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

We begin this MD&A with the overall strategy of AMERCO, 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 policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. Next, w e discuss our results of operations for fiscal 201 6 compared with fiscal 20 15 , and for fiscal 20 15 compared with fiscal 20 14 which are followed by an analysis of 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. We conclude this MD&A by discussing our outlook for fiscal 201 7 .

This MD&A should be read in conjunction with the other sections of this Annual Report, including Item 1: Business, Item 6: Selected Financial Data 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.

AMERCO has a fiscal year that ends on the 31 st of March for each year that is 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 a ll material events , if any, occurring during the intervening period. Consequently, all references to our insurance subsidiaries’ years 20 15 , 20 14 and 20 13 correspond to fiscal 201 6 , 20 15 and 20 14 for AMERCO.

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 rooms 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 eMove 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 Segments

AMERCO’s three reportable segments are:

• Moving and Storage, comprised of AMERCO, U-Haul, and Real Estate and the subsidiaries of U-Haul and Real Estate,
• Property and Casualty Insurance, comprised of Repwest and its subsidiaries and ARCOA, and
• Life Insurance, comprised of Oxford and its subsidiaries.

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 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 brand 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 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 provide rs furnish pack and load help, cleaning help, self-storage and similar services, all over North America. Our goal is to further utilize our web-based technology platform to increase service to consumers and businesses in the moving and storage market.

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 across North America. 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.

Critical Accounting Policies and Estimates

Our 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 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.

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; 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:

Principles of Consolidation

We appl y ASC 810 - Consolidation (“ASC 810”) in our principles of consolidation. ASC 810 addresses arrangements where a company does not hold a majority of the voting or similar interests of a variable interest entity (“VIE”). A company is required to consolidate a VIE if it has determined it is the primary beneficiary. ASC 810 also addresses the policy when a company owns a majority of the voting or similar rights and exercises effective control.

As promulgated by ASC 810, a VIE is not self-supportive due to having one or both of the following conditions: (i ) it has an insufficient amount of equity for it to finance its activities without receiving additional subordinated financial support or (ii ) its owners do not hold the typical risks and rights of equity owners. This determination is made upon the creation of a variable interest and is re-assessed on an on-going basis should certain changes in the operations of a VIE, or its relationship with the primary beneficiary trigger a reconsideration under the provisions of ASC 810. After a triggering event occurs the facts and circumstances are utilized in determining whether or not a company is a VIE, which other company(s) have a variable interest in the entity, and whether or not the company’s interest is such that it is the primary beneficiary.

We will continue to monitor our relationships with the other entities regarding who is the primary beneficiary, which could change based on facts and circumstances of any reconsideration events.

Recoverability of Property, Plant and Equipment

Our Property, plant and equipment is stated at cost. Interest expense incurred during the initial construction of buildings and rental equipment is considered part of cost. Depreciation is computed for financial reporting purposes using the straight-line or an accelerated method based on a declining balance formula over the following estimated useful lives: rental equipment 2-20 years and buildings and non-rental equipment 3-55 years. We follow the deferral method of accounting based on ASC 908 - Airlines for major overhauls in which engine and transmission overhauls are currently capitalized and amortized over three years. Routine maintenance costs are charged to operating expense as they are incurred. Gains and losses on dispositions of property, plant and equipment are netted against depreciation expense when realized. Equipment depreciation is recognized in amounts expected to result in the recovery of estimated residual values upon disposal, i.e., minimize gains or losses. In determining the depreciation rate, historical disposal experience, holding periods and trends in the market for vehicles are reviewed.

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, the net book value of the assets is depreciated over the newly determined remaining useful lives.

M anagement determined that additions to the fleet resulting from purchase s should be depreciated on an accelerated method based upon a declining formula. Under the declining balances method (2.4 times declining balance), the book value of a rental truck is reduced by approximately 16%, 13%, 11%, 9%, 8%, 7%, and 6% during years one through seven, respectively , and then reduced on a straight line basis to a salvage value of 20 % by the end of year fifteen. Beginning in October 2012, new purchased rental equipment subject to this depreciation schedule is depreciated to a salvage value of 15%. Comparatively, a standard straight line approach would reduce the book value by approximately 5. 7 % per year over the life of the truck .

