American Home Shield 2011 Annual Report Download - page 100

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 9. Commitments and Contingencies (Continued)
be approximately $4.1 million in 2012, $2.6 million in 2013, $2.8 million in 2014, $2.0 million in 2015, $0.6 million in 2016 and $0.1 million in 2017
and thereafter.
In the normal course of business, the Company periodically enters into agreements that incorporate indemnification provisions. While the
maximum amount to which the Company may be exposed under such agreements cannot be estimated, the Company does not expect these guarantees
and indemnifications to have a material effect on the Company's business, financial condition, results of operations or cash flows.
The Company carries insurance policies on insurable risks at levels which it believes to be appropriate, including workers' compensation, auto and
general liability risks. The Company purchases insurance policies from third party insurance carriers, which typically incorporate significant deductibles
or self-insured retentions. The Company is responsible for all claims that fall below the retention limits. In determining the Company's accrual for self-
insured claims, the Company uses historical claims experience to establish both the current year accrual and the underlying provision for future losses.
This actuarially determined provision and related accrual includes known claims, as well as incurred but not reported claims. The Company adjusts its
estimate of accrued self-insured claims when required to reflect changes based on factors such as changes in health care costs, accident frequency and
claim severity.
A reconciliation of the beginning and ending accrued self-insured claims, which are included in Accrued liabilities—Self-insured claims and
related expenses and Other long-term obligations, primarily self-insured claims on the Consolidated Statements of Financial Position, is presented as
follows:
(In thousands)
Accrued
Self-insured
Claims
Balance as of December 31, 2009 $ 130,932
Provision for self-insured claims(1) 31,378
Cash payments (40,618)
Balance as of December 31, 2010 $ 121,692
Provision for self-insured claims(1) 26,052
Cash payments (39,662)
Balance as of December 31, 2011 $ 108,082
For the years ending December 31, 2011, 2010 and 2009, provisions for uninsured claims of $1.8 million, $5.7 million and
$6.7 million, respectively, are included in (loss) income from discontinued operations, net of income taxes in the Consolidated
Statements of Operations.
(1)
Accruals for home service contract claims in the American Home Shield business are made based on the Company's claims experience and actuarial
projections. Termite damage claim accruals are recorded based on both the historical rates of claims incurred within a contract year and the cost per claim.
Current activity could differ causing a change in estimates. The Company has certain liabilities with respect to existing or potential claims, lawsuits and other
proceedings. The Company accrues for these liabilities when it is probable that future costs will be incurred and
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