U-Haul 2011 Annual Report Download - page 34

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29
Total costs and expenses decreased $81.4 million for fiscal 2010, compared with fiscal 2009. Operating
expenses decreased $35.8 million from improvement in maintenance and repair costs and improved
liability costs associated with the rental equipment fleet. Maintenance and repair was positively influenced
by the retirement of older equipment from the truck fleet. Liability costs have improved as expected losses
from prior years are developing positively. Depreciation expense decreased $37.6 million due to a decline
in the amount of new equipment added to the balance sheet in fiscal 2010 along with an $18.6 million
improvement in the gain on the disposal of rental equipment. Cost of sales decreased $10.3 million
largely from lower propane costs combined with a positive LIFO inventory adjustment.
Equity in the earnings of AMERCO’s insurance subsidiaries decreased $1.4 million for fiscal 2010,
compared with fiscal 2009.
As a result of the above mentioned changes in revenues and expenses, earnings from operations
increased to $185.3 million for fiscal 2010, compared with $112.1 million for fiscal 2009.
Property and Casualty Insurance
2010 Compared with 2009
Net premiums were $30.7 million and $27.6 million for the years ended December 31, 2010 and 2009,
respectively. A portion of Repwest’s premiums are from policies sold in conjunction with U-Haul rental
transactions. As moving transactions have increased this year so have the related premiums.
Net investment income was $8.0 million and $6.8 million for the years ended December 31, 2010 and
2009, respectively. The increase was primarily due to a reallocation of invested assets between short and
long term investment opportunities.
Net operating expenses were $15.8 million and $13.6 million for the years ended December 31, 2010
and 2009, respectively. The increase was due to a $1.1 million payment of prior year excess worker’s
compensation commissions and a $1.1 million increase in underwriting expenses.
Benefits and losses incurred were $17.2 million and $14.6 million for the years ended December 31,
2010 and 2009, respectively. The increase was due to the increase in premiums on the “Safe” product
line of business and the strengthening of reserves on terminated programs. Also contributing to the
increase was a $1.0 million increase in terminated lines offset by a $1.1 million decrease in claims
expenses.
As a result of the above mentioned changes in revenues and expenses, pretax earnings from
operations were $5.6 million and $6.3 million for the years ended December 31, 2010 and 2009,
respectively.
Property and Casualty Insurance
2009 Compared with 2008
Net premiums were $27.6 million and $28.3 million for the years ended December 31, 2009 and 2008,
respectively.
Net investment income was $6.8 million and $9.1 million for years ended December 31, 2009 and 2008,
respectively. The decrease was due to a lower interest rates earned on short-term investments.
Net operating expenses were $13.6 million and $15.9 million for years ended December 31, 2009 and
2008. The decrease was a result of consolidating claims offices which reduced operating expenses by
$1.2 million and a $0.8 million decrease in uncollectible reinsurance written off.
Benefits and losses incurred were $14.6 million and $14.0 million for years ended December 31, 2009
and 2008, respectively.
As a result of the above mentioned change in revenues and expenses, pretax earnings from operations
were $6.3 million and $7.5 million for years ended December 31, 2009 and 2008, respectively.