Although we intend to sell our used vehicles for prices approximating book value, the extent to which we realize a gain or loss on the sale of used vehicles is dependent upon various factors including but not limited to, the general state of the used vehicle market, the age and condition of the vehicle at the time of its disposal and the depreciation rates with respect to the vehicle . We typically sell our used vehicles at our sales centers throughout North America, on our web site at uhaul.com/trucksales or by phone at 1-866-404-0355. Additionally, we sell a large portion of our pickup and cargo van fleet at automobile dealer auctions.

Insurance Reserves

Liabilities for life insurance and certain annuity and health policies are established to meet the estimated future obligations of policies in force, and are based on mortality, morbidity and withdrawal assumptions from recognized actuarial tables which contain margins for adverse deviation. In addition, liabilities for health, disability and other policies include estimates of payments to be made on insurance claims for reported losses and estimates of losses incurred, but not yet reported. Liabilities for annuity contracts consist of contract account balances that accrue to the benefit of the policyholders.

Insurance reserves for Property and Casualty Insurance and U-Haul take into 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 losses incurred but not reported (“IBNR”), 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 during 1983 through 200 1 , 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
• Current conditions affecting claim settlements
• 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 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

Investments are evaluated pursuant to guidance contained in ASC 320 - Investments - Debt and Equity Securities to determine if and when a decline in market value below amortized cost is other-than-temporary. Management makes certain assumptions or judgments in its assessment including but not limited to: our ability and intent to hold the security, quoted market prices, dealer quotes or discounted cash flows, industry factors, financial factors, and issuer specific information such as credit strength. Other-than-temporary impairment in value is recognized in the current period operating results. There were no write downs in fiscal 2016, 201 5 and 201 4 , respectively.

Income Taxes

AMERCO files a consolidated tax return with all of its 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 for more information.

Fair Values

Fair values of cash equivalents approximate carrying value due to the short period of time to maturity. Fair values of short term investments, investments available-for-sale, long term investments, mortgage loans and notes on real estate, and interest rate swap contracts are based on quoted market prices, dealer quotes or discounted cash flows. Fair values of trade receivables approximate their recorded value.

Our financial instruments that are exposed to concentrations of credit risk consist primarily of temporary cash investments, trade receivables, reinsurance recoverables and notes receivable. Limited credit risk exists on trade receivables due to the diversity of our customer base and their dispersion across broad geographic markets. We place our temporary cash investments with f inancial institutions and limit the amount of credit exposure to any one financial institution.

We have mortgage receivables, which potentially expose us to credit risk. The portfolio of notes is principally collateralized by self- storage facilities and commercial properties. We have not experienced any material losses related to the notes from individual or groups of notes in any particular industry or geographic area. The estimated fair values were determined using the discounted cash flow method and using interest rates currently offered for similar loans to borrowers with similar credit ratings.

The carrying amount of long term debt and short term borrowings are estimated to approximate fair value as the actual interest rate is consistent with the rate estimated to be currently available for debt of similar term and remaining maturity.

Other investments including short term investments are substantially current or bear reasonable interest rates. As a result, the carrying values of these financial instruments approximate fair value.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers , an updated standard on revenue recognition. The standard creates a five-step model for revenue recognition that requires companies to exercise judgment when considering contract terms and relevant facts and circumstances. The standard requires expanded disclosure surrounding revenue recognition. Early application is not permitted. The standard is effective for fiscal periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective adoption. In July 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers, Deferral of Effective Date , which delays the effective date of ASU 2014-09 by one year to fiscal periods beginning after December 15, 2017. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations and the effective date is the same as requirements in ASU 2015-14. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements.

