VLCT Property and Casualty Intermunicipal Fund (PACIF), Inc.
Board of Directors Meeting
Friday, May 24, 2019
VLCT Offices, Montpelier, Vermont
Directors Present: Pete Johnson, Carl Rogers, Joshua Powers, Jackie Higgins, John Lawe, Jerry Storey, Brendan Whittaker, David Atherton, Neal Fox, Aaron Frank (by phone), Stuart Hurd (by phone) and Patrick Moreland
Staff Present: Joe Damiata, Maura Carroll, Jeremiah Breer, Fred Satink, Kelley Avery, Kelly Kindestin and Jill George
Others Present: Mike Waterman, Isabella Pang and Nicholas Dranchak (JLTRe)
President Johnson called the meeting to order at 9:35 a.m.
Upon motion (Fox/Rogers) duly adopted, the Board voted unanimously to approve the agenda.
Upon motion (Powers/Whittaker) duly adopted, the Board voted unanimously to approve the minutes from the March 22, 2019 meeting as presented.
Joe Damiata provided the staff report on the following topics:
- Dean Mudgett has resigned and staff is interviewing applicants for the open position.
- VC3 met with staff regarding the CRM project, and the system build has begun; the NavRisk Policy portal system upgrade is on schedule for late summer completion.
- Mr. Damiata attended the NLC RISC Conference along with directors Atherton and Moreland.
President Johnson updated the board and staff that the September meeting would be his last meeting of the year.
Kelly Kindestin provided an update to the board on current property and liability claims activity.
Jill George reviewed the claims report for the first quarter. On the average, claims were up for Q1, largely due to weather-related issues on the roads and at worksite locations. Property claims were below average for the quarter.
Jeremiah Breer presented the financial report for the first quarter. Mr. Breer noted that actual claims paid are very close to actuarial projections for the period. However, actuarial estimates for the prior year were substantially higher than the actuals. Milliman will be providing updated estimates as part of their mid-year analysis at the end of August.
Nicholas Dranchak presented the BCAR (Best Capital Adequacy Ratio) analysis to the board. BCAR is the methodology that A.M. Best uses to provide financial strength ratings for insurance companies. The BCAR analysis was applied to VLCT PACIF, using its net position and financials as of 12/31/18. The results showed that PACIF’s net position was in the strongest financial rating range. Stress test BCARs were also calculated to illustrate financial strength and solvency under various stress scenarios.
Staff intends to use the results of this analysis to draft a target net position policy and present the policy to the board at its next meeting.
Mike Waterman and Isabella Pang presented JLTRe’s annual stewardship report. This report detailed PACIF’s 2019 reinsurance renewal outcomes by lines of coverage, provided an overview of current and developing market conditions, and also specified JLTRe’s reinsurance recommendations for 2020.
Upon motion (Rogers/Hurd), duly adopted, the Board voted unanimously to accept the stewardship report from JLT Re.
Jeremiah Breer presented a Ten-Year Analysis of Financial Performance to the board from 2009 to 2018. Data points such as capacity/leverage, profitability/operating position, liquidity and reserve adequacy were analyzed over a ten-year period to determine PACIF’s trends. In general, the results reflect improving financial metrics due to the continuation of actuarial reserve reductions.
Fred Satink provided a brief overview of the 2018 EAP Utilization Report. The report showed a breakdown of both organizational and individual services provided for 2018. Also noted were services provided through EAPFirst. Mr. Satink believes the program has merit, but continues to evaluate where PACIF is receiving adequate value.
Mr. Satink reviewed a request for PACIF coverage from the Central Vermont Fiber Communications District. John Riley confirmed the district is eligible for coverage. Given its nature of business, some unique joint contractual insurance arrangements, and the fact that neither our coverage nor our rating structure is really designed for the complexities or exposures associated with this type entity, staff is recommending we do not quote the municipal entity. Staff may recommend adding this as a type of municipal entity not eligible for coverage to the Underwriting Policy later this fall.
Upon motion (Whittaker/Powers), duly adopted, the board agreed with staff’s recommendation to not offer a quote to CV Fiber communications district.
President Johnson noted the VLCT Board voted at its April meeting to establish an advisory subcommittee for the 2020 budget process. The committee would be comprised of members from the VLCT, PACIF and VERB boards. Carl Rogers and Jerry Storey have both expressed interest in serving on this subcommittee, if there are no objections from the board. There were none.
Mr. Damiata explained there is no new information to report from this legislative session as no bills have been passed which would have any impact to PACIF. The proposed medical marijuana bill as covered treatment for workers’ compensation stalled in committee, although it may resurface once again next year.
Upon motion (Powers/Storey), duly adopted, the board voted unanimously to adjourn the meeting (12:27 p.m.).