U-Haul Holding Co /NV/ (UHAL-B) FY 2024 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We begin this MD&A with the overall strategy of U-Haul Holding Company, followed by a 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 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 2024 compared with fiscal 2023, 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 March 31, 2022 included 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 March 31, 2023 is incorporated by reference into this MD&A. We conclude this MD&A by discussing our outlook for fiscal 2025.

This MD&A should be read in conjunction with the other sections of this Annual Report, including Item 1: Business and Item 8: Consolidated 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.

U-Haul Holding Company has a fiscal year that ends on the 31st of March for each year that is referenced. Our insurance company subsidiaries have fiscal years that end on the 31st 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. We believe that consolidating their calendar year into our fiscal year consolidated 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 2023, 2022 and 2021 correspond to fiscal 2024, 2023 and 2022 for U-Haul Holding Company.

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 U-Haul with our full line of moving and self-storage related 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 is focused on providing and administering property and casualty insurance to U-Haul and its customers, its independent 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 and Reportable Segments

U-Haul Holding Company’s three operating and reportable segments are:

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Moving and Storage, comprised of U-Haul Holding Company, U-Haul, and Real Estate and the subsidiaries of U-Haul and Real Estate;

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Property and Casualty Insurance, comprised of Repwest and its subsidiaries and ARCOA; and

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Life Insurance, comprised of Oxford and its subsidiaries.

See Note 1, Basis of Presentation, Note 21,Reportable Segment Information, and Note 22, Financial Information by Geographic Area, of the Notes to Consolidated Financial Statements included in Item 8: Consolidated Financial Statements and Supplementary Data, of this Annual Report.

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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 U-Haul® throughout the United States and Canada.

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.

U-Haul® branded self-moving related products and services, such as boxes, pads 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® and U-Haul's mobile app are 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 the United States and Canada. Our goal is to further utilize our web-based technology platform to increase service to consumers and businesses in the moving and storage market.

Truck Share 24/7, Skip-the-Counter Self-Storage rentals and 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, U-Haul has incorporated sustainable practices into its everyday 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

Property and Casualty Insurance provides loss adjusting and claims handling for U-Haul through regional offices in the United States and Canada. Property and Casualty Insurance also underwrites components of the Safemove®, Safetow®, Safemove Plus®, Safestor® and Safestor Mobile® protection packages to U-Haul® customers. We continue to focus on increasing the penetration of these products into the moving and storage market. The business plan for Property and Casualty Insurance includes offering property and casualty products in other U-Haul® related programs.

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.

Cybersecurity Incident

On September 9, 2022, we announced that the Company was made aware of a data security incident involving U-Haul's information technology network. U-Haul detected a compromise of two unique passwords used to access U-Haul customers' information. U-Haul took immediate steps to contain the incident and promptly enhanced its security measures to prevent any further unauthorized access. U-Haul retained cybersecurity experts and incident response counsel to investigate the incident and implement additional security safeguards. The investigation determined that between November 5, 2021 and April 8, 2022, the threat actor accessed customer contracts containing customers’ names, dates of birth, and driver’s license or state identification numbers. None of U-Haul’s financial, payment processing or email systems were involved. U-Haul has notified impacted customers and relevant governmental authorities.

Several class action lawsuits related to the incident have been filed against U-Haul. The lawsuits have been consolidated into one action in the U.S. District Court for the District of Arizona (the "Court"). On October 27, 2023, the Court dismissed with prejudice all claims except those brought under the California Consumer Privacy Act. The remaining claims will be vigorously defended by the Company; however, the outcome of such lawsuits cannot be predicted or guaranteed with any certainty. The parties are currently working on a settlement agreement, which will then go through the approval process by the Court.

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with the generally accepted accounting principles (“GAAP”) in the United States. The methods, estimates and judgments we use in applying our accounting policies can have a significant impact on the results we report in our consolidated financial statements. Note 3, Accounting Policies, of the Notes to Consolidated Financial Statements in Item 8: Consolidated Financial Statements and Supplementary Data, of this Annual Report summarizes the significant accounting policies and methods used in the preparation of our

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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.