In March   2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs . The amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The guidance is effective for interim periods and annual period beginning after December 15, 2015; however early adoption is permitted. T he adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01 , Financial Instruments – Overall (subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Among other provisions, the new guidance requires the fair value measurement of investments in certain equity securities. For investments without readily determinable fair values, entities have the option to either measure these investments at fair value or at cost adjusted for changes in observable prices minus impairment. All changes in measurement will be recognized in net income. The guidance is effective for interim periods and annual period beginning after December 15, 201 7 . Early adoption is not permitted, except for certain provisions relating to financial liabilities. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 , Leases - (Topic 842) . This update will require lessees to recognize all leases with terms greater than 12 months on their balance sheet as lease liabilities with a corresponding right-of-use asset. This update maintains the dual model for lease accounting, requiring leases to be classified as either operating or finance, with lease classification determined in a manner similar to existing lease guidance. The basic principle is that leases of all types convey the right to direct the use and obtain substantially all the economic benefits of an identified asset, meaning they create an asset and liability for lessees. Lessees will classify leases as either finance leases (comparable to current capital leases) or operating leases (comparable to current operating leases). Costs for a finance lease will be split between amortization and interest expense, with a single lease expense reported for operating leases. This update also will require both qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The guidance is effective for interim periods and annual period beginning after December 15, 201 8; however e arly adoption is permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. For the last nine years, we have reported a discounted estimate of the off-balance sheet lease obligations in our MD&A.

From time to time, new accounting pronouncements are issued by the FASB or the SEC that are adopted by the Company as of the specified effective date. Unless otherwise discussed, these ASU’s entail technical corrections to existing guidance or affect guidance related to specialized industries or entities and therefore will have minimal, if any, impact on our financial position or results of operations upon adoption.

Self-moving equip ment rental revenues increased $151.6 million during fiscal 201 6 , compared with t he fiscal 201 5 .  We continue to focus on enhancing our convenience to our customers by expanding our retail distribution system and growing our rental equipment fleet.  During fiscal 2016, we added both independent dealers and Company-owned locations further extending our network reach.  Our truck, trailer and towing device fleets experienced net additions during fiscal 2016.  These activities, combined with operational improvements resulted in increases in both our one-way and In-Town rental transactions compared with last year.  Revenue increased primarily from these transaction gains.

Self-storage revenues increased $ 36.8 million during fiscal 201 6 , com pared with fiscal 201 5.  The average monthly amount of occupied square feet increased by 13.8 % during fiscal 201 6 compared with the same period last year.  The growth in revenues and square feet rented comes from a combination of improved rates per square foot, occupancy gains at existing locations and from the addition of new facilities to the portfolio. During fiscal 2016, we added approximately 3.6 million net rentable square feet or a 17.9% increase, with approximately 0.8 million of that coming during the fourth quarter.

Sales of self-moving and self-storage products and services increased $ 7.4 million during fiscal 201 6 , compared with fiscal 201 5 . Increases were recognized in the sales of moving supplies and towing accessories and related installations.  

Life insurance premiums in c reased $ 6.6 million during fiscal 201 6 , compared with fiscal 2015 due primarily to increased life and Medicare supplement premiums.

Property and casualty insurance premiums inc reased $ 3.6 million during fiscal 2016, compared with fiscal 2015 due to an increase in Safestor and Safetow sales , which is a reflection of the increased equipment and storage rental transactions.

Net investment and interest income in creased $ 2.1 million during fiscal 2016, compared with fiscal 2015 , due to a larger invested asset base at our insurance companies.  This was partially offset by decreased interest income at Moving and Storage resulting from re duced note balances due from SAC Holding and Private Mini Storage Realty (“Private Mini”) .   

Other revenue decreased $ 8.0 million during fiscal 2016, compared with fiscal 2015 caused primarily by lower U-Box TM program rentals .

As a result of the items mentioned above, revenues for AMERCO and its consolidated entities were $ 3,275.7 million for fiscal 2016 as compared with $ 3,074.5 million for fiscal 2015 .

Listed below are revenues and earnings from operations at each of our operating segments for fiscal 201 6 and 201 5 . The insurance companies’ years ended December 31, 201 5 and 201 4 .

