U-Haul 2009 Annual Report Download - page 65

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AMERCO AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Cash and Cash Equivalents
The Company considers cash equivalents to be highly liquid debt securities with insignificant interest rate risk with
original maturities from the date of purchase of three months or less.
Financial Instruments that potentially subject the Company to concentrations of credit risk consist principally of cash
deposits. Accounts at each United States financial institution are insured by the Federal Deposit Insurance Corporation
(“FDIC”) up to $250,000. Accounts at each Canadian financial institution are insured by the Canada Deposit Insurance
Corporation (“CDIC”) up to $100,000 CAD per account. At March 31, 2009 and March 31, 2008, the Company had
approximately $211.8 million and $190.6 million, respectively, in excess of FDIC and CDIC insured limits. To mitigate
this risk, the Company selects financial institutions based on their credit ratings and financial strength.
Investments
Fixed Maturities. Fixed maturity investments consist of either marketable debt or redeemable preferred stocks. As of the
balance sheet dates, all of the Company’s investments in fixed maturities are classified as available-for-sale. Available-for-
sale investments are reported at fair value, with unrealized gains or losses recorded net of taxes and applicable adjustments
to deferred policy acquisition costs in stockholders’ equity. Fair value for these investments is based on quoted market
prices, dealer quotes or discounted cash flows. The cost of investments sold is based on the specific identification method.
In determining if and when a decline in market value below carrying value is an other-than-temporary impairment,
management makes certain assumptions or judgments in its assessment including but not limited to: ability to hold the
security, quoted market prices, dealer quotes, discounted cash flows, industry factors, financial factors, and issuer specific
information. Other-than-temporary impairments, to the extent of the decline, as well as realized gains or losses on the sale
or exchange of investments are recognized in the current period operating results.
Mortgage Loans and Notes on Real Estate. Mortgage loans and notes on real estate are reported at their unpaid balance,
net of any allowance for possible losses and any unamortized premium or discount.
Recognition of Investment Income. Interest income from bonds and mortgage notes is recognized when earned.
Dividends on common and preferred stocks are recognized on the ex-dividend dates. Realized gains and losses on the sale
or exchange of investments are recognized at the trade date.
Fair Values
Fair values of cash equivalents approximate carrying value due to the short period of time to maturity. Fair values of
short-term investments, investments available-for-sale, long-term investments, mortgage loans and notes on real estate, and
interest rate swap contracts are based on quoted market prices, dealer quotes or discounted cash flows. Fair values of trade
receivables approximate their recorded value.
Limited credit risk exists on trade receivables due to the diversity of our customer base and their dispersion across broad
geographic markets. The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily
of temporary cash investments, trade receivables, reinsurance recoverables and notes receivable. The Company places its
temporary cash investments with financial institutions and limits the amount of credit exposure to any one financial
institution.
The Company has mortgage receivables, which potentially expose the Company to credit risk. The portfolio of notes is
principally collateralized by mini-warehouse storage facilities and commercial properties. The Company has not
experienced losses related to the notes from individual notes or groups of notes in any particular industry or geographic
area. The estimated fair values were determined using the discounted cash flow method and using interest rates currently
offered for similar loans to borrowers with similar credit ratings.
The carrying amount of long-term debt and short-term borrowings are estimated to approximate fair value as the actual
interest rate is consistent with the rate estimated to be currently available for debt of similar term and remaining maturity.
Other investments including short-term investments are substantially current or bear reasonable interest rates. As a
result, the carrying values of these financial instruments approximate fair value.
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