Following is a detailed description of the accounting estimates 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 significant accounting policies used to record the results of the majority of our recurring operations in our financial statements, 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 and estimates 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. 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

Life Insurance

The liability for future policy benefits for traditional and limited-payment long duration life and health products is determined each reporting period based on the net level premium method. This method requires the liability for future policy benefits be calculated as the present value of estimated future policyholder benefits and the related termination expenses, less the present value of estimated future net premiums to be collected from policyholders. Both the present value of expected future benefit payments and the present value of expected future net premiums are based primarily on assumptions of discount rates, mortality, morbidity, lapse, and persistency. The Company reviews, and updates as necessary, its cash flow assumptions (mortality, morbidity, lapses and persistency) used to calculate the change in the liability for future policy benefits at least annually.

Property & Casualty

Property and Casualty Insurance’s liability for reported and unreported losses is based on historical data along with industry averages. The liability for unpaid loss adjustment expenses is based on historical ratios of loss adjustment expenses paid to losses paid. Amounts recoverable from reinsurers on unpaid losses are estimated in a manner consistent with the claim liability associated with the reinsured policy.

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 during 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:

• Claimant longevity;

• Cost trends associated with claimant treatments;

• Changes in ceding entity and third-party administrator reporting practices;

• Changes in environmental factors, including legal and regulatory;

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• Current conditions affecting claim settlements; and

• 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 liability related to claims incurred but not reported ("IBNR"). 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.

Self-Insurance Liability

U-Haul retains the risk for certain public liability and third-party property damage claims related to our rental equipment. These liabilities represent an estimate for both reported claims not yet paid, and claims incurred but not yet reported and are recorded on an undiscounted basis in policy benefits and losses, claims and loss expenses payable. Requirements are based on actuarial evaluation of historical accident claims expense and trends, as well as future projection of ultimate losses, expenses and administrative costs. The adequacy of the liability is monitored based on evolving claim history. This liability is subject to change in the future based upon changes in the underlying assumptions, including claims experience, frequency of incidents, and severity of incidents.

U-Haul has operated a self-insurance program for general liability coverage related to risks arising from U-Haul's moving operations since 2002. The Company maintains excess of loss coverage with third-party insurers for losses in excess of specific limits.

We estimate this liability based on actual claims outstanding as of the balance sheet date as well as an actuarial estimate of IBNR claims.

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. Management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse market conditions specifically related to the security, among other factors.

There was a $1.0 million and $2.0 million net impairment charge recorded in fixed maturity securities for fiscal 2024 and 2023, respectively.

Income Taxes

We file a consolidated tax return with all of our legal subsidiaries.

Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect the Company's best estimate of current and future taxes to be paid. We are subject to income taxes in the United States and other foreign jurisdictions. Significant judgments and estimates are required in the determination of the consolidated income tax expense.

Please see Note 15, Provision for Taxes, of the Notes to Consolidated Financial Statements included in Item 8: Consolidated 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: Consolidated Financial Statements and Supplementary Data, of this Annual Report for more information.

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Results of Operations

U-Haul Holding Company and Consolidated Subsidiaries

Fiscal 2024 Compared with Fiscal 2023

Listed below, on a consolidated basis, are revenues for our major product lines for fiscal 2024 and fiscal 2023:

Self-moving equipment rental revenues decreased $253.2 million during fiscal 2024, compared with fiscal 2023. Transactions, revenue and average miles driven per transaction decreased with the rate of decline lessening throughout the year. These declines were more pronounced in our one-way markets. Compared to the end of last year, we decreased the number of trucks in the fleet while increasing the number of trailers and retail locations.

Self-storage revenues increased $86.6 million during fiscal 2024, compared with fiscal 2023. The average monthly number of occupied units increased by 7%, or 36,100 units during fiscal 2024 compared with the same period last year. The growth in revenues and square feet rented comes from a combination of occupancy gains, the addition of new capacity to the portfolio and a 2.9% improvement in average revenue per occupied square foot. The occupancy gains and revenue per square foot improvements slowed over the course of the fiscal year. During fiscal 2024, we added approximately 5.5 million net rentable square feet.

