AMERCO /NV/ – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations
We begin this MD&A with the overall strategy of
description of, and strategy related to, our operating segments to give the
reader an overview of the goals of our businesses and the direction in which our
businesses and products are moving. We then discuss our critical accounting
policies and estimates that we believe are important to understanding the
assumptions and judgments incorporated in our reported financial results. Next,
we discuss our results of operations for fiscal 2022 compared with fiscal 2021,
which are followed by an analysis of liquidity changes in our balance sheets and
cash flows, and a discussion of our financial commitments in the sections
entitled Liquidity and Capital Resources and Disclosures about Contractual
Obligations and Commercial Commitments. The discussion of our financial
condition and results of operations for the year ended
in Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations in our Annual Report on Form 10-K for the year ended
31, 2021
discussing our outlook for fiscal 2023.
This MD&A should be read in conjunction with the other sections of this Annual
Report, including Item 1: Business and Item 8: Financial Statements and
Supplementary Data. The various sections of this MD&A contain a number of
forward-looking statements, as discussed under the caption, Cautionary
Statements Regarding Forward-Looking Statements, all of which are based on our
current expectations and could be affected by the uncertainties and risk factors
described throughout this Annual Report and particularly under the section Item
1A: Risk Factors. Our actual results may differ materially from these
forward-looking statements.
referenced. Our insurance company subsidiaries have fiscal years that end on the
31 st of December for each year that is referenced. They have been consolidated
on that basis. Our insurance companies' financial reporting processes conform to
calendar year reporting as required by state insurance departments. Management
believes that consolidating their calendar year into our fiscal year financial
statements does not materially affect the presentation of financial position or
results of operations. We disclose all material events, if any, occurring during
the intervening period. Consequently, all references to our insurance
subsidiaries' years 2021, 2020 and 2019 correspond to fiscal 2022, 2021 and 2020
for
Overall Strategy
Our overall strategy is to maintain our leadership position in the North
American "do-it-yourself" moving and storage industry. We accomplish this by
providing a seamless and integrated supply chain to the "do-it-yourself" moving
and storage market. As part of executing this strategy, we leverage the brand
recognition of
products and services and the convenience of our broad geographic presence.
Our primary focus is to provide our customers with a wide selection of moving
rental equipment, convenient self-storage rental facilities and portable moving
and storage units and related moving and self-storage products and services. We
are able to expand our distribution and improve customer service by increasing
the amount of moving equipment and storage units and portable moving and storage
units available for rent, expanding the number of independent dealers in our
network and expanding and taking advantage of our Storage Affiliate and Moving
Help capabilities.
property and casualty insurance to
dealers and affiliates.
Life Insurance is focused on long-term capital growth through direct writing and
reinsuring of life, Medicare supplement and annuity products in the senior
marketplace.
Description of Operating Segments
º Moving and Storage, comprised ofAMERCO ,U-Haul , and Real Estate and the subsidiaries ofU-Haul and Real Estate; ºProperty and Casualty Insurance , comprised of Repwest and its subsidiaries andARCOA ; and º Life Insurance, comprised of Oxford and its subsidiaries. 16
See Note 1, Basis of Presentation, Note 21, Financial Information by Geographic
Area, and Note 21A, Consolidating Financial Information by Industry Segment, of
the Notes to Consolidated Financial Statements included in Item 8: Financial
Statements and Supplementary Data, of this Annual Report.
Moving and Storage Operating Segment
Moving and Storage consists of the rental of trucks, trailers, portable moving
and storage units, specialty rental items and self-storage spaces primarily to
the household mover as well as sales of moving supplies, towing accessories and
propane. Operations are conducted under the registered trade name
throughout
With respect to our truck, trailer, specialty rental items and self-storage
rental business, we are focused on expanding our dealer network, which provides
added convenience for our customers and expanding the selection and availability
of rental equipment to satisfy the needs of our customers.
and tape allow our customers to, among other things, protect their belongings
from potential damage during the moving process. We are committed to providing a
complete line of products selected with the "do-it-yourself" moving and storage
customer in mind.
uhaul.com ® is an online marketplace that connects consumers to our operations
as well as independent Moving Help ® service providers and thousands of
independent Self-Storage Affiliates. Our network of customer-rated affiliates
and service providers furnish pack and load help, cleaning help, self-storage
and similar services throughout
further utilize our web-based technology platform to increase service to
consumers and businesses in the moving and storage market.
