Thrifty Car Rental 2007 Annual Report Download - page 22

creditworthiness and operating performance of franchisees participating in the fleet leasing programs and
periodically audit franchisees’ leased fleets. For the year ended December 31, 2007, approximately 2%
of the Company’s total revenue was derived from vehicle leasing programs.
U.S. Fleet Data
2007 2006 2005
DTG
Average number of vehicles leased to
franchisees 4,309 8,836 11,230
Average number of vehicles in
combined fleets of franchisees 22,696 29,095 34,277
Average number of vehicles in combined
fleets of company-owned stores 117,488 113,762 107,344
Total 140,184 142,857 141,621
Year Ended December 31,
Competition
There is intense competition in the vehicle rental industry on the basis of price, service levels, vehicle
quality, vehicle availability and the convenience and condition of rental locations. Dollar and Thrifty and
their franchisees operate mainly in the U.S. airport market, relying on leisure, tour and small business
customers. Dollar and Thrifty and their franchisees’ principal competitors are Alamo, Avis, Budget,
Enterprise, Hertz and National.
The Canadian vehicle rental markets are also intensely competitive. Most of the Canadian market is
operated either directly or through franchisees of the major U.S. vehicle rental companies, including
Alamo, Avis, Budget, Enterprise, Hertz and National, as well as Dollar and Thrifty.
Insurance
The Company is subject to third-party bodily injury liability and property damage claims resulting from
accidents involving its rental vehicles. In 2005, the Company retained the risk of loss in various amounts
up to $2.0 million on a per occurrence basis for public liability and property damage claims, plus a self-
insured corridor of $1.0 million per occurrence for losses in excess of $2.0 million with an aggregate limit
of $3.0 million for losses within this corridor. Beginning in March 2006 and continuing in 2007, the
Company retained risk of loss up to $4.0 million per occurrence for public liability and property damage
claims, plus a self-insured corridor of $1.0 million per occurrence for losses in excess of $4.0 million with
an aggregate limit of $7.0 million for losses within this corridor. The Company maintains insurance
coverages at certain amounts in excess of its retained risk. The Company retains the risk of loss on
supplemental liability insurance sold to vehicle rental customers.
In 2005, the Company retained the risk of loss for general and garage liability insurance coverage in
various amounts up to $2.0 million and maintained insurance at certain amounts in excess of $2.0 million.
Beginning in March 2006 and continuing in 2007, the Company retained risk of loss to up to $5.0 million
for general and garage liability. The Company retains the risk of loss for any catastrophic and
comprehensive damage to its vehicles. In addition, the Company carries workers' compensation
coverage with retentions in various amounts up to $500,000. The Company also carries excess liability
and directors' and officers' liability insurance coverage.
Provisions for bodily injury liability and property damage liability on self-insured claims and for
supplemental liability insurance claims (collectively referred to as “Vehicle Insurance Reserves”) are
made by charges to expense based upon periodic actuarial evaluations of estimated ultimate liabilities on
reported and unreported claims. As of December 31, 2007, the Company’s reserve for Vehicle Insurance
Reserves was approximately $110.0 million. The Company’s obligations to pay insurance related losses
and indemnify the insurance carriers for fronted policies are collateralized by surety bonds and letters of
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