Sales of self-moving and self-storage products and services decreased $21.5 million during fiscal 2024, compared with fiscal 2023, primarily due to decreased sales of hitches, moving supplies and propane. The decrease in self-moving transactions has negatively impacted the sales of moving supplies.

Life insurance premiums decreased $9.4 million during fiscal 2024, compared with fiscal 2023 primarily due to decreased sales of single premium life products and policy decrements in Medicare supplement.

Property and casualty insurance premiums increased $1.6 million during fiscal 2024, compared with fiscal 2023. A significant portion of Repwest’s premiums are from policies sold in conjunction with U-Haul moving and storage transactions and generally correspond to the related activity at U-Haul during the same period.

Net investment and interest income decreased $30.2 million during fiscal 2024, compared with fiscal 2023. Changes in the market value of unaffiliated common stocks held at our Property and Casualty Insurance subsidiary accounted for $17.9 million of the increase. Our Life Insurance subsidiaries investment income increased $22.3 million primarily from gains on derivatives used as hedges to fixed indexed annuities. The Moving and Storage segment decreased as the interest income has been classified as Other interest income in fiscal 2024.

Other revenue decreased $12.8 million during fiscal 2024, compared with fiscal 2023, caused primarily by decreases in our U-Box® program.

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Listed below are revenues and earnings from operations at each of our operating segments for fiscal 2024 and 2023. The insurance companies’ years ended December 31, 2023 and 2022.

Total costs and expenses increased $228.8 million during fiscal 2024, compared with fiscal 2023. Operating expenses for Moving and Storage increased $99.7 million. Repair expenses associated with the rental fleet experienced a $33.0 million increase during fiscal year 2024 due to higher cost of preventative maintenance along with the costs associated with selling more retired trucks. Personnel related costs increased $50.3 million along with increases in liability costs, property taxes and building maintenance.

Depreciation expense associated with our rental fleet increased $44.0 million for fiscal 2024 compared with fiscal 2023 due to an increase in the pace of new additions to the fleet combined with their higher cost. Net gains from the disposal of rental equipment decreased $91.8 million as resale values have decreased and the average cost of units being sold has increased. Depreciation expense on all other assets, largely from buildings and improvements, increased $40.0 million. Net losses on the disposal or retirement of land and buildings increased $2.3 million. Additional details are available in the following Moving and Storage section.

As a result of the above-mentioned changes in revenues and expenses, earnings from operations decreased $467.8 million to $977.8 million for fiscal 2024, compared with $1,445.6 million for fiscal 2023.

Interest expense for fiscal 2024 was $256.2 million, compared with $224.0 million for fiscal 2023 due to an increase in our average cost of debt.

Income tax expense was $211.5 million for fiscal 2024, compared with $294.9 million for fiscal 2023. See Note 14, Provision for Taxes, of the Notes to Consolidated Financial Statements included in Item 8: Consolidated Financial Statements and Supplementary Data, of this Annual Report for more information on income taxes.

As a result of the above-mentioned items, earnings available to common stockholders were $628.7 million for fiscal 2024, compared with $924.5 million for fiscal 2023.

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Moving and Storage

Fiscal 2024 Compared with Fiscal 2023

Listed below are revenues for the major product lines at Moving and Storage for fiscal 2024 and fiscal 2023:

Self-moving equipment rental revenues decreased $253.4 million during fiscal 2024, compared with fiscal 2023. Transactions, revenue and average miles driven per transaction decreased with the rate of decline lessening throughout the year. These declines were more pronounced in our one-way markets. Compared to the end of last year, we decreased the number of trucks in the fleet while increasing the number of trailers and retail locations.

Self-storage revenues increased $86.6 million during fiscal 2024, compared with fiscal 2023. The average monthly number of occupied units increased by 7%, or 36,100 units during fiscal 2024 compared with the same period last year. The growth in revenues and square feet rented comes from a combination of occupancy gains, the addition of new capacity to the portfolio and a 2.9% improvement in average revenue per occupied square foot. The occupancy gains and revenue per square foot improvements slowed over the course of the fiscal year. During fiscal 2024, we added approximately 5.5 million net rentable square feet.

