U-Haul 2004 Annual Report Download - page 30

$3.8 million from 2001 due to the termination of major medical programs. Annuity and life beneÑts decreased
$3.6 million from 2002 and $1.3 million from 2001 due to decreases in life insurance exposure.
Amortization of deferred policy acquisition costs (DAC) and the value of business acquired
(VOBA) was $25.0 million, $20.5 million, and $18.6 million for 2003, 2002, and 2001, respectively. These
costs are amortized for life and health policies as the premium is earned over the term of the policy; and for
deferred annuities, amortized in relation to interest spreads. Amortization associated with annuity policies
increased $6.4 million from 2002 and $7.5 million from 2001 primarily due to increased surrender activity.
Other segments decreased $1.9 million from 2002 to 2003, and $1.1 million from 2001 to 2003 due to
decreased new business volume.
Operating expenses were $27.1 million, $40.5 million, and $37.5 million for the years ended Decem-
ber 31, 2003, 2002, and 2001, respectively. Commissions have decreased $4.1 million from 2002 and
$3.1 million from 2001 primarily due to decreases in new business. Fee income from surrendered annuity
policies is netted into this category. Surrender charge income increased $5.0 million from 2002 and
$5.2 million from 2001. General and administrative expenses net of fees collected decreased $4.3 million from
2002 to 2003 and $2.1 million from 2001 to 2003.
Earnings/(losses) from operations were $11.3 million, $(1.4) million, and $5.6 million for the years
ending December 31, 2003, 2002 and 2001, respectively. The increase from 2002 and 2001 is due primarily to
fewer other than temporary declines in the investment portfolio and improved loss ratios in the Medicare
supplement segment.
Republic Western Insurance Company
The following table sets forth certain revenue and statements of operations data for the periods indicated:
December 31,
2003 2002 2001
PremiumsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 93,242 $152,618 $261,975
Net investment income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 21,699 22,318 20,651
Total revenueÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 114,941 174,936 282,626
BeneÑts and losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 109,362 128,680 255,756
Amortization of deferred policy acquisition costs ÏÏÏÏÏÏÏÏÏÏÏ 14,126 17,281 22,091
Operating expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 27,403 36,958 77,210
Total expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 150,891 182,919 355,057
Loss from operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (35,950) (7,983) (72,431)
Income tax beneÑt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12,508 2,612 23,736
Net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(23,442) $ (5,371) $(48,695)
Premium revenues, before intercompany eliminations, were $93.2 million, $152.6 million, and
$262.0 million for the years ended December 31, 2003, 2002, and 2001, respectively. Cancelled agency
premiums were $65.6 million, $86.8 million, and $146.5 million for the years ended December 31, 2003, 2002,
and 2001, respectively. The decreases from 2002 and 2001 are the result of the Company's shift in its
operating focus away from non aÇliated and unproÑtable lines of business. Assumed treaty reinsurance
premiums were $1.7 million, $31.0 million, and $69.1 million for the year ended December 31, 2003, 2002 and
2001, respectively. The decreases in both years are due to the cancellation and non renewal of all assumed
treaty business. Rental industry revenues were $25.9 million, $34.8 million, and $46.3 million for the years
ended December 31, 2003, 2002, and 2001, respectively. These decreases are due to the change in structure of
the U-Haul business to deductible/self-insured arrangements.
Net investment income was $21.7 million, $22.3 million, and $20.7 million for the twelve months ended
December 31, 2003 2002 and 2001 respectively.
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