AutoNation 2001 Annual Report Download - page 58

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sold and administered by independent third parties, including the vehicle
manufacturers' captive finance subsidiaries. Pursuant to the Company's
arrangements with these third-party finance and insurance product providers, it
either sells the products on a straight commission basis or it sells the
product, recognizes commission and assumes some or all of the underwriting risk
through reinsurance agreements with its captive insurance subsidiaries. As
disclosed below, the Company has restricted cash and investments primarily in
trust accounts in accordance with the terms and conditions of certain
reinsurance agreements to secure the payments of outstanding losses and loss
adjustment expenses relating to its insurance captives.
53
AUTONATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of restricted assets at December 31 is as follows:
2001 2000
------ ------
Restricted cash............................................. $ 43.7 $160.8
Restricted investments...................................... 156.2 --
------ ------
$199.9 $160.8
====== ======
Restricted investments are classified as available-for-sale and as such are
reflected at fair market value at December 31, 2001 as follows:
GROSS GROSS FAIR
UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
------ ---------- ---------- ------
Government and agency obligations................. $ 73.9 $ .9 $ -- $ 74.8
Corporate debt securities......................... 80.8 .6 -- 81.4
------ ---- ---- ------
$154.7 $1.5 $ -- $156.2
====== ==== ==== ======
At December 31, 2001, aggregate maturities of the Company's highly-liquid
restricted investments are as follows:
COST VALUE
------ ------
Due after one year through 5 years.......................... $140.8 $142.4
Due after 5 years through 10 years.......................... 13.9 13.8
------ ------
$154.7 $156.2
====== ======
Proceeds from sales and related gross realized gains from the sale of
available-for-sale restricted investments were $19.9 million and $.1 million for
2001, respectively.
At December 31, 2001 and 2000, current unearned premiums and loss reserves