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:

During fiscal 2024, we added approximately 5.5 million net rentable square feet of new storage. This was a mix of approximately 1.2 million square feet of existing self-storage acquired along with 4.3 million square feet of new development.

Sales of self-moving and self-storage products and services decreased $21.5 million during fiscal 2024, compared with fiscal 2023, primarily due to decreased sales of hitches, moving supplies and propane. The decrease in self-moving transactions has negatively impacted the sales of moving supplies

Net investment and interest income decreased $70.9 million during fiscal 2024, compared with fiscal 2023 decreased as the interest income has been classified as Other interest income in fiscal 2024.

Other revenue decreased $13.4 million during fiscal 2024, compared with fiscal 2023, caused primarily by decreases in our U-Box® program.

Total costs and expenses increased $227.2 million during fiscal 2024, compared with fiscal 2023. Operating expenses increased $99.7 million. Repair expenses associated with the rental fleet experienced a $33.0 million increase during fiscal year 2024 due to higher cost of preventative maintenance along with the costs associated with selling more retired trucks. Personnel related costs increased $50.3 million along with increases in liability costs, property taxes and building maintenance.

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Depreciation expense associated with our rental fleet increased $44.0 million for fiscal 2024 compared with fiscal 2023, due to an increase in the pace of new additions to the fleet combined with their higher cost. Net gains from the disposal of rental equipment decreased $91.8 million as resale values have decreased and the average cost of units being sold has increased. Depreciation expense on all other assets, largely from buildings and improvements, increased $40.0 million. Net losses on the disposal or retirement of land and buildings increased $2.3 million. Additional details are available in the following Moving and Storage section.

Property and Casualty Insurance

2023 Compared with 2022

Net premiums were $97.9 million and $96.2 million for the years ended December 31, 2023 and 2022, respectively. A significant portion of Repwest’s premiums are from policies sold in conjunction with U-Haul moving and storage transactions and generally correspond to the related activity at U-Haul during the same period.

Net investment and interest income were $25.2 million and $7.3 million for the years ended December 31, 2023 and 2022, respectively. The main driver of the change in net investment income was the increase in valuation of unaffiliated common stock.

Operating expenses were $48.3 million and $45.0 million for the years ended December 31, 2023 and 2022, respectively. The change was primarily due to an increase in commissions, wages and other administrative expenses.

Benefits and losses expenses were $11.9 million and $21.5 million for the years ended December 31, 2023 and 2022, respectively. Benefits and losses incurred decreased due to a reduction in reserves caused by favorable development in Repwest’s run-off book of business.

As a result of the above-mentioned changes in revenues and expenses, pretax earnings from operations were $62.5 million and $36.6 million for the twelve months ended December 31, 2023 and 2022, respectively.

Life Insurance

2023 Compared with 2022

Net premiums were $89.7 million and $99.1 million for the years ended December 31, 2023 and 2022, respectively. Medicare Supplement premiums decreased due to the advanced age of the block. Life premiums decreased primarily from the decrease in sales of single premium life and final expense. Deferred annuity deposits were $352.6 million or $26.1 million above prior year and are accounted for on the balance sheet as deposits rather than premiums.

Net investment income was $124.7 million and $102.4 million for the years ended December 31, 2023 and 2022, respectively. Realized gains on derivatives used as hedges to fixed indexed annuities was $15.3 million this year compared to a $12.6 million realized loss for the prior year. The change in the provision for expected credit losses resulted in a $2.8 million additional increase to the investment income this year compared to a $2.9 million decrease last year. Net interest income and realized gain on the invested assets increased $3.0 million.

Operating expenses were $19.6 million and $21.1 million for the years ended December 31, 2023 and 2022, respectively.

