Yellow Book Continued

The Yellow Book consists of lots of detailed schedules that we do for year-end and is more detailed than our monthly financial statements. It addresses areas such as cash flow, investments, reinsurance and loss and loss adjustment expense reserves. We start work on the Yellow Book on the first day of business in January.

We spend many, many hours making sure that we get it right. The book must be filed before March 1, and we usually send the book to the printer around the 8th or the 9th of February. January and February are our busiest times of the year—each state has their own requirements that we must complete in addition to the Yellow Book. And, of course, we generate our normal monthly financial statements for January and February in addition to working on year-end.  This year, all filings to the states were completed by Friday, February 24th.

So that’s what the Yellow Book is, but who uses it?

The purpose of the Yellow Book is for regulators to determine the financial health of companies—it gives a snapshot of company health at each year-end. NAIC and the states closely monitor the numbers in the Yellow Book to make sure that companies remain solvent. They want to make certain that there is enough financial resources to satisfy policyholder claims. Their responsibility is to the public—in this case the policyholders.

In addition to being a tool for regulators, other institutions use the Yellow Book. A.M. Best looks at them from a ratings standpoint and it is used by reinsurers and even by people who might be interested in buying insurance. Financial institutions also look at the Yellow Book.

The Yellow Book has been around since the late 1800’s—not sure if it was always yellow, though. Greg has been doing the Yellow Book since 1991 when he joined American Mining—that’s 15 Yellow Books. The book has continued to evolve since then—regulators are always adding additional requests to get a more comprehensive look at the company.

On a personal note, Greg has been married to Linda for almost eight years. Greg’s son Lee turned 20 last week and his other son, John Paul, turns 19 months old later this week. There’s usually some mention of what people’s hobbies are in the newsletter—well, for Greg, taking care of an 18 month old has become hobby enough! John Paul has recently started staying in his crib all night, which has been cause for celebration.

Greg also is active in his church and is a big fan of United States history, especially the Civil War and World War II.  Hopefully, when John Paul gets a little older, the Pierre family can start back on their hikes and camping trips.

Rosemary has some exciting things happening this week as well: her 2 year anniversary with the company is this week. She’s been married for over 5 1/2 years and she and her husband are expecting their first child at the end of July. The real excitement comes on March 2: that’s when she’ll find out if they are having a boy or a girl!