New Mexico Association of Counties Advancing Counties through Service, Education, Advocacy and Leadership

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1 New Mexico Association of Counties Advancing Counties through Service, Education, Advocacy and Leadership MULTI-LINE POOL BOARD OF DIRECTORS MEETING August 21, 2013 Serving New Mexico s Counties for More than 75 Years New Mexico Association of Counties 613 Old Santa Fe Trail Santa Fe, NM

2 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL BOARD OF DIRECTORS MEETING Wednesday, August 21, 2013, 8:30 a.m. LaFonda Hotel The New Mexican Room 100 E. San Francisco Santa Fé, New Mexico (505) AGENDA 1. Call to Order / Pledge of Allegiance / Roll Call / Introductions 2. Approval of Minutes of April 17, Approval of Agenda 4. Executive Session Pending and Threatened Litigation 5. Board Action Items A. Consideration of 2013 Multi-Line Pool Financial Audit B. Approval of Revised Open Meetings Act Resolution C. Approval of LEDAC Appointments and Ex-officio Positions D. Consideration of Revision to Strategic Plan E. Ratification of Board Sub-committee Member 6. Presentations to the Board A. Executive Director Update B. Discussion Regarding Revisions to Coverage Agreement for 2014 C. Risk Management Update D. Loss Ratio and Loss Data Report E. Financial Reports F. Loss Prevention Update G. LEDAC Update H. A. J. Gallagher Update 7. Other Business 8. Adjournment 2

3 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL AGENDA ITEM SUMMARY Item Number: Item Title: 1. Call to Order / Pledge of Allegiance / Roll Call / Introductions Presenter (s): Ron Lethgo, Board Chair / Cynthia Stephenson, Risk Management Coordinator Background: Call to order time: Type of Item: Staff Recommendation: 3

4 New Mexico County Insurance Authority Multi-Line Pool Board of Directors 2013 Group I: Geographic Districts Term Expires 1/2014 DISTRICT 1 Lonnie Freyburger Torrance County Commissioner P.O. Box 48, Estancia, NM (505) , (505) Fax Cell (505) lfreyburger@hotmail.com Counties Represented: Taos, McKinley, Cibola, Valencia, Torrance DISTRICT 2 Wendell Bostwick Curry County Commissioner 700 N Main St., Ste. 10 Clovis, NM (575) , (575) Fax Cell (575) webco@yucca.net Counties Represented: Colfax, Union, Mora, Harding, San Miguel, Guadalupe, Quay, Curry DISTRICT 3 Kelly Kuenstler Luna County Manager 700 S. Silver Avenue Deming, NM (505) , (505) Fax Cell (575) kelly_kuenstler@lunacountynm.us Counties Represented: Catron, Socorro, Grant, Sierra, Hidalgo, Luna DISTRICT 4 Ron Lethgo Chair and NMAC Rep Chaves County Assessor #1 St. Mary s Place, Suite 130 Roswell, NM (575) , (575) Fax ronl@co.chaves.nm.us Counties Represented: De Baca, Roosevelt, Lincoln, Chaves, Otero, Eddy Group II: Class A Counties Term Expires 1/2015 BERNALILLO Teresa Byrd Vice Chair Bernalillo County Deputy County Manager of Finance One Civic Plaza NW, 10th Fl. Albuquerque, NM (505) , (505) Fax Cell (505) tabyrd@bernco.gov SANDOVAL Orlando Lucero Secretary / Treasurer Sandoval County Commissioner 893 South Hill Road Bernalillo, NM Cell (505) , (505) Fax ojlucero@aol.com DONA ANA Wayne Hancock Dona Ana County Commissioner 845 N. Motel Blvd. Las Cruces, NM (575) , Fax (575) Cell (575) whancock@donaanacounty.org New Mexico County Insurance Authority Multi-Line Pool Board of Directors Last updated by Cynthia Stephenson 1_18_2013

5 New Mexico County Insurance Authority Multi-Line Pool Board of Directors 2013 Group III: Population Categories Term Expires 1/2015 CATEGORY 1 Counties with populations of 24,999 and under Nita Taylor Lincoln County Manager P.O. Box 711 Carrizozo, NM Cell ( 575) , (575) (575) Fax linclnco@tularosa.net Counties Represented: Lincoln, Roosevelt, Socorro, Torrance, Colfax, Sierra, Quay, Hidalgo, Mora, Guadalupe, Union, Catron, De Baca, Harding CATEGORY 2 Counties with populations of 25, ,000 Ron Ortega San Miguel County Commissioner 500 West National Avenue, Suite 200 Las Vegas, NM (505) , (505) Fax ronortega54@gmail.com Counties Represented: Valencia, McKinley, Chaves, Otero, Eddy, Curry, Taos, Grant, San Miguel, Cibola, Luna Ex-Officio Members Doug Decker McKinley County Attorney PO Box 70 Gallup, NM (505) , (505) Fax C (505) ddecker@co.mckinley.nm.us Patrick Snedeker San Miguel County Warden / Detention Administrator 26 NM 283 Las Vegas, NM (505) , (505) Fax C (505) smcwarden@smcounty.net NMAC Attorneys' Affiliate Law Enforcement and Detention Advisory Committee (LEDAC) New Mexico County Insurance Authority Multi-Line Pool Board of Directors Last updated by Cynthia Stephenson 1_18_2013

6 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL AGENDA ITEM SUMMARY Item Number: Item Title: 2. Approval of Minutes of April 17, 2013 Presenter (s): Ron Lethgo, Board Chair Background: The April 17, 2013 minutes follow. Type of Item: Board Action Item Staff Recommendation: Motion by: Seconded by: 6

7 NMCIA Multi-Line BOD Meeting Wednesday, April 17, 2013 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL BOARD OF DIRECTORS MEETING Wednesday, April 17, 2013, 8:30 a.m. New Mexico Association of Counties Conference Room Santa Fe, NM MINUTES Call to Order/Pledge of Allegiance/Roll Call/Introductions Chair Ron Lethgo called the meeting to order at 8:40 a.m. and led the pledge of allegiance. Cynthia Stephenson called the roll and announced that a quorum was present. Board Members Present Wendell Bostwick, Curry County Commissioner Teresa Byrd, Vice Chair, Bernalillo County Deputy Manager/Finance Doug Decker, NMAC Attorneys Affiliate, McKinley County Attorney Lonnie Freyburger, Torrance County Commissioner Wayne Hancock, Dona Ana County Commissioner Kelly Kuenstler, Luna County Manager Ron Lethgo, Chair, Chaves County Assessor Orlando Lucero, Secretary/Treasurer, Sandoval County Commissioner Ron Ortega, San Miguel County Commissioner Nita Taylor, Lincoln County Manager Board Members Absent/Excused Dee Robinson, NMAC President, Lea County Assessor NMCIA/NMAC Staff Present Rahwa Asghedom, Risk Management Specialist Santiago Chavez, Finance Director Paul Gutierrez, Executive Director Taylor Horst, IT Director Steve Kopelman, Risk Management Director Robin Martinez, ML Claims Manager Art Murphy, LP Specialist Grace Philips, LP Attorney Manuel Romero, LP Specialist/Public Safety Cynthia Stephenson, Risk Management Coordinator Becky Tafoya, Assistant Risk Management Director Guests Present John Chino, Area President, A.J. Gallagher & Co. Nasreen Kopecky, Account Manager, A.J. Gallagher & Co. Kathryn Minter, Lincoln County Commissioner 7

8 NMCIA Multi-Line BOD Meeting Wednesday, April 17, 2013 Approval of Minutes Theresa Byrd made a motion to approve the minutes of December 13, 2012, January 16, 2013 and February 22, 2013 as presented. Nita Taylor seconded the motion, which passed unanimously. Approval of Agenda Wendell Bostwick made a motion to approve the agenda with the change of moving 6 A and B ahead of 5A. Orlando Lucero seconded the motion, which passed unanimously. Board Action Items: Executive Session Lonnie Freyburger made a motion to go into executive session to discuss pending and threatened litigation in accordance with the Open Meetings Act. Orlando Lucero seconded the motion and a roll call vote was taken. The motion passed unanimously. Wendell Bostwick made a motion to come out of executive session and Orlando Lucero seconded the motion, which passed unanimously. Ron Lethgo certified that the only thing discussed was pending and threatened litigation. Wendell Bostwick made a motion to authorize settlement authority in case for up to $200,000 and Orlando Lucero seconded the motion, which passed unanimously. Wendell Bostwick made a motion to authorize settlement authority in case for up to $500,000 and Orlando Lucero seconded the motion, which passed unanimously. Ratification of Sub-committee Members The following board members volunteered to fill vacant seats on the following committees: Nita Taylor on the Multi-Line Underwriting Committee, Kelly Kuenstler on the Multi-Line Litigation Claims Committee, Lonnie Freyburger as the Multi-Line alternate on the Joint Membership Committee, Teresa Byrd as a Multi-Line representative on the Joint Bylaw Review Committee and Doug Decker as that committee s Multi-Line alternate. Ron Lethgo suggested disbanding the Joint Pool Board Composition Committee since that committee had completed its work. Wendell Bostwick made a motion to ratify the suggested changes as discussed. Lonnie Freyburger seconded the motion, which passed unanimously. Consideration of Litigation Management Program Steve Kopelman let board members know that he and staff had developed a litigation management program designed to reduce claims litigation expenses, and that he was asking the board for authority to enter into a contract with attorney Mike Dickman to implement a claims committee and to assist with training multi-line examiners. Approval of Contract with Mike Dickman Wendell Bostwick made a motion to accept the proposal from Mike Dickman and Wayne Hancock seconded the motion. After further discussion, Kelly Kuenstler made a motion to authorize staff to draft and enter into a contract with Mike Dickman to establish a claims committee, and to include performance measures. Teresa Byrd seconded the motion, which passed unanimously. Approval of Revised Investment Policy Orlando Lucero made a motion to approve the revised investment policy and Lonnie Freyburger seconded the motion, which passed unanimously. 8

9 NMCIA Multi-Line BOD Meeting Wednesday, April 17, 2013 Approval of 2013 Retreat Location Kelly Kuenstler made a motion to approve holding the 2013 joint pool board of directors retreat at the Inn of the Mountain Gods in Ruidoso, subject to the concurrence of the Workers Compensation Pool Board of Directors. Lonnie Freyburger seconded the motion, which passed unanimously. Kelly Kuenstler amended her motion to include the Lodge at Cloudcroft as the second choice for a retreat location. The motion was seconded and passed unanimously. Approval of Joint Pool Strategic Plan Becky Tafoya presented the final version of the strategic plan to board members. Kelly Kuenstler made a motion to approve the joint pool strategic plan and Teresa Byrd seconded the motion, which passed unanimously. Presentations to the Board: Executive Director Update Paul Gutierrez welcomed the new board members and thanked them for their service. He reminded members that the Multi-Line Pool Board of Directors had loaned NMAC money to purchase a new Santa Fe office building and gave an update on the progress of the remodeling work. He stated that NMAC had leased a larger office space in Albuquerque, and would move that office from the second floor at 111 Lomas Blvd. to the fourth floor. He said the IT director would set up a redundant server for backup of the server located in the Santa Fe office. He then gave a review of the NMAC regional district meetings. He presented the draft NMAC budget that the NMAC board would consider at their May 3 meeting, which included a salary increase for staff of up to 4% and an increase by 5% of the amount NMAC contributes to offset employees health premiums, as premiums would increase July 1 by 15%. Lastly, he stated that a staff committee updated the employee handbook and the NMAC Board of Directors approved the changes. Legislative Update Paul Gutierrez let board members know that 96% of legislation passed did so during the last week of the session and that there had been a 33% turnover in both chambers, with new legislators in leadership positions. He gave an overview of how the session had gone and updates on particular bills, adding that NMAC would include a final legislative report as an insert in the next quarterly newsletter. Risk Management Director Update Steve Kopelman let the Board know that in March NMAC hosted a Better Informed Public Officials conference for newly elected officials including clerks and treasurers. He also said he had been in contact with officials from San Juan County who indicated they would probably go out to bid for liability coverage for their next renewal. He said that Santa Fe County might consider re-joining the Pool, but that the county would need additional land use coverage, which board members would discuss in more detail at the next board meeting. Becky Tafoya handed out a draft copy of the Bernalillo County customized risk plan for the Board to review. She also gave an update on meetings with A.J. Gallagher on enterprise risk management and with EXIGIS regarding the Pool s use of the company s online portal for exposure data gathering. 9

10 NMCIA Multi-Line BOD Meeting Wednesday, April 17, 2013 Loss Ratio and Loss Data Reports Becky Tafoya reviewed the Law-Enforcement loss ratio report as of March 31, 2013, pointing out that in 2010 the Pool s self-insured retention increased to $500,000 from $250,000 the previous year and that it increased to $750,000 in For fiscal year 2011, loss ratios were 87.47%, with 51 of 257 claims open and reserves at $2,888,273; for fiscal year 2012 the loss ratio was 48.47% with 102 of 240 claims open and reserves at $2,636,041. She then presented several analyses, breaking losses down by department and by claim type. For there were 1,417 claims with $30,626,456 incurred and the average cost per claim was $21,614. She then reviewed the Multi-Line loss ratio report as of March 31, 2013, stating that for fiscal year 2011 the loss ratio was % with 66 of 522 open and reserves at $2,198,795. For fiscal year 2012 the loss ratio was % with 154 of 433 claims open and reserves at $3,211,139. She reviewed a number of different claim analysis with board members, including a 10-year analysis by claim type which revealed that employment related claims account for the largest percentage of losses. Financial Reports Santiago Chavez reviewed the Law Enforcement Pool s statement of financial position as of December 31, 2012, which indicated total assets of $18,257,778 and a Pool surplus of $4,447,780, up from $4,049,871 the prior year. He reviewed the Pool s 2012 budget report as of December 31, 2012, which indicated net income of $1,075,657. Santiago stated that the yield on total cash and investments for the Pool was 3.20% as of December 2012 with a total of $17,674,817 invested. He indicated that the Multi-Line Pool s statement of financial position as of December 31, 2012 revealed total assets of $19,781,452, up from $18,885,825 the prior year, and a pool surplus of $8,163,584, up slightly. He reviewed the Pool s 2012 budget report as of December 31, 2012, which indicated net income of $273,607. He said that as of December 31, 2012 total of investments of $17,443,879 earned 3.23% for the year. Loss Prevention Update Sal Baragiola introduced Manny Romero, Art Murphy and Grace Philips of the department to new board members. He stated that in March an emergency vehicle accident reduction training program called Beyond the Cones was given to more than 425 law enforcement personnel from around the state including nearly 200 county law enforcement officers. He indicated that several detention centers were seeking accreditation and that several others would be applying for accreditation over the summer. Sal said that NMAC had entered into a partnership with the Department of Corrections that allows county facilities to drive inmates to the closest Corrections Department facility, instead of to the Los Lunas facility. He said this allows counties to get inmates out of county facilities quicker with less wear and tear on vehicles and less time spent by staff doing transport. Art Murphy gave an update on the training advisory committee which was handling three major initiatives: 1) standardizing entry level detention officer training, 2) collaborating with CYFD using a grant from the MacArthur Foundation to provide a mental health train-the-trainer program for juvenile detention officers, and 3) creating a 40- hour mental health train-the trainer program that will give county detention facilities and law enforcement the tools to provide first aid mental health responses. Grace Philips let board members know that the Sentencing Commission was creating two supplemental reports to the jail population study with data on inmates with mental illness. LEDAC Update Patrick Snedeker gave an update on the LEDAC meeting that had taken place the previous day, stating that Sandra Stewart announced that she would be leaving Chavez County and had accepted the Governor-appointed position of Director of Juvenile Services for CYFD. He said that the committee presented a gift of appreciation to former Eddy County Sheriff Kent Waller for his 10 years of service to LEDAC and NMAC. 10