Self-checkout for moving supplies provide our customers methods for conducting
business with us directly via their mobile devices and also limiting physical
exposure.
Since 1945,
operations. We believe that our basic business premise of equipment sharing
helps reduce greenhouse gas emissions and reduces the inventory of total large
capacity vehicles. We continue to look for ways to reduce waste within our
business and are dedicated to manufacturing reusable components and recyclable
products. We believe that our commitment to sustainability, through our products
and services and everyday operations has helped us to reduce our impact on the
environment.
Property and Casualty Insurance Operating Segment
Casualty Insurance
Safemove Plus ® , Safestor ® and Safestor Mobile ® protection packages to
® customers. We continue to focus on increasing the penetration of these
products into the moving and storage market. The business plan for
Casualty Insurance
Life Insurance Operating Segment
Life Insurance provides life and health insurance products primarily to the
senior market through the direct writing and reinsuring of life insurance,
Medicare supplement and annuity policies.
Critical Accounting Policies and Estimates
Our financial statements have been prepared in accordance with the generally
accepted accounting principles ("GAAP") in
estimates and judgments we use in applying our accounting policies can have a
significant impact on the results we report in our financial statements. Note 3,
Accounting Policies, of the Notes to Consolidated Financial Statements in Item
8: Financial Statements and Supplementary Data, in this Annual Report summarizes
the significant accounting policies and methods used in the preparation of our
consolidated financial statements and related disclosures. Certain accounting
policies require us to make difficult and subjective judgments and assumptions,
often as a result of the need to estimate matters that are inherently uncertain.
17
Following is a detailed description of the accounting policies that we deem most
critical to us and that require management's most difficult and subjective
judgments. These estimates are based on historical experience, observance of
trends in particular areas, information and valuations available from outside
sources and on various other assumptions that are believed to be reasonable
under the circumstances and which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from
other sources. Actual amounts may differ from these estimates under different
assumptions and conditions, and such differences may be material.
We also have other policies that we consider key accounting policies, such as
revenue recognition; however, these policies do not meet the definition of
critical accounting estimates, because they do not generally require us to make
estimates or judgments that are difficult or subjective. The accounting policies
that we deem most critical to us, and involve the most difficult, subjective or
complex judgments include the following:
Recoverability of Property, Plant and Equipment
Our property, plant and equipment is stated at cost. We regularly perform
reviews to determine whether facts and circumstances exist, which indicate that
the carrying amount of assets, including estimates of residual value, may not be
recoverable or that the useful life of assets are shorter or longer than
originally estimated. Reductions in residual values (i.e., the price at which we
ultimately expect to dispose of revenue earning equipment) or useful lives will
result in an increase in depreciation expense over the remaining life of the
equipment. Reviews are performed based on vehicle class, generally subcategories
of trucks and trailers. We assess the recoverability of our assets by comparing
the projected undiscounted net cash flows associated with the related asset or
group of assets over their estimated remaining lives against their respective
carrying amounts. We consider factors such as current and expected future market
price trends on used vehicles and the expected life of vehicles included in the
fleet. Impairment, if any, is based on the excess of the carrying amount over
the fair value of those assets. If asset residual values are determined to be
recoverable, but the useful lives are shorter or longer than originally
estimated, then the net book value of the assets is depreciated over the newly
determined remaining useful lives.
Insurance Reserves
Liabilities for future policy benefits related to life insurance, Medicare
supplement insurance, and deferred annuities are determined by management
utilizing the net premium valuation methodology and are accrued when premium
revenue is recognized. The liability, which represents the present value of
future benefits to be paid to policyholders and related expenses less the
present value of future net premiums, is estimated using assumptions applicable
at the time the insurance contracts are written, with provisions for the risk of
adverse deviation, as appropriate. Assumptions include expected mortality and
morbidity experience, policy lapses and surrenders, current asset yields and
expenses, and expected interest rate yields. The Company periodically performs a
gross premium valuation and reviews original assumptions, including capitalized
expenses which reduce the gross premium valuation, to evaluate whether the
assets and liabilities are adequate and whether a loss reserve should be
recognized.
Insurance reserves for
account losses incurred based upon actuarial estimates and are management's best
approximation of future payments. These estimates are based upon past claims
experience and current claim trends as well as social and economic conditions
such as changes in legal theories and inflation. These reserves consist of
case reserves for reported losses and a provision for IBNR losses, both reduced
by applicable reinsurance recoverables, resulting in a net liability.