Total costs and expenses de creased $ 2.7 million during fiscal 201 6 , compared with fiscal 201 5.  Total costs at Moving and Storage decreased $18.6 million. The largest component of the decrease was related to our accruals for expenses associated with the PEI litigation which were $5.0 million and $60.7 million for fiscal 2016 and 2015, respectively. Personnel and overhead cost increases were partially offset by decreased direct operating costs associated with the U-Box program. Depreciation expense increased $36.6 million; however, gains from the disposal of property, plant and equipment increased $24.1 million. This resulted in a net increase of $12.5 million in depreciation expense, net. We have increased the number of trucks sold compared with the same period last year and the resale market for these trucks remained relatively strong.  Lease expense decreased $30.0 million as a result of our shift in financing new equipment on the balance sheet versus through operating leases.  Total costs and expenses in the insurance segments increased $15.9 million primarily due to expenses associated with additional new business written.

As a result of the above mentioned changes in revenues and expenses, earnings from operations increased to $ 866.8 million for fiscal 201 6 , compared with $ 663.0 million for fiscal 201 5 .

Interest expense for fiscal 201 6 was $ 97.9 million, compared with $97 . 5 million for fiscal 201 5 due to an increase in average borrowings partially offset by a decrease in average borrowing costs .

Income tax expense was $ 279.9 million for fiscal 201 6 , compared with $ 204.7 million for fiscal 201 5 . The increase was due to higher pretax earnings for fiscal 201 6 . The effective tax rate was 36.4% and 36.5% for fiscal 2016 and 2015, respectively.

As a result of the above mentioned items, earnings available to common shareholders were $ 489.0 million for fiscal 201 6 , compared with $ 356.7 million for fiscal 201 5 .

Basic and diluted earnings per common share for fiscal 201 6 were $ 24.95 , compared with $ 18.21 for fiscal 201 5 .

The weighted average common shares outstanding basic and diluted were 19,596 , 110 for fiscal 201 6 , compared with 19, 586,633 for fiscal 201 5 .

Self-moving equipment rental revenues increased $ 191.0 million for fiscal 201 5 , compared with fiscal 2014 .  During fiscal 2015, we continued to broaden our retail distribution network through the expansion of our independent dealer network combined with the acquisition and development of new Company owned and operated locations.  Our rental equipment fleet expanded as we increased the number of trucks, trailers and towing devices available for customer use.  These initiatives, in tandem with our continued focus improving the rental process through the use of technology resulted in our ability to facilitate the increase in both our In-Town and one-way rental transactions.  These additional transactions account for the majority of the improvement in revenues during fiscal 2015 .     

Self-storage revenues increased $ 29.3 million for fiscal 2015 , compared with fiscal 201 4.  The improvement in revenue comes from an increase in the number of rooms rented at both new and existing locations along with an improvement in overall rental rates across our portfolio.  During fiscal 2015, we added approximately 2.1 million net rentable square feet or nearly a 12% increase, with approximately 0.7 million of that coming during the fourth quarter.  Meanwhile, the average monthly amount of occupied square feet increased by 13% compared with fiscal 2014 .

Sales of self-moving and self-storage products and services increased $ 10.0 million for fiscal 2015, compared with fiscal 2014 .  We earned increases from the sale of moving supplies, towing accessories and installation.

Life insurance premiums decreased $ 1.8 million for fiscal 20 15, compared with fiscal 2014, primarily attributable to reduced life and Medicare supplement premiums.

Property and casualty insurance premiums increased $ 5.4 million for fiscal 201 5, compared with fiscal 2014, primarily from policies sold in conjunction with U-Haul rental transactions. As moving transactions increased this year so did the sales of insurance products related to these transactions.

Net investment and interest income in creased $ 5.1 million for fiscal 201 5 , compared with fiscal 201 4 .  Increases at our Life Insurance and Property and Casualty Insurance segments were due to a larger invested asset base along with realized gains.   Conversely, interest income from Moving and Storage has decreased since SAC Holding and Private Mini repaid a combined $29.1 million of their junior note debt due to the Company in October 2014 .  

Other revenue decreased $0.6 million for fiscal 2015, compared with f iscal 2014 due in large part to our U-Box program performing below expectations .

As a result of the items mentioned above, revenues for AMERCO and its consolidated entities were $ 3,074.5 million for fiscal 2015 as compared with $ 2,835.3 million for fiscal 2014 .

