PURMIT Board of Trustees Meeting
January 30, 2020
Minutes
Trustees Present: Brian Roy (PSU), Christina McKnight (OSU), Greg Perkinson (SOU), Vivian Chen (OIT), Lara Moore (EOU), Ryan Hagemann (WOU)
Others Present: Ryan Britz & Sheryl Sattler (Berkley), James Parker (DWT), Sidney Friedman, Ron Cutter & Joel Troisi (BBNW), Taylor Marsden & Jamie Kilcoyne (K Financial)
Call to Order
The meeting was called to order at 8:59 a.m.
Roll Call
Roll call was taken.
Review and Approval of Minutes
Meeting minutes from the October 17, 2019 and January 14, 2020 PURMIT Board of Trustees meetings were reviewed and discussed.
Action:
A motion was made by Mr. Hagemann to approve the minutes. The motion was seconded by Mr. Perkinson. The motion carried unanimously.
PURMIT Financial Auditors Report for Fiscal Year 2018 – 2019
Mr. Marsden and Mr. Kilcoyne from K Financial presented the PURMIT financial audit report. Mr. Kilcoyne noted that this was the fifth year K Financial has performed the audit for PURMIT. Mr. Marsden discussed the auditor’s letter and noted that management’s estimates for reserves are at an appropriate level. Mr. Marsden further noted that the Management Discussion and Analysis document is a requirement for the audit process and it provides a high level overview of the program and K Financial’s audit results. K Financial issued PURMIT a clean and unqualified audit. Mr. Kilcoyne thanked PURMIT for its continued confidence selecting K Financial to perform PURMIT’s financial audit.
Action:
No action was taken.
Financial Review as of December 31, 2019
Ms. Sattler from Berkley Risk presented the financial information as of December 31, 2019. Ms. Sattler noted PURMIT had $1.561M of operating revenue and an operating loss of $613K, resulting in a current surplus of $10.785M. The operating loss is being driven by the use of surplus to offset the excess insurance premium for the term. Ms. Sattler continued her discussion with the balance sheet portion of the financial statement, noting the Trust has $18M in assets and $7.4M in liabilities. Ms. Sattler also noted that since the designated funds had been transferred to the Oregon State Treasury, PURMIT has earned approximately $82,539 of investment income. Ms. Sattler commented that all Trust lines of business are operating at a profit. PURMIT’s expenses remained on budget through December. PURMIT continues to add surplus to the operation and has positioned itself well by utilizing the Oregon State Treasury as an investment vehicle within the overall PURMIT investment portfolio. Berkley continues its quarterly review of the surplus position, adding $5M to the Treasury account in January, and will advise the Trustees as to the amounts that are eligible for transfer to the Oregon State Treasury. Finally, Ms. Sattler mentioned that PURMIT’s financial position is above the Oregon statute’s regulatory requirement.
Action:
No action was taken.
Financial Proforma Update and Discussion
Ms. Sattler continued the financial discussion by reviewing the Proforma document and its trajectory out to 2023. Ms. Sattler noted that the Proforma document does not include any potential SAIF dividend for the group for the 2021 year and beyond. Ms. Sattler also noted that the Proforma is in line with prior assumptions and factors that were utilized to generate the exhibit. PURMIT is projected to have a $1.2M loss for the current year, driven by the use of surplus to absorb excess insurance premium increases.
Action:
No action was taken
ProCor Solutions & Consulting – Business Interruption Valuation Activities
Mr. Britz noted that the contract has been signed with ProCor to perform the Business Income analysis for each of the institutions. He is in the process of working with the members to set dates for the review to begin. He further stated that the on campus visits will be with OSU and PSU, with the intent of developing a template that the remaining members can use for this year, and the group can continue to use in the future. Mr. Perkinson noted that the success of the tool will be predicated on OSU and PSU’s on campus work sessions. Mr. Roy noted that this will provide valuable information on several levels, for the member institutions.