Due to the nature of the underlying risks and high degree of uncertainty
associated with the determination of the liability for future policy benefits
and claims, the amounts to be ultimately paid to settle these liabilities cannot
be precisely determined and may vary significantly from the estimated liability,
especially for long-tailed casualty lines of business such as excess workers'
compensation. As a result of the long-tailed nature of the excess workers'
compensation policies written by Repwest from 1983 through 2001, it may take a
number of years for claims to be fully reported and finally settled.
On a regular basis, insurance reserve adequacy is reviewed by management to
determine if existing assumptions need to be updated. In determining the
assumptions for calculating workers' compensation reserves, management considers
multiple factors including the following:
º Claimant longevity,
18
º Cost trends associated with claimant treatments,
º Changes in ceding entity and third party administrator reporting practices,
º Changes in environmental factors including legal and regulatory,
º Current conditions affecting claim settlements, and
º Future economic conditions including inflation.
We have reserved each claim based upon the accumulation of current claim costs
projected through each claimant's life expectancy, and then adjusted for
applicable reinsurance arrangements. Management reviews each claim bi-annually
or more frequently, if there are changes in facts or circumstances to determine
if the estimated life-time claim costs have increased and then adjusts the
reserve estimate accordingly at that time. We have factored in an estimate of
what the potential cost increases could be in our IBNR liability. We have not
assumed settlement of the existing claims in calculating the reserve amount,
unless it is in the final stages of completion.
Continued increases in claim costs, including medical inflation and new
treatments and medications could lead to future adverse development resulting in
additional reserve strengthening. Conversely, settlement of existing claims or
if injured workers return to work or expire prematurely, could lead to future
positive development.
Impairment of Investments
Under the current expected credit loss model, a valuation allowance is
recognized in earnings for credit losses. If we intend to sell a debt security,
or it is more likely than not that we will be required to sell the security
before recovery of its amortized cost basis, the debt security is written down
to its fair value and the write down is charged against the allowance for credit
losses, with any incremental impairment reported in earnings. Reversals of the
allowance for credit losses are permitted and should not exceed the allowance
amount initially recognized.
There were no incremental impairment charges recorded during the fiscal year
ended
Income Taxes
We file a consolidated tax return with all of our legal subsidiaries.
Our tax returns are periodically reviewed by various taxing authorities. The
final outcome of these audits may cause changes that could materially impact our
financial results. Please see Note 13, Provision for Taxes, of the Notes to
Consolidated Financial Statements included in Item 8: Financial Statements and
Supplementary Data, of this Annual Report for more information.
Recent Accounting Pronouncements
Please see Note 3, Accounting Policies, of the Notes to Consolidated Financial
Statements included in Item 8: Financial Statements and Supplementary Data, of
this Annual Report for more information.
19
Results of Operations
Fiscal 2022 Compared with Fiscal 2021
Listed below, on a consolidated basis, are revenues for our major product lines
for fiscal 2022 and fiscal 2021:
Year Ended March 31,
2022 2021
(In thousands)
Self-moving equipment rentals $ 3,958,807 $ 3,083,317
Self-storage revenues 617,120 477,262
Self-moving and self-storage products and service sales 351,447 344,929
Property management fees
35,194 31,603 Life insurance premiums 111,027 121,609 Property and casualty insurance premiums 86,518 68,779 Net investment and interest income 148,261 122,938 Other revenue 431,373 291,548 Consolidated revenue$ 5,739,747 $ 4,541,985
Self-moving equipment rental revenues increased
2022, compared with fiscal 2021. The revenue improvement was in both the
In-town and one-way markets and primarily came from increased transactions along
with average revenue per transaction. These improvements were spread across
trucks, trailer and towing devices. Compared to the same period last year, we
increased the number of retail locations and independent dealers.
Self-storage revenues increased
fiscal 2021. The average monthly number of occupied units increased by 25%, or
95,000 units during fiscal 2022 compared with the same period last year. The
growth in revenues and units rented comes from a combination of occupancy gains
at existing locations, the addition of new capacity to the portfolio and from an
improvement in average revenue per occupied foot. During fiscal 2022, we added
approximately 4.6 million net rentable square feet, a 10% increase, with
approximately 1.5 million of that occurring during the fourth quarter of fiscal
2022.
Sales of self-moving and self-storage products and services increased
million
increased sales of moving supplies and propane offset by decreases in hitch
sales.