11 NMCIA Multi-Line BOD Meeting Wednesday, April 17, 2013 A.J. Gallagher Update John Chino provided an update on the state of the insurance industry that included a summary of net income after taxes since 1991, the property and casualty combined ratios since 2001, and natural catastrophes worldwide. He indicated that at the Board s August meeting he would discuss land use coverage, the pros and cons of higher limits and terrorism coverage. Other Business No other business was discussed. Adjournment Orlando Lucero made a motion to adjourn the meeting. Wendell Bostwick seconded the motion, which passed unanimously. The meeting adjourned at 4:31 p.m. 11

12 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL AGENDA ITEM SUMMARY Item Number: Item Title: 3. Approval of Agenda Presenter (s): Ron Lethgo, Board Chair Background: A copy of the agenda follows. Type of Item: Board Action Item Staff Recommendation: Motion by: Seconded by: 12

13 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL BOARD OF DIRECTORS MEETING Wednesday, August 21, 2013, 8:30 a.m. LaFonda Hotel The New Mexican Room 100 E. San Francisco Santa Fé, New Mexico (505) AGENDA 1. Call to Order / Pledge of Allegiance / Roll Call / Introductions 2. Approval of Minutes of April 17, Approval of Agenda 4. Executive Session Pending and Threatened Litigation 5. Board Action Items A. Consideration of 2013 Multi-Line Pool Financial Audit B. Approval of Revised Open Meetings Act Resolution C. Approval of LEDAC Appointments and Ex-officio Positions D. Consideration of Revision to Strategic Plan E. Ratification of Board Sub-committee Member 6. Presentations to the Board A. Executive Director Update B. Discussion Regarding Revisions to Coverage Agreement for 2014 C. Risk Management Update D. Loss Ratio and Loss Data Report E. Financial Reports F. Loss Prevention Update G. LEDAC Update H. A. J. Gallagher Update 7. Other Business 8. Adjournment 13

14 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL AGENDA ITEM SUMMARY Item Number: Item Title: 4. Executive Session Pending and Threatened Litigation Presenter (s): Ron Lethgo, Board Chair Background: A motion may be made to go into Executive Session to discuss pending and threatened litigation in accordance with the Open Meetings Act. Motion In by: Roll Call Vote Motion Out by: Certified by: Seconded by: Seconded by: that the only thing discussed was pending and threatened litigation Type of Item: Board Action Item Staff Recommendation: Motion by: Seconded by: Motion by: Seconded by: Motion by: Seconded by: Motion by: Seconded by: 14

15 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL AGENDA ITEM SUMMARY Item Number: Item Title: 5. A. Consideration of 2013 Multi-Line Pool Financial Audit Presenter (s): Ron Lethgo, Board Chair Background: Type of Item: Board Action Item Staff Recommendation: Motion by: Seconded by: 15

16 NEW MEXICO COUNTY INSURANCE AUTHORITY MUL TI LlNE POOL Santa Fe, New Mexico FINANCIAL STATEMENTS December 31,

17 TABLE OF CONTENTS PAGE OFFICIAL ROSTER... 1 INDEPENDENT AUDITORS' REPORT... 2 MANAGEMENT'S DISCUSSION AND ANALYSIS... 5 BASIC FINANCIAL STATEMENTS Balance Sheet - Enterprise Funds...,... 8 Statement of Revenues, Expenses and Changes in Fund Net Position - Enterprise Funds... 9 Statement of Cash Flows - Enterprise Funds Notes to Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Notes to Ten Year Claims Development Information (Unaudited) Ten Year Claims Development Information (Unaudited) SUPPLEMENTARY BUDGETARY COMPARiSONS Schedule of Revenues and Expenses - Budget and Actual (Budgetary Basis) - Multi-Line Program Schedule of Revenues and Expenses - Budget and Actual (Budgetary Basis) - Law Enforcement Program OTHER SUPPLEMENTARY INFORMATION Cash and Cash Equivalents Reconciliation from Books to Financial Statements Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Schedule of Findings and Responses Summary Schedule of Prior Year Audit Findings Exit Conference

18 OFFICIAL ROSTER December 31, 2012 Board of Directors Ron Lethgo Teresa Bird Orlando Lucero Lonnie Freyburger Wendell Bostwick Kelly Kuenstler Wayne Hancock Nita Taylor Ron Ortega Doug Decker Patrick Snedeker Dee Robinson Chair Vice Chair Secretary/Treasurer Member Member Member Member Member Member Ex-officio Member Ex-officio Member Ex-officio Member Administrative Officers Paul Gutierrez Steven Kopelman Santiago Chavez Executive Director Risk Management Director Finance Director Multi-Line Program Member Counties as of December 31,2012 Bernalillo Guadalupe San Miguel Catron Harding Sandoval Chaves Hidalgo Sierra Cibola Lincoln Socorro Colfax Luna Taos Curry McKinley Torrance De Baca Mora Union Dona Ana Otero Valencia Eddy Quay Grant Roosevelt Law Enforcement Program Member Counties as of December 31, 2012 Bernalillo Guadalupe San Miguel Catron Harding Sandoval Chaves Hidalgo Sierra Cibola Lincoln Socorro Colfax Luna Taos Curry McKinley Torrance De Baca Mora Union Dona Ana Otero Valencia Eddy Quay Grant Roosevelt 1 18

19 G Clifton LarsonAllen CliftonLarsonAllen LLP 500 Marquette NW, Suite 800 Albuquerque, NM fax Independent Auditors' Report To the Board of Directors of New Mexico County Insurance Authority Multi-Line Pool Santa Fe, New Mexico and Mr. Hector H. Balderas New Mexico State Auditor Santa Fe, New Mexico Report on the Financial Statements We have. audited the accompanying financial statements of the business-type activities, each major fund, and the Schedules of Revenues and Expenses - Budget and Actual (Budgetary Basis) of the N.M. County Insurance Authority: Multi-Line Pool (the Pool), as of and for the year ended December 31,2012, and the related notes to the financial statements, which collectively comprise the Pool's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from materi'al misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 2 19

20 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, each major fund, and the Schedules of Revenues and Expenses - Budget and Actual (Budgetary Basis) of the Pool as of December 31, 2012, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 4 through 6 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about th.e methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Pool's basic financial statements. The accompanying financial information listed as other supplementary information in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. The accompanying financial information listed as other supplementary information in the table of contents is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying other supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The other supplementary information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. 3 20

21 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 30, 2013, on our consideration of the Pool's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the result of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Pool's internal control over financial reporting and compliance. ~~LL? Albuquerque, New Mexico May 30,

22 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL MANAGEMENT'S DISCUSSION AND ANALYSIS December 31,2012 As management of the New Mexico County Insurance Authority (NMCIA) Multi-Line Pool (the Pool), we offer readers of the Pool's financial statements this narrative overview and analysis of the financial activities of the Pool for the fiscal year ended December 31, Overview of the Financial Statements The NMCIA-Multi-Line Pool is a self-insurance pool for New Mexico counties created pursuant to joint powers agreements. The NMCIA Multi-Line Pool is composed of two separate county self-insurance pools, the Multi-Line Program and the Law Enforcement Program (the Programs). Both programs had 28 member counties as of December 31, Members pay annual contributions to the Programs. The other source of income is investments. The Programs then pay all administrative, claims and excess insurance costs. The Programs' basic financial statements are composed of three components: 1) government-wide financial statements, 2) separate pool financial statements, and 3) notes to the financial statements. Condensed Comparative Data Total assets (cash, investments, receivables and prepaids) Total liabilities (claims and claim adjustment expenses) Pool net assets Revenues: Member contributions Investment and other income $ 40,477,383 $ 38,349,311 29,694,040 27,031,466 $ 10,783,343 $ 11,317,845 $ 16,282,169 $ 16,160,074 1,527,189 1,325,530 Total revenues Expenses: Claims and claim adjustment expenses Excess insurance and brokerage fees General and administrative Member equity return Total expenses Excess of revenues over expenses Net assets, beginning of year 17,809,358 13,647,826 2,274,035 2,421,999 18,343,860 (534,502) 11,317,845 17,485,604 10,943,299 2,239,638 2,259, ,066 15,942,489 1,543,115 9,774,730 Net assets, end of year $ 10,783,343 $ 11,317,

23 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL MANAGEMENT'S DISCUSSION AND ANALYSIS December 31,2012 Financial Highlights Multi-Line Program assets increased by approximately $872,000 and Pool surplus increased $2,517. Law Enforcement Program assets increased approximately $1.26 million and net assets decreased by approximately $537,000. Underwriting Results Contributions to the Multi-Line Program increased from $7,160,112 in 2011 to $7,286,739. Law Enforcement Program contributions remained consistent with 2011 at approximately $9 million. Individual counties' contributions to the Multi-Line and Law Enforcement Programs are based on each county's loss experience and exposure. The Pools' pricing and budgeting approach includes investment income. Adding in investment income, the Pools had a decrease in net assets of $534,502: a $2,517 increase for Multi-Line and a $537,019 decrease for Law Enforcement. Excess Insurance Premiums Reinsurance expenses for the Multi-Line Program increased approximately $2,000 in 2012 due to lower excess property rates. Reinsurance expenses for the Law Enforcement Program increased by $35,526, from $1,342,474 to $1,375,000. Investment Results At the end of 2012, the Pools' current assets totaled $38,654,626. Of this amount, $1,126,575 was in cash, earning less than 1 % interest. Most of the remaining amount was invested primarily in a fixed income portfolio of government and corporate bonds earning about 4.25%. The Multi-Line Program portfolio increased about 1.2%, and the Law Enforcement Program portfolio increased about 2.3%. The Pools' equity in County Reinsurance Ltd. (CRL) decreased as the amounts due to return of equity payments during the year. As allowed in CRL's By-Laws, one-fifth of Multi-Line and Law Enforcement's equity in CRL was returned during Investment income for both insurance programs was higher than 2011: about $1,476,000 compared with $1,323,150. Property, Plant and Equipment The Pool had no purchases or disposals of property, plant and equipment during Long-term Debt The Pool had no long-term debt during

24 NEW MEXICO COUNTY INSURANCE AUTHORITY MUL TI-UNE POOL MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2012 Net Income For the year ended December 31,2012, the Multi-Line Program had a net income of $2,517. The Law Enforcement Program had a net loss of $537,019. The net income for the Multi-Line Program included an operating loss of $606,823 and investment income of $642,314. The net loss for the Law Enforcement Program included an operating loss of $1,336,789 and investment income of $834,090. Member Surplus The Pool had a combined net asset surplus of $10,783,343 at the close of its most recent fiscal year. The MUlti-line Program surplus increased from $7,126,674 to $7,129,191 and the Law Enforcement Program surplus decreased from $4,191,171 to $3,654,152. Budget In the Multi-Line Program, member contributions were slightly more than budgeted by $72,501. Investment income for both Programs was more than budgeted. In total, claims and claim adjustment expenses were more than budgeted for both programs. Pool Trends and Conditions Both pools are doing well financially. They continue to provide loss prevention and risk management services to counties to help reduce the occurrence and severity of claims. Approximately half of the member counties are participating in the pools' Risk Awareness Program, which is a custom training program for the various county departments. In addition, the Multi-Line Pool Board of Directors recently voted to implement a litigation management program, the goals of which are to reduce the amount of attorney's fees and costs paid out by the pools, empower claims examiners to better manage litigation claims, encourage early investigation of claims, and early settlement of cases where liability is clear. Contributions have been iilcreased annually to those counties seeing increased exposure and/or high losses. 7 24

25 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL BALANCE SHEET - ENTERPRISE FUNDS December 31, 2012 ASSETS Law MUlti-line Enforcement Program Program Total CURRENT ASSETS Cash and cash equivalents $ 603,597 $ 522,978 $ 1,126,575 Investment in the Local Government Investment Pool 953 1,588 2,541 Investments 16,922,671 17,386,351 34,309,022 Accounts receivable - Subrogation, Deductibles 10, , ,195 Accounts receivable - Reinsurance 166,193 2,435,134 2,601,327 Due from New Mexico County Insurance Authority, current portion 27,500 27,500 Investment in County Reinsurance, Limited 198, , ,748 Accrued interest on note receivable 32,546 32,546 Prepaids 4,172 4,172 NON-CURRENT ASSETS Total current assets 17,966,388 20,688,238 38,654,626 Due from New Mexico County Insurance Authority, net of current portion 1,822,757 1,822,757 Total non-current assets 1,822,757 1,822,757 TOTAL ASSETS $ 19,789,145 $ 20,688,238 $ 40,477,383 LIABILITIES AND POOL NET POSITION CURRENT LIABILITIES Accounts payable $ 49,452 $ 24,683 $ 74,135 Claims and claim adjustment expenses 5,450,893 6,472,553 11,923,446 Total current liabilities 5,500,345 6,497,236 11,997,581 LONG-TERM LIABILITIES Claims and claim adjustment expenses 7,159,609 10,536,850 17,696,459 Total long-term liabilities 7,159,609 10,536,850 17,696,459 POOL NET POSITION HELD FOR MEMBERS' BENEFITS Unrestricted 7,129,191 3,654,152 10,783,343 Total pool net position held for members' benefits 7,129,191 3,654,152 10,783,343 TOTAL LIABILITIES AND POOL NET POSITION $ 19,789,145 $ 20,688,238 $ 40,477,383 The accompanying notes are an integral part of the financial statements. 8 25

26 OPERATING REVENUES NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION - ENTERPRISE FUNDS Year Ended December 31,2012 Law Multi-Line Enforcement Program Program Total Member contributions $ 7,286,739 $ 8,995,430 $ 16,282,169 Other revenue 9,923 8,316 18,239 OPERATING EXPENSES Total operating revenues 7,296,662 9,003,746 16,300,408 Claims and. claim adjustment expenses 5,799,748 7,848,078 13,647,826 Excess insurance premiums 799,195 1,375,000 2,174,195 General and administrative 1,304,542 1,117,457 2,421,999 Total operating expenses 7,903,485 10,340,535 18,244,020 Operating loss (606,823) (1,336,789) (1,943,612) NON-OPERATING REVENUES (EXPENSES) Investment income 642, ,090 1,476,404 Accrued interest income 32,546 32,546 Commissions/brokerage fees (65,520) (34,320) (99,840) Total non-operating revenue, net 609, ,770 1,409,110 Change in net position 2,517 (537,019). (534,502) POOL NET POSITION HELD FOR MEMBERS' BENEFITS, BEGINNING OF YEAR 7,126,674 4,191,171 11,317,845 POOL NET POSITION HELD FOR MEMBERS' BENEFITS, END OF YEAR $ 7,129,191 $ 3,654,152 $ 10,783,343 The accompanying notes are an integral part of the financial statements. 9 26

