U-Haul 2005 Annual Report Download - page 35

34 I AMERCO ANNUAL REPORT
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Activity฀in฀the฀liability฀for฀unpaid฀losses฀and฀loss฀adjustment฀expenses฀for฀RepWest฀is฀summarized฀as฀follows:
Activity in the liability for unpaid losses and loss adjustment expenses for RepWest is summarized as
follows:
Year Ended December 31,
2004 2003 2002
(In thousands)
Balance at January 1 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $416,259 $399,447 $448,987
Less reinsurance recoverable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 177,635 146,622 128,044
Net balance at January 1ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 238,624 252,825 320,943
Incurred related to:
Current year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 17,960 56,454 112,284
Prior years ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 21,773 53,127 16,396
Total incurred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 39,733 109,581 128,680
Paid related to:
Current year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13,570 22,931 66,728
Prior years ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 73,384 100,851 130,070
Total paidÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 86,954 123,782 196,798
Net balance at December 31ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 191,403 238,624 252,825
Plus reinsurance recoverable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 189,472 177,635 146,622
Balance at December 31 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $380,875 $416,259 $399,447
The liability for incurred losses and loss adjustment expenses (net of reinsurance recoverable of
$189.5 million) increased by $21.8 million in fiscal 2004. The increase is a result of additional reserves being
added for RepWest's liabilities that are long term in nature.
Oxford Life Insurance Company
2004 Compared with 2003
Net premiums were $127.7 million, $147.8 million for the years ended December 31, 2004 and 2003,
respectively. Medicare supplement premiums decreased by $8.2 million from 2003 due to lapses on closed
lines being greater than new business written on active lines. Credit insurance premiums decreased
$6.9 million from 2003 due to fewer accounts resulting from the rating downgrade by A.M. Best. Life, other
health, and annuity premiums decreased $5.0 million from 2003 primarily from reduced life insurance sales
and fewer annuitizations.
Net investment income was $23.5 million and $19.0 million for 2004 and 2003, respectively.
Benefits incurred were $91.5 million and $103.5 million for 2004 and 2003, respectively. Medicare
supplement benefits decreased $5.8 million from 2003 due primarily to reduced exposure. Credit insurance
benefits decreased $2.8 million from 2003 due to reduced exposure and improved disability experience. Life
insurance benefits decreased $3.6 million from 2003 as new business declined and existing exposure decreased.
All other lines had increases of $0.2 million from 2003.
Amortization of deferred acquisition costs (DAC) and the value of business acquired (VOBA) was
$23.8 million and $25.0 million for 2004 and 2003, respectively. These costs are amortized for life and health
policies as the premium is earned over the term of the policy; and for deferred annuities in relation to interest
spreads. Annuity amortization increased $0.8 million from 2003 primarily due to increased surrender activity.
Other segments, primarily credit, had decreases of $2.0 million from 2003 due to decreased new business
volume.
Operating expenses were $42.2 million and $38.1 million for 2004 and 2003, respectively. The
$10.6 million accrual related to the Kocher settlement, net of insurance recoveries, accounted for the majority
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The฀ liability฀ for฀ incurred฀ losses฀ and฀ loss฀ adjustment฀
expenses฀ (net฀ of฀ reinsurance฀ recoverable฀ of฀ $189.5฀
million)฀increased฀ by฀$21.8฀ million฀in฀ fiscal฀2004.฀The฀
increase฀is฀a฀result฀of฀additional฀reserves฀being฀added฀for฀
RepWest’s฀liabilities฀that฀are฀long฀term฀in฀nature.
Oxford฀Life฀Insurance฀Company
2004 Compared with 2003
Net฀ premiums฀ were฀ $127.7฀ million,฀ $147.8฀ million฀
for฀ the฀ years฀ ended฀ December฀ 31,฀ 2004฀ and฀ 2003,฀
respectively.฀ Medicare฀ supplement฀ premiums฀ decreased฀
by฀ $8.2฀ million฀ from฀ 2003฀ due฀ to฀ lapses฀ on฀ closed฀
lines฀ being฀greater฀ than฀ new฀business฀ written฀ on฀active฀
lines.฀Credit฀insurance฀premiums฀decreased฀$6.9฀million฀
from฀ 2003฀ due฀ to฀ fewer฀ accounts฀ resulting฀ from฀ the฀
rating฀downgrade฀by฀A.M.฀Best.฀Life,฀other฀ health,฀ and฀
annuity฀ premiums฀ decreased฀ $5.0฀ million฀ from฀ 2003฀
primarily฀ from฀ reduced฀ life฀ insurance฀ sales฀ and฀ fewer฀
annuitizations.
Net฀ investment฀ income฀ was฀ $23.5฀ million฀ and฀ $19.0฀
million฀for฀2004฀and฀2003,฀respectively.
Benefits฀incurred฀were฀$91.5฀million฀and฀$103.5฀million฀
for฀ 2004฀ and฀ 2003,฀ respectively.฀ Medicare฀ supplement฀
benefits฀decreased฀$5.8฀million฀from฀2003฀due฀primarily฀
to฀reduced฀exposure.฀Credit฀insurance฀benefits฀decreased฀
$2.8฀ million฀ from฀ 2003฀ due฀ to฀ reduced฀ exposure฀ and฀
improved฀ disability฀ experience.฀ Life฀ insurance฀ benefits฀
decreased฀ $3.6฀ million฀ from฀ 2003฀ as฀ new฀ business฀
declined฀and฀existing฀exposure฀decreased.฀All฀other฀lines฀
had฀increases฀of฀$0.2฀million฀from฀2003.
Amortization฀of฀deferred฀acquisition฀costs฀(DAC)฀and฀the฀
value฀ of฀ business฀ acquired฀ (VOBA)฀ was฀ $23.8฀ million฀
and฀$25.0฀million฀for฀2004฀and฀2003,฀respectively.฀These฀
costs฀ are฀ amortized฀ for฀ life฀ and฀ health฀ policies฀ as฀ the฀
premium฀is฀ earned฀ over฀ the฀ term฀of฀the฀ policy;฀and฀ for฀
deferred฀annuities฀in฀relation฀to฀interest฀spreads.฀Annuity฀
amortization฀increased฀$0.8฀million฀from฀2003฀primarily฀
due฀ to฀ increased฀ surrender฀ activity.฀ Other฀ segments,฀
primarily฀ credit,฀ had฀ decreases฀ of฀ $2.0฀ million฀ from฀
2003฀due฀to฀decreased฀new฀business฀volume.
Operating฀expenses฀were฀$42.2฀million฀and฀$38.1฀million฀
for฀ 2004฀ and฀ 2003,฀ respectively.฀ The฀ $10.6฀ million฀
accrual฀related฀to฀the฀Kocher฀settlement,฀net฀of฀insurance฀
recoveries,฀ accounted฀ for฀ the฀ majority฀ of฀ the฀ variance.฀
Non-deferrable฀ commissions฀ have฀ decreased฀ $5.5฀ million฀
from฀ 2003฀ primarily฀ due฀ to฀ decreased฀ sales฀ of฀ Medicare฀
supplement฀and฀life฀ products.