Life insurance premiums decreased
with fiscal 2021 primarily due to decreased Medicare supplement premiums.
Property and casualty insurance premiums increased
2022, compared with fiscal 2021. A significant portion of Repwest's premiums are
from policies sold in conjunction with
increase corresponded with the increased moving and storage transactions at
Net investment and interest income increased
compared with fiscal 2021. Changes in the market value of unaffiliated common
stocks held at our
million
loans increased
insurance subsidiary. In addition, the change in the provision for expected
credit losses resulted in a
Storage accounted for
interest rates on short-term deposits.
Other revenue increased
2021, caused primarily by growth in our U-Box® program.
20
Listed below are revenues and earnings from operations at each of our operating
segments for fiscal 2022 and 2021. The insurance companies' years ended December
31, 2021 and 2020.
Year Ended March 31,
2022 2021
(In thousands)
Moving and storage
Revenues $ 5,398,267 $ 4,231,674
Earnings from operations before equity in earnings of
subsidiaries
1,577,226 906,863 Property and casualty insurance Revenues 115,043 86,737 Earnings from operations 49,780 32,498 Life insurance Revenues 238,812 232,634 Earnings from operations 19,538 22,876 Eliminations Revenues (12,375) (9,060) Earnings from operations before equity in earnings of subsidiaries (1,547) (1,090) Consolidated Results Revenues 5,739,747 4,541,985 Earnings from operations 1,644,997 961,147
Total costs and expenses increased
with fiscal 2021. Operating expenses for Moving and Storage increased
million
payment processing fees and freight costs associated with U-Box. Repair costs
associated with the rental fleet experienced a
fiscal 2022 due to preventative maintenance from higher customer activity
combined with a slowdown in the rotation of new equipment into the fleet and
older equipment out of the fleet. The addition of new equipment has been
affected by delays at our original equipment manufacturers. Net gains from the
disposal of rental equipment increased
values. Depreciation expense associated with our rental fleet increased
million
from buildings and improvements, increased
Gains on the disposal of real estate increased
As a result of the above-mentioned changes in revenues and expenses, earnings
from operations increased to
Interest expense for fiscal 2022 was
million
million
lower interest rates on the debt added in fiscal 2022 compared with fiscal 2021.
Income tax expense was
million
Statements included in Item 8: Financial Statements and Supplementary Data, of
this Annual Report for more information on income taxes.
21
Moving and Storage
Fiscal 2022 Compared with Fiscal 2021
Listed below are revenues for the major product lines at Moving and Storage for
fiscal 2022 and fiscal 2021:
Year Ended March 31,
2022 2021
(In thousands)
Self-moving equipment rentals $ 3,963,535 $ 3,086,824
Self-storage revenues 617,120 477,262
Self-moving and self-storage products and service sales 351,447 344,929
Property management fees
35,194 31,603 Net investment and interest income 3,135 2,259 Other revenue 427,836 288,797 Moving and Storage revenue$ 5,398,267 $ 4,231,674
Self-moving equipment rental revenues increased
2022, compared with fiscal 2021 . The revenue improvement was in both the
In-town and one-way markets and primarily came from increased transactions along
with average revenue per transaction. These improvements were spread across
trucks, trailer and towing devices. Compared to the same period last year, we
increased the number of retail locations and independent dealers.
Self-storage revenues increased
fiscal 2021. The average monthly number of occupied units increased by 25%, or
95,000 units during fiscal 2022 compared with the same period last year. The
growth in revenues and units rented comes from a combination of occupancy gains
at existing locations, the addition of new capacity to the portfolio and from an
improvement in average revenue per occupied foot.
The Company owns and manages self-storage facilities. Self-storage revenues
reported in the consolidated financial statements represent Company-owned
locations only. Self-storage data for our owned storage locations follows:
Year Ended March 31,
2022 2021
(In thousands, except occupancy rate)
Unit count as of March 31 601 539
Square footage as of March 31 50,366 45,746
Average monthly number of units occupied 471 376
Average monthly occupancy rate based on
unit count 82.6% 71.8%
Average monthly square footage occupied 41,379 33,700
During fiscal 2022, we added approximately 4.6 million net rentable square feet,
a 10% increase, with approximately 1.5 million of that occurring during the
fourth quarter of fiscal 2022. This was a mix of existing storage locations we
acquired and new development.
Sales of self-moving and self-storage products and services increased
million
increased sales of moving supplies and propane offset by decreases in hitch
sales.
