VLCT Property and Casualty Intermunicipal Fund, Inc.
Board of Directors Meeting
VLCT Offices, Montpelier, Vermont, and
Wednesday, October 13, 2021
Directors Present: Carl Rogers, Jackie Higgins, Aaron Frank, Dave Atherton, Stuart Hurd, Patrick Moreland, Jared Cadwell, Jerry Storey, Erik Wells, Bryan Young, Neal Fox, and Rob Gaiotti
Staff Present: Ted Brady, Joe Damiata, Fred Satink, Jeremiah Breer, Phil Woodward, Kelly Knotek and Kelley Avery
President Rogers called the meeting to order at 10:01 a.m.
Upon motion (Higgins/Cadwell) duly adopted, the board voted unanimously to approve the agenda as amended.
Upon motion (Hurd/Frank) duly adopted, the board voted unanimously to approve the minutes of the September 24, 2021 meeting.
Joe Damiata provided an organizational update including the following:
- Last week’s virtual Town Fair was very successful and well attended. The hybrid PACIF and VERB Annual Meetings the week prior were also well attended and a quorum was confirmed for both trusts. Feedback surveys will be going out to the membership this week.
- For staffing updates, a new Executive Administrative Assistant has been hired to support the Leadership Team and will start on October 18. The Loss Control Manager position is still open and staff is working hard to fill it. The Municipal Assistance Center is looking to add a staff attorney for next year.
- New payroll and HR software will be rolled out to staff this week and will go live on Friday. Staff will now be able to access paystubs online.
Jill George reviewed PACIF claims for the second quarter. Overall, claims were down across all lines of coverage in comparison to the five-year average.
Upon motion (Hurd/Young) duly adopted, the board voted unanimously to approve the Q2 Claims Report as presented.
Ted Brady and Jeremiah Breer presented the report of the Joint Investment Committee (JIC), which met on September 3rd. Mr. Brady explained his proposal presented at the meeting to include VT-based local investments in the PACIF and VERB portfolios. Mr. Brady stated he firmly believed this would benefit not only VLCT and its mission but its members and their local communities as well. The proposal was met with mixed results from the committee, and staff plans to present options, risks and potential returns based on various local investment options at a future meeting. Jeremiah Breer provided an overview on the rest of the meeting where representatives from Insight and Strategic Asset Alliance provided an overview of portfolio returns through the second quarter. Insight also shared their economic outlook, which is positive. PACIF’s consolidated return, net of fees through June 30th was -.26%. Director Cadwell noted he is pleased with the local investment initiative.
Upon motion (Higgins/Moreland) duly adopted, the board voted unanimously to accept the report of the Joint Investment Committee.
President Rogers noted that with Jerry Storey’s departure from the board, a replacement is needed now to serve on the JIC and the Strategic Planning Committee. If anyone on the board is interested in serving as a replacement, please let President Rogers know. Mr. Damiata also noted it is more appropriate for a representative from the board to be presenting the report of the JIC rather than staff, so staff recommends the board select a representative on the JIC to provide the Committee report at future meetings. President Rogers asked Staff to have this item be included in the board governance discussion at the December meeting.
Joe Damiata proposed a revised version of the Member Participation in the Defense and Settlement of Claims Board Policy included in the board packet. This policy was last revised in 1999, and edits have been made to further clarify the language. These changes now illustrate PACIF’s intent on how members may participate in the settlement of liability claims. PACIF counsel Phil Woodward has reviewed and approved the changes. The board members agreed this policy seems fair to both the Trust and its members. This policy will now be referenced in the PACIF Coverage Document and will be included with the acknowledgement letters that are sent to members after a liability claim is received.
Upon motion (Hurd/Higgins), duly adopted, the board voted unanimously to approve the revised Member Participation in the Defense and Settlement of Claims Board Policy.
Mr. Damiata briefly reviewed the report of the actuary. This report was reviewed in depth with the board at the September 24th meeting, and an executive summary was included from Milliman in the board packet. Milliman increased the reserve central estimate to $38.3 million. Based on the funding analysis, staff is proposing to raise $25,055,561. The proposed rates generate a net contribution slightly higher than the 60% safety margin.
Upon motion (Frank/Cadwell), duly adopted, the board voted unanimously to accept the actuary’s June 30, 2021 Loss Reserve and Funding Reports and Contribution Credit Analysis.
Fred Satink provided a review of the 2022 renewal including proposed changes to rates and reinsurance. The proposed gross-net rate reduction of .1% for all lines reflects the actuary’s funding analysis recommendations and staff rate smoothing. Individual rates across all lines were included in the board packet.
Mr. Satink reviewed staff’s recommended reinsurance structure for 2022, also discussed at the last meeting, which includes renewing with all of the incumbent reinsurers with the same structure, including cyber. The updated pricing chart for reinsurance was provided in the board packet, with minor changes. Overall, PACIF’s 2022 reinsurance costs are up modestly for 2022. Beazley provided a quote which offers a price range for cyber coverage based on PACIF’s loss experience between now and December 1st. Staff believes Beazley’s quote is fair based on the current cyber landscape.
Mr Satink briefly reviewed coverage changes for 2022, detailed in depth at the September 24 meeting, which consisted largely of language clarifications. Of special note were the changes to certain Crime & Fidelity sublimits from $25,000 to $50,000. Two new drone endorsements were also discussed, with the intent of providing liability and physical damage coverage in 2022.
Upon motion (Frank/Higgins), duly adopted, the board voted unanimously to approve the proposed 2022 PACIF rates, changes to coverages and limits as proposed and authorized staff to bind 2022 reinsurance coverage as presented.
Joe Damiata proposed consolidating the November and December board meetings and holding the meeting on December 17 so it will not conflict with the NLC Mutual board meeting which Mr. Damiata needs to attend. In addition, staff will look to consolidate board meetings more for 2022, and this will be discussed at the December meeting where a draft meeting schedule will be presented.
Upon motion (Hurd/Cadwell), duly adopted, the board voted unanimously to approve to consolidate the November and December meetings and to reschedule the meeting to December 17.
Upon motion (Hurd/Cadwell), duly adopted, the board voted unanimously to adjourn the meeting (10:58 a.m.).