Florida Self-Insurers Guaranty Association Audit Committee Meeting Report: March 22
Date Published: 03-23-2011
The Florida Self-Insurers Guaranty Association, Inc. ("FSIGA") Audit Committee ("Committee") met on March 22, 2011 to review and approve the organization's annual financial statement for presentation to the FSIGA Board of Directors ("Board") later this month.
After approving minutes from the Committee's most recent meeting, Members voted to accept the auditor's report.
The Committee then heard a brief report on FSIGA's financial statement from Russell Perkins, who explained that the statement appeared to properly reflect the financial position of FSIGA. He also reported that no exceptions were found in relation to claims testing.
Liability for FSIGA net assets totaled $41.6 million as of December 31, 2010, representing an increase of approximately $2.1 million from December 31, 2009. There has been a change in investments, as well as a change in refundable security deposits in excess of $9 million, Mr. Perkins said.
According to FSIGA's financial statement, $5.5 million is designated for claims for insolvent members, $31.9 million is designated for future insolvency and $4.1 million remains undesignated. The total unrestricted net assets are $41.6 million a year, Mr. Perkins added.
FSIGA's annual revenues were down about $1 million, the result of increased investment income and claim recoveries, he continued. Two new insolvencies resulted in an approximate $350,000 charge, creating an ultimate $2.1 million net change in assets this year.
Mr. Perkins also said FSIGA is working to resolve a dispute over an old claim involving Old Republic Insurance Company. A settlement may be negotiated in the future, but current plans are to try to recover the full amount.
The actuarial report followed, which Actuary Terry Godbold explained is a review of FSIGA's loss reserves.
"(We) come up with best estimate of what the liabilities should be on your balance sheet for all the known insolvencies as of December 31, 2010," Mr. Godbold added.
He said the primary concern is the amount of development that still exists on several open claims, some of which are fairly old.
During 2010, FSIGA sustained two new insolvencies--Fleetwood Enterprises and Suncoast Hospital--that resulted in about $2.3 million in additional liabilities, or ultimate losses, he said.
FSIGA closed 13 claims last year and received six new claims as a result of insolvencies, for a decrease of seven claims, Mr. Godbold added. He said he found no "major red flags."
After hearing the reports, the Committee voted unanimously to recommend that the Board approve the financial statements at its March 28 meeting.
FSIGA Executive Director Brian Gee then spoke briefly.
"As far as companies on the cusp, we have several that we are continuing to look at. One testament to how well we are handling risk management is that Walt Disney World is going to come back into self-insurance effective June 30," Mr. Gee said, adding that Disney is supposed to be submitting its application in the next few weeks.
"That is a vote of confidence," Mr. Gee said. "I am very pleased that a large member like that has a comfort level . . . to want to come back to self-insurance."
With no further business before the Committee, the meeting was adjourned.
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