Florida Workers’ Compensation Joint Underwriting Association Investment Committee Recommends Retaining Merrill Lynch as Interim Investment Manager

The Florida Workers’ Compensation Joint Underwriting Association, Inc. (“FWCJUA”) Investment Committee (“Committee”) met on November 19, 2010, during which it voted to recommend to the FWCJUA Board of Directors (“Board”) that Merrill Lynch be hired on a short-term basis as the FWCJUA’s investment manager.  The Board will take up the recommendation at its next meeting on December 7.

If ultimately approved, Merrill Lynch will serve on an interim basis for up to one year.  During that time, Committee members will conduct additional research to determine if Merrill Lynch is the best long-term choice for the FWCJUA.

Procurement procedures for the FWCJUA do not require competitive bids if the transaction is under $25,000. 

In addition to Merrill Lynch, Committee members also considered hiring Cap Trust, but decided on Merrill Lynch because Cap Trust only offers advisory services.  With Cap Trust, trading or the purchase of bonds would have to be accomplished by another entity.

The agreement with Merrill Lynch requires opening a company account for $300, with additional fees levied for trading or custodial services.   Committee members agreed Merrill Lynch was the most cost effective choice because trading activity in recent years has been minimal.

The FWCJUA had used Wells Capital Management/US Bank as its investment advisor since 2007, however, the company resigned from the position, making it necessary to find a replacement.  

Since 2001, the FWCJUA had paid annual management fees to Wells Capital Management/US Bank ranging from $23,694.32 to $37,125.61.

In other business, as part of a compliance review, the Committee also moved to reconfirm the continued holding of Lehman Brothers and Citigroup bonds within the FWCJUA’s investment portfolio.

The meeting materials are attached for review.