2008 - 2009 - Pinsent Masons Water Yearbook 2012 - 2013

USA
PART 3(ii): COMPANY ANALYSIS: LOCAL/REGIONAL PLAYERS
PICO HOLDINGS INC
The Physicians Insurance Company of Ohio (PICO) is a holding company specialising in the
acquisition of apparently undervalued assets. The company seeks to develop a portfolio of water
assets for sale to municipal and industrial clients.
PICO Holdings Inc, profit and loss account
Y/E 31/12 (USDmillion) 2003 2004 2005 2006 2007
Turnover 31.50 22.12 142.11 82.72 33.93
Operating profit -13.62 -10.64 40.33 50.87 2.01
Net profit -3.24 -10.56 16.20 29.24 -1.27
Earnings per share -0.26 -0.85 1.25 1.95 -0.07
(USD)
PICO entered the water rights market in 1995 through the acquisition of Vidler Water Co. Currently,
Vidler controls water rights in Nevada (11,306 acre-feet plus applications for up to 100,000 acre-feet
outstanding), Arizona (37,795 acre-feet plus 13,764 acre-feet under option) and Colorado (268 acrefeet,
these operations are in the process of being sold off). Revenues are generated by the sale of
land and water rights and from the selling of water to third parties. Nevada Land and Resource
Company (NLRC) was acquired in 1996 for USD48.6million. NLRC currently owns 5,582 acre-feet of
water rights in Nevada and is applying for up to 105,506 acre-feet of additional water rights. In
Arizona, the Vidler Arizona Recharge Facility has an estimated capacity of 1million acre-feet with an
annual recharge capacity of 35,000 acre-feet. The Semitropic water storage facility in California holds
the right to store 30,000 acre-feet of water until 2035, with an annual recovery of 2,700-6,800 acrefeet
per annum. In July 2008 Vidler Water sold the company’s interests in Semitropic to the San
Diego Water Authority for USD11.7million resulting in a net gain of USD8.7million.
Water Rights held by Pico, 09-2008
System State Status Acre-feet
Harquahala, La Paz County Arizona Owned 3,840
Fish Springs Ranch Nevada 51% owned 13,000
Lincoln County Nevada Application 40,000
Sandy Valley Nevada Owned 415
Sandy Valley Nevada Application 1,000
Muddy River Nevada Owned 267
Carson River Nevada Owned 2,069
Carson River Nevada Option 1,652
Colorado Colorado Owned 180
Boise Idaho Owned 7,044
In March 2002, PICO sold 2,645 acre-feet of transferable ground water in Harquahala Valley, Arizona
for USD1,450 per acre-foot. A further 480 acre-feet were sold in May 2002 for USD2,083 per acrefoot.
Sales since 2001 have generated USD15.6million in revenues and USD4.8million in gross
margins. In 2001, Vidler Water Company sold 83.8% of its original interests in the Semitropic Water
Banking and Exchange Program for USD10.2million, with a gross margin of USD5.7million. Vidler
sold 44,000 acres of land in 2003, generating USD14.8million in revenues and USD4.6million to gross
margins. In 2005, Vidler sold 42,000 acre-feet of water rights in the Harquahala Valley Irrigation
District of Arizona for USD94.4million at USD2,200 per acre-foot, with a net gain of USD55.5million.
Vidler and NRLC, profit and loss account
Y/E 31/12 (USDmillion) 2003 2004 2005 2006 2007
Vidler
Turnover 16.8 2.0 106.4 3.0 7.9
Pre-tax profit -0.5 -5.7 56.2 -2.5 -5.3
NRLC
Turnover 5.9 11.6 21.8 41.4 13.5
403
Pinsent Masons Water Yearbook 2008-2009