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Benefits and losses incurred were $155.2 million and $142.5 million for the years ended December 31, 2023 and 2022, respectively. Interest credited to policyholders increased $18.7 million due to an increase in the interest credited rates on equity - indexed annuities due to rising equity markets. Life benefits decreased $3.3 million due to fewer death claims and lower sales. Medicare supplement benefits decreased by $4.0 million from fewer policies in force.

Amortization of deferred acquisition costs, sales inducement asset and the value of business acquired was $24.2 million and $27.9 million for the years ended December 31, 2023 and 2022, respectively.

As a result of the above-mentioned changes in revenues and expenses, pretax earnings from operations were $19.7 million and $13.9 million for the years ended December 31, 2023 and 2022, respectively.

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. 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 March 31, 2024, cash and cash equivalents totaled $1,534.5 million, compared with $2,060.5 million as of March 31, 2023. The assets of our insurance subsidiaries are generally unavailable to fulfill the obligations of non-insurance operations (U-Haul Holding Company, U-Haul and Real Estate). As of March 31, 2024 (or as otherwise indicated), cash and cash equivalents, other financial assets (receivables, other investments, fixed maturities, equity securities and related party assets) and debt obligations of each operating segment were:

(a) As of December 31, 2023

(b) Excludes ($32,676) of debt issuance costs

As of March 31, 2024, Moving and Storage had available borrowing capacity under existing credit facilities of $506.1 million. The majority of invested cash at the Moving and Storage segment is held in government money market funds. Our current forecasted debt payments for fiscal 2025 on all borrowings are $535.0 million. For detailed information regarding our debt obligations, please see Note 10, Notes, Loans and Finance Leases Payable, net, of the Notes to Consolidated Financial Statements.

A summary of our consolidated cash flows for fiscal 2024 and 2023 is shown in the table below:

Net cash provided by operating activities decreased $276.9 million in fiscal 2024, compared with fiscal 2023 due to a decrease in Moving and Storage operating profits combined with an increase in claim payments and the timing of working capital payments and receivables.

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Net cash used in investing activities decreased $375.0 million in fiscal 2024, compared with fiscal 2023. Purchases of property, plant and equipment increased $269.0 million. Fleet related spending increased $320.4 million while investment spending on real estate and development decreased $83.4 million. Cash from the sales of property, plant and equipment increased $37.8 million largely due to fleet sales. For our insurance subsidiaries, net cash provided by investing activities increased $230.7 million. Net cash provided by investing activities for Moving and Storage increased $377.0 million on short-term Treasury notes.

Net cash provided by financing activities increased $6.7 million in fiscal 2024, as compared with fiscal 2023. This was due to a combination of increased debt payments of $117.8 million, decreased finance lease payments of $18.6 million, an increase in cash from borrowings of $168.5 million, a decrease in dividend payments of $2.0 million and an increase in net annuity withdrawals from Life Insurance of $65.8 million.

Liquidity and Capital Resources and Requirements of Our Operating Segments

Moving and Storage

To meet the needs of our customers, U-Haul maintains a large fleet of rental 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. U-Haul estimates that during fiscal 2025 the Company will reinvest in its rental equipment fleet approximately $1,050 million, net of equipment sales and excluding any lease buyouts. For fiscal 2024, the Company invested, net of sales, approximately $891 million before any lease buyouts in its rental equipment fleet. Fleet investments in fiscal 2025 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 2025 investments will be funded largely through debt financing, external lease financing and cash from operations. We consider 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 funded the acquisition of self-storage properties to support U-Haul's growth through debt financing and funds from 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 2024, the Company invested $1,258.0 million in real estate acquisitions, new construction and renovation and repair compared to $1,341.4 million in fiscal 2023. For fiscal 2025, the 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 maintain a high level of real estate capital expenditures in fiscal 2025. U-Haul's growth plan in self-storage also includes the expansion of the U-Haul Storage Affiliate program, which does not require significant capital.

Net capital expenditures (purchases of property, plant and equipment less proceeds from the sale of property, plant and equipment and lease proceeds) at Moving and Storage were $2,253.7 million and $2,025.6 million for fiscal 2024 and 2023, respectively. The components of our net capital expenditures are provided in the following table:

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.

