FWCJUA Investment Committee Meeting Report: June 26
Jun 26, 2009
The Florida Workers’ Compensation Joint Underwriters Association (“FWCJUA”) Investment Committee (“Committee”) met via teleconference on Friday, June 26, 2009.
The Committee reviewed currently authorized exceptions to the FWCJUA Investment Policy, which were most recently reconfirmed by the FWCJUA Board of Governors (“Board”) on June 9, 2009. The FWCJUA maintains nine bonds downgraded below an “A” rating in its portfolio, including those issued by Home Depot, Anheuser Busch, Lehman Brothers, SunTrust, CitiGroup and Vulcan Materials.
There have been no changes since the most recent reconfirmation. Thus, the Committee authorized the continued holding of the downgraded bonds.
The Committee considered an amendment to the FWCJUA Investment Policy that would increase the investment allocation from 50 percent to 100 percent for Certificates of Deposit (“CDs”) issued by banks or thrift institutions that are fully insured by the Federal Deposit Insurance Corporation (“FDIC”). As of June 12, 2009, 37.5 percent of the FWCJUA’s portfolio was invested in CDs issued by institutions that are fully FDIC insured. Approximately $44 million of the FWCJUA’s investments will mature over the next year.
Given that CDs have been providing the FWCJUA with the most competitive investment yields with the least amount of risk, FWCJUA Staff advised that the Committee recommend the Investment Policy amendment to the FWCJUA Board. Staff noted that the process for redeeming a CD issued by a failed bank or thrift institution insured by the FDIC has not proven problematic for the FWCJUA and has typically been resolved within one day of written request.
The FWCJUA Investment Policy currently provides for a 100 percent investment allocation for United States Government Securities in the FWCJUA portfolio.
The Committee passed a motion to recommend that the Board adopt an amendment to the FWCJUA Investment Policy that would permit a 100 percent investment allocation to CDs issued by institutions that are fully FDIC insured.
The Committee is scheduled to meet next at 10:00 a.m. on Friday, July 31, 2009.
Should you have any questions or comments, please contact Colodny Fass.
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