27 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL STATEMENT OF CASH FLOWS - ENTERPRISE FUNDS Year Ended December 31,2012 CASH FLOWS FROM OPERATING ACTIVITIES Law Multi-Line Enforcement Program Program Total Cash received from members $ 7,951,538 $ 6,602,702 $ 14,554,240 Cash paid to vendors (1,261,580) (1,098,589) (2,360,169) Cash paid on claims and claims adjustment expenses (4,572,782) (6,074,300) (10,647,082) Cash paid for excess insurance (799,195) (1,375,000) (2,174,195) Cash received from others 212, , ,249 Net cash provided by (used in) operating activities 1,530,609 (1,690,566) (159,957) CASH FLOWS FROM INVESTING ACTIVITIES Investment income received 691, ,675 1,433,473 Payments for commission and brokerage (65,520) (34,320) (99,840) Proceeds from sale or maturity of investments 2,538,920 20,204,231 22,743,151 Purchases of investments (2,786,002) (20,500,000) (23,286,002) Net cash provided by investing activities 379, , ,782 CASH FLOWS FROM FINANCING ACTIVITIES Issuance of note receivable (1,850,257) (1,850,257) Payment of short-term loan from Law Enforcement Program (400,000) 400,000 Net cash provided by (used in) financing activities (2,250,257) 400,000 (1,850,257) NET DECREASE IN CASH AND CASH EQUIVALENTS (340,452) (878,980) (1,219,432) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 944,049 1,401,958 2,346,007 CASH AND CASH EQUIVALENTS, END OF YEAR $ 603,597 $ 522,978 $ 1,126,

28 Multi-Line Program Law Enforcement Program Total RECONCILIATION OF OPERATING INCOME (LOSS) TO CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: Operating (loss) income Change in assets and liabilities: $ (606,823) $ (1,336,789) $ (1,943,612) Accounts receivable Prepaids Investment in County Reinsurance, Limited Accounts payable Claims and claim adjustment expenses 664,799 4, ,161 42,962 1,226,966 (2,392,728) 8, ,589 18,868 1,773,778 (1,727,929) 13, ,750 61,830 3,000,744 Net cash provided by (used in) operating activities $ 1,530,609 $ (1,690,566) $ (159,957) The accompanying notes are an integral part of the financial statements

29 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO FINANCIAL STATEMENTS December 31,2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The New Mexico County Insurance Authority Multi-Line Pool (the Pool) was formed January 1, 1989, pursuant to the New Mexico Joint Powers Agreement Act ( NMSA 1978), as amended. The Pool operates two self-insurance pools, a Multi-Line Program and a Law Enforcement Program (collectively referred to as the Programs). As a self-insurance fund under Section NMSA 1978, the Pool is not considered to be in the insurance business and, as such, is not subject to New Mexico laws regulating insurance operations. The Law Enforcement Program was formed August 1, 1995, by the Pool as a self-insurance program for law enforcement employees, detention officers and sheriff reserve officers. Members of the Law Enforcement Program include various counties within the State of New Mexico. Membership in the Programs is voluntary and members may withdraw at the end of any fiscal year upon sixty days' written notice to the Pool's Board of Directors. Members may be expelled for failure to make timely contributions to the Pool, or failure to institute loss reduction and prevention procedures. Upon withdrawal or expulsion, a member is not entitled to reimbursement of contributions made to the Pool, and continues to be obligated to make payment for obligations that arose prior to withdrawal. Members agree to contribute amounts determined by the Pool's Board of Directors to be necessary to protect the solvency of the Pool after considering investment income. The Pool is responsible for paying all claims and for administering the funds. The Pool has no component units as defined in Governmental Accounting Standards Board (GASB) Statement 39. Use of Estimates in Preparing Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.. Basis of Accounting The Pool uses fund accounting. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. All operations of the Pool are accounted for as a proprietary fund. Proprietary funds are used to account for activities similar to those found in the private sector, where the determination of net income is necessary or useful to sound financial administration. Goods or services from such activities are provided to outside parties. The only proprietary fund types the Pool has are enterprise funds. Enterprise funds are required to account for operations for which a fee is charged to external users for goods and services, and the activity is financed with debt that is: a) solely secured by a pledge of the net revenues; b) has third party requirements that the cost of providing services, including capital costs, be recovered with fees and charges, or c) has a pricing policy designed for the fees and charges to recover similar costs. The Multi-Line Program and Law Enforcement Program are considered enterprise funds

30 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO FINANCIAL STATEMENTS December 31, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Cash and Cash Equivalents For purposes of the statement of cash flows, cash and cash equivalents include demand and money market accounts. Cash in bank accounts are insured up to $250,000 per bank by the Federal Deposit Insurance Corporation (FDIC). The Pool has all cash and cash equivalents secured by pledges of qualifying securities held by the depository. Cash held by the investment company is insured by the Securities Protection Investors Corporation up to $500,000. This coverage does not protect against losses from any change in the market values of securities. Investments The Pool reports certain investments at fair value in the balance sheet and recognizes the corresponding change in the fair value of investments in the year in which the change occurred. Fair value is based on the quoted market value at year-end. Investment transactions are recorded on the trade date. Dividends are recognized as income when declared. In accordance with the Pools' investment policy, allowable investments include securities of the United States government and certain state and local governments; securities guaranteed by the United States Government; certain commercial paper and corporate bonds; asset backed obligations; repurchase agreements; certificates of deposit; mutual funds; and the New Mexico Office of the State Treasurer State Investment Pool (State Investment Pool). Participation in the State Local Government Investment Pool is not required and the State Investment Pool is not registered with the SEC. Also, the State Treasurer is authorized to invest the short-term investment funds, with the advice and consent of the State Board of Finance, in accordance with Sections I through P and Sections A and E, NMSA The State Investment Pool does not have unit shares, and all interest earned is distributed by the State Treasurer to contributing entities in amounts directly proportionate to the respective amounts deposited in the fund and the length of time the fund amounts were invested. Accounting Method The Pool's books are maintained on the accrual basis of accounting using the economic resources measurement focus. Billings for contributions are recognized as revenue in the period of the insurance coverage. Operating Revenues Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services in connection with a proprietary fund's principal ongoing operations. The principal ongoing operations of the Pool is risk financing, and accordingly, premiums paid by participants and members for risk and benefits coverage are classified as operating revenues. Other income, including investment income, is outside of the Pool's principal ongoing operations and, therefore, is classified as nonoperating income. The principal operating expenses of the Pool include the cost of claims and adjustment, as well as excess insurance premiums and general and administrative expenses. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses

31 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO FINANCIAL STATEMENTS December 31,2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Participant Premiums Participant premiums for benefits coverage are recognized on a pro rata basis over the applicable contract period. Premiums for risk coverage are recognized as revenue in the applicable contract period (coincides with the fiscal year). Excess Insurance Premiums Excess insurance premiums for risk coverage are recognized as an expense in the applicable contract period (coincides with the fiscal year). Excess insurance premiums for benefits coverage are recognized as an expense on a pro rata basis over the applicable contract period. Premium adjustments for retrospectively adjusted excess insurance policies are estimated and recorded as revenue or expense over the period of policy coverage. Claims and Claim Adjustment Expenses Insurance losses and related loss adjustment expenses are charged to operations as incurred. The reserves for losses and loss adjustment expenses are determined based upon case-basis evaluations and actuarial projections, and include a provision for claims incurred but not reported. The actuarial projections of ultimate losses on reported claims and the estimate of claims incurred but not reported are based on a composite of the Pool's experience and. benefits, as well as property and casualty insurance industry data, which supplements the Pool's limited historical experience and includes the effects of inflation and other factors. Losses are reported net of estimated amounts recoverable from excess insurance, salvage and subrogations, and the deductible portion of claims. Adjustments to the probable ultimate liability for losses and loss adjustment expenses are made continually, based on subsequent developments and experience, and are included in operations. Exemption from Income Taxes The Pool has not requested a ruling from the Internal Revenue Service regarding its tax status. Management of the Pool considers the organization exempt from income taxed under Section 115 of the Internal Revenue Code. Accordingly, no liability for income taxes is included in the accompanying financial statements. Credit Risk The Pool transacts the majority of its business with its members. Credit losses relating to member receivables have been within management's expectations and there is no allowance for doubtful accounts. Generally, collateral is not required on receivables

32 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO FINANCIAL STATEMENTS December 31,2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Budget In accordance with by-laws, the Pool prepares the budget that is controlled at the Pool level. The level of budgetary control is at the total fund level. Amendments affecting the overall Pool must be approved by the Board and members. The budget is adopted on a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America (GAAP). GAAP differences in budgeted amounts arise from non-budgeted depreciation expense on capital assets, when applicable. The Pool budgets claims and claim adjustment expenses based on actuarial estimates. Overages on this specific line item are only considered deficiencies if the cash and investment balances within the Pool cannot support the overage. Restricted Net Assets Net assets are restricted to the extent external constraints place restrictions on the use of the net assets, such as restrictions by contributors or laws and regulations. Usage of the Pool's net assets was not externally restricted at December 31, 2012, and, accordingly, the net assets are reported as unrestricted. When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, the Pool first uses restricted net assets. NOTE 2 - CASH AND INVESTMENTS The Pool deposits its funds with various financial institutions. New Mexico statutes provide that deposits of public monies in financial institutions must be secured by pledged collateral in an aggregate value equal to one-half of the amount of the public monies deposited after deducting the amount of Federal Deposit Insurance Corporation insurance coverage for each financial institution. The Pool does not engage in any securities lending arrangements or derivatives

33 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO FINANCIAL STATEMENTS December 31,2012 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) Investments consisted of the following at December 31, 2012: Unrealized Maturity Moody Holding Estimated Rate Date Ratina Cost Gain (Loss) Fair Value Multi-Line Program: Pimco Total Return MF N/A N/A N/A $ 1,632,883 $ 26,963 $ 1,659,846 Federated Total Return Bond N/A N/A N/A 1,340,507 37,305 1,377,812 Delaware LTD Term Diverse N/A N/A N/A 1,328,429 (4,910) 1,323,519 Pimco Mortgage Back MF N/A N/A N/A 1,270,542 (7,299) 1,263,243 Federated Income Trust, N/A N/A N/A 1,152,887 (4,756) 1,148,131 Delaware Group MF N/A N/A N/A 1,039, ,040,467 GNMA II 5.00% 7/20/2035 N/A 774,716 30, ,858 Mainstay FDS Trust MF N/A N/A N/A 700,000 2, ,938 Pimco FDS Pac Inv Tot Ret N/A N/A N/A 529,367 8, ,650 GNMA II 5.50% 2/20/2038 N/A 492,849 14, ,033 Delaware LTD MF N/A N/A N/A 520,437 (15,918) 504,519 Pimco FDS Pac Inv Low Dur N/A N/A N/A 459,869 (2,093) 457,776 GNMA II 5.00% 3/20/2038 N/A 409,829 7, ,218 GNMA II 5.00% 2/20/2039 N/A 403,215 11, ,874 Loomis Sayles LTD Gov N/A N/A N/A 407,138 2, ,150 Pimco Low Duration MF N/A N/A N/A 392,473 3, ,907 GNMA II 5.00% 8/20/2035 N/A 318,078 13, ,610 Dodge and Cox Income MF N/A N/A N/A 280,329 13, ,425 Franklin Invs Sec Adj US Gov N/A N/A N/A 289,607 (4,003) 285,604 Vanguard GNMA MF N/A N/A N/A 281,348 (860) 280,488 Vanguard Fixed Inc SIT N/A N/A N/A 254,588 2, ,922 American Express CD 3.20% 5/6/2013 N/A 250,000 2, ,443 American Express FSB CD 3.20% 5/6/2013 N/A 250,000 2, ,443 JP Morgan Chase 6.00% 1/15/2018 AA3 207,747 31, ,924 GNMA II 6.00% 3/20/2037 N/A 208,624 1, ,885 GNMAII 6.00% 5/20/2036 N/A 200,210 2, ,199 GNMA 5.50% 3/15/2032 N/A 239,545 (61,461) 178,084 Verizon Communications 5.50% 4/1/2017 A3 155,630 20, ,525 Vanguard SIT Bond N/A N/A N/A 152, ,469 National Rural Utility Corp % 11/1/2018 A1 129,007 19, ,421 IBM Corporation 5.70% 9/14/2017 AA3 104,535 16, ,883 Goldman Sachs Group 6.25% 9/1/2017 A2 105,130 12, ,196 Goldman Sachs Notes 5.95% 1/18/2018 A2 103,344 13, ,425 Wal-Mart Notes 7.25% 6/1/2013 AA2 115,505 (12,577) 102,

34 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO FINANCIAL STATEMENTS December 31, 2012 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) Multi-Line Program (continued): Unrealized Maturity Moody Holding Estimated Rate Date Rating Cost Gain (Loss) Fair Value BMW Bank N. America CD 3.35% 5/28/2013 N/A 100, ,206 GNMA 6.00% 8/20/2033 N/A 78,900 (10,865) 68,035 GNMA 5.50% 10/15/2033 N/A 55,566 (3,125) 52,441 GNMA 6.00% 6/20/2031 N/A 15,552 (4,982) 10,570 GNMA 7.00% 3/15/2017 N/A 84,753 (77,149) 7,604 $ 16,836,073 $ 86,598 $ 16,922,671 Law Enforcement Program: Pimco FDS Total III MF N/A N/A N/A $ 2,021,206 $ 35,461 $ 2,056,667 Federated Total Return MF N/A N/A N/A 1,802,160 35,643 1,837,803 Delaware LTD MF N/A N/A N/A 1,751,477 (9,213) 1,742,264 Dodge and Cox Income MF N/A N/A N/A 1,076,509 37,199 1,113,708 Pimco FDS MF N/A N/A N/A 1,057,106 20,564 1,077,670 Delaware Group MF N/A N/A N/A 1,039, ,040,468 Federated Income MF N/A N/A N/A 1,018,801 (2,995) 1,015,806 Pimco MBS MF N/A N/A N/A 989,426 (4,398) 985,028 Mainstay FDS MF N/A N/A N/A 800,000 4, ,309 Pimco FDS Total MF N/A N/A N/A 770,614 3, ,441 Pimco Low Duration MF N/A N/A N/A 547,407 6, ,707 GNMA II 5.00% 7/20/2035 N/A 502,156 19, ,691 Oppenheimer Senior MF N/A N/A N/A 434,006 (2,370) 431,636 GNMA II 5.00% 2/20/2039 N/A 403,215 11, ,874 Loomis Sayles MF N/A N/A N/A 407,160 1, ,836 GNMA II 5.00% 8/20/2035 N/A 309,782 (780) 309,002 Vanguard GNMA MF N/A N/A N/A 292,236 (6,791 ) 285,445 GNMA II 5.00% 8/20/2035 N/A 258,801 11, ,807 Vanguard Short Term MF N/A N/A N/A 254,588 2, ,922 Vanguard Short Term Bond MI N/A N/A N/A 253, ,115 Caterpillar Financial 7.15% 2/15/2019 A2 163,393 33, ,441 AT&T Inc. 5.60% 5/15/2018 A2 104,047 16, ,521 Duke Energy 5.45% 4/1/2019 A2 104,229 16, ,245 Verizon Communications 5.50% 2/15/2018 A3 103,411 16, ,097 JP Morgan Chase 6.00% 1/15/2018 AA3 103,094 16, ,462 GNMA II 6.00% 3/20/2037 N/A 104, ,

