Trust - TMLT

Notes to ConsolidatedFinancial Statements7. Policyholders’ SurplusEligible physicians desiring to purchase insurance through the Trust are required topurchase a Surplus Deposit Certificate. The Surplus Deposit Certificates are offeredsolely to provide surplus for the Trust and do not bear interest. Surplus contributionsare refunded to the physician at the discretion of the Trust or when a physician dies,becomes disabled or retires.As of December 31, 2005 and 2004, surplus contributions receivable of $1,000 and$3,000, respectively, represent collections subsequent to year-end but prior to theissuance of the consolidated financial statements. In accordance with EITF 85-1,these amounts were recorded as an asset as opposed to a reduction of policyholders’surplus.8. Commitments and ContingenciesThe Trust leases office facilities and certain equipment through agreements whichexpire through 2011. As of December 31, 2005, the future minimum lease paymentsunder these noncancelable agreements for the years ending December 31 are asfollows:YearAmount(in thousands)2006 $ 1,1352007 1,1352008 1,3872009 1,3872010 and thereafter 2,773Total rent expense was $1,217 for 2005 and $835 for 2004.$ 7,817The Trust is named as a defendant in various legal actions principally from claimsmade under insurance policies. Those actions are considered by the Trust in estimatingthe loss and loss adjustment expense reserves. The Trust's management believesthat the resolution of those actions will not have a material adverse effect on theTrust's financial position or results of operations. In lieu of purchasing surety bondson cases being appealed, the Trust has placed $4,145 in deposits with the courts.9. Concentrations of Credit RiskThe Trust has concentrations of credit risks relating to reinsurance recoverablebalances and cash balances at financial institutions in excess of insured amounts.The Trust believes the risk of incurring material losses related to these credit risksis unlikely.10. Employee Benefit PlanThe Trust sponsors a noncontributory, defined contribution employee benefit plan,which covers all employees who have completed one year of service. The Trustmakes contributions to the Plan equal to 10% of participants' salaries. Such contributionsare reduced by forfeitures of participants who leave the Plan before theybecome fully vested. Plan expense was $1,468 for 2005 and $1,445 for 2004.38 TRUST - The Annual Report Magazine