Listed below are revenues and earnings from operations at each of our operating segments for fiscal 201 5 and 201 4 . The insurance companies’ years ended December 31, 201 4 and 201 3 .

Total costs and expenses in creased $ 206.5 million for fiscal 201 5 as compared with fiscal 201 4 . The M oving and Storage operating segment accounted for $ 202.7 million of the total increase for fiscal 2015 as compared with fiscal 201 4 . Operating expenses increased $ 165.7 million primarily from spending on personnel, rental equipment maintenance and operating costs associated with the U-Box program. Commission expenses increased in relation to the associated revenues. Depreciation expense, net, increased $ 18.6 million while lease expense decreased $ 20.7 million as a result of the Company’s continued focus in financing new equipment on the balance sheet versus through operating leases. During the fourth quarter of fiscal 2015 the Company recorded an accrual related to the PEI litigation resulting in an increase in operating expenses of $60.7 million.

As a result of the above mentioned changes in revenues and expenses, earnings from operations increased to $ 663.0 million for fiscal 201 5 , compared with $ 630.2 million for fiscal 201 4 .

Interest expense for fiscal 201 5 was $ 97.5 million, compared with $92 . 7 million for fiscal 201 4 due to an increase in average borrowings partially offset by a decrease in average borrowing costs.   In addition, we incurred costs associated with the early extinguishment of debt during the second quarter of fiscal 2015, which included $3.8 million of fees and $0.3 million of transaction cost amortization related to defeased debt.

Income tax expense was $ 204.7 million for fiscal 201 5 , compared with $ 195.1 million for fiscal 201 4 . The increase was due to higher pretax earnings for fiscal 201 5 .

As a result of the above mentioned items, earnings available to common shareholders were $ 356.7 million for fiscal 201 5 , compared with $ 342.4 million for fiscal 201 4 .

Basic and diluted earnings per common share for fiscal 201 5 were $ 18.21 , compared with $ 17.51 for fiscal 201 4 .

The weighted average common shares outstanding basic and diluted were 19,58 6 , 633 for fiscal 201 5 , compared with 19, 558,758 for fiscal 201 4 .

Self-moving equipment rental revenues increased $ 151.6 million during fiscal 201 6 , compared with fiscal 201 5 .  We continue to focus on enhancing our convenience to our customers by expanding our retail distribution system and growing our rental equipment fleet.  During fiscal 2016, we added both independent dealers and Company-owned locations further extending our network reach.  Our truck, trailer and towing device fleets experienced net additions during fiscal 2016.  These activities, combined with operational improvements resulted in increases in both our one-way and In-Town rental transactions compared with last year.  Revenue increased primarily from these transaction gains .      

Self-storage revenues increased $ 36.8 million during fiscal 201 6 , com pared with fiscal 201 5. The average monthly amount of occupied square feet increased by 13.8 % during fiscal 201 6 compared with the same period last year.  The growth in revenues and square feet rented comes from a combination of improved rates per square foot, occupancy gains at existing locations and from the addition of new facilities to the portfolio. During fiscal 2016, we added approximately 3.6 million net rentable square feet or a 17.9% increase, with approximately 0.8 million of that coming during the fourth quarter.

Sales of self-moving and self-storage products and services increased $ 7.4 million during fiscal 201 6 , compared with fiscal 201 5 .  Increases were recognized in the sales of moving supplies and towing accessories and related installations.   

Net investment and interest income decreased $4.8 million during fiscal 2016, compared with fiscal 201 5 . Reduced note balances due from SAC Holding and Private Mini resulted in decreased interest income.

Other revenue de creased $ 8.1 million during fiscal 201 6 , compared with fiscal 2015 caused primarily by lower U-Box TM program rentals .

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:

Total costs and expenses decreased $18.6 million for fiscal 2016 as compared with fiscal 2015. The largest component of the decrease was related to our accruals for expenses associated with the PEI litigation which were $5.0 million and $60.7 million for fiscal 2016 and 2015, respectively. Personnel and overhead cost increases were partially offset by decreased direct operating costs associated with the U-Box program. Depreciation expense increased $36.6 million; however, gains from the disposal of property, plant and equipment increased $24.1 million. This resulted in a net increase of $12.5 million in depreciation expense, net. We have increased the number of trucks sold compared with the same period last year and the resale market for these trucks remained relatively strong.  Lease expense decreased $30.0 million as a result of our shift in financing new equipment on the balance sheet versus through operating leases.

