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Cash provided by operating activities amounted to $141.4 million, $173.2 million and $361.6 million for 2000, 1999 and 1998, respectively, after net claim payments of $135.4 million, $119. 3 million and $100.9 million, respectively. The principal nonoperating uses of cash and cash equivalents for the three-year period ended December 31, 2000, were for capital expenditures, additions to the investment portfolio, company acquisitions in 2000 and 1999, dividends and the repayment of debt. The most significant nonoperating sources of cash and cash equivalents were proceeds from the sales and maturities of certain investments, proceeds in 2000 and 1999 from the sale-leaseback of certain property and equipment and proceeds in 1998 from the issuance of senior debentures. The net effect of all activities on total cash and cash equivalents was a decrease of $49. 1 million for 2000, a decrease of $31.3 million for 1999 and an increase of $197. 9 million for 1998. On July 2, 1999, the Company increased its lines of credit to $175.0 million. Pursuant to the terms of the credit agreements, the Company is required to maintain minimum levels of capital and earnings and meet predetermined debt-to-capitalization ratios. The lines of credit are currently unused. Notes and contracts payable, as a percentage of total capitalization, was 16.9% as of December 31, 2000, as compared with 16.4% as of the prior year end. This increase was primarily attributable to debt incurred in connection with company acquisitions, offset, in part, by an increase in the capital base primarily due to the net income for the period. Notes and contracts payable are more fully described in Note 8 to the consolidated financial statements. Pursuant to various insurance and other regulations, the maximum amount of dividends, loans and advances available to the Company in 2001 from its insurance subsidiaries is $138.2 million. Such restrictions have not had, nor are they expected to have, an impact on the Company’s ability to meet its cash obligations (see Note 2 to the consolidated financial statements). Due to the Company’s significant liquid-asset position and its consistent ability to generate cash flows from operations, management believes that its resources are sufficient to satisfy its anticipated operational cash requirements. The Company’s financial position will enable management to react to future opportunities for acquisitions or other investments in support of the Company’s continued growth and expansion. |
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Income
taxes —
The Company’s effective income tax rate, which includes a provision
for state income and franchise taxes for noninsurance subsidiaries, was
35.5%, 36.7% and 35.2% for 2000, 1999 and 1998, respectively. The differences
in the effective tax rate were primarily due to changes in the ratio of
permanent differences to income before income taxes and minority interests
and changes in state income and franchise taxes resulting from fluctuations
in the Company’s noninsurance subsidiaries’ contribution to
pretax profits. Information regarding items included in the reconciliation
of the effective rate with the federal statutory rate is contained in
Note 10 to the consolidated financial statements. 
