You are here

Printer-friendly versionPDF version

VLCT Property and Casualty Intermunicipal Fund, Inc.
Board of Directors Meeting
Friday, October 12, 2018
VLCT Offices, Montpelier, Vermont

Minutes

Directors Present: Pete Johnson, Carl Rogers, Joshua Powers, Aaron Frank (by phone), Jackie Higgins, Stuart Hurd, John Lawe, Jerry Storey, Bruce Urie, Brendan Whittaker and David Atherton

Staff Present: Joe Damiata, David Sichel, Maura Carroll, Jeremiah Breer, Fred Satink, Kelly Kindestin, Kelley Avery, Jill George and Dean Mudgett (left 10:15 am)

Others Present: John Mohr (Strategic Asset Alliance) (by phone at 10:30 – 11:25 a.m.)

President Johnson called the meeting to order at 10:00 a.m.

Upon motion (Rogers/Storey) duly adopted, the Board voted unanimously to approve the agenda as presented.

Upon motion (Urie/Rogers) duly adopted, the Board voted to approve the minutes from the September 28, 2018 meeting as presented. 

For the sake of new attendees present, President Johnson asked for everyone to go around the room and introduce themselves.

Joe Damiata presented a staff update. Reinsurance provider JLT has been acquired by Marsh. This will result in a name change and should enable improved leveraging and pricing in the future. There was an excellent turnout for Annual Meeting at Town Fair last week.  The joint meeting format combined with both VERB Trust and VLCT will likely continue for future annual meetings. Mr. Damiata invited Dean Mudgett to review VLCT’s rebranding project.

Mr. Mudgett noted a rebranding ”work group” will be formed comprised of two or three members from each board and key VLCT staff to work together on rebranding VLCT and the Trust entities as well. Staff will be looking to outside firms to assist in this process.  The hope is to have presentations available shortly after the new year with a series of options to choose from. David Atherton, Jackie Higgins and Joshua Powers volunteered to represent the PACIF board.

Upon motion (Storey/Powers) duly adopted, the Board voted to appoint Joshua Powers, Jackie Higgins and David Atherton to the VLCT Rebranding Committee.

Joe Damiata shared new and improved member quote documents that are now in use.

Jeremiah Breer reviewed the financial statements through June 30, 2018. Net position has decreased $2,970,132 or 13.11% from 2017 year-end. This is largely due to adverse development, which is more than compensated for in the actuary’s reserve adjustments. Revenues are just .4% higher than last year at this time, and general and administrative expenses are down 4.1%.

Upon motion (Urie/Storey) duly adopted, the Board voted to approve the financial statements through June 30, 2018 as presented.

Jill George reviewed the Q2 2018 PACIF Claims Report. Overall claims frequency was down, with workers’ compensation (WC) claims frequency down substantially compared to prior years. Total incurred for WC was up, but largely due to one large claim.  Property/casualty claims incurred were also up, with frequency around average compared to prior quarters. Auto claims frequency was down substantially compared to prior years.

Upon motion (Hurd/Rogers) duly adopted, the Board voted unanimously to approve the Q2 2018 PACIF Claims Report.

John Lawe presented the Report of the Joint Investment Committee. The committee met September 14, and the investment advisor recommended some adjustments to the Trust’s investment policy and asset allocation to reduce the portfolio risk. The advisor proposed two  options for asset allocation changes:

  • Option 1 - to keep allocations the same with a few minor changes to asset classes, and
  • Option 2 – to reduce risk asset allocation from 50% to 40% of net position.

Staff is recommending Option 2 for the board’s consideration.

Upon motion (Whittaker/Higgins) duly adopted, the board voted unanimously to adopt “Option 2” as presented for asset allocation.