As a result of the above mentioned changes in revenues and expenses, earnings from operations for Moving and Storage before consolidation of the equity in the earnings of the insurance subsidiaries increased to $ 813.1 million for fiscal 2016 as compared with $610.4 million for fiscal 2015.

Equity in the earnings of AMERCO’s insurance subsidiaries increased $ 0.7 million for fiscal 201 6 , compared with fiscal 2015 .

As a result of the above mentioned changes in revenues and expenses, earnings from operations increased to $848.6 million for fiscal 2016 , compared with $ 645.2 million for fiscal 2015.

Self-moving equipment rental revenues increased $ 191.8 million for fiscal 201 5, compared with fiscal 2014.  During fiscal 2015 we continued to broaden our retail distribution network through the expansion of our independent dealer network combined with the acquisition and development of new Company owned and operated locations.  Our rental equipment fleet expanded as we increased the number of trucks, trailers and towing devices available for customer use.  These initiatives, in tandem with our continued focus on improving the rental process through the use of technology resulted in our ability to facilitate the increase in both our In-Town and one-way rental transactions.  These additional transactions account for the majority of the improvement in revenues during fiscal 2015.

Self-storage revenues increased $ 29.3 million for fiscal 2015 , compared with fiscal 201 4. The improvement in revenue comes from an increase in the number of rooms rented at both new and existing locations along with an improvement in overall rental rates across our portfolio.  During fiscal 2015, we added approximately 2.1 million net rentable square feet or nearly a 12% increase, with approximately 0.7 million of that coming during the fourth quarter.  Meanwhile, the average monthly amount of occupied square feet increased by 13% compared with fiscal 2014.

Sales of self-moving and self-storage products and services increased $ 10.0 million for fiscal 2015, compared with fiscal 2014 .  We earned increases from the sale of moving supplies, towing accessories and installation s .

Net investment and interest income de creased $ 1.6 million for fiscal 201 5 , compared with fiscal 201 4 .  SAC Holding and Private Mini repaid a combined $29.1 million of their junior note debt due to the Company in October 2014 resulting in reduced interest income earned by the Company .

Ot her revenue de creased $ 1.9 million for fiscal 201 5 , compared with fiscal 201 4 due in large part to our U-Box program performing below expectations .

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:

Total costs and expenses increased $ 202.7 million for fiscal 201 5 as compared with fiscal 2014 . Operating expenses increased $ 163.7 million primarily from spending on personnel, rental equipment maintenance and operating costs associated with the U-Box program. Commission expenses increased in relation to the associated revenues. Depreciation expense increased $ 59.6 million and gains from the disposal of property, plant and equipment increased by $41.1 million. L ease expense decreased $ 20.7 million as a result of the Company’s continued focus towards financing new equipment on the balance sheet versus through operating leases. During the fourth quarter of fiscal 2015 the Company recorded an accrual related to the PEI litigation resulting in an increase in operating expenses of $60.7 million.

As a result of the above mentioned changes in revenues and expenses, earnings from operations for Moving and Storage before consolidation of the equity in the earnings of the insurance subsidiaries increased to $ 610.4 million for fiscal 2015 as compared with $584.7 million for fiscal 2014.

Equity in the earnings of AMERCO’s insurance subsidiaries increased $ 4.8 million for fiscal 201 5 , compared with fiscal 2014 .

As a result of the above mentioned changes in revenues and expenses, earnings from operations increased to $645.2 million for fiscal 2015 , compared with $ 614.7 million for fiscal 2014.

Property and Casualty Insurance

201 5 Compared with 201 4

Net premiums were $ 50.0 million and $4 6 . 5 million for the years ended December 31, 201 5 and 201 4 , respectively. A significant portion of Repwest’s premiums are from policies sold in conjunction with U-Haul rental transactions. The premium growth corresponded with the increased moving and storage transactions at U-Haul.

