U-Haul 2016 Annual Report Download - page 17

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breaches, detected or undetected by us, for any period of time in any portion of these systems could
adversely affect our results of operations and financial condition, inflict reputational damage and result in
litigation with third parties.
A.M. Best financial strength ratings are crucial to our life insurance business.
In May 2015, A.M. Best affirmed the financial strength rating for Oxford and Christian Fidelity Life
Insurance Company (“CFLIC”) to A- with a stable outlook and affirmed the financial strength rating for
North American Insurance Company (“NAI”) of B++ with a stable outlook. Financial strength ratings are
important external factors that can affect the success of Oxford’s business plans. Accordingly, if Oxford’s
ratings, relative to its competitors, are not maintained or do not continue to improve, Oxford may not be
able to retain and attract business as currently planned, which could adversely affect our results of
operations and financial condition.
We may incur losses due to our reinsurers’ or counterparties’ failure to perform under existing
contracts or we may be unable to secure sufficient reinsurance or hedging protection in the
future.
We use reinsurance and derivative contracts to mitigate our risk of loss in various circumstances;
primarily at Repwest and for Moving and Storage. These agreements do not release us from our primary
obligations and therefore we remain ultimately responsible for these potential costs. We cannot provide
assurance that these reinsurers or counterparties will fulfill their obligations. Their inability or
unwillingness to make payments to us under the terms of the contracts may have a material adverse
effect on our financial condition and results of operations.
At December 31, 2015, Repwest reported $1.7 million of reinsurance recoverables, net of allowances
and $107.3 million of reserves and liabilities ceded to reinsurers. Of this, Repwest’s largest exposure to a
single reinsurer was $60.5 million.
Item 1B. Unresolved Staff Comments
To our knowledge, we have no unresolved staff comments as of March 31, 2016.
Item 2. Properties
The Company, through its legal subsidiaries, owns property, plant and equipment that are utilized in
the manufacturing, repair and rental of U-Haul equipment and storage space, as well as providing office
space for us. Such facilities exist throughout the United States and Canada. We also manage storage
facilities owned by others. We operate approximately 1,700 U-Haul retail centers of which approximately
480 are managed for other owners, and 11 manufacturing and assembly facilities. We also operate over
130 fixed-site repair facilities located throughout the United States and Canada. These facilities are used
primarily for the benefit of Moving and Storage.
Item 3. Legal Proceedings
PODS Enterprises, Inc. v. U-Haul International, Inc.
On July 3, 2012, PODS Enterprises, Inc. (“PEI”), filed a lawsuit against U-Haul International, Inc. (“U-
Haul”), in the United States District Court for the Middle District of Florida, Tampa Division, alleging (1)
Federal Trademark Infringement under Section 32 of the Lanham Act, (2) Federal Unfair Competition
under Section 43(a) of the Lanham Act, (3) Federal Trademark dilution by blurring in violation of Section
43(c) of the Lanham Act, (4) common law trademark infringement under Florida law, (5) violation of the
Florida Dilution; Injury to Business Reputation statute, (6) unfair competition and trade practices, false
advertising and passing off under Florida common law, (7) violation of the Florida Deceptive and Unfair
Trade Practices Act, and (8) unjust enrichment under Florida law.