Other revenue increased
2021, caused primarily by growth in our U-Box® program.
22
Total costs and expenses increased
with fiscal 2021. Operating expenses for Moving and Storage increased
million
payment processing fees and freight costs associated with U-Box. Repair costs
associated with the rental fleet experienced a
fiscal 2022 due to preventative maintenance from higher customer activity
combined with a slowdown in the rotation of new equipment into the fleet and
older equipment out of the fleet. The addition of new equipment has been
affected by delays at our original equipment manufacturers. Net gains from the
disposal of rental equipment increased
values. Depreciation expense associated with our rental fleet increased
million
from buildings and improvements, increased
Gains on the disposal of real estate increased
2021 Compared with 2020
Net premiums were
31, 2021
from policies sold in conjunction with
growth corresponded with the increased moving and storage transactions at
Net investment and interest income were
years ended
change in net investment income was the increase in valuation of unaffiliated
common stock of
Net operating expenses were
commissions offset by an increase in loss adjusting fees and subrogation income.
Benefits and losses expenses were
ended
result of an increase in premiums.
Life Insurance
2021 Compared with 2020
Net premiums were
31, 2021
million
premiums decreased
life products offset by the increased final expense renewal premiums. Premiums
on the remaining lines of business increased
deposits were
accounted for on the balance sheet as deposits rather than premiums. The
decrease in deferred annuity deposits is a result of highly competitive rates
and exceptionally high sales in the prior year.
Net investment and interest income was
years ended
fixed maturities and mortgage loans increased
assets base. Net gain of
to fixed indexed annuities. In addition, the change in the provision for
expected credit losses resulted in a
income. This was partially offset by a
gains and a
Net operating expenses were
increase in administrative expenses offset by the decreased commissions on
Medicare supplement and single premium life due to declined premiums.
Benefits and losses expenses were
years ended
policyholders increased
due to sales. Benefits on annuity products increased
increase in supplementary contracts payouts. This was offset by
decrease in Medicare supplement benefits from the declined policies in force and
a small
23
Amortization of deferred acquisition costs ("DAC"), sales inducement asset
("SIA") and the value of business acquired ("VOBA") was
million
million
base supported by sales and additional amortization related to realized gains.
DAC amortization on life policies increased by
lapses and increased death benefits on final expense. This was partially offset
by a
decline in the in-force.
Liquidity and Capital Resources
We believe our current capital structure is a positive factor that will enable
us to pursue our operational plans and goals and provide us with sufficient
liquidity for the foreseeable future. There are many factors which could affect
our liquidity, including some which are beyond our control, and there is no
assurance that future cash flows and liquidity resources will be sufficient to
meet our outstanding debt obligations and our other future capital needs.
As of
compared with
subsidiaries are generally unavailable to fulfill the obligations of
non-insurance operations (
(or as otherwise indicated), cash and cash equivalents, other financial assets
(receivables, short-term investments, other investments, fixed maturities, and
related party assets) and debt obligations of each operating segment were:
Moving & Property and Casualty Life Insurance
Storage Insurance (a) (a)
(In thousands)
Cash and cash
equivalents $ 2,643,213 $ 10,800 $ 50,124
Other financial assets 228,159 468,705 3,057,868
Debt obligations 6,022,497 - -
(a) As of December 31,
2021
As of
existing credit facilities of
the Moving and Storage segment is held in government money market funds. The
largest component of the increase in the Company's debt obligations in fiscal
2022 was the result of us entering into
placement loans with final payment dates ranging between 2029 and 2035. Our
current forecasted debt payments for fiscal 2023 on all borrowings are
million
Note 8, Borrowings, of the Notes to Consolidated Financial Statements.
