Meeting Recap – FIGA Finance & Audit Committee

On October 10, 2007, the Finance and Audit Committee (“Committee”) of the Florida Insurance Guaranty Association, Inc. (“FIGA”) met in Tallahassee, Florida to discuss the finance operations, audit operations and items that will be brought before FIGA’s Board of Directors (“Board”) for consideration on October 11, 2007.  Chairman Paul Green called the meeting to order and substantive issues were discussed after a reading of the antitrust statement and approval of the June 11, 2007 meeting minutes.
           
FIGA’s Investment Report was presented–there is $171 million of total cash and assets with an average interest rate was 4.69 percent.  Further, a review of FIGA’s short-term investments demonstrated some degree of volatility.

The Committee received an update from the Public Finance Working Group (“Group”), an ad hoc unit that investigated preparedness for bond issuance in the event that it becomes necessary.  A representative from Raymond James provided a summary of the Group’s recent activities and bond rating.  The Group’s goal is to allow FIGA to issue bonds as quickly and effectively as possible.  FIGA received a AAA rating from Moody’s, which the Group was very pleased with.  FIGA was also rated as a public sector entity.  The Group discussed the next step in reaching its goal–validation.  The Group also discussed its interlocal agency agreements.  Finally, it was recommended that FIGA consider establishing its own special entity to issue bonds rather than relying on an outside entity, similar to the practice employed by Citizens Property Insurance Corporation.

The Committee next discussed FIGA’s 2008 budget.  It was noted that salary and benefits will decrease by 28% from 2007, based primarily upon FIGA consolidating two offices.  The budget was approved by the Committee and will be presented to the Board.

The Committee discussed the Florida Department of Financial Services’ (“DFS”) operational review.  Specifically, it discussed the auditing materials and the process and procedures both internally and in conjunction with DFS.  The Committee addressed FIGA’s claims handling reviews and expressed concern over some of the recommendations provided by DFS.  Based upon the responses and discussion, the Committee agreed to move forward with the audit responses.
           
The Committee briefly addressed FIGA’s 401(k) plan and agreed upon certain related procedures.  It was noted that because FIGA has less than 120 employees, its 401(k) plan is not subject to a mandatory audit.

Next, the Committee engaged in a Charter Checklist Review (“Charter”).  There were no recommended changes to the Charter.  The Committee addressed many areas, including the oversight of FIGA’s financial statement reporting process, unusual and complex auditing areas, risks and audit reports.  There was discussion regarding whether the Committee should consider other auditing areas (e.g., travel, competitive bidding processes, disaster plan testing and security procedures).  However, a formal position was not taken. 

Following the Charter Checklist Review, the Committee agreed to take two items to the Board for its consideration: (1) budget approval and (2) presentation of the audit report for December 31, 2006.

As noted above, FIGA’s Board will meet on October 11, 2007.  We will provide you with a summary of the discussion that takes place upon its conclusion. 

For your review, a copy of the Agenda is included.

 

 

The above information is intended to be a general summary of the discussions that took place during the Committee meeting.  It is neither intended to provide specific analysis nor should it be relied upon as legal advice, regulatory advice or in making individual business decisions, specific in nature.

Should you have any questions or comments regarding this information, please feel free to contact this office.