OTHER INCOME AND OTHER OPERATING EXPENSES

12 Months Ended

Oct. 31, 2012

OTHER INCOME AND OTHER OPERATING EXPENSES

OTHER INCOME AND OTHER OPERATING EXPENSES

9. OTHER INCOME AND OTHER OPERATING EXPENSES

The major components of other income and other operating expenses consisted of the following in millions of dollars:

	2012		2011		2010
Other income
Insurance premiums and fees earned	$	248	$	236	$	198
Revenues from services	233		217		276
Investment income	14		11		10
Other	180		160		122
Total	$	675	$	624	$	606
Other operating expenses
Depreciation of equipment on operating leases	$	339	$	306	$	288
Insurance claims and expenses	245		193		146
Cost of services	122		115		198
Other	76		102		116
Total	$	782	$	716	$	748

The company issues insurance policies for crop insurance and extended equipment warranties. Beginning in 2011, the crop insurance subsidiary utilized reinsurance to limit its losses and reduce its exposure to claims. Prior to 2011, the crop insurance business was conducted through managing general agency agreements with external insurance companies. Although reinsurance contracts permit recovery of certain claims from reinsurers, the insurance subsidiary is not relieved of its primary obligation to the policyholders. The premiums ceded by the crop insurance subsidiary in 2012 and 2011 were $251 million and $246 million, and claims recoveries on the ceded business were $493 million and $271 million, respectively. These amounts from reinsurance are netted against the insurance premiums and fees earned and the insurance claims and expenses in the table above.