A summary of our consolidated cash flows for fiscal 2022, 2021 and 2020 is shown
in the table below:
Years Ended March 31,
2022 2021 2020
(In thousands)
Net cash provided by operating activities
Net cash used by investing activities (1,867,176) (1,129,529) (1,766,649)
Net cash provided by financing activities 1,433,155 287,353 512,320
Effects of exchange rate on cash
(2,089) 6,441 (533)
Net increase (decrease) in cash flow 1,510,125 699,660 (179,349)
Cash at the beginning of the period
1,194,012 494,352 673,701 Cash at the end of the period$ 2,704,137 $ 1,194,012 $ 494,352
Net cash provided by operating activities increased
2022, compared with fiscal 2021. The improvement in operating cashflows was
primarily due to increased revenue and profitability, a decrease in interest
paid of
payments, offset by increases in cash used for inventory and parts of
million
24
Net cash used in investing activities increased
compared with fiscal 2021. Purchases of property, plant and equipment increased
anticipated due to delays in receiving new equipment from manufacturers;
however, the level of reinvestment in the rental fleet has increased in
comparison with fiscal 2021. We have also increased our investment in new
self-storage acquisitions and development during fiscal 2022. Cash from the
sales of property, plant and equipment increased
fleet sales. For our insurance subsidiaries, net cash used in investing
activities increased
Net cash provided by financing activities increased
2022, compared with fiscal 2021. This was due to a combination of decreased debt
payments of
increase in cash from borrowings of
deposits from Life Insurance of
dividends paid of
Liquidity and Capital Resources and Requirements of Our Operating Segments
Moving and Storage
To meet the needs of our customers,
equipment. Capital expenditures have primarily consisted of new rental equipment
acquisitions and the buyouts of existing fleet from leases. The capital to fund
these expenditures has historically been obtained internally from operations and
the sale of used equipment and externally from debt and lease financing. In the
future, we anticipate that our internally generated funds will be used to
service the existing debt and fund operations.
fiscal 2023 the Company will reinvest in its truck and trailer rental fleet
approximately
buyouts. For fiscal 2022, the Company invested, net of sales, approximately
million
investments in fiscal 2023 and beyond will be dependent upon several factors
including the availability of capital, the truck rental environment, the
availability of equipment from manufacturers and the used-truck sales market. We
anticipate that the fiscal 2023 investments will be funded largely through debt
financing, external lease financing and cash from operations. Management
considers several factors including cost and tax consequences when selecting a
method to fund capital expenditures. Our allocation between debt and lease
financing can change from year to year based upon financial market conditions
which may alter the cost or availability of financing options.
The Company has traditionally financed the acquisition of self-storage
properties to support
operations. The Company's plan for the expansion of owned storage properties
includes the acquisition of existing self-storage locations from third parties,
the acquisition and development of bare land, and the acquisition and
redevelopment of existing buildings not currently used for self-storage. The
Company expects to fund these development projects through a combination of
internally generated funds, corporate debt and with borrowings against existing
properties as they operationally mature. For fiscal 2022, the Company invested
and repair compared to
timing of new projects will be dependent upon several factors, including the
entitlement process, availability of capital, weather, the identification and
successful acquisition of target properties and the availability of labor and
materials. We are likely to increase real estate capital expenditures in fiscal
2023.
U-Haul Storage Affiliate program, which does not require significant capital.
25
Net capital expenditures (purchases of property, plant and equipment less
proceeds from the sale of property, plant and equipment and lease proceeds) were
$1,513.3 million , $904.0 million and $1,622.0 million for fiscal 2022, 2021 and
2020, respectively. The components of our net capital expenditures are provided
in the following table:
Years Ended March 31,
2022 2021 2020
(In thousands)
Purchases of rental equipment $ 1,061,439 $ 870,106 $ 1,374,141
Equipment lease buyouts - 11,477 63,973
Purchases of real estate, construction and
renovations 1,004,192 505,112 751,395
Other capital expenditures 70,906 54,780 119,897
Gross capital expenditures 2,136,537 1,441,475 2,309,406
Less: Sales of property, plant and equipment (623,235) (537,484) (687,375)
Net capital expenditures
$ 1,513,302 $ 903,991 $ 1,622,031
Moving and Storage continues to hold significant cash and we believe has access
to additional liquidity. Management may invest these funds in our existing
operations, expand our product lines or pursue external opportunities in the
self-moving and storage marketplace, pay dividends or reduce existing
indebtedness where possible.
State insurance regulations may restrict the amount of dividends that can be
paid to stockholders of insurance companies. As a result,
Insurance's
or its legal subsidiaries. For calendar year 2022, the ordinary dividend
available to be paid to
see Note 20, Statutory Financial Information of Insurance Subsidiaries, of the
Notes to Consolidated Financial Statements included in Part II, Item 8 of this
Annual Report. We believe that stockholders' equity at the Property and Casualty
operating segment remains sufficient and we do not believe that its ability to
pay ordinary dividends to
Our Property and Casualty operating segment stockholders' equity was
million
2019, respectively. The increase in 2021 compared with 2020 resulted from net
earnings of
income of
equity issues to increase capital and therefore has no direct exposure to
capital market conditions other than through its investment portfolio.