The investment advisor also recommended reducing the municipal bond rating from AA to A-, increasing the Yankee bonds allocation in the fixed income portfolio from 10% to 15% and adding bank loans as an allowable risk asset. The board and staff discussed these recommendations and the board also requested some clarification regarding the Joint Investment Committee’s role in making such recommendations. David Sichel explained the role of the committee in bringing back these recommendations to the various boards for approval. Mr. Mohr assured the board these changes would, despite market volatility, set the portfolio at a risk level meant for the long term.

Upon motion (Lawe/Hurd), duly adopted, the board voted unanimously to adopt the proposed changes to the Investment Policy.

Upon motion (Hurd/Higgins), duly adopted, the board voted unanimously to accept the Joint Investment Committee Report.

Mr. Damiata reviewed the summary report of Milliman’s mid-year Loss Reserve, 2019 Funding and Distribution Credit Analysis. The actuary is recommending an overall 2.8% decrease in rates for 2019, a substantial reduction compared to prior years. This average is a combined decrease of a 2.7% reduction in workers’ compensation and a 2.9% reduction in property and casualty. The actuary is also recommending a distribution credit of $1.7 million.

Upon motion (Urie/Storey), duly adopted, the board voted unanimously to accept the mid-year Loss Reserve, 2019 Funding and Distribution Credit Analysis.

Fred Satink reviewed the proposed renewal rates for 2019 by classification and category. Although rates are based on the overall 2.8% average reduction, rates for property and casualty are subsidizing those for workers’ compensation slightly in order to smooth and stabilize rates overall to the benefit of the membership. Staff also requests the authorization to use up to $1 million of net position for underwriting flexibility.

Upon motion (Hurd/Urie), duly adopted, the board voted unanimously to approve the 2019 renewal rates as proposed.

Mr. Satink also reviewed the 2019 reinsurance changes. Although there will be rate reductions in property and cyber coverages, overall reinsurance rates have increased. Changes for 2019 include:

  • An increase in annual aggregate deductible from $250K to $500K for the first layer of liability reinsurance with Markel;
  • Switching excess liability carriers from Genesis to Chubb; and
  • Changing the attachment point of Safety National to $1 million, with NLC MIC filling the gap.

Upon motion (Urie/Hurd), duly adopted, the board voted unanimously to approve the reinsurance renewals as presented.

Upon motion (Storey/Hurd), duly adopted, the board voted unanimously to authorize the use of up to $1 million in Net Position to provide additional underwriting flexibility.

 

Mr. Satink briefly reviewed the proposed changes to the PACIF Coverage Documents.  These changes were reviewed at the September 28th meeting of the board. There were no new changes proposed.

Upon motion (Powers/Higgins), duly adopted, the board voted unanimously to approve the changes to the Coverage Documents for 2019.

Mr. Satink reviewed the proposed Underwriting Policy changes.  These changes were also discussed at the September 28th meeting.  Proposed changes include:

  • Adding insect control districts as a class of business that PACIF will not quote;
  • Increasing the contribution amount which triggers loss control debits and credits; and
  • Removing the reference to the discontinued WorkStrong Program.

Upon motion (Urie/Storey), duly adopted, the board voted unanimously to approve the changes to the PACIF Underwriting Policy for 2019.

Mr. Damiata discussed the proposed distribution credit for members for 2019. At the September 28 meeting, the board agreed to distribute the actuary’s recommendation of $1.7 million via $1.5 million in contribution credits and $200,000 in grants.

Upon motion (Powers/Hurd), duly adopted, the board voted unanimously to approve a distribution of $1.7 million to members in 2019 via $1.5 million in contribution credits, per current distribution policy, and $200,000 to fund the PACIF equipment grant program.

In other business, Director Storey commended VLCT staff on a successful Annual Meeting and also saluted Director Brendan Whittaker on his service on both the PACIF and VLCT boards.

Upon motion (Powers/Whittaker), duly adopted, the Board adjourned at 12:05 pm.

Respectfully submitted,
David Sichel
Assistant Secretary

Board or Committee: 
PACIF Board of Directors
Board Meeting Date: 
Friday, October 12, 2018

Resource Category: