Thrifty Car Rental 2009 Annual Report Download - page 81

loss up to $7.5 million per occurrence for public liability and property damage claims, including third-
party bodily injury and property damage. The Company maintains insurance for losses above these
levels. The Company continues to retain the risk of loss on SLI policies sold to vehicle rental
customers.
The Company records reserves for its vehicle liability exposure using actuarially-based loss
estimates, which are updated semi-annually in June and December of each year. As a result of
favorable overall claims loss development determined in 2009, the Company recorded insurance
reserve adjustments of $9.4 million during 2009.
The accrual for Vehicle Insurance Reserves includes amounts for incurred and incurred but not
reported losses. Such liabilities are necessarily based on actuarially determined estimates and
management believes that the amounts accrued are adequate. At December 31, 2009 and 2008,
the public liability and property damage amounts have been discounted at 1.7% and 1.0% (assumed
risk free rate), respectively, based upon the actuarially determined estimated timing of payments to
be made in future years. Discounting resulted in reducing the accrual for public liability and property
damage by $2.0 million and $1.2 million at December 31, 2009 and 2008, respectively. SLI amounts
are not discounted. Estimated future payments of Vehicle Insurance Reserves as of December 31,
2009 are as follows (in thousands):
2010 25,067$
2011 16,713
2012 11,444
2013 7,031
2014 4,043
Thereafter 4,305
Aggregate undiscounted public liability and property damage 68,603
Effect of discounting (2,039)
Public liability and property damage, net of discount 66,564
Supplemental liability insurance 42,020
Total vehicle insurance reserves 108,584$
Contingencies
The Company is a defendant in several class action lawsuits in California and one in Colorado. The
lawsuits allege that the pass through of the California trade and tourism commission and airport
concession fees violate antitrust laws and various other rights and laws by compelling out-of-state
visitors to subsidize the passenger car rental tourism assessment program, violation of the California
Business and Professions Code, breach of contract, and violation of the Colorado Consumer
Protection Act. The Company intends to vigorously defend these matters. Given the inherent
uncertainties of litigation, the Company cannot predict the ultimate outcome or reasonably estimate
the amount of ultimate loss that may arise from these lawsuits.
Various other claims and legal proceedings have been asserted or instituted against the Company,
including some purporting to be class actions, and some which demand large monetary damages or
other relief which could result in significant expenditures. Litigation is subject to many uncertainties
and the outcome of individual matters is not predictable with assurance. The Company is also
subject to potential liability related to environmental matters. The Company establishes reserves for
litigation and environmental matters when the loss is probable and reasonably estimable. It is
reasonably possible that the final resolution of some of these matters may require the Company to
make expenditures, in excess of established reserves, over an extended period of time and in a
range of amounts that cannot be reasonably estimated. The term “reasonably possible” is used
herein to mean that the chance of a future transaction or event occurring is more than remote but
less than likely. Although the final resolution of any such matters could have a material effect on the
Company’s consolidated operating results for the particular reporting period in which an adjustment
of the estimated liability is recorded, the Company believes that any resulting liability should not
materially affect its consolidated financial position.
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