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Property and Casualty Insurance

State insurance regulations may restrict the amount of dividends that can be paid to stockholders of insurance companies. As a result, Property and Casualty Insurance's assets are generally not available to satisfy the claims of U-Haul Holding Company, or its legal subsidiaries. For calendar year 2024, the ordinary dividend available to be paid to U-Haul Holding Company from Repwest is $34.2 million. For more information, please see Note 28, Statutory Financial Information of Insurance Subsidiaries, of the Notes to Consolidated Financial Statements included in, Item 8: Consolidated Financial Statements and Supplementary Data 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 U-Haul Holding Company will be restricted per state regulations.

Our Property and Casualty operating segment stockholders’ equity was $350.5 million and $294.5 million as of December 31, 2023 and 2022, respectively. The increase in 2023 compared with 2022 resulted from net earnings of $49.6 million and an increase in accumulated other comprehensive income of $6.4 million. Property and Casualty Insurance does not use debt or 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 withdrawals for the year ended December 31, 2023 were $59.0 million. State insurance regulations may restrict the amount of dividends that can be paid to stockholders of insurance companies. As a result, Life Insurance's assets are generally not available to satisfy the claims of U-Haul Holding Company or its legal subsidiaries. For calendar year 2024, the ordinary dividend available to be paid to U-Haul Holding Company from Oxford is $5.3 million. For more information, please see Note 28, Statutory Financial Information of Insurance Subsidiaries, of the Notes to Consolidated Financial Statements included in, Item 8: Consolidated Financial Statements and Supplementary Data of this Annual Report.

Our Life Insurance operating segment stockholders’ equity was $197.7 million and $132.2 million as of December 31, 2023 and 2022, respectively. The increase in 2023 compared with 2022 resulted from earnings of $15.5 million and a increase in accumulated other comprehensive income of $50.0 million primarily due to the effect of interest rate changes on the fixed 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 December 31, 2023, Oxford had outstanding advances of $60.0 million through its membership in the Federal Home Loan Bank (“FHLB”). For a more detailed discussion of these advances, please see Note 10, Notes, Loans and Finance Leases Payable, net, of the Notes to Consolidated Financial Statements.

Cash Flows by Operating Segments

Moving and Storage

Net cash provided by operating activities was $1,319.0 million and $1,593.7 million in fiscal 2024 and 2023, respectively, due to a decrease in operating profits.

Property and Casualty Insurance

Net cash provided by operating activities was $32.7 million and $36.2 million for the years ended December 31, 2023 and 2022, respectively. The decrease was the result of changes in intercompany balances and the timing of payables activity.

Property and Casualty Insurance’s cash and cash equivalents and short-term investment portfolios amounted to $52.5 million and $27.2 million as of December 31, 2023 and 2022, respectively. These balances 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 Property and Casualty Insurance to schedule cash needs in accordance with investment and underwriting proceeds.

Life Insurance

Net cash provided by operating activities was $101.0 million and $99.8 million for the years ended December 31, 2023, and 2022, respectively. The increase in operating cash flows was primarily due to timing of settlement of receivables for securities. This was offset by the decrease in premiums net of benefits and commissions.

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 December 31, 2023 and 2022, cash and cash equivalents amounted to $101.9 million and $15.0 million, respectively. Management believes that the overall sources of liquidity are adequate to meet foreseeable cash needs.

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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.

The IRS completed and finalized their examination for tax March 2014 through March 2021. As a result, we are owed $129 million which is reflected in prepaid expense.

Our borrowing strategy has primarily focused on asset-backed financing, private placements 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 March 31, 2024, we had available borrowing capacity under existing credit facilities of $506.1 million. While it is possible that circumstances beyond our control 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 10, Notes, Loans and Finance Leases Payable, net, of the Notes to Consolidated Financial Statements included in Item 8: Consolidated 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 20, Related Party Transactions, of the Notes to Consolidated Financial Statements included in Item 8: Consolidated 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.