35 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO FINANCIAL STATEMENTS December 31,2012 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) Law Enforcement Program (continued): Unrealized Maturity Moody Holding Rate Date Ratina Cost Gain (Loss) Wal-Mart Stores 7.25% 6/1/2013 AA2 115,505 (12,577) GNMA II 6.00% 5/20/2036 N/A 100,109 1,491 BMW Bank NA CD 3.35% 5/28/2013 N/A 100, GNMAII 5.50% 6/20/2033 N/A 83,596 (19,910) IBM Corporation 5.70% 9/14/2017 A1 52,270 8,172 Franklin Inv. Security MF N/A N/A N/A 20,656 (74) Estimated Fair Value 102, , ,206 63,686 60,442 20,582 $ 17,145,575 $ 240,776 $ 17,386,351 Investment income is summarized as follows for the year ended December 31,2012: Multi-Line Program: Interest income Loss on sale of investments Unrealized gains $ 623,030 (15,100) 34,384 Total investment income $ 642,314 Law Enforcement Program: Interest income Loss on sale of investments Unrealized gains $ 741,675 (1,512) 93,927 Total investment income $ 834,

36 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO FINANCIAL STATEMENTS December 31,2012 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) As of December 31, 2012, the Pool's cash and cash equivalents and investments were as follows: Multi-Line Program Cash and cash equivalents: Checking and money market Total Investment Type Investment in the State General Fund Investment Pool Total Cost Fair Value $ 603,597 $ 603,597 $ 603,597 $ 603,597 $ 953 $ 953 $ 953 $ 953 Investments: Corporate Notes Government Asset-backed Securities Certificates of Deposit Mutual Funds $ 920,898 3,281, ,906 12,032,432 $ 1,021,302 3,205, ,091 12,089,866 Total $ 16,836,073 $ 16,922,

37 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO FINANCIAL STATEMENTS December 31, 2012 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) Law Enforcement Program Investment Type Cash and cash equivalents: Checking and money market Total Cost Fair Value $ 522,978 $ 522,978 $ 522,978 $ 522,978 Investment in the State General Fund Investment Pool $ 1,588...:...$ 1...!..,5_8_8 Total $ 1,588 ==$ ==1==, 5=8=8 Investments: Corporate Notes Government Asset-backed Securities Certificates of Deposit Mutual Funds Total $ 745,949 $ 1,761, ,906 14,536, ,135 1,785, ,206 14,659,407 $ 17,145,575 $ 17,386,351 Both Programs Cash and cash equivalents: Money market Total $ 1,126,575 $ 1,126,575 $ 1,126,575 $ 1,126,575 Investment in the State General Fund Investment Pool $ 2,541 ",-$ _---=2=,5:...,;4...:...1 Total $ 2,541 ==$ =~2;;,:";,5~4,,,;.1 Investments: Corporate Notes Government Asset-backed Securities Certificates of Deposit Mutual Funds $ 1,666,847 $ 5,043, ,812 26,569,178 1,861,437 4,991, ,297 26,749,273 Total $ 33,981,648 $ 34,309,

38 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO FINANCIAL STATEMENTS December 31,2012 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) Collateral Requirements First National Bank of Santa Fe: Total amount on deposit in bank: Multi-Line checking Law Enforcement checking Other funds administered by the New Mexico Association of Counties (not held by the Pool) $ 563, ,869 2,026,171 Total deposit in bank 3,317,403 FDIC coverage (250,000) Total uninsured funds $ 3,067,403 50% pledged collateral requirement $ 1,533,702 Pledged collateral: Description CUSP #31331XWW8 CUSP #31398A3R1 Total pledged collateral Maturity 04/25/ /21/2014 Par 5,000,000 1,000,000 Market $5,306,486 1, ,319,950 Over-collateralized $ 4,786,248 Custodial Credit Risk Custodial credit risk is the risk that, in the event of a bank failure, the Pool's deposits may not be returned to it. As of December 31, 2012 and 2011, none of the Pool's deposits were exposed to custodial credit risk; the total of demand deposits" was covered by FDIC or by collateral held by the Pool's agent in the Pool's name. Interest Rate Risk The Pool does not have an investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk The Pool's investment policy states that investments are limited to the following: 21 38

39 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO FINANCIAL STATEMENTS December 31,2012 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) Government Bonds. Bonds or negotiable securities of the United States, the state or any municipality or school district which has a taxable valuation of real property for the last preceding year of at least one million dollars and has not defaulted in the payment of any interest or sinking fund obligation or failed to meet any bonds at maturity at any time within five years last preceding. Such investments shall have aggregate durations or maturities of no more than five years. Government Securities. Securities issued by the United States government or by its agencies or instrumentalities and that are either direct obligations of the United States, the Federal Home Loan Mortgage Association, the Federal National Mortgage Association, the Federal Farm Credit Bank or the Student Loan Marketing Association, or are backed by the full faith and credit of the United States government. Such investments shall have aggregate durations or maturities of no more than five years. Commercial Paper. Unsecured obligations with maturity up to 270 days issued by corporations organized and operating within the United States. The commercial paper shall be assigned the highest rating by 3 of the 4 national rating services (A 1, P1, D1 or F1). Corporate Bonds. The Pool is no longer purchasing corporate bonds. Such investments currently held by the Pool will be sold if management believes that the sale will be beneficial. Otherwise, investments in corporate bonds will be held until maturity. Asset-backed Obligations. Debt instruments which are backed by defined cash flows or receivables with a final maturity not exceeding five years and AAA by Standard & Poor's and Moody's. Repurchase Agreements. Contracts with banks, savings and loan associations or credit unions for the present purchase and resale at a specified time in the future of specific securities at specified prices at a price differential representing the interest income to be earned by the investor. Certificates of Deposit. Limited to $250,000. per financial institution or bank, unless collateralization requirements within the investment policy are met. Mutual Funds. Shares of a diversified investment company registered pursuant to the federal Investment Company Act of 1940 that invests in fixed-income securities or debt instruments that are listed in a nationally recognized, broad-market, fixed-income-securities market index; provided that the investment company or manager has total assets under management of at least one billion dollars and provided that the board of finance of the county or municipality may allow reasonable administrative and investment expenses to be paid directly from the income or assets of these investments or individual, common or collective trust funds of banks or trust companies that invest in fixed-income securities or debt instruments that are listed in a nationally recognized, broad-market, fixed-incomesecurities market index; provided that the investment company or manager has total assets under management of at least one billion dollars and provided that the board of finance of the county or municipality may allow reasonable administrative and investment expenses to be 22 39

40 NEW MEXICO COUNTY INSURANCE AUTHORITY MUL TI-UNE POOL NOTES TO FINANCIAL STATEMENTS December 31,2012 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) paid directly from the income or assets of these investments. Such investments shall have aggregate durations or maturities of no more than five years. New Mexico State Treasurer's Local Government State Investment Pool (State Investment Pool as defined in Note 1). This fund is rated AAA by Standard and Poor's. Concentration of Credit Risk The Pool places no limit on the amount the Pool may invest in anyone issuer. Excluding investments that are implicitly backed by the full faith and credit of the United States, investments in the following issuers represent more than 5 percent of the Pool's investments, and are therefore considered to have a concentration of credit risk. Multi-Line Program: Delaware Group MF Federated Income Trust MF Federated Total Return MF PIMCO Total Return MF PIMCO Mortgage Backed MF Delaware LTD Term Direct MF Law Enforcement Program: Dodge and Cox Income MF Franklin Investment Security MF Delaware LTD MF Federated Income MF Delaware Group MF PIMCO FDS Total III MF Federated Total Return MF 6.15% 6.78% 8.14% 9.81% 7.46% 7.82% 6.41% 6.03% 10.02% 5.84% 5.98% 11.83% 10.57% NOTE 3 - NOTE RECEIVABLE During the year ended December 31, 2012, the Multi-Line Program loaned the New Mexico Association of Counties, a related party, $1,850,257 in return for a promissory note. This note carries a 5% annual interest rate, with payments of $59,742 beginning on February 24,2013 and every six months thereafter, for a total of 60 payments, with the note maturing on August 24, This loan funded the purchase of a new building for the New Mexico Association of Counties, which performs administrative functions for the Multi-Line Program and the Law Enforcement Program

41 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO FINANCIAL STATEMENTS December 31,2012 NOTE 4 - CLAIMS AND CLAIM ADJUSTMENT EXPENSES The liability for claims and claims adjustment expenses, which is reported on an ultimate development basis, includes an amount determined from claims reports and individual cases, and an amount for claims incurred but not reported. Estimates of the liability for amounts incurred but not reported as of December 31, 2012 have been based on an actuarial evaluation of the Pool's historical claims experience, industry data and other factors. While management believes that these estimates are adequate, actual incurred but unpaid claims may vary significantly from the amount provided. Changes in reserves for claims and claim adjustment expenses were as follows for the year ended December 31,2012: Multi-Line Program: Liability for claims and claim adjustment expenses, beginning of year Incurred claims and claim adjustment expenses related to: Current year Prior years Total incurred Payments (net of amounts received pursuant to excess insurance contracts) related to: Current year Prior years Total payments Liability for claims and claim adjustment expenses, end of year Law Enforcement Program: Liability for claims and claim adjustment expenses, beginning of year Incurred claims and claim adjustment expenses related to: Current year Prior years Total incurred Payments (net of amounts received pursuant to excess insurance contracts) related to: Current year Prior years Total payments $ 11,383,536 6,471,315 (671,567) 5,799,748 (1,327,747) (3,245,035) (4,572,782) 12,610,502 15,235,625 4,949,849 2,898,229 7,848,078 (387,627) (5,686,673) (6,074,300) 24 41

42 NEW MEXICO COUNTY INSURANCE AUTHORITY MUL TI-UNE POOL NOTES TO FINANCIAL STATEMENTS December 31, NOTE 4 - CLAIMS AND CLAIM ADJUSTMENT EXPENSES (CONTINUED) Liability for claims and claim adjustment expenses, end of year 17,009,403 Total liability claims and claim adjustment expenses, end of year $ As of year-end, the liability for unpaid claims and claim adjustment expenses of $13,455,347 for the Multi-Line Program and $18,265,167 for the Law Enforcement Program are presented at their net present value of $12,610,502 and $17,009,403, respectively. These claims are discounted at a rate of 4.0%. For the year ended December 31,2012, the Multi-Line Program experienced negative development on prior policy year claims, resulting in an addtional claim expense of $783,075. For the year ended December 31, 2012, the Law Enforcement Program experienced negative development on prior policy year claims, resulting in an additional claim expense of $4,822,014. NOTE 5 - REINSURANCE AND EXCESS INSURANCE The Multi-Line Program and the Law Enforcement Program have purchased commercial excess insurance for specific claims. The Multi-Line Program's excess coverage layer begins at $150,000 for property claims and $1,000,000 for liability claims, while the Law Enforcement Program's excess coverage layer begins at $500,000 for individual claims. Excess coverage on property claims is provided by Axis Insurance Company, which provides limits of liability up to $25 million for anyone occurrence, and RSUI, which provides additional property coverage of up to $125 million per occurrence ($125 million excess of $25 million). Both policies contain sublimits for certain losses (e.g., earthquake and flood claims). Reinsurance coverage on liability claims is provided by Munich Re and Gen Re. Munich Re covers losses between the retention amount described above and $2,000,000 for the Multi-Line Pool, while covering losses between the retention and $1,850,000 for the Law Enforcement Pool. These limits are on a per-member basis, and reinsurance coverage in the aggregate is limited to $10,000,000 and $9,000,000 for the Multi-Line and Law Enforcement Pools, respectively. General Re's excess coverage layer begins at $2,000,000, covering losses between this amount and $5,000,000 per occurrence for both Pools. It is possible that one occurrence may result in multiple claims. General Re provides such coverage up to an aggregate of $6,000,000 per pool, per claim year. Effective January 1, 2008, the Multi-Line Program and the Law Enforcement Program ceased their relationships with County Reinsurance, Limited (CRL). CRL is a captive organization formed to provide excess and reinsurance to county association pools. The Multi-Line Program joined CRL effective January 1, 1998, while the Law Enforcement Program joined January 1, Similar to counties that participate as members of the Pool, the Pool's contribution to CRL includes a loss fund portion, capital, and expenses. CRL has the ability to return equity to its members in the event that loss fund contributions are not depleted or if there is a surplus of 25 42

43 NEW MEXICO COUNTY INSURANCE AUTHORITY MUL TI-UNE POOL NOTES TO FINANCIAL STATEMENTS December 31,2012 NOTE 5 - REINSURANCE AND EXCESS INSURANCE (CONTINUED) capital. Subsequent to December 31, 2008, CRL agreed to return the Multi-Line Program's and the Law Enforcement Program's equity in five equal installments beginning in April For the year ended December 31, 2012, the Pool paid $2,174,195 for excess insurance premiums. NOTE 6 - BROKERAGE SERVICE FEE Commission/brokerage service fees were $99,840 for the year ended December 31, NOTE 7 - GENERAL AND ADMINISTRATIVE The New Mexico Association of Counties provides general and administrative services, as well as office space, equipment and supplies, to the Pool. These services include general administration and consulting, financial management and risk management. The Pool expensed $2,008,500 in 2012 under this arrangement. The fees to be paid to the New Mexico Association of Counties for such services are approved by the Pool's Board of Directors when the Pool's annual operating budget is reviewed and approved. The Pool also engages other related third parties to provide legal, actuarial and other services. The Pool's general and administrative expenses for the year ended Decem ber 31, 2012 consisted of the following: Law Multi-Line Enforcement Program Program Total Risk management $ 1,030,000 $ 978,500 $ 2,008,500 Consulting and training 116,222 50, ,272 Software support and licensing 52,285 52, ,570 Appraisal fees 55,300 55,300 Accounting and auditing 19,788 19,788 39,576 Actuarial 10,475 8,463 18,938 Miscellaneous 11,927 4,784 16,711 Legal 8,545 3,587 12,132 Total operating expenses $ 1,304,542 $ 1,117,457 $ 2,421,