Action:
No action was taken
Legal Counsel Transition
Mr. Parker presented a packet to the Trustees for his involvement as Trust Attorney for the Trust, upon his departure from DWT. The packet included; an engagement letter, DWT release letter and the letter outlining Mr. Parker’s departure from DWT. Mr. Roy inquired as to the reason for a flat fee instead of hourly charges. Mr. Parker noted that founding a law firm and the associated overhead costs would not be feasible without a fixed fee arrangement. Mr. Parker also noted that he had set the fees to fit within the current legal budget. Mr. Roy noted that the Trust would need to authorize Berkley Risk to complete the paperwork for the transition of the PURMIT Trust Attorney role to Mr. Parker’s law firm. Mr. Roy noted that PSU would be willing to host Trustee meetings in the future. Mr. Friedman also offered BBNW’s board room for hosting future meetings.
Action:
A motion was made by Mr. Perkinson authorizing Berkley Risk to engage Mr. Parker’s new firm and transition the DWT files to his new firm. The motion was seconded by Mr. Hagemann. The motion carried unanimously.
July 1, 2020 Renewal – Market Overview and Timeline
Mr. Troisi began the discussion by noting that the marketplace continues to be in hardening posture, with many companies reporting combined ratios over 100%. Continued pressure is being applied to rates. He further noted that there has been little pressure up to this point for PURMIT to look at a higher retention. Anticipated rate increases for the renewal are in the 10% – 20% range. The markets underwrote the PURMIT business as new last year, which should help to keep rate increases in check. Mr. Troisi noted that the marketplace is moving slow due to the number of submissions underwriters are working through. He is targeting late April for indications. Mr. Cutter discussed the state of the casualty market, noting that terms and pricing continue to deteriorate. He is anticipating an increase for the July renewal and is working closely with Mr. Poling to determine market expectations. He further noted that SAM coverage is becoming increasingly challenging, with more requirements for claim reporting being put in place. He further commented that there will be significant changes to the Foreign Liability coverage at the renewal. Mr. Roy asked what alternatives exist for writing the property coverage. Mr. Troisi noted that there have been good discussions with alternative markets and expects to have quotes to offer. He also mentioned that some markets may want to visit each campus. Mr. Perkinson asked if the industry recognizes risk management programs in place for cyber and social engineering exposure. Mr. Cutter said that there currently is no direct correlation but effective risk management programs are recognized by underwriters and can result in a reduced premium. Ms. McKnight noted that United Educators has a very good cyber training program that is focused towards campus IT departments, and OSU has gone through the training and has been beneficial. Mr. Roy commented about the pro response benefit in the UE policy and the success PSU has had when using the program. He further commented that the limit on the policy is for PURMIT, not each individual member. Mr. Friedman noted that it is an additional coverage offered by UE and that it applies at the policy level and does not apply to each member institution individually. He further noted that BBNW would look into expanding the coverage at the upcoming renewal.
Action:
No action was taken
The Trustees called a break at 10:08 a.m.
The meeting was called back into session and 10:16 a.m.
Executive Session
The Board adjourned the regular meeting and went into Executive Session at 10:02 a.m. to address documents and information relating to attorney-client privileged communications and trade secret documents. The executive session was held pursuant to ORS 192.660(2)(f) and ORS 192.660(2)(h).
The Board exited Executive Session at 10:40 a.m.
Final Decisions Related to Executive Session Discussions (if any)
The Board made no decisions related to executive session.
Legal Counsel Items
Mr. Parker noted that the annual reporting to the State of Oregon was completed in December. He is continuing to work on PURMIT access to PUF and is optimistic that the process is moving in the right direction. He also mentioned that he reviewed the broker contract with BBNW to ensure all responsibilities were being completed.
Other Items
Mr. Britz noted that a few folks will be meeting with Lloyds underwriters to discuss the PURMIT program and expectations for the upcoming renewal. He requested that each institution provide wildfire mitigation plans in advance of the Lloyds meetings. Ms. Moore requested that an overview of the meetings be provided at the next Trustee meeting.
Adjourn
The Board adjourned the meeting at 11:09 a.m.