Segment Information

9 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Segment Information

Note 13 – Segment Information

Financial information for our reportable operating segments is summarized as follows:

	Three months ended December 31, 2020
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	2,974	$	-	$	-		$	2,974
Depreciation on operating leases		1,450		-		-			1,450
Interest expense		491		-		-			491
Net financing revenues		1,033		-		-			1,033
Insurance earned premiums and contract revenues		-		241		-			241
Investment and other income, net		21		158		-			179
Net financing and other revenues		1,054		399		-			1,453
Expenses:
Provision for credit losses		118		-		-			118
Operating and administrative expenses		268		86		-			354
Insurance losses and loss adjustment expenses		-		98		-			98
Total expenses		386		184		-			570
Income before income taxes		668		215		-			883
Provision for income taxes		163		52		-			215
Net income	$	505	$	163	$	-		$	668
	Nine months ended December 31, 2020
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	8,821	$	-	$	-		$	8,821
Depreciation on operating leases		4,484		-		-			4,484
Interest expense		1,534		-		-			1,534
Net financing revenues		2,803		-		-			2,803
Insurance earned premiums and contract revenues		-		714		-			714
Investment and other income, net		76		369		-			445
Net financing and other revenues		2,879		1,083		-			3,962
Expenses:
Provision for credit losses		366		-		-			366
Operating and administrative expenses		818		270		-			1,088
Insurance losses and loss adjustment expenses		-		265		-			265
Total expenses		1,184		535		-			1,719
Income before income taxes		1,695		548		-			2,243
Provision for income taxes		414		132		-			546
Net income	$	1,281	$	416	$	-		$	1,697
Total assets at December 31, 2020	$	128,442	$	6,176	$	(127	)	$	134,491

Note 13 – Segment Information (Continued)

	Three months ended December 31, 2019
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	3,044	$	-	$	-		$	3,044
Depreciation on operating leases		1,712		-		-			1,712
Interest expense		759		-		(4	)		755
Net financing revenues		573		-		4			577
Insurance earned premiums and contract revenues		-		231		-			231
Investment and other income, net		42		19		(4	)		57
Net financing and other revenues		615		250		-			865
Expenses:
Provision for credit losses		128		-		-			128
Operating and administrative expenses		318		88		-			406
Insurance losses and loss adjustment expenses		-		116		-			116
Total expenses		446		204		-			650
Income before income taxes		169		46		-			215
Provision for income taxes		23		11		-			34
Net income	$	146	$	35	$	-		$	181
	Nine months ended December 31, 2019
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	9,025	$	-	$	-		$	9,025
Depreciation on operating leases		4,920		-		-			4,920
Interest expense		2,081		-		(16	)		2,065
Net financing revenues		2,024		-		16			2,040
Insurance earned premiums and contract revenues		-		692		-			692
Investment and other income, net		117		171		(16	)		272
Net financing and other revenues		2,141		863		-			3,004
Expenses:
Provision for credit losses		264		-		-			264
Operating and administrative expenses		832		269		-			1,101
Insurance losses and loss adjustment expenses		-		344		-			344
Total expenses		1,096		613		-			1,709
Income before income taxes		1,045		250		-			1,295
Provision for income taxes		235		61		-			296
Net income	$	810	$	189	$	-		$	999
Total assets at December 31, 2019	$	118,228	$	5,491	$	(1,112	)	$	122,607

Note 13 – Segment Information (Continued)

Insurance Operations – Revenue Recognition

For the three and nine months ended December 31, 2020, approximately 83 percent of Insurance earned premiums and contract revenues in the Insurance operations segment were accounted for under the guidance for revenue from contracts with customers.  For the three and nine months ended December 31, 2019, approximately 85 percent and 84 percent, respectively, of Insurance earned premiums and contract revenues in the Insurance operations segment were accounted for under the guidance for revenue from contracts with customers.  

The Insurance operations segment defers contractually determined incentives paid to dealers as contract costs for selling vehicle and payment protection products.  These costs are recorded in Other assets on our Consolidated Balance Sheets and are amortized to Operating and administrative expenses on the Consolidated Statements of Income using a methodology consistent with the recognition of revenue.  The amount of capitalized dealer incentives and the related amortization was not significant to our consolidated financial statements as of and for the three and nine months ended December 31, 2020 and 2019.

We had $2.4 billion and $2.2 billion of unearned insurance premiums and contract revenues from contracts with customers included in Other liabilities on our Consolidated Balance Sheets as of March 31, 2020 and 2019, respectively.  We recognized $169 million and $537 million of these balances in Insurance earned premiums and contract revenues in our Consolidated Statements of Income during the three and nine months ended December 31, 2020, respectively, compared to $216 million and $519 million recognized during the same periods in fiscal 2020.  At December 31, 2020, we had unearned insurance premiums and contract revenues of $2.4 billion included in Other liabilities on our Consolidated Balance Sheets, and with respect to this balance we expect to recognize revenue of $192 million during fiscal 2021, and $2.2 billion thereafter.  At December 31, 2019, we had unearned insurance premiums and contract revenues of $2.3 billion associated with outstanding contracts.