Restatement of the March 31, 2013 Statements of Cash Flows

9 Months Ended

Sep. 30, 2014

Accounting Changes and Error Corrections [Abstract]

Restatement of the June 30, 2013 Statements of Cash Flows

Restatement of the September 30, 2013 Statement of Cash Flows

The accompanying statement of cash flows for the nine months ended September 30, 2013 has been restated to reflect the following corrections of misstatements identified subsequent to the issuance of the September 30, 2013 quarterly financial statements:

• During the fourth quarter of 2013, the Company recorded a cumulative out-of-period adjustment in connection with certain derivative instruments not qualifying for hedge accounting due to ineffectiveness. These derivative instruments were deemed to have a financing element at inception which should be classified as a financing activity instead of an operating activity within the statement of cash flows.  As a result, net cash provided by operating activities was overstated by $44,444 and net cash provided by financing activities was understated by the same amount for the nine months ended September 30, 2013. The Company believes the effects of this error are immaterial to the prior period.

• The Company holds certain forward settling to be announced (“TBA”) securities that are accounted for as derivative instruments as the Company does not regularly accept delivery of such securities when issued.  In certain limited circumstances, the Company will accept delivery of the securities from one broker and then immediately deliver the securities to another broker.  In these limited circumstances, the Company recorded the purchase and sale of the securities as an equal and offsetting purchase and sale of investments in the net cash provided by investing activities.  Because the Company did not hold the securities as an investment, the cash flows should be accounted for net within operating activities.  As a result of this misstatement, both proceeds from sales, maturities and redemptions of investments and purchases of investments were overstated by $5,723,818 for the nine months ended September 30, 2013. The Company believes the effects of this error are immaterial to the prior period.

The following table summarizes the effect of the adjustments the Company made to its financial statements: 

	Nine Months Ended September 30, 2013
	As previously reported			Adjustments			As restated
Statements of Cash Flows
Net cash provided by operating activities	$	510,852		$	(44,444	)	$	466,408
Proceeds from sales, maturities and redemptions of investments:
Fixed maturities, available-for-sale	9,157,329			(5,723,818		)	3,433,511
Purchases of investments:
Fixed maturities, available-for-sale	(7,876,028		)	5,723,818			(2,152,210		)
Proceeds from financing element derivatives	—			51,832			51,832
Payments for and interest (paid) received on financing element derivatives, net	—			(7,388		)	(7,388		)
Net cash provided by financing activities	391,893			44,444			436,337