Life Insurance
Life Insurance manages its financial assets to meet policyholder and other
obligations including investment contract withdrawals and deposits. Life
Insurance's net deposits for the year ended
million
can be paid to stockholders of insurance companies. As a result, Life
Insurance's assets are generally not available to satisfy the claims of AMERCO®
or its legal subsidiaries. For calendar year 2022, the ordinary dividend
available to be paid to
see Note 20, Statutory Financial Information of Insurance Subsidiaries, of the
Notes to Consolidated Financial Statements included in Part II, Item 8 of this
Annual Report.
26
Our Life Insurance operating segment stockholders' equity was
respectively. The decrease in 2021 compared with 2020 resulted from earnings of
million
maturity portion of the investment portfolio. Life Insurance has not
historically used debt or equity issues to increase capital and therefore has
not had any significant direct exposure to capital market conditions other than
through its investment portfolio. However, as of
outstanding advances of
Loan Bank
Note 8, Borrowings, of the Notes to Consolidated Financial Statements.
Cash Provided from Operating Activities by Operating Segments
Moving and Storage
Net cash provided by operating activities was
and
in operating cashflows was primarily due to increased revenue and profitability,
a decrease in interest paid of
taxes received, net of payments, offset by increases in cash used for inventory
and parts of
Net cash provided by operating activities was
respectively. The increase was the result of changes in intercompany balances
and the timing of payables activity.
investment portfolios amounted to
million
reflect funds in transition from maturity proceeds to long-term investments.
Management believes this level of liquid assets, combined with budgeted cash
flow, is adequate to meet foreseeable cash needs. Capital and operating budgets
allow
investment and underwriting proceeds.
Life Insurance
Net cash provided (used) by operating activities was
million
respectively. The increase in operating cash flows was primarily due to timing
of settlement of payables and receivables and an increase in collected
investment income offset by the reduced collected premiums.
In addition to cash flows from operating activities and financing activities, a
substantial amount of liquid funds are available through Life Insurance's
short-term portfolio and its membership in the FHLB. As of
2020 and 2019, cash and cash equivalents and short-term investments amounted to
believes that the overall sources of liquidity are adequate to meet foreseeable
cash needs.
Liquidity and Capital Resources - Summary
We believe we have the financial resources needed to meet our business plans
including our working capital needs. We continue to hold significant cash and
have access to additional liquidity to meet our anticipated capital expenditure
requirements for investment in our rental fleet, rental equipment and storage
acquisitions and build outs.
As a result of the federal income tax provisions of the CARES Act, we have filed
applicable forms with the
claims total approximately
amounts are expected to provide us additional liquidity whenever received. It is
possible future legislation could negatively impact our ability to receive these
tax refunds.
27
Our borrowing strategy has primarily focused on asset-backed financing and
rental equipment leases. As part of this strategy, we seek to ladder maturities
and fix interest rates. While each of these loans typically contains provisions
governing the amount that can be borrowed in relation to specific assets, the
overall structure is flexible with no limits on overall Company borrowings.
Management believes it has adequate liquidity between cash and cash equivalents
and unused borrowing capacity in existing credit facilities to meet the current
and expected needs of the Company over the next several years. As of
2022
could alter the ability of the financial institutions to lend us the unused
lines of credit. We believe that there are additional opportunities for
leverage in our existing capital structure. For a more detailed discussion of
our long-term debt and borrowing capacity, please see Note 8, Borrowings, of the
Notes to Consolidated Financial Statements included in Item 8: Financial
Statements and Supplementary Data, of this Annual Report.
Historically, we used certain off-balance sheet arrangements in connection with
the expansion of our self-storage business. For more information please see Note
19, Related Party Transactions, of the Notes to Consolidated Financial
Statements included in Item 8: Financial Statements and Supplementary Data, of
this Annual Report. These arrangements were primarily used when our overall
borrowing structure was more limited. We do not face similar limitations
currently and off-balance sheet arrangements have not been utilized in our
self-storage expansion in recent years. In the future, we will continue to
identify and consider off-balance sheet opportunities to the extent such
arrangements would be economically advantageous to us and our stockholders.