Net investment income was $14.8 million and $12.8 million for the years ended December 31, 2015 and 2014, respectively. The in crease came from the real estate and fixed maturity portfolios that both grew in size compared to 2014.

Net operating expenses were $28.0 million and $24.8 million for the years ended December 31, 2015 and 2014, respectively. The increase was due largely to additional commission expense s and higher loss adjusting expenses. 

Benefits and losses incurred were $12.3 million and $11.0 million for the years ended December 31, 201 5 and 201 4 , respectively. Th e increase was due to claims activity coming from additional new business .

As a result of the above mentioned changes in revenues and expenses, pretax earnings from operations were $2 4 .5 million and $ 23.5 million for the years ended December 31, 201 5 and 201 4 , respectively.

Property and Casualty Insurance

201 4 Compared with 201 3

Net premiums were $46.5 million and $41.1 million for the years ended December 31, 201 4 and 201 3 , respectively. A significant portion of Repwest’s premiums are from policies sold in conjunction with U-Haul rental transactions. The premium growth corresponded with the increased moving and storage transactions at U-Haul.

Net investment income was $12.8 million and $10.6 million for the years ended December 31, 201 4 and 201 3 , respectively. The increase was due to a $0.3 million gain on disposals in 2014, $0.4 million in real estate rental income and a $1.4 million increase in fixed maturity income due to an increase in invested assets .

Net operating expenses were $24.8 million and $20.8 million for the years ended December 31, 201 4 and 201 3, respectively . The increase was primarily due to a $3.7 million increase in commission expense.

Benefits and losses incurred were $11.0 million and $11.5 million for the years ended December 31, 2014 and 2013, respectively. 

As a result of the above mentioned changes in revenues and expenses, pretax earnings from operations were $23.5 million and $19.3 million for the years ended December 31, 2014 and 2013, respectively.

Life Insurance

201 5 Compared with 201 4

Net premiums were $ 162.7 million and $ 156.1 million for the years ended December 31 , 201 5 and 201 4 , respectively .  Medicare supplement premiums increased $5.8 million from new sales offset by a reduction in renewal premiums due to reduction in the in force business on older blocks. Medicare supplement first year premiums were $16.9 million, an increase of $7.5 million over prior year. Life premiums increased by $0.8 million primarily as a result of final expense renewals. Annuity deposits, which are accounted for on the balance sheet as deposits rather than premiums, increased $195.8 million over prior year. Included in the deposit increase is a $30.0 mil lion deposit relating to a funding agreement with Federal Home Loan Bank system (“FHLB”) .

Net investment income was $ 64.0 million and $ 59.1 million for the years ended December 31, 201 5 and 201 4 , respectively. Investment income increased $4.3 million due to a larger invested asset base while $0.7 million came from realized gains from sales of investments.

Net operating expenses were $ 23.0 million and $ 22.5 million for the years ended December 31 , 201 5 and 201 4 , respectively. The moderate increase was primarily due to the increased administrative expenses supporting new sales.

Benefits and losses incurred were $ 155.1 million and $ 147.8 million for the years ended December 31 , 201 5 and 201 4 , respectively . Medicare supplement benefits increased by $4.6 million primarily as a result of the increase in incurred benefits from new sales partially offset by a decrease in Medicare supplement active life reserve from the change in reserve valuation basis. Life insurance benefits increased $2.5 million due to higher mortality exposure while other benefits decreased $1.0 million.  Interest credited to policyholders increased $1.2 million reflecting the increase in annuity deposits.

Amortization of deferred acquisition costs (“DAC”), sales inducement asset ( “ SIA ” ) and the value of business acquired (“VOBA”) was $23.3 million and $19.7 million for the years ended December 31, 2015 and 2014, respectively. The increase over prior year wa s a result of an increased amortization on annuity and Medicare Supplement DAC due to the increased DAC asset base . This was partially offset by the decrease in life amortization due to a prior year DAC balance write off on older blocks.   

As a result of the above mentioned changes in revenues and expenses, pretax earnings from operations were $29.8 million for both years ended December 31, 2015 and 2014.