Use of Cash

For material cash requirements as part of liquidity and capital resources discussion, please see Notes 10, Notes, Loans and Finance Leases Payable, net; 11, Interest on Notes, Loans and Finance Leases Payable, net; 19, Contingencies and 27 Life Insurance Liability, of the Notes to Consolidated Financial Statements included in Item 8: Consolidated Financial Statements and Supplementary Data, of this Annual Report. The following table provides additional detail for uses of cash and contingencies as of March 31, 2024.

(a) These cash flows represent our estimates of the payments we expect to make to our policyholders, without consideration of future premiums or reinsurance recoveries. These estimates are based on numerous assumptions (depending on the product type) related to mortality, morbidity, lapses, withdrawals, future premiums, future deposits, interest rates on investments, credited rates, expenses and other factors which affect our future payments. The cash flows presented are undiscounted for interest. As a result, total outflows for all years exceed the corresponding liabilities of $2,785.3 million included in our consolidated balances sheet as of March 31, 2024. As such payments are based on numerous assumptions, the actual payments may vary significantly from the amounts shown.

(b) 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.

ASC 740 - Income Taxes liabilities and interest of $94.6 million is not included above due to uncertainty surrounding ultimate settlements, if any.

Fiscal 2025 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

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component of our plan to meet our operational goals and is likely to increase in fiscal 2025. 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 2025, 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 remain high in fiscal 2025. We will continue to invest capital and resources in the U-Box® program throughout fiscal 2025.

Inflationary pressures may challenge our ability to maintain or improve upon our operating margin.

Property and Casualty Insurance will continue to provide loss adjusting and claims handling for U-Haul and underwrite components of the Safemove®, Safetow®, Safemove Plus®, Safestor®, and Safestor Mobile® protection packages to U-Haul customers.

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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Consolidating Schedules by Operating and Reporting Segment

This information includes elimination entries necessary to consolidate U-Haul Holding Company, the parent, with its subsidiaries.

Consolidating balance sheets by industry segment as of March 31, 2024 are as follows:

(a)
Balances as of December 31, 2023

(b)
Eliminate investment in subsidiaries

(c)
Eliminate intercompany receivables and payables

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Consolidating balance sheets by industry segment as of March 31, 2024 are as follows:

(a)
Balances as of December 31, 2023

(b)
Eliminate investment in subsidiaries

(c)
Eliminate intercompany receivables and payables

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Consolidating balance sheets by industry segment as of March 31, 2023 are as follows:

(a)
Balances as of December 31, 2022

(b)
Eliminate investment in subsidiaries

(c)
Eliminate intercompany receivables and payables

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Consolidating balance sheets by industry segment as of March 31, 2023 are as follows:

(a)
Balances as of December 31, 2022

(b)
Eliminate investment in subsidiaries

(c)
Eliminate intercompany receivables and payables

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Consolidating statements of operations by industry segment for year ending March 31, 2024 are as follows:

(a)
Balances for the year ended December 31, 2023

(b)
Eliminate intercompany lease / interest income

(c)
Eliminate intercompany premiums

(d)
Eliminate equity in earnings of subsidiaries

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Consolidating statements of operations by industry segment for year ending March 31, 2023 are as follows:

(a)
Balances for the year ended December 31, 2022

(b)
Eliminate intercompany lease/interest income

(c)
Eliminate intercompany premiums

(d)
Eliminate equity in earnings of subsidiaries

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Consolidating statements of operations by industry segment for year ending March 31, 2022 are as follows:

(a)
Balances for the year ended December 31, 2021

(b)
Eliminate intercompany lease/interest income

(c)
Eliminate intercompany premiums

(d)
Eliminate equity in earnings of subsidiaries

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Consolidating cash flow statements by industry segment for the year ended March 31, 2024, are as follows:

Page 1 of 2

(a)
Balance for the period ended December 31, 2023

(b)
Eliminate purchase and sale of real estate

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Continuation of consolidating cash flow statements by industry segment for the year ended March 31, 2024, are as follows:

Page 2 of 2

(a)
Balance for the period ended December 31, 2023

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Consolidating cash flow statements by industry segment for the year ended March 31, 2023, are as follows: