 2004
|Net Assessment Income||$ 676|
|Policy Fee Income||77|
|Interest & Dividend Income||3,573|
|Total Income||$ 4,581|
|Policy Fees Retained by Agents||$ 168|
|General Office Maintenance||43|
|Taxes, Licenses and Fees||26|
|Total Expenses||$ 6,137|
|Net Income||$ (1,556)|
Unrealized gain of $7,962 was incorrectly included in income and should have been posted directly to surplus. As a result of this examination, the following adjustment was made and is presented here showing the effect on net income/(loss). (See Comment and Recommendation)
|Net Income Per Company||$ 6,406|
|Examination Adjustments for unrealized gains||$ (7,962)|
|Net Loss per Examination||$ (1,556)|
|Note 1 - Cash and Certificates of Deposit||Cash||$ 1,888|
|Certificates of Deposit||64,857|
Bank balances were confirmed directly from the Company’s various depositories and reconciled to the Company’s book balance. The Company includes cash and certificates of deposit as Deposits in Trust Companies and Banks.
|Note 2 - Stocks||$ 97,485|
Stock ownership and valuation was verified by obtaining confirmations from the depositories for these securities held under custodial agreements. Stocks, including Common Stocks and Mutual Funds, are reported at market value.
As discussed in the Examination Adjustments section, the unrealized gains on stock and mutual funds were deducted from Net Income, and posted directly to surplus.
STATE OF MAINE
COUNTY OF KENNEBEC, SS
Michael R. Nadeau, CPA, CFE, CISA, AES, being duly sworn according to law, deposes and says that in accordance with the authority vested in him by Alessandro A. Iuppa, Superintendent of Insurance, pursuant to the Insurance Laws of the State of Maine, he has made an examination on the conditions and affairs of
WARREN FARMERS MUTUAL FIRE INSURANCE COMPANY
of Warren, Maine as of December 31, 2004 and that the foregoing report of examination subscribed to by him is true to the best of his knowledge and belief. The following examiners from the Bureau of Insurance assisted:
Margaret S. Boghosian, CPA, CFE
Michael R. Nadeau, CPA, CFE, CISA, AES
Subscribed and sworn to before me
This ____ day of __________, 2006
My Commission Expires:
Last Updated: October 22, 2013
|Copyright © 2006 All rights reserved.|