44 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO FINANCIAL STATEMENTS December 31,2012 NOTE 8 - LITIGATION The Pool is subject to various legal proceedings, claims and liabilities which arise in the ordinary course of the Pool's operations. In the opinion of the Pool's management and legal counsel, the ultimate resolution of these matters will not have a material adverse impact on the financial position or results of operation of the Pool. NOTE 9-SUBSEQUENT EVENT In April of 2013, the Multi-Line Program loaned an additional $903,213 to the New Mexico Association of Counties, a related party, for furniture, fixtures, equipment and improvements to the new building where Pool administration will occur. The promissory note received in exchange carries an interest rate of five percent annually, and requires payments of $43,153, including a first interest-only payment in May of 2013 in the amount of $33,871. Payments to the Multi-Line Program will be made quarterly beginning on November 23, This note matures on November 27,2027. On February 22,2013, the Board of Directors approved a $1,000,000 payment to a claimant on. behalf of a member county. Payment was subsequently made on March 6, 2013, and will be included in the statement of revenues, expenses, and changes in fund balance for fiscal year The Board made this payment outside of any legal or contractual obligation to either the member county or the claimant. This information is an integral part of the accompanying financial statements

45 REQUIRED SUPPLEMENTARY INFORMATION 28 45

46 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL NOTES TO TEN YEAR CLAIMS DEVELOPMENT INFORMATION (UNAUDITED) December 31, 2012 The following illustrates how the Pool's earned revenues and investment income compare to related costs of loss (net of loss assumed by reinsurers) and other expenses assumed by the Pool as of the end of each of the last nine years. The rows of the table are defined as follows: (1) This line shows the total of each fiscal year's earned contribution revenues and investment revenues, net of contribution revenue ceded to reinsurers. (2) This line shows each fiscal year's other operation costs of the Pool, including overhead and claims expenses not allocable to individual claims. (3) This line shows the Pool's incurred claims and allocated claim adjustment expense (both paid and accrued) as originally reported at the end of the first year in which the event that triggered coverage under the contract occurred (called policy year). (4) This section of ten rows shows the cumulative net amounts paid as of the end of successive years for each policy year. (5) This section of ten rows shows how each policy year's incurred claims increased or decreased as of the end of the successive years. (These annual re-estimations result from new information received on known claims, reevaluation of existing information on known claims, as well as emergence of new claims not previously known.) (6) This line compares the latest re-estimated incurred claims amount to the amount originally established (line 3) and shows whether this latest estimate of claims cost is greater or less than originally thought. As data for individual policy years matures, the correlation between original estimates and re-estimated amounts is commonly used to evaluate the accuracy of incurred claims currently recognized in less mature policy years. The columns of the table show data for successive policy years

47 NEW MEXICO COUNTY INSURANCE AUTHORITY MUL TI-UNE POOL TEN YEAR CLAIMS DEVELOPMENT INFORMATION (UNAUDITED) Ten Years Ended December 31,2012 (in thousands) Net earned required contribution and investment revenues $ 7,747 $ 11,386 $ 12, Unallocated claim expenses 1,208 1,044 1, Estimated incurred claims and expense, end of policy year 3,257 2,602 4, Paid (cumulative) as of: Year one 655 1, Year two 1,279 2,605 3,241 Year three 2,998 4,223 4,389 Year four 4,127 4,915 5,853 Year five 4;231 5,058 5,430 Year six 4,317 5,711 5,475 Year seven 4,327 5,807 6,729 Year eight 4,233 7,147 7,260 Year nine 5,281 7,160 Year ten 5, Re-estimated incurred claims and expense Year one 3,257 2,602 4,308 Year two 3,569 4,078 4,961 Year three 4,220 4,896 5,776 Year four 4,842 5,516 6,407 Year five 4,452 5,759 6,176 Year six 4,341 5,878 6,332 Year seven 4,327 5,884 7,595 Year eight 4,233 7,147 7,513 Year nine 5,281 6,163 Year ten 5, Increase (decrease) in estimated incurred claims and expense from end of policy year 2,112 3,561 3,205 $ 14,138 1,392 4, ,443 5,854 8,001 8,685 10,604 10,727 4,255 6,287 9,137 9,649 9,641 10,830 10,804 6,

48 $ 16,063 $ 16,323 $ 17,796 $ 17,301 $ 17,483 $ 17,759 1,768 2,027 2,203 2,296 2,358 2,522 3,397 5,443 6,357 11,685 13,601 7, , ,839 1,566 2,905 1,856 3,751 3,659 5,771 5,300 4,160 7,522 6,570 7,439 6,289 9,689 8,963 7,255 9,767 3,397 5,443 6,357 11,685 13,601 7,174 6,335 6,050 8,767 10,622 10,990 8,707 6,754 11,586 10,622 9,090 8,280 11,854 10,344 8,138 10,278 6,881 2,695 5,497 (1,063) (2,611 ) 31 48

49 SUPPLEMENTARY BUDGETARY COMPARISONS 32 49

50 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL SCHEDULE OF REVENUES AND EXPENSES - BUDGET AND ACTUAL (BUDGETARY BASIS) - MULTI-LINE PROGRAM Year Ended December 31, 2012 Actual Original Final Amounts - Budgeted Budgeted Budgetary Amounts Amounts Basis REVENUES Member contributions $ 7,214,238 $ 7,214,238 $ 7,286,739 Investment income 600, , ,314 Land Use Contribution 72,500 72,500 Other 42,469 Total revenues 7,886,738 7,886,738 7,971,522 Variance with Final Budget - Positive (Negative) $ 72,501 42,314 (72,500) 42,469 84,784 "\ -) EXPENSES Claims and claim adjustment expenses 5,748,238 5,748,238 5,799,748 Excess insurance premiums 850, , ,195 General and administrative 1,220,000 1,220,000 1,304,542 Brokerage fees 66,000 66,000 65,520 Other expenses 2,500 2,500 Total expenses 7,886,738 7,886,738 7,969,005 (51,510) * 50,805 (84,542) * 480 2,500 (82,267) EXCESS OF EXPENSES OVER REVENUES - BUDGETARY BASIS $ $ 2,517 $ 2,517 * * See Note 1 - Budget on page 14 for Budget authority level

51 NEW MEXICO COUNTY INSURANCE AUTHORITY MUL TI-UNE POOL SCHEDULE OF REVENUES AND EXPENSES - BUDGET AND ACTUAL (BUDGETARY BASIS) - LAW ENFORCEMENT PROGRAM Year Ended December 31,2012 Actual Variance with Original Final Amounts - Final Budget - Budgeted Budgeted Budgetary Positive Amounts Amounts Basis (Negative) REVENUES Member contributions $ 9,005,716 $ 9,005,716 $ 8,995,430 $ (10,286) Investment income 500, , , ,090 Other 8,316 8,316 Total revenues 9,505,716 9,505,716 9,837, ,120 EXPENSES Claims and claim adjustment expenses 6,964,716 6,964,716 7,848,078 (883,362) * Excess insurance premiums 1,400,000 1,400,000 1,375,000 25,000 General and administrative 1,103,500 1,103,500 1,117,457 (13,957) * Brokerage fees 35,000 35,000 34, Other expenses 2,500 2,500 2,500 Total expenses 9,505,716 9,505,716 10,374,855 (869,139) EXCESS OF REVENUES OVER EXPENSES - BUDGETARY BASIS $ $ {537,019) $ {537,019) * See Note 1 - Budget on page 14 for Budget authority level

52 OTHER SUPPLEMENTARY INFORMATION 35 52

53 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL CASH AND CASH EQUIVALENTS RECONCILIATION FROM BOOKS TO FINANCIAL STATEMENTS December 31,2012 Law Multi-Line Enforcement Program Pro9ram Total Interest-bearing checking accounts: First National Bank of Santa Fe $ 563,363 $ 727,869 $ 1,291,232 Mutual funds - money market Wachovia Securities 311,959 98, ,152 Mutual funds - money market LPL Financial 27,173 6,397 33, , ,459 1,734,954 Reconciling items Outstanding checks (298,898) (309,481) (608,379) Financial statement balance 603, ,978 1,126,575 Cash held with the State Treasurer Local Government Investment Fund 953 1,588 $ 2,541 Financial statement balance 953 1,588 2,541 TOTAL CASH AND CASH EQUIVALENTS AND INVESTMENT IN THE STATE LOCAL GOVERNMENT INVESTMENT POOL $ 604,550 $ 524,566 $ 1,129,

54 CliftonLarsonAllen LLP 500 Marquette NW, Suite 800 Albuquerque, NM fax INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Directors New Mexico County Insurance Authority Multi-Line Pool and Mr. Hector H. Balderas New Mexico State Auditor We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the business-type activities, each major fund, and the related budgetary comparisons presented as supplemental information of N.M. County Insurance Authority: Multi Line Pool (the Pool), as of and for the year ended December 31, 2012, and the related notes to the financial statements, which collectively comprise the Pool's basic financial statements, and have issued our report thereon dated May 30, Internal Control over Financial Reporting Management of the Pool is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit of the financial statements, we considered the Pool's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Pool's internal control. Accordingly, we do not express an opinion on the effectiveness of the Pool's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. We did identify a certain deficiency in internal control, described in the accompanying schedule of findings and responses as finding , which we consider to be a significant deficiency

55 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Pool's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Pool Management's Response to Findings The Pool's response to the findings identified in our audit is described in the accompanying schedule of findings and responses. The Pool's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Albuquerque, New Mexico May 30,

56 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL SCHEDULE OF FINDINGS AND RESPONSES Year Ended December 31,2012 Section I - Financial Statement Findings Finding Year-End Accounting Close - Significant Deficiency Condition: Management of the Pools has not established a set of written accounting policies for the year-end close, resulting in the need for several audit adjustments. These entries included recognition of $32,546 in accrued interest on notes receivable and an entry to accounts payable in the amount of $6,500. Further there is a lack of a specific accounting policy for recognizing year-end receivables for reinsurance recoveries and deductibles. The recognition of such receivables and their associated effect on the statement of revenues, expenses, and changes in fund net assets requires an approach that deviates from the accounting used during the year. There is no internal guidance on both the initial recognition and subsequent reversal in the subsequent fiscal year's accounting records. Criteria: It is standard in the accounting process to have in place procedures and controls over financial reporting. These processes culminate in the production of a complete year-end trial balance from which the annual, GAAP-based financial statements are prepared. All necessary accruals and adjustments to account balances should be performed prior to providing the external auditors with the final trial balance. Cause: The accounting policies and procedures currently in place for the Pools do not specify the actions to be taken, nor the deadline by which they are required to be performed, for financial statement preparation. Effect: The trial balance provided to the auditors was not complete and the lack of a formal accounting policy increases the chance that the financial statements could be misstated. Recommendation: We recommend that management develop a set of procedures through which the trial balance can be finalized within a reasonable time (typically two months) after year-ena. This should include an evaluation of accounts that are subject to year-end accruals, such as interest on notes receivable, and the appropriate entries should be made after being reviewed by the Finance Director. These policies and procedures should also include a policy on the accounting treatment for recoveries of deductibles and reinsurance. Management's Response: Management agrees that the procedures for the year-end closing process need to be updated. The Finance Department will document a formal process that includes the specific actions that need to be taken in order to recognize year-end receivables for reinsurance recoveries and deductibles

57 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL SCHEDULE OF FINDINGS AND RESPONSES Year Ended December 31,2012 Section II - Federal Award Findings and Questioned Costs There were no findings for the year ended December 31, Section III - Other Findings There were no findings for the year ended December 31,

58 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS Year Ended December 31, 2012 Section I - Financial Statement Findings Finding Deviation from Investment Policy - Significant Deficiency (Resolved) Condition: During our audit of investment balances, it was found that 12 out of the 16 corporate bonds included in the Pool's investment balances have maturity dates of more than five years from the date of purchase

59 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL EXIT CONFERENCE Year Ended December 31,2012 An exit conference was held on May 30, In attendance were: NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL Ron Lethgo, Board Chair Paul Gutierrez, Executive Director Steve Kopelman, Risk Management Director Santiago Chavez, Finance Director CLiFTONLARSONALLEN, LLP Raul J. Anaya, CPA, CGFM, CFE, Senior Manager PREPARATION OF FINANCIAL STATEMENTS The financial statements presented in this report have been prepared by the independent auditor. However, they are the responsibility of management, as addressed in the Independent Auditors' Report

60 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL AGENDA ITEM SUMMARY Item Number: Item Title: 5. B. Approval of Revised Open Meetings Act Resolution Presenter (s): Steve Kopelman, Risk Management Director & General Counsel Background: Type of Item: Board Action Item Staff Recommendation: Motion by: Seconded by: 60

61 NMCIA MULTI-LINE POOL BOARD OF DIRECTORS OPEN MEETINGS ACT RESOLUTION WHEREAS, the Board of Directors of the Multi-Line Pool shares the common belief that the democratic ideal is best served by a well-informed public; WHEREAS, the Board of Directors of the Multi-Line Pool is of unanimous opinion that its business should be conducted in full public view; that actions should be taken openly, and that deliberations should be subject to public scrutiny; and WHEREAS, the New Mexico County Insurance Authority and Joint Powers Agreement require the Pool to comply with the New Mexico Open Meetings Act, Sections through NMSA 1978; NOW THEREFORE, BE IT RESOLVED by the Board of Directors of the Multi-Line Pool that: 1. Regular meetings of the Board of Directors of the Multi-Line Pool shall be held at 8:30 a.m. pursuant to the schedule attached hereto as Exhibit A and incorporated herein by reference. In the event circumstances require the rescheduling of a regular meeting shall be given as hereinafter provided. Notices of these regular meetings shall be given, not less than five days prior to the meeting. The five-day period shall begin to run upon the delivery of notice to the media as set forth in Paragraph 5 below. A proposed agenda will be available during the week before the meeting and may be obtained from the office of the New Mexico Association of Counties, located at 444 Galisteo St., Santa Fe, New Mexico. The Board of Directors of the Multi-Line Pool, in accordance with law, will not take 61

62 action of any item not included on the Agenda unless such business constitutes an emergency in accordance with the Open Meetings act. From time to time the Board of Directors of the Multi-Line Pool may schedule its meetings in the various communities and regions of the State in order to serve specific local concerns or interests. In such an event, the Board will endeavor to provide accommodation to persons who may have to travel longer distances to have their matters heard by the Board of Directors of the Multi- Line Pool. 2. Special meetings of the Board of Directors of the Multi-Line pool may be called by any three members of the Board, provided that a quorum of the Board of Directors of the Multi-Line Pool can be assembled, and shall require seventy-two (72) hours notice to the media as set forth in Paragraph 5 below. 3. Emergency meetings of the Board of Directors of the Multi-Line Pool may be called by the Chair of the Board, provided that a quorum of the Board can be assembled, and shall require three (3) hours notice to the media as set forth by Paragraph 5 below. 4. Informal work sessions may be called by agreement of the Board of Directors of the Multi- Line Pool with notice to the news media and informal work sessions shall always be open to the public. The Board shall not formulate public policy or take action by vote at informal work sessions. In addition, the Board of Directors of the Multi-Line Pool herewith serves notice to the public that, during any meeting of the Board, the Board may adjourn into an informal work session for the purpose of lunch or dinner. During the meal, the informal work session may be conducted, provided that no public policy shall be formulated nor business conducted by vote. The media and public are invited to attend these sessions at their own expense. 62

