U-Haul 2006 Annual Report Download - page 36

AMERCO AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Insurance Plans
Oxford insures various group life and group disability insurance plans covering employees of the Company. Premiums
earned by Oxford on these policies were $3.5 million, $3.3 million and $4.5 million for the years ended December 31,
2005, 2004, and 2003, respectively. The group life premiums are paid by the Company and those amounts were eliminated
from the Company’ s financial statements in consolidation. The group disability premiums are paid by the covered
employees.
Post Retirement and Post Employment Benefits
The Company provides medical and life insurance benefits to its eligible employees and their dependents upon
retirement from the Company. The retirees must have attained age sixty-five and earned twenty years of full-time service
upon retirement for coverage under the medical plan. The medical benefits are capped at a $20,000 lifetime maximum per
covered person. The benefits are coordinated with Medicare and any other medical policies in force. Retirees who have
attained age sixty-five and earned at least ten years of full-time service upon retirement from the Company are entitled to
group term life insurance benefits. The life insurance benefit is $2,000 plus $100 for each year of employment over ten
years. The plan is not funded and claims are paid as they are incurred. The Company has elected to use a December 31
measurement date for its post retirement benefit disclosures as of March 31.
The components of net periodic post retirement benefit cost were as follows:
2006 2005 2004
Service cost for benefits earned during the period $ 373 $ 316 $ 315
Interest cost on accumulated postretirement benefit 306 313 331
Other components (299) (317) (293)
Net periodic postretirement benefit cos
t
$380 $ 312 $ 353
Year Ended March 31,
(In thousands)
The fiscal 2006 and fiscal 2005 post retirement benefit liability included the following components:
2006 2005
Beginning of year $ 5,376 $ 5,074
Service cost for benefits earned during the period 373 316
Interest cost on accumulated post retirement benefit 306 313
Benefit payments and expense (417) (116)
Actuarial (gain) loss 2,545 (211)
Accumulated postretirement benefit obligation 8,183 5,376
Unrecognized net gain 1,563 4,406
Total post retirement benefit liability $ 9,746 $ 9,782
Year Ended March 31,
(In thousands)
The discount rate assumptions in computing the information above were as follows:
2006 2005 2004
Accumulated postretirement benefit obligation 5.75% 5.75% 6.25%
Year Ended March 31,
(In percentages)
The discount rate represents the expected yield on a portfolio of high grade (AA to AAA rated or equivalent) fixed
income investments with cash flow streams sufficient to satisfy benefit obligations under the plan when due. Fluctuations in
the discount rate assumptions primarily reflect changes in U.S. interest rates. The estimated health care cost inflation rates
used to measure the accumulated post retirement benefit obligation was 5.00% in fiscal 2006, which was projected to
decline annually to an ultimate rate of 4.20% in fiscal 2013.
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