Life Insurance

201 4 Compared with 201 3

Net premiums were $ 156.1 million and $1 57.9 million for the year s ended December 31, 201 4 and 2013 , respectively. Medicare supplement premiums decreased by $2.4 million due to a reduction in the in force business offset by new sales. Medicare Supplement first year premiums were $9.4 million, or a $6.4 million increase above prior year.  Other product lines experienced a $0.6 million increase.  Annuity deposits, which are accounted for on our balance sheet as deposits rather than premiums, decreased by $16.9 million compared with the prior year.  

Net investment income was $5 9 . 1 million and $5 4.4 million for the year s ended December 31, 201 4 and 201 3 , respectively . Investment income increased $3.8 million due to a larger invested asset base while approximately $0.8 million came from realized gains .

Net operating expenses were $ 22.5 million and $ 23.7 million for the year s ended December 31, 201 4 and 201 3 , respectively. The variance was due to a reduction in commission expenses on declining earned premiums .

Benefits and losses incurred were $14 7 . 8 million and $14 5 . 2 million for the year s ended December 31, 201 4 and 201 3 , respectively. Life benefits increased $2.5 million resulting from higher mortality exposure. Medicare supplement benefits decreased $1.1 million from a reduction in the in force on the existing blocks offset by the increased benefits from new sales. Annuity benefits decreased $1.3 million due to the reserve reduction in single premium annuities and guaranteed life withdrawal benefit rider. Supplementary contract payments increased $0.2 million. Increase in interest credited to policyholders was $2.2 million as a result of a larger annuity account value . 

Amortization of deferred acquisition costs (“DAC”), sales inducement asset (“SIA”) and the value of business acquired (“VOBA”) was $ 19.7 million and $ 20.0 million for the year s ended December 31, 201 4 and 201 3 , respectively.   

As a result of the above mentioned changes in revenues and expenses, pretax earnings from operations were $ 29.8 million and $ 26.7 million for the year ended December 31, 201 4 and 201 3 , respectively.

Net cash provided by operating activities increased $ 282.0 million in fiscal 201 6, compared with fiscal 2015, primarily due to an improvement in earnings, lower federal income tax payments, combined with $56.8 million of note and interest repayments from Private Mini.

Net cash used in investing activities in creased $ 518.1 million in fiscal 201 6 , compared with fiscal 201 5 . Purchases of property, plant and equipment, which are reported net of cash from sales and lease -back transactions , increased $467.2 million. Cash from the sales of property, pla nt and equipment increased $127.6 million largely due to an increase in fleet sales. Life Insurance had an increase in net cash used for investing of $186.9 million due to additional investment purchases.

Net cash provided by financing activities in creased $ 453.2 million in fiscal 201 6 , as compared with fiscal 201 5 due to an increase in borrowings of $198.4 million, net decrease in repayments of debt and capital leases of $117.8 million, an increase in annuity deposits, net of withdrawals, by Life Insurance of $194.4 million and an increase in dividends paid of $58.8 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 201 7 the Company will reinvest in its truck and trailer rental fleet approximately $ 600 million , net of equipment sales and excluding any lease buyouts. For fiscal 201 6 , the Company invested, net of sales, approximately $ 365 million before any lease buyouts in its truck and trailer fleet. Fleet investments in fiscal 201 7 and beyond will be dependent upon several factors including availability of capital, the truck rental environment and the used-truck sales market. We anticipate that the fiscal 201 7 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.

Real Estate has traditionally financed the acquisition of self-storage properties to support U-Haul's growth through debt financing and funds from operations and sales. 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 construction loans and internally generated funds. For fiscal 201 6 , the Company invested $ 592.4 million in real estate acquisitions, new construction and renovation and repair. For fiscal 201 7 , the timing of new projects will be dependent upon several factors , including the entitlement process, availability of capital, weather, and the identification and successful acquisition of target properties. 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) were $ 969.9 million , $ 630.3 million and $ 730.2 million for fiscal 2016, 2015 and 2014 , respectively. The components of our net capital expenditures are provided in the following table: