SVU » Topics » Reserves for Self-Insurance

This excerpt taken from the SVU 10-K filed Apr 25, 2007.

Reserves for Self-Insurance

The Company is primarily self-insured for workers’ compensation, health care for certain employees and general and automobile liability costs. It is the Company’s policy to record its self-insurance liabilities based on claims filed and an estimate of claims incurred but not yet reported, discounted at a risk free interest rate. The present value of such claims was calculated using discount rates ranging from 4.7 to 5.0 percent for fiscal 2007 and 3.7 to 6.8 percent for both fiscal 2006 and fiscal 2005. Any projection of losses concerning workers’ compensation, health care and general and automobile liability is subject to a considerable degree of variability. Among the causes of this variability are unpredictable external factors affecting future inflation rates, discount rates, litigation trends, legal interpretations, benefit level changes and claim settlement patterns.

A summary of changes in the Company’s reserves for self-insurance is as follows:

 

      2007     2006     2005  

Claims and claim adjustment expense reserves at beginning of year

   $ 58     $ 59     $ 54  
                        

Acquisition of New Albertsons (net of reinsurance receivable of $35)

     922       —         —    

Claim and claim adjustment expenses

     193       51       60  
                        

Total increases

     1,115       51       60  

Claim payments

     (217 )     (52 )     (55 )
                        

Net reserves

     956       58       59  

Reinsurance receivable

     36       —         —    
                        

Claims and claim adjustment expense reserves at end of year

     992       58       59  
                        

Less current portion

     (329 )     (27 )     (29 )
                        

Long-term portion

   $ 663     $ 31     $ 30  
                        

The current portion of the reserves for self-insurance is included in Other current liabilities, and the long-term portion is included in Other liabilities in the Consolidated Balance Sheets. The claims and claim adjustment expense reserves at end of year are net of the discount in the amount of $148, $11 and $12 for 2007, 2006, and 2005 respectively.

"Reserves for Self-Insurance" elsewhere:

Nash-Finch Company (NAFC)
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