U-Haul 2016 Annual Report Download - page 36

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Net investment income was $12.8 million and $10.6 million for the years ended December 31, 2014
and 2013, respectively. The increase was due to a $0.3 million gain on disposals in 2014, $0.4 million in
real estate rental income and a $1.4 million increase in fixed maturity income due to an increase in
invested assets.
Net operating expenses were $24.8 million and $20.8 million for the years ended December 31, 2014
and 2013, respectively. The increase was primarily due to a $3.7 million increase in commission expense.
Benefits and losses incurred were $11.0 million and $11.5 million for the years ended December 31,
2014 and 2013, respectively.
As a result of the above mentioned changes in revenues and expenses, pretax earnings from
operations were $23.5 million and $19.3 million for the years ended December 31, 2014 and 2013,
respectively.
Life Insurance
2015 Compared with 2014
Net premiums were $162.7 million and $156.1 million for the years ended December 31, 2015 and
2014, respectively. Medicare supplement premiums increased $5.8 million from new sales offset by a
reduction in renewal premiums due to reduction in the in force business on older blocks. Medicare
supplement first year premiums were $16.9 million, an increase of $7.5 million over prior year. Life
premiums increased by $0.8 million primarily as a result of final expense renewals. Annuity deposits,
which are accounted for on the balance sheet as deposits rather than premiums, increased $195.8 million
over prior year. Included in the deposit increase is a $30.0 million deposit relating to a funding agreement
with Federal Home Loan Bank system (“FHLB”).
Net investment income was $64.0 million and $59.1 million for the years ended December 31, 2015
and 2014, respectively. Investment income increased $4.3 million due to a larger invested asset base
while $0.7 million came from realized gains from sales of investments.
Net operating expenses were $23.0 million and $22.5 million for the years ended December 31, 2015
and 2014, respectively. The moderate increase was primarily due to the increased administrative
expenses supporting new sales.
Benefits and losses incurred were $155.1 million and $147.8 million for the years ended December 31,
2015 and 2014, respectively. Medicare supplement benefits increased by $4.6 million primarily as a result
of the increase in incurred benefits from new sales partially offset by a decrease in Medicare supplement
active life reserve from the change in reserve valuation basis. Life insurance benefits increased $2.5
million due to higher mortality exposure while other benefits decreased $1.0 million. Interest credited to
policyholders increased $1.2 million reflecting the increase in annuity deposits.
Amortization of deferred acquisition costs (“DAC”), sales inducement asset (“SIA”) and the value of
business acquired (“VOBA”) was $23.3 million and $19.7 million for the years ended December 31, 2015
and 2014, respectively. The increase over prior year was a result of an increased amortization on annuity
and Medicare Supplement DAC due to the increased DAC asset base. This was partially offset by the
decrease in life amortization due to a prior year DAC balance write off on older blocks.
As a result of the above mentioned changes in revenues and expenses, pretax earnings from
operations were $29.8 million for both years ended December 31, 2015 and 2014.
Life Insurance
2014 Compared with 2013
Net premiums were $156.1 million and $157.9 million for the years ended December 31, 2014 and
2013, respectively. Medicare supplement premiums decreased by $2.4 million due to a reduction in the
in force business offset by new sales. Medicare Supplement first year premiums were $9.4 million, or a
$6.4 million increase above prior year. Other product lines experienced a $0.6 million increase. Annuity
deposits, which are accounted for on our balance sheet as deposits rather than premiums, decreased by
$16.9 million compared with the prior year.
Net investment income was $59.1 million and $54.4 million for the years ended December 31, 2014
and 2013, respectively. Investment income increased $3.8 million due to a larger invested asset base
while approximately $0.8 million came from realized gains.