FWCIGA Board of Directors Meeting Report: Mar. 10

On Monday, March 10, 2008, the Florida Workers’ Compensation Insurance Guaranty Association (“FWCIGA”) held a Board of Directors (“Board”) meeting to receive updates regarding FWCIGA investments, legal actions, claims, financial statements and operations business.

Chairman Tom Stahl called the meeting to order with a quorum of Board members present.

A review of pending legal actions was given. FWCIGA currently has one on hold and another that is progressing through the discovery phase.

A report from the Investment Committee (“Committee”) was given on FWCIGA’s investment portfolio. As of December 31, 2007, FWCIGA had approximately $189 million in investments through Trusco (81 percent), the Capital City Trust Company (12 percent), the Florida Treasurer’s Security and Privacy Impact Assessment and others (6 percent). Concern was expressed whether these companies have been affected by the subprime credit crisis. Several of the short-term annuities FWCIGA holds are with banks that have had problems, but many of the annuities held by these banks have either already expired or will expire in the near future.

Proposed changes to FWCIGA’s investment policy also were given in the Committee report. The Committee requests that the securities rating requirements for future investment companies be raised, and a “fallen angel provision” be added into the investment policy. This provision would provide for an immediate review of any security that falls below approved ratings and that a report with action suggestions be given to the Board within five days. The proposed changes were accepted by the Board.

A report on claims was given. By the end of 2007, FWCIGA had 992 open claims from the Florida Insurance Guaranty Association (“FIGA”). Sixty-four new claims were submitted in 2007. Of those, 26 were settled. The average settlement amount of claims rose in 2007 to $210, 000 from $170,000 in 2006.

A report was given on FWCIGA’s December, 2007 financial statements. FWCIGA’s short-term cash flow amount was down $18.5 million from the prior year due to a shift toward higher quality investments. FWCIGA net assets were up $4.4 million due to early-access dollars and investment earnings. Net claim expenses were down.

The FWCIGA Operations Department next reported that it is working on automating the claims process and integrating the FWCIGA Jacksonville office into the new Tallahassee office.

An update on the American Guaranty Fund Group (“AGFG”) also was given. The Board approved changes to the AGFG bylaws clarifying the scope of AGFG responsibilities. The employer liability assessment contract between FIGA and FWCIGA was also reviewed by the Board. No employer liability claims are open at this time.

The meeting was then adjourned.

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