63 5. Notice, as required by this Resolution, for regular, special, and/or work session meetings of the Board of Directors of the Multi-Line Pool shall be provided by delivering a news release to the following media organizations: A: Albuquerque Journal B: The Santa Fe New Mexican In addition, notice of regular and special sessions shall be posted in the lobby of the New Mexico Association of Counties. In the event an emergency meeting is called, notice shall be by telephone to the above listed media organizations. The Board of Directors of the Multi-Line Pool reserves the right to utilize legal publications as notice of meetings where circumstances and/or law require such notice. 6. The Risk Management Director shall be responsible for drafting and delivery of all notices required herein, and the Risk Management Director shall develop a system for safekeeping of proof of all notices required by this Resolution. Telephone notice shall be noted by a Certificate of the Risk Management Director or his designee that each media organization has been contacted by telephone. RESOLVED BY THE Board of Directors of the Multi-Line Pool in regular session on the 21 st day of August, BOARD OF DIRECTORS OF THE MULTI-LINE POOL APPROVED AS TO LEGAL SUFFICIENCY Multi-Line Pool Chair Douglas W. Decker, County Attorney s Affiliate Rep. 63

64 New Mexico County Insurance Authority MULTI-LINE POOL BOARD OF DIRECTORS 2013 SCHEDULE OF MEETINGS January 16, 2013 General Membership (Hotel Eldorado-Santa Fe) January 16, 2013 (Hotel Eldorado-Santa Fe) April 17, 2013 (Santa Fe) August 21, 2013 (Santa Fe) October 22, 23, & 24, 2013 (Inn of the Mountain Gods, Ruidoso) December 11, 2013 (Santa Fe) Exhibit A 64

65 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL AGENDA ITEM SUMMARY Item Number: Presenter (s): 5. C. Item Title: Approval of LEDAC Appointments and Ex-officio Positions Steve Kopelman, Risk Management Director & General Counsel Background: Type of Item: Board Action Item Staff Recommendation: Motion by: Seconded by: 65

66 NEW MEXICO ASSOCIATION OF COUNTIES MEMORANDUM To: Multiline Pool Board of Directors From: Steve Kopelman, Risk Management Director Sal Baragiola, Loss Prevention Manager Re: LEDAC Appointments Date: August 20, 2013 The Law Enforcement & Detention Advisory Committee has one vacancy and an opportunity to enhance its effectiveness with the addition of two ex-officio members. Sandra Stewart, the administrator for the Chaves County Detention Center resigned her position to take the job as the Director of Juvenile Justice Services for Children, Youth and Families Department (CYFD). Based on this vacancy and the opportunity to add an additional member, we are requesting the following appointments to LEDAC. Matt Elwell, Detention Director, Luna County Detention Center, Deming New Mexico, to replace Sandra Stewart. Sandra Stewart (new ex-officio position representing CYFD) in her capacity as Director of Juvenile Services for CYFD which have oversight of all juvenile facilities in the state. Gregg Marcantel, Secretary, Department of Corrections, re-appointment as an ex-officio member of LEDAC. Staff recommends that the board make these appointments to LEDAC. 613 Old Santa Fe Trail or Phone Santa Fe, NM Fax 66

67 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL AGENDA ITEM SUMMARY Item Number: Item Title: 5. D. Consideration of Revision to Strategic Plan Presenter (s): Cynthia Stephenson, Risk Management Coordinator Background: Type of Item: Board Action Item Staff Recommendation: Motion by: Seconded by: 67

68 OBJECTIVE 2: Increase the fund balances. Strategy: Reduce claims and litigation costs. TASK: Develop risk plans and implement loss control programs to mitigate member risks. Strategy: Maintain viable rates. TASK: Conduct proper underwriting of members and work with actuary to provide accurate funding levels for the Pools. Strategy: Continue to provide comprehensive loss prevention and risk management services. Strategy: Continue to provide effective claims handling to reduce costs to the Pools. Performance Measure: Double Increase the WC pool fund balance by 15%, increase the ML pool fund balance by 15%, and increase the LE pool fund balance by 15%

69 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL AGENDA ITEM SUMMARY Item Number: Item Title: 5. E. Ratification of Board Sub-committee Members Presenter (s): Ron Lethgo, Board Chair Background: Type of Item: Board Action Item Staff Recommendation: Motion by: Seconded by: 69

70 Pool Committees Multi-Line Underwriting Committee Formed 4/18/08; last amended 4/17/13 Chair: Ron Lethgo Orlando Lucero Nita Taylor Teresa Byrd Alternate: Wendell Bostwick Multi-Line Litigation Claims Committee Formed 8/16/06; authority up to $250,000; last amended 4/17/13 Chair: Ron Lethgo Attorney: Doug Decker Kelly Kuentsler Alternate: Wendell Bostwick Workers' Compensation Litigation Claims Committee Formed 4/16/08; authority up to $250,000; last amended 8/16/12 Chair: Brenda Sanchez Attorney: Dan Bryant Alternate: Gloria Jean Chavez Workers' Compensation Underwriting Committee Formed 4/6/09; last amended 8/16/12 Chair: Robert Anaya Joseph Crelier Lance Pyle Alternate: Dan Bryant Joint Finance Committee Formed 10/20/08 & 10/21/08; meets annually; last amended 6/24/13 ML Chair: Ron Lethgo ML: ML Alternate: Doug Decker WC Chair: WC: Gloria Jean Chavez WC Alternate: NMAC President: Wendell Bostwick NMAC President-Elect: Paula Garcia NMAC Vice President: Sharon Stover NMAC Treasurer: Alvin Maestas Joint Membership Committee Formed 12/9/2009 & 12/10/2009; last amended 4/17/13 ML Chair: Ron Lethgo ML: Wendell Bostwick ML: Orlando Lucero ML Alternate: Lonnie Freyburger WC Chair: Jan Porter-Carrejo WC Attorney: Dan Bryant WC: Brenda Sanchez WC Alternate: Tommie Herrell

71 Joint Bylaw Review Committee Formed 04/20/11 & 04/21/11; last amended 4/17/13 ML: Teresa Byrd ML: Ron Lethgo ML: Orlando Lucero ML Alternate: Doug Decker WC: Dan Bryant WC: Brenda Sanchez WC: Robert Anaya WC Alternate: Gloria Jean Chavez

72 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL AGENDA ITEM SUMMARY Item Number: 6. A. Item Title: Presentations to the Board: Executive Director Update Presenter (s): Paul Gutierrez, Executive Director Background: This is a verbal report on the activities and status of the New Mexico Association of Counties and staff. Type of Item: Presentation to the Board, Information and Discussion Staff Recommendation: 72

73 NEW MEXICO ASSOCIATION OF COUNTIES 2014 NMAC POLICY STATEMENT The New Mexico Association of Counties (NMAC) will continue to oppose legislation that significantly erodes its revenue base and preempts local authority NMAC LEGISLATIVE PRIORITIES The seven priorities listed below originated as resolutions approved by each affiliate at the NMAC June Annual Conference in Clovis, New Mexico. The resolutions were reviewed by the NMAC Executive Committee and affiliate chairs in July, and finally approved at the NMAC Board meeting in Angel Fire in August. The following issues were selected as priorities by the NMAC Board of Directors for the 2014 session. They are not in numerical order. Delinquent Property Tax Payments Amend state law to authorize County Treasurers to receive all payments of property taxes, including for those properties that have been turned over to the Property Tax Division for collection and have been placed on installment agreements (Treasurers). Delinquent Property Tax List Clarify the responsibility of County Treasurers and the Property Tax Division, so that if a delinquent property does not appear on the most recent delinquent property tax list, that property reverts back to the County Treasurer for collection, and the penalty and interest collected are distributed to the county.(treasurers) Notice of Liens Require liens to contain language that notice of the lien was sent to the property owner prior to filing the lien (Clerks) Medicaid Benefits Suspension Support suspension of Medicaid benefits in lieu of termination, during incarceration In county detention facilities (Commissioners) County Correctional Facility Gross Receipts Tax Increase existing county local option gross receipts tax for county correctional facilities (Detention Administrators and Commissioners) 444 Galisteo St or Phone Santa Fe, NM Fax 73

74 NEW MEXICO ASSOCIATION OF COUNTIES Property Tax Equity Provide for a more equitable, transparent, and understandable property tax system (Assessors) Real Property Sales Disclosure Provide for the disclosure of sales data for all real property, (includes non-residential but not agricultural land or subsurface rights on mineral deeds) (Assessors) 444 Galisteo St or Phone Santa Fe, NM Fax 74

75 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL AGENDA ITEM SUMMARY Item Number: Presenter (s): 6. B. Item Title: Discussion Regarding Revisions to Coverage Agreement for 2014 Steve Kopelman, Risk Management Director & General Counsel Background: Type of Item: Presentation to the Board, Information and Discussion Staff Recommendation: 75

76 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL AGENDA ITEM SUMMARY Item Number: Item Title: 6. C. Risk Management Update Presenter (s): Steve Kopelman, Risk Management Director & General Counsel Becky Tafoya, Assistant Risk Management Director Background: This is a report on the activities and status of the Risk Management Department and staff. Type of Item: Presentation to the Board, Information and Discussion Staff Recommendation: 76

77 October Board Meetings & Joint Retreat Inn of the Mountain Gods 287 Carrizo Canyon Rd., Mescalero, NM (800) Attire is business casual Tue., Oct. 22 2:00 p.m. ML Board meeting (lunch on your own) Dinner on your own Wed., Oct. 23 8:00 a.m. 12:00 p.m. ML Board Meeting continued 12:00 1:00 p.m. Joint Pool Board Lunch 1:00 5:00 p.m. WC Board Meeting Dinner on your own Thu., Oct 24 7:30 a.m. Joint board retreat begins with buffet breakfast 12:00 p.m. Lunch 1:00 p.m. Retreat continues 6:00 p.m. Cocktail Reception and Dinner Fri, Oct. 25 7:30 a.m. Retreat continues with buffet breakfast 11:30 a.m. Wrap-up, Adjourn December Board Meetings & Joint Appreciation Dinner NMAC Office, 444 Galisteo St., Santa Fe Wed., Dec. 11 8:30 a.m. ML Board Meeting 4:00 p.m. Joint Finance Committee Meeting 6:00 p.m. Joint Pool Board Appreciation Dinner Reception 6:00, dinner 7:00 Spouses welcome Thu., Dec. 12 8:30 a.m. WC Board Meeting NMAC Annual Open House NMAC Office, 444 Galisteo St., Santa Fe Fri., Dec :30 a.m. 3:30 p.m. Hot buffet lunch provided 77

78 Fired Oregon Officer Sues: Alcoholism Was A Disability By Steven Dubois April 29, 2013 A police officer fired for driving drunk in an unmarked police car while off-duty has filed a $6 million lawsuit against the city of Gresham, Ore. the police chief and others, alleging his rights were violated under the Americans with Disabilities Act. The lawsuit filed in Portland alleged the officer, Jason Servo, was suffering from alcoholism, a recognized disability under the act, and shouldn t have been dismissed. Catlin US offers specialty insurance and reinsurance, combining a broad risk appetite and a diverse book of business with a culture based on underwriting discipline and responsiveness. Catlin's goal is to offer the highest level of service and underwriting expertise to brokers and clients. The suit also alleged Servo was denied due process, and the police union failed to represent him adequately. Just as with any type of disability or disease, they should have made some kind of effort to accommodate that, or some kind of effort to work with him, and not simply sever all ties, said Shawn Kollie, one of Servo s attorneys. Police Chief Craig Junginger was out of the office Friday. City spokeswoman Laura Shepard said officials would not discuss the case because their policy is to not talk about pending litigation. Servo, 43, was arrested in January 2011 after he crashed into a ditch while off-duty. The lawsuit said that Servo, a detective who was the department s lead firearms instructor, had taken the police vehicle to a firearms training session in the nearby city of Troutdale. He later joined fellow officers for dinner and drinks. This was a common practice among (Gresham) officers and had become an inherent part of the culture, according to the lawsuit filed late Thursday. Servo was alone when his vehicle veered into a ditch and he was not hurt. Though Servo refused to take breath or field sobriety tests, the Clackamas County sheriff s deputy who arrested him later testified before the state Department of Public Safety Standards and Training that Servo was probably one of the top 10 most intoxicated people he had arrested in almost 15 years of drunken-driving investigations. Two months after the accident, Servo pleaded guilty to drunken driving and entered a diversion program. He fulfilled the program s requirements and the DUI was dismissed. Servo also voluntarily entered an in-patient program at a Serenity Lane drug-and-alcohol treatment center, where he was diagnosed as an alcoholic. 78

79 There were times where I went home and I couldn t get crime scenes out of my head; I went to drinking for that and there are other officers that do the same thing, Servo said Friday, adding that he has now been sober for 818 days. The lawsuit alleged the chief fired Servo to save money, ignoring the known disability of alcoholism. I know it sounds kind of like a conspiracy theorist s claim, Kollie said, but we do believe there was a funding issue in the Gresham police department at the time. It could not immediately be determined how common it is for alcoholics to claim their rights have been violated under the Americans with Disabilities Act. The U.S. Equal Employment Opportunity Commission, in a fact sheet, provides an example of how an alcoholic can justly be fired, and it s similar to the Servo case. In its example, a federal police officer is involved in an accident for which he is charged with drunken driving. About a month later, he gets a termination notice stating that his conduct makes it inappropriate for him to continue. The officer says the arrest made him realize he is an alcoholic and that he is obtaining treatment. According to the EEOC, the employer may proceed with the firing. The example, of course, is not precise because Servo s crash happened while he was off-duty. The ADA has provisions in it, across the board, to not require employers to subject other people to unreasonable risk to accommodate a disability, said Bob Joondeph, executive director with Disability Rights Oregon. Joondeph said he couldn t comment on any specifics in the Servo case, but generally accommodations for an alcoholic might include letting the worker attend Alcoholics Anonymous meetings, not allowing them to drink on the job or drive drunk. Separate from the lawsuit, Servo is appealing the standards-and-training agency s decision to strip him of his police certification. Servo is currently working as a private investigator. Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. 79

80 The Telegraph Policewoman sues grandmother after being injured by her runaway goat A grandmother is facing legal action from a policewoman who was injured by her runaway goat, in the latest of a series of claims made by officers against members of the public. A grandmother is facing legal action from a policewoman who was injured by her runaway goat. Photo: ALAMY By Daniel Johnson 7:59AM BST 12 Jul 2013 Jean Horsley, 63, said WPC Lorraine Bowman is asking for medical costs after the oneyear-old billy goat jumped on her from a garage roof. According to the Daily Mirror, Mrs Horlsey, from Cheadle, Staffs, has received a letter from WPC Bowman s solicitors which accuses the keeper of the goat of breaching the Animals Act of 1971 by not keeping her goat restrained. It asks that she pay toward the officer s treatment for injuries to her back, ribs and shoulder. While being unloaded from a trailer at an abattoir, the goat jumped over a fence, before going on to a garage roof and hitting WPC Bowman on the back. Mrs Horsley told the paper: My husband and I had a smallholding and took one of the goats to the slaughterhouse but he did a runner. There must have been around 40 villagers and a load of police in the road and they had found my goat. I drove to the slaughterhouse to get help and when I came back I heard the goat had jumped on the WPC. 80

