2 of 95& & & UNICO AMERICAN CORPORATION INDEX TO FORM 10-K & & & & Page No. Many of these factors are beyond our ability to control or predict. CMP policies include both property and liability coverages. However, Crusader does not write earthquake coverage. All policies are produced by a network of independent brokers and agents. & The property casualty insurance marketplace continues to be intensely competitive. To date, U.S. Risk is providing claims management services only to Crusader. Crusader has no reinsurance recoverable balances in dispute. & The ultimate liability of Crusader may be greater or less than estimated reserves. SAP differs in certain respects from GAAP. The analytical phase is a review of statutory annual statements and the financial ratios. Higher ratings generally indicate financial stability and a strong ability to pay claims. The outlook of the Long-Term ICR of Unico was revised to stable from negative. & This subsidiary holds licenses issued by the CA DOI and other states where applicable. & The services provided consist of marketing, sales and customer service. bull; & Options and futures contracts. & & An independent investment advisor manages Crusader’s investments.& Competition is also affected by the pace of technological developments. The strength of an insurer is measured in large part by is policyholder surplus. Such events typically increase the frequency and severity of commercial property claims.& bull; & Claims relating to potentially changing climate conditions. & & bull; & Ongoing changes in the Company’s claim settlement practices. & & Consequently, Unico relies on the ability of its subsidiaries to meet its obligations. The Company’s investments may be subject to credit, prepayment and other risks. Litigation may have an adverse effect on the Company’s business. bull; & Terrorism acts and attacks by computer viruses or hackers. & & bull; & Unauthorized access. & & The Company faces intense competition in the property and casualty insurance industry. At this point, the Company does not have an estimate on when these changes will occur. Written premium is a required statutory measure. The Company recognized a premium deficiency of $150,000 as of December 31, 2020. 3) Combined ratio is defined as a sum of loss ratio and expense ratio. Cash used by operating activities in 2020 was $2,436,399 compared to $3,163,210 in 2019.& Premium taxes are deferred and amortized as the related premium is earned. For these services, AAQHC receives membership and fee income from its members. The number of loans issued decreased by 436 (28%) during 2020 when compared to 2019. The average premium financed by AAC was $6,477 and $5,672 in 2020 and 2019, respectively. Some categories exclude certain items and/or others include certain items. Not all categories are defined in the same way. Insurance claims costs are inherently uncertain. At the beginning of 2020, Crusader had 510 open claim files. The change was accounted for as a change in accounting estimate. & Any adjustments necessary are reflected in the current operations. Short-term investments are carried at cost, which approximates fair value. We tested the accuracy of the data on a sample basis by tracing it to source documents. Unico was incorporated under the laws of Nevada in 1969. & The Company files income tax returns under U.S. federal and various state jurisdictions. Policy fee income is recognized on a pro-rata basis over the