Contractual Obligations and Commercial Commitments
For contractual obligations for material cash requirements from known
contractual and other obligations as part of liquidity and capital resources
discussion, please see Notes 8, 9, 10, 16, 17 and 18 of the Notes to
Consolidated Financial Statements. The following table provides additional
detail for contractual commitments and contingencies as of
Payment due by Period (as of March 31, 2022)
Contractual 04/01/22 - 04/01/23 - 04/01/25 -
Obligations Total 03/31/23 03/31/25 03/31/27 Thereafter
(In thousands)
Notes and loans
payable - Principal $ 3,667,384 $ 177,890 480,307 $ 591,213 $ 2,417,974
Notes and loans
payable - Interest 1,314,997 161,579 294,759 257,838 600,821
Revolving credit
agreements -
Principal 1,095,000 - 878,889 216,111 -
Revolving credit
agreements - Interest 38,638 16,308 20,554 1,776 -
Finance leases -
Principal 347,393 122,350 179,213 45,830 -
Finance leases -
Interest 23,309 11,227 10,848 1,234 -
Finance liability -
Principal 949,936 178,714 297,873 276,934 196,415
Finance liability -
Interest 91,971 26,368 38,204 20,843 6,556
Operating lease
liabilities 122,415 23,311 32,533 7,223 59,348
Property and casualty
obligations (a) 111,768 19,212 20,473 6,675 65,408
Life, health and
annuity obligations
(b) 3,966,709 584,069 804,639 572,699 2,005,302
Self-insurance
accruals (c) 418,890 130,973 165,177 72,421 50,319
Post-retirement
benefit liability 20,870 1,369 3,269 4,120 12,112
Total contractual
obligations $ 12,169,280 $ 1,453,370 $ 3,226,738 $ 2,074,917 $ 5,414,255
(a) These estimated obligations for unpaid losses and loss adjustment expenses
include case reserves for reported claims and estimates of claims incurred but
not reported ("IBNR") claims estimates and are net of expected reinsurance
recoveries. The ultimate amount to settle both the case reserves and IBNR is an
estimate based upon historical experience and current trends and such estimates
could materially differ from actual results. The assumptions do not include
future premiums. Due to the significant assumptions employed in this model, the
amounts shown could materially differ from actual results.
(b) These estimated obligations are based on mortality, morbidity, withdrawal
and lapse assumptions drawn from our historical experience and adjusted for any
known trends. These obligations include expected interest crediting but no
amounts for future annuity deposits or premiums for life and Medicare supplement
policies. The cash flows shown above are undiscounted for interest and as a
result total outflows for all years shown significantly exceed the corresponding
liabilities of
their invested asset portfolio. Due to the significant assumptions employed in
this model, the amounts shown could materially differ from actual results.
(c) These estimated obligations are primarily the Company's self insurance
accruals for portions of the liability coverage for our rental equipment. The
estimates for future settlement are based upon historical experience and current
trends. Due to the significant assumptions employed in this model, the amounts
shown could materially differ from actual results.
28
As presented above, contractual obligations on debt and guarantees represent
principal payments while contractual obligations for operating leases represent
the notional payments under the lease arrangements.
ASC 740 - Income Taxes liabilities and interest of
above due to uncertainty surrounding ultimate settlements, if any.
Fiscal 2023 Outlook
We will continue to focus our attention on increasing transaction volume and
improving pricing, product and utilization for self-moving equipment rentals.
Maintaining an adequate level of new investment in our truck fleet is an
important component of our plan to meet our operational goals and is likely to
increase in fiscal 2023. Revenue in the U-Move ® program could be adversely
impacted should we fail to execute in any of these areas. Even if we execute our
plans, we could see declines in revenues primarily due to unforeseen events
including adverse economic conditions or heightened competition that is beyond
our control.
With respect to our storage business, we have added new locations and expanded
existing locations. In fiscal 2023, we are actively looking to complete current
projects, increase occupancy in our existing portfolio of locations and acquire
new locations. New projects and acquisitions will be considered and pursued if
they fit our long-term plans and meet our financial objectives. It is likely
spending on acquisitions and new development will increase in fiscal 2023. We
will continue to invest capital and resources in the U-Box ® program throughout
fiscal 2023.
Inflationary pressures may challenge our ability to maintain or improve upon our
operating margin.
claims handling for
® , Safemove Plus ® , Safestor ® , and Safestor Mobile ® protection packages to
Life Insurance is pursuing its goal of expanding its presence in the senior
market through the sales of its Medicare supplement, life and annuity policies.
This strategy includes growing its agency force, expanding its new product
offerings, and pursuing business acquisition opportunities.
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