81 Chief Superintendent Juliet Prince, of Staffordshire Police, said: The officer made a personal decision to seek legal redress. Andy Adams from the Police Federation said WPC Bowman sustained serious injuries. Mr Adams added: She has paid for private medical treatment for which she now appears to be seeking recompense. The claim is not one for profit. It comes as up to 2,000 police officers are winning compensation for injuries every year worth millions of pounds. Earlier this year WPC Kelly Jones, 33, sparked outrage when it emerged she is suing a garage owner in Thetford, Norfolk after she tripped over a kerb while investigating a burglary. In May the Home Secretary, Theresa May, crticised police officers who launch frivolous claims after they are accidentally injured on duty. She said: When a police officer sues a member of th e public because they slipped on private property that is simply not the sort of attitude police officers should exhibit. I want to work with the Federation to make sure police officers don't make frivolous claims. Not least because it would be quite wrong if people become reluctant to call the police for fear of being sued. 81

82 Supreme Court Clarifies Definition of Supervisor in Hostile Work Environment Cases Date: Rejecting the Equal Employment Opportunity Commission s broader definition (1999 EEOC Enforcement Guidance), the U.S. Supreme Court has held that an employee is a supervisor for purposes of imposing vicarious liability on an employer under Title VII of the Civil Rights Act of 1964 only if the employee is empowered by the employer to take tangible employment actions against the victim. Vance v. Ball State University, No (June 24, 2013). The Court defined supervisory authority to include having the power to make a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits. Chief Justice John Roberts and Justices Anthony Kennedy and Antonin Scalia joined Justice Samuel Alito s opinion, while Justice Clarence Thomas concurred in the judgment. Justice Ruth Bader Ginsburg authored a dissenting opinion, which was joined by Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan. Maetta Vance, an African-American catering employee at Ball State University, claimed a White co-worker had slapped her, threatened her and used racial epithets. Vance said the co-worker had the authority to direct her work and qualified as a supervisor, making the University vicariously liable for a hostile work environment. The Supreme Court disagreed. According to the Court, an employer can be held vicariously liable in a Title VII hostile work environment claim if the employee accused of the harassment is empowered by the employer to take tangible employment actions against the plaintiff. Since Vance s alleged harasser did not have such power, the school was entitled to summary judgment in its favor. Justice Alito stressed that hostile work environment victims are not without a remedy when a harasser is deemed a co-worker. Victims of co-worker harassment will succeed if they can show their employer was negligent in allowing the harassment to occur. The Court considered but rejected the EEOC s Guidance, which would find an alleged harasser a supervisor if that employee had the ability to exercise significant direction over another s daily work, as nebulous, ill-defined and overly fact-specific. In contrast, the Court found its tangible employment action standard to be easily workable. A significant advantage of its bright-line test, the Court said, was that supervisory status can usually be readily determined, generally by written documentation and done so at the summary judgment stage or earlier. Dissenting Opinion Justice Ginsburg wrote that the Court s new rule strikes from the supervisory category employees who control the day-to-day schedules and assignments of others, and therefore ignores the conditions under which members of the work force labor. She continued, The Court s disregard for the realities of the workplace means that many victims of workplace harassment will have no effective remedy. 82

83 Supervisor Status Varies In advocating for a more plaintiff-friendly definition of supervisor in the harassment context, Justice Ginsburg suggested that the EEOC s expansive definition is consistent with the manner in which supervisor is defined under the National Labor Relations Act. Justice Alito, responding, wrote that the meaning of supervisor under the NLRA differed from the Court s new Title VII standard. Although the definition of supervisor found in the NLRA is written in broad language, he observed, the application of the statutory definition by the Board has been decidedly narrow. Citing Justice Ginsburg s opinion from an earlier Board case, Justice Alito observed that the NLRB looks to the specific facts of each case and makes a case-by-case determination. It evaluates whether the putative supervisor uses independent judgment in the exercise of his or her authority and is held responsible by the employer for the actions of subordinates. According to Justice Alito, in application, supervisor is not as broadly defined under the NLRA as Justice Ginsburg argues. In any event, and as the Supreme Court s ruling notes, the NLRA definition is not applicable in determining supervisory status under Title VII because the two statutes have divergent purposes, i.e., the NLRA s purpose is to address the imbalance between labor and management while Title VII s is to eradicate discrimination. Implications Despite the Court s bright-line test, issues of workplace authority and supervisory status will continue. Providing some hope to plaintiffs, Justice Alito wrote that juries nevertheless should be instructed that day-to-day authority wielded by a co-worker is an important factor to be considered in determining whether the employer was negligent in permitting co-worker harassment, even if the perpetrator is not a supervisor. On the other hand, Justice Ginsburg contemplated that even an employee with authority to recommend and heavily influence hiring, promotion and termination might not rise to the level of a supervisor. The issue also may receive legislative attention. Ginsburg ended her dissent by calling on Congress to intervene to correct the majority s wayward interpretations of Title VII, as it has done in the past (e.g., the Lilly Ledbetter Act). Vance is a welcome ruling for employers. The Court s focus on using documentation to evaluate supervisor status should impel employers to review the job descriptions of employees who assume quasi-leadership roles and to make sure they are accurate. Employers should continue with their efforts to prevent workplace harassment through training and aggressive investigation of alleged harassment. If Justice Alito is correct, the negligence model for hostile work environment claims will remain a potent strategy for establishing liability. If you have any questions about this or other workplace developments, please contact Paul Patten, at (312) or PattenP@jacksonlewis.com, or Sean Herring, at (312) or Sean.Herring@jacksonlewis.com, or the Jackson Lewis attorney with whom you regularly work. 2013, Jackson Lewis LLP. This Update is provided for informational purposes only. It is not intended as legal advice nor does it create an attorney/client relationship between Jackson Lewis LLP and any readers or recipients. Readers should consult counsel of their own choosing to 83

84 discuss how these matters relate to their individual circumstances. Reproduction in whole or in part is prohibited without the express written consent of Jackson Lewis LLP. This Update may be considered attorney advertising in some states. Furthermore, prior results do not guarantee a similar outcome. Jackson Lewis LLP represents management exclusively in workplace law and related litigation. Our attorneys are available to assist employers in their compliance efforts and to represent employers in matters before state and federal courts and administrative agencies. For more information, please contact the attorney(s) listed or the Jackson Lewis attorney with whom you regularly work. 84

85 U.S. Supreme Court: Title VII Retaliation Claims Require Proof of But-For Causation Court Rejects Less Stringent Motivating Factor Standard Date: A divided U.S. Supreme Court has ruled that retaliation claims under Title VII of the Civil Rights Act of 1964 must be established using a but-for causation standard, rejecting an employee s argument that the lower motivating factor causation test applied. University of Texas Southwestern Medical Ctr. v. Nassar, No (June 24, 2013). Justice Anthony Kennedy wrote the Court s decision, joined by Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas and Samuel Alito. The Court found that the statute s plain language and Title VII s structure demonstrated that retaliation claims were not subject to the motivating factor standard. The Court also declined to defer to the Equal Employment Opportunity Commission s view that the lower standard should apply, as expressed in the Commission s guidance manual, finding that it lacked persuasive force. Justice Ruth Bader Ginsburg filed a dissent in which Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan joined. Background Naiel Nassar, M.D., an internal medicine and infectious disease specialist of Middle Eastern descent, was a faculty member at the University of Texas Southwestern Medical Center and a staff physician at Parkland Memorial Hospital, pursuant to an affiliation agreement between the University and the Hospital requiring all staff physicians to be employed by the University. Dr. Nassar alleged that during his employment, Dr. Beth Levine, the University s Chief of Infectious Disease Medicine, harassed him based on his religion and ethnic heritage. Dr. Nassar complained to Dr. Gregory Fitz, Dr. Levine s supervisor, about Dr. Levine s alleged conduct. As a result of the alleged harassment, Dr. Nassar sought to work at the Hospital without being on the University s faculty. After preliminary negotiations with the Hospital suggested this might be possible, Dr. Nassar submitted a letter of resignation to Dr. Fitz in which he stated his resignation was due to Dr. Levine s harassment. The Hospital eventually offered Dr. Nassar a staff physician position; however, when Dr. Fitz learned of the offer, he protested the arrangement as inconsistent with the affiliation agreement. The Hospital withdrew its offer, and Dr. Nassar sued the University for racial and religious discrimination and retaliation in violation of Title VII. A jury found for Dr. Nassar on both claims. The University appealed. The U.S. Court of Appeals for the Fifth Circuit affirmed the judgment on the retaliation claim, holding Dr. Nassar had shown that retaliation was a motivating factor in Dr. Fitz s protest, which led to the withdrawal of the employment offer. The U.S. Supreme Court granted certiorari to address the standard of proof for a retaliation claim under Title VII. Applicable Law 85

86 Title VII prohibits employers from discriminating against employees based on their personal characteristics, including their race, color, religion, sex, and national origin, as set forth in 42 U.S.C. 2000e-2, referred to by the Court as status discrimination. Title VII also prohibits employers from retaliating against employees based on an employee s opposition to employment discrimination or complaint of discrimination. See 42 U.S.C. 2000e-3(a). In Price Waterhouse v. Hopkins, 490 U. S. 228 (1989), the U.S. Supreme Court first examined the standard for proving causation in status discrimination cases. It ruled, in a plurality opinion, that an employee could establish causation by showing that the employee s membership in a protected class was a motivating or substantial factor in the employer s adverse decision. If the employee made that showing, the employer still could avoid liability if it proved that it would have taken the same employment action regardless of any discrimination. Congress soon after enacted the Civil Rights Act of 1991 (the 1991 Act ), which amended Title VII by adding a provision ( 2000e-2(m)), overruling in part the Price Waterhouse decision. After the 1991 Act, an employee showing that his or her membership in a protected class was a motivating factor in an employer s adverse decision could establish an unfair employment practice sufficient to warrant injunctive relief, attorney fees and costs, even if the employer could show it would have taken the same action regardless of discrimination, thereby denying the employee an award of individual damages or affirmative relief. Significantly, however, the 1991 Act did not amend any of the provisions related to retaliation set forth in 2000e-3(a) of Title VII. But-For Causation Required for Retaliation Claims Dr. Nassar argued that, since retaliation is an unlawful employment practice under Title VII and the 1991 Act allowed claims for unlawful employment practices based on status to be proven by the lower standard, then that standard should apply to retaliation because retaliation is a form of status discrimination. The Court rejected the circular argument as unsupported by Title VII and the 1991 Act s plain language. The 1991 Act s provision addressing the burden of proof amended only Title VII s status discrimination provision and specifically referred to unlawful employment practices based on race, color, religion, sex, and national origin discrimination. The Court noted that this indicates Congress intent to confine that provision s coverage to only those types of employment practices. Had Congress intended the motivating factor standard should apply to retaliation claims, it would have included it as an amendment to the retaliation provision or as an amendment to one of Title VII s sections applicable to all claims. It did not do so, and the Court was bound to give effect to Congress choice. University of Texas, No , slip op. at 14. Dr. Nassar also argued that the motivating factor standard should apply to retaliation claims because this was the EEOC s position in its guidance manual, which was entitled to deference under Skidmore v. Swift & Co., 323 U.S. 134 (1944). The Court also rejected this argument, too, finding the manual was unsupported by law and thus not entitled to deference. Accordingly, the Court concluded that retaliation claims must be proven according to traditional principles of but-for causation, not the lessened causation test stated in 2000e-2(m). This 86

87 requires proof that the unlawful retaliation would not have occurred in the absence of the alleged wrongful action or actions of the employer. The Court remanded the case to the lower court for further proceedings. The Dissent Justice Ginsburg dissented. She argued that having two standards of proof for discrimination and retaliation claims will burden trial judges and cause jury confusion. Justice Ginsburg also expressed concern that the majority opinion would undermine Title VII s retaliation provision. *** This opinion is welcome news for employers confronted with increasing numbers of retaliation claims. In fact, Justice Kennedy indicated that the heightened standard of proof will assist in obtaining the dismissal of dubious claims at the summary judgment stage. If you have any questions about this or other workplace developments, please contact Paul Patten, at (312) or PattenP@jacksonlewis.com, or the Jackson Lewis attorney with whom you regularly work. 2013, Jackson Lewis LLP. This Update is provided for informational purposes only. It is not intended as legal advice nor does it create an attorney/client relationship between Jackson Lewis LLP and any readers or recipients. Readers should consult counsel of their own choosing to discuss how these matters relate to their individual circumstances. Reproduction in whole or in part is prohibited without the express written consent of Jackson Lewis LLP. This Update may be considered attorney advertising in some states. Furthermore, prior results do not guarantee a similar outcome. Jackson Lewis LLP represents management exclusively in workplace law and related litigation. Our attorneys are available to assist employers in their compliance efforts and to represent employers in matters before state and federal courts and administrative agencies. For more information, please contact the attorney(s) listed or the Jackson Lewis attorney with whom you regularly work. 87

88 NEW MEXICO COUNTY INSURANCE AUTHORITY MULTI-LINE POOL AGENDA ITEM SUMMARY Item Number: Item Title: 6. D. Loss Ratio and Loss Data Reports Presenter (s): Becky Tafoya, Assistant Risk Management Director Background: This is a report on the loss ratios by county of the Law Enforcement and Multi-Line Pool. Type of Item: Presentation to the Board, Information and Discussion Staff Recommendation: 88

89 NMCIA MULTILINE POOL LAW ENFORCEMENT PROGRAM LOSS RATIOS BY COUNTY as of 3, 2013 FY 11 (2005) FY 12 (2006) Total Total Total Total Total Total Loss Fund Loss Fund Contribution Incurred Loss Number Loss Fund Contribution Incurred Loss Number COUNTY Losses Ratio of Claims Losses Ratio of Claims Bernalillo 403,982 51, % 32 1,077,163 2,108, % 3_85 Catron 21, % 0 19, % 0 Chaves 142, % 7 146, % 6 Cibola 83, , % 7 103, , % 6 Colfax 29, % 6 26, % 3 Curry 136, , % , , % 9 De Baca 16, % 0 15, % 0 Dona Ana 529, , % ,982 1,163, % 19 Eddy 165, , % 5 196,056 38, % 5 Grant 93, , % 5 121,119 73, % 5 Guadalupe 10, % 1 10, % 0 Harding 5, % 0 5, % 0 Hidalgo * * * * * * * Lincoln 49,080 66, % 7 45, % 4 Luna 92,353 16, % 5 104, % 1 McKinley 110,610 28, % 6 210, % 7 Mora 18, % 1 18,803 94, % 1 Otero 155,552 72, % , , % 7 Quay 57, % 0 62,860 75, % 1 Roosevelt 38, , % 5 48, % 2 SanMiguel 92, % 6 86, , % 7 Sandoval 195, , % , , % 11 Santa Fe 279,071 42, % ,515 1,143, % 28 Sierra 50,319 91, % 4 51, % 2 Socorro 65,073 17, % 3 70, % 4 Taos 104, , % 5 129,764 11, % 9 Torrance 72,838 10, % 7 71, % 1 Tri-County Juven 29, % 0 30, % 0 Union 8, % 0 7, % 0 Valencia 384, , % , , % 10 TOTAL 3,442,736 2,071, % 199 4,712,090 6,575, % 3_ ,550 2,058, % 1_199 6,992, % 4_233 89

90 NMCIA MULTILINE POOL LAW ENFORCEMENT PROGRAM LOSS RATIOS BY COUNTY as of 2013 Loss Fund COUNTY Bernalillo Catron Chaves Cibola Colfax Curry De Baca Dona Ana Eddy Grant Guadalupe Harding Hidalgo Lincoln Luna McKinley Mora Otero Quay Roosevelt SanMiguel Sandoval Santa Fe Sierra Socorro Taos Torrance Tri-County Juven Union Valencia TOTAL FY 13 (2007) FY 14 (2008) Total Total Total Total Total Total Loss Fund Contribution Incurred Loss Number Loss Fund Contribution Incurred Loss Number Losses Ratio of Claims Losses Ratio of Claims 1,207,845 1,682, % 1_168 1,141,580 2,020, % 2_144 20, % 0 19, % 0 173,644 22, % , % ,594 2, % 7 161,881 43, % 9 27, % 0 26,913 10, % 1 159,569 18, % 1_11 185, , % 1_9 19,909 92, % 2 21, % 2 562,744 1,248, % 1_23 681,899 1,019, % 3_42 242,047 54, % 4 278, , % 9 155,761 86, % 6 171, , % 6 10, % 2 10,353 5, % 1 5, % 0 5, % 0 * * * * 32, % 0 46, % 2 45, % 3 107,979 8, % 3 102, , % 4 216, , % 5 205, , % 1_8 20, % 1 21, % 2 217, , % 1_10 249, % 11 80, % 1 80, % 2 61, % 1 71, % 5 88, , % 1_12 84, % 4 197, , % 9 197,843 57, % , , % , , % 1_24 53, % 3 57, , % 3 72,625 6, % 2 68, , % 5 134,338 85, % 4 154, % 2 73, % 0 69,871 47, % 3 31, % 0 0 * * * 8, % 0 8, % 0 493, , % , , % 2_12 5,324,981 4,992, % 5_323 5,669,117 5,287, % 10_ , ,712 4,930, % 5_323 5,328, % 10_334 90

91 NMCIA MULTILINE POOL LAW ENFORCEMENT PROGRAM LOSS RATIOS BY COUNTY as of 2013 Loss Fund COUNTY Bernalillo Catron Chaves Cibola Colfax Curry De Baca Dona Ana Eddy Grant Guadalupe Harding Hidalgo Lincoln Luna McKinley Mora Otero Quay Roosevelt SanMiguel Sandoval Santa Fe Sierra Socorro Taos Torrance Tri-County Juven Union Valencia TOTAL FY 15 (2009) FY 16 (2010) SIR: $500K Total Total Total Total Loss Fund Contribution Incurred Loss Number Loss Fund Contribution Incurred Loss Number Losses Ratio of Claims Losses Ratio of Claims 1,153,361 2,384, % 3_140 1,438,313 2,819, % 11_133 19, % 0 19, % 0 153,869 93, % , % 7 202, % 4 263,240 88, % 1_2 26, % 2 26, % 0 223,260 40, % , , % 4_21 25, % 0 31, % 1 839, , % 5_33 1,007, , % 2_27 311, , % 1_6 367,646 90, % 2_4 191, % 1 201, , % 6 10, % 0 10,623 73, % 2 5, % 0 6, % 0 63, % 0 63, % 0 43, , % 4 51,644 8, % 3 98,074 37, % 5 86,306 45, % 7 192,094 30, % 6 192,094 52, % 1_5 21, % 1 21,883 15, % 1 279, , % 1_12 312,850 44, % 7 79, % 0 79, % 0 86, % 1 101,622 29, % 4 98, , % 1_9 127, % 4 221,447 32, % 5 248, , % 1_5 901, , % 2_27 * * * * 67, , % 1_5 79, , % 7 67,572 19, % 4 67, % 1 165, , % 2_11 185, % 3 66, , % 2_3 66,803 13, % 2_2 0 * * * 0 * * * 8, % 1 9, % 1 632, , % 1_15 664, , % 3_15 6,257,806 6,547, % 19_315 6,122,007 5,352, % 27_268 1,578,379 2,222,541 6,548, % 25_315 5,425, % 31_268 91

92 NMCIA MULTILINE POOL LAW ENFORCEMENT PROGRAM LOSS RATIOS BY COUNTY as of 2013 Loss Fund COUNTY Bernalillo Catron Chaves Cibola Colfax Curry De Baca Dona Ana Eddy Grant Guadalupe Harding Hidalgo Lincoln Luna McKinley Mora Otero Quay Roosevelt SanMiguel Sandoval Santa Fe Sierra Socorro Taos Torrance Tri-County Juven Union Valencia TOTAL FY 17 (2011) SIR: $500K FY 18 (2012) SIR: $500K Total Total Total Total Loss Fund Contribution Incurred Loss Number Loss Fund Contribution Incurred Loss Number Losses Ratio of Claims Losses Ratio of Claims 1,618,166 2,082, % 21_126 1,656, , % 21_90 19, % 0 18, % 0 138, , % 4_13 99,394 63, % 4_11 263, , % 1_2 251, , % 3_8 26, % 3 25,402 21, % 1 308, , % 2_9 280, , % 4_10 36,705 85, % 1_1 37, % 0 1,158, , % 4_25 1,109, , % 9_30 367, % 5 299,056 14, % 2_7 211, % 5 188, , % 2_6 10, % 1 10, % 0 6, % 0 6, % 0 63, % 1 61, % 0 51, % 1 50, % 0 86, , % 2_5 85,071 83, % 2_6 192,094 45, % 1_7 183,830 50, % 3_5 21, % 3 20,941 35, % 2_2 312,850 96, % 1_7 299,392 45, % 5_8 75, % 2 68, % 0 106, % 1 109, , % 4_10 146, % 2 140,361 90, % 2_5 235, , % 4_7 214, , % 1_3 * * * * * * * * 83, , % 2_6 81, % 3 64, , % 4 61,432 33, % 1_4 194, % 5 199,553 5, % 1_7 60,122 40, % 1_4 53,508 21, % 1_2 0 * * * * * * * 9, % 0 8, % 0 664, , % 4_12 635,979 1,006, % 9_18 6,534,930 5,987, % 48_257 6,257,806 3,016, % 76_240 2,768,496 2,454,799 5,716, % 51_257 3,032, % 102_240 92

93 NMCIA MULTILINE POOL LAW ENFORCEMENT PROGRAM LOSS RATIOS BY COUNTY as of 2013 Loss Fund COUNTY Bernalillo Catron Chaves Cibola Colfax Curry De Baca Dona Ana Eddy Grant Guadalupe Harding Hidalgo Lincoln Luna McKinley Mora Otero Quay Roosevelt SanMiguel Sandoval Santa Fe Sierra Socorro Taos Torrance Tri-County Juven Union Valencia TOTAL FY 19 (2013) SIR: $750K Total YTD Total Loss Fund Contribution Loss Fund Incurred Loss Number Contrib Losses Ratio of Claims 1,834, , , % 47_583 19,214 9, % 1_1 97,030 48, % 1_2 253, ,765 50, % 2_3 26,843 13,421 25, % 1_1 281, ,948 50, % 6_8 41,609 20, % 1_2 1,133, , , % 7_12 294, ,476 17, % 4_5 185,595 92,798 39, % 3_3 11,065 5, % 1_2 6,698 3, % 0 62,848 31, % 1 52,256 26, % 1_1 92,465 46,232 21, % 4_4 188,708 94, % 0 22,762 11, % 1_1 295, ,642 50, % 2_4 67,442 33, % 1 109,961 54,981 72, % 2_4 144,085 72, % 1_1 232, ,414 41, % 3_4 * * * 90,635 45, % 1 64,917 32, % 0 220, ,457 42, % 5_5 54,928 27, % 3 * * * 8,878 4, % 0 640, ,027 30, % 4_7 6,534,930 3,267,465 1,079, % 97_151 Reserve 984,872 Previous Rprt. 703, % 66_76 93

94 NMCIA MULTILINE POOL LAW ENFORCEMENT PROGRAM LOSS RATIOS BY COUNTY as of 2013 Summary Loss Ratios Loss Fund COUNTY Bernalillo Catron Chaves Cibola Colfax Curry De Baca Dona Ana Eddy Grant Guadalupe Harding Hidalgo Lincoln Luna McKinley Mora Otero Quay Roosevelt SanMiguel Sandoval Santa Fe Sierra Socorro Taos Torrance Tri-County Juven Union Valencia TOTAL Pool Avg. FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 YTD 12.85% % % % % % % 29.23% 58.61% % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 3.37% 0.00% 0.30% 12.69% 0.00% 60.67% 0.00% % 64.22% 0.00% 73.24% % % 2.07% 26.87% 0.00% 33.65% 38.82% 65.50% 39.44% % 0.00% 0.00% 0.00% 38.51% 0.00% 0.00% 0.00% 82.82% % 11.03% % % 11.77% 57.30% 17.92% 87.66% % 51.95% 35.68% % 0.00% 0.00% % 0.00% 0.00% 0.00% % 0.00% 0.00% 77.09% 50.53% % % % % 56.22% 17.05% 14.88% 18.09% 79.24% % 19.59% 22.40% % 80.49% 24.48% 0.00% 4.97% 11.87% 47.10% % 60.43% 55.29% % 0.00% % 0.00% % 42.57% 87.52% 0.00% 0.00% 0.00% 51.96% 0.00% % 0.00% 0.00% 0.00% 87.57% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% * * * 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% % 0.00% 0.00% 0.00% % 16.34% 0.00% 0.00% 0.00% 53.50% 18.04% 0.00% 7.71% % 37.80% 52.34% % 97.57% 46.50% 85.66% 25.71% 0.00% 81.77% % 16.03% 27.29% 23.43% 27.20% 0.00% 31.31% 0.00% % 0.00% 0.00% 0.00% 70.02% 0.00% % 0.00% 68.50% 46.76% % % 0.00% 53.35% 14.30% 30.84% 15.13% 33.87% 53.26% 0.00% % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% % % 0.00% 0.00% 0.00% 0.00% 29.09% 0.00% 99.42% % 98.98% 0.00% % % 0.00% % 0.00% 0.00% 64.12% 0.00% 99.71% 51.24% % 66.96% 29.06% 14.56% % % % 35.22% 90.20% 15.29% % 17.50% 37.35% 25.56% * 0.00% 0.00% 0.00% 66.97% % 0.00% 0.00% % % % % 0.00% 0.00% % 26.83% 0.00% 8.36% % 29.34% 0.00% % 54.31% 0.00% 81.84% 99.79% 8.97% 63.96% 0.00% % 0.00% 0.00% 2.70% 38.48% 86.01% 14.48% 0.00% 0.00% 67.58% % 20.46% 67.53% 40.49% 0.00% % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 9.27% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 31.00% 79.64% 60.42% 45.56% % 48.75% 38.21% % 9.37% 92.29% 60.17% % 93.75% 93.28% % 87.43% 91.63% 48.20% 33.03% 86.13% 94

95 NMCIA-MULTI LINE POOL LOSS RATIOS BY COUNTY As of June 30, 2013 FY 15 (2003) $SIR 250K FY 16 (2004) SIR $250K Total Total COUNTY Loss Fund Incurred Loss Total Loss Fund Incurred Loss Total Contrib Losses Ratio Claims Contrib Losses Ratio Claims Bernalillo 1,257, , % 147 1,127, , % 180 Catron 36,413 30, % 10 41,476 5, % 2 Chaves 174,667 50, % , , % 27 Cibola 66, , % 7 77,163 60, % 9 Colfax 51,398 20, % 9 49,710 44, % 12 Curry 80,705 13, % 9 69,916 7, % 9 De Baca 21,164 4, % 3 24,919 4, % 2 Dona Ana 444, , % , , % 85 Eddy 150, , % ,355 96, % 22 Grant * * * * * * * * * Guadalupe * * * * 50,318 16, % 2 Harding 16,137 23, % 3 19,512 12, % 4 Hidalgo * * * * * * * * * Lincoln 87,177 62, % 10 89,989 37, % 17 Luna 40,183 1, % 2 121, , % 10 McKinley 132, , % , , % 36 Mora 43,104 29, % 6 41,621 65, % 10 Otero 203,814 65, % ,327 33, % 18 Quay 48,384 13, % 2 59,261 12, % 11 Roosevelt 55,384 85, % 10 58, % 3 San Miguel 56,240 21, % 23 65,786 83, % 27 Sandoval 177,914 67, % , , % 31 Santa Fe 404, , % , , % 100 Sierra 45,907 39, % 11 55, , % 6 Socorro 82, , % , , % 48 Taos 157,081 31, % , , % 39 Torrance 76,901 42, % 7 92,370 63, % 10 Union 25,320 8, % 4 24,393 2, % 2 Valencia 189, , % ,844 99, % 44 TOTAL 4,124,685 $3,465, % 642 4,235,979 $3,767, % 765 Reserved $0 Reserved $0 Previous Rpt $3,465, % Previous Rpt $3,770, % 1 95

96 NMCIA-MULTI LINE POOL LOSS RATIOS BY COUNTY As of June 30, 2013 FY 17 (2005) SIR $350K FY 18 (2006) SIR $350K Total Total COUNTY Loss Fund Incurred Loss Total Loss Fund Incurred Loss Total Contrib Losses Ratio Claims Contrib Losses Ratio Claims Bernalillo 1,150,491 1,387, % 152 1,163,206 1,223, % 169 Catron 45,613 49, % 2 43,811 7, % 2 Chaves 187,569 80, % , , % 18 Cibola 98,036 1, % 9 99,120 94, % 11 Colfax 49,698 39, % 14 52,760 11, % 7 Curry 69, , % 10 66,438 46, % 11 De Baca 27,248 10, % 3 26,172 5, % 3 Dona Ana 494, , % , , % 113 Eddy 169, , % ,343 29, % 10 Grant 146, , % 6 162,660 23, % 16 Guadalupe 50,306 2, % 4 48,319 5, % 6 Harding 25,359 37, % 3 28,203 17, % 8 * * * * * * * * * Lincoln 85, , % 9 86,413 88, % 13 Luna 132, , % 7 147, , % 19 McKinley 179, , % , , % 30 Mora 52,013 56, % 9 57,847 56, % 14 Otero 210,064 25, % ,766 99, % 18 Quay 59,246 12, % 5 56,906 27, % 9 Roosevelt 56,379 11, % 9 54,152 28, % 6 San Miguel 78,787 62, % 28 79,657 