REDEEMABLE SHARES, SHAREHOLDERS' EQUITY AND DIVIDEND RESTRICTIONS

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

REDEEMABLE SHARES, SHAREHOLDERS' EQUITY AND DIVIDEND RESTRICTIONS

10. REDEEMABLE SHARES, SHAREHOLDERS’ EQUITY AND DIVIDEND RESTRICTIONS

When Redeemable Common shares are offered by the Company, providers in the Company’s service area have the option to purchase one share of voting Class A Redeemable Common Shares of the Company. Only participating providers in our service area that includes Ohio and Kentucky are eligible to own Class A voting redeemable common shares. All participating providers along with Company directors and employees have the option to purchase one or more non-voting Class B Redeemable Common Shares of the Company, when offered. Accordingly, prospective shareholders may make a subscription payment per share equal to the book value of a common share, which was approximately $894 and $815 at December 31, 2013 and 2012, respectively. In February 2013 and March 2012, the Board declared a per share cash dividend for all Class A and Class B redeemable common shares in the amounts of $32.60 and $21.00, respectively. No dividends were declared or paid in 2011.

The Board of Directors authorized and approved the issuance of Redeemable Institutional Preferred Shares (“the Shares”) consisting of a total of 2,300 preferred shares issued of the 100,000 authorized. In 2010, the Company entered into a Preferred Stock Purchase Agreement with an investor for 300 Shares at a purchase price of $1,000 per share. In 2012 and 2013, the Company entered into an additional Stock Purchase Agreement with an investor for the sale of 1,000 Shares each year at a purchase price of $1,000 per share. The annual dividend payable on each Share is 5% of the book value at the beginning of the dividend period. As of December 31, 2013, 2012, and 2011, dividends declared were approximately $123,000, $67,000, and $16,000, respectively. As of December 31, 2013, 2012, and 2011, dividends paid were approximately $123,000, $83,000, and $7,000 respectively.

The Board authorized and approved for issuance the Provider Preferred Shares-2009 Series that includes 5,000 preferred shares of the 100,000 authorized. Redeemable Provider Preferred Shares are entitled to a cumulative cash dividend equal to 5% of the year end book value of the redeemable Provider Preferred Shares. As of December 31, 2013 and 2012, none of these Provider Preferred shares were issued or are outstanding.

The Company has 92,700 authorized preferred shares, without par value. As of December 31, 2013 and 2012, none of these preferred shares were issued or are outstanding. The preferred shares do not have voting rights except to the extent required by law or designated by the Board of Directors.

Dividend restrictions vary among the subsidiaries. Dental Care Plus is restricted by regulatory requirements of its domiciliary state, which limit by reference to statutory net income and net worth, the dividends that can be paid without prior regulatory approval. Dividends paid by Dental Care Plus cannot, without prior approval of the Ohio Department of Insurance, exceed in any one year the lesser of: (i) 10% of net worth (as of the preceding December 31), or (ii) net income for the prior year, and only if net worth exceeds $250,000 and only out of unassigned surplus. In December 2012, Dental Care Plus declared and paid a dividend to the Company totaling $360,000. There were no dividends declared or paid by any subsidiaries during 2013 or 2011. During 2014, the total dividend that the Dental Care Plus subsidiary may declare without prior regulatory approval is approximately $856,000.

GAAP differs in certain respects from the accounting practices prescribed or permitted by state insurance regulatory authorities (“statutory-basis”), a non-GAAP basis of accounting. The statutory-basis net income for Dental Care Plus was approximately $1,191,000, $1,108,000, and $703,000 for the years ended December 31, 2013, 2012 and 2011, respectively. Statutory-basis equity was approximately $8,560,000 and $7,396,000 at December 31, 2013 and 2012, respectively.