American Guaranty Fund Group of Florida Board of Directors Meeting Report: October 23, 2012

The American Guaranty Fund Group (“AGFG” or “Fund”) Board of Directors (“Board”) met today, October 23, 2012, to discuss general business. 

AGFG Director of Operations Tom Streukens presented the organization’s financial report for the period ending September 30, 2012.  The Fund currently holds just over $800,000 in assets and just over $800,000 in liabilities.  Total general and administrative expenses were over $3 million, while operating revenues of just over $3 million created net income of just over $3,000.

Mr. Streukens then led a discussion of the AGFG’s 2013 budget.  The Board is tasked with recommending claim payment and benefit levels to the Florida Insurance Guaranty Association (“FIGA”) and the Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”).  AGFG’s Board is projecting a 1.9 percent increase in the compensation budget for FIGA and an increase of more than 6 percent for the FWCJUA budget.  A decrease of 3.4 percent will be realized in benefits for AGFG, FIGA and FWCJUA employees, primarily due to employee having chosen lower benefit levels from those that are available.

Approximately $10,000 will be shifted from FIGA to FWCJUA for the use of technology.  Beginning in 2013, savings will begin to be realized as a result of consolidated budgeting of FIGA and FWCJUA, which was implemented in 2008. To this point, savings have not been realized due to costs associated with closing down the FWCJUA office in Jacksonville.  The budget was approved by the AGFG Board, but will not be sent for ratification to the FIGA and FWCJUA Board.

Discussion was held as to whether an external third-party claims audit should be procured in 2013 or 2014 in an effort to calm the Florida Department of Financial Services’ concerns about the lack of a recent external audit.  Currently, the Florida Office of Insurance Regulation (“OIR”) performs an audit function for FIGA and the FWCJUA, but there are concerns as to whether the OIR audit appropriately reflects the unique nature of the organizations. There was consensus that an external third-party claims audit would provide benefit to the organizations not provided by the OIR audits.

The AGFG Management Agreement was approved after being amended to reflect a shift in utility expense from being shared equally by FIGA and FWCJUA to FIGA coving 75 percent of the bill.

A brief overview of the 2011 AGFG GAPP audit was presented. The audit demonstrated that AGFG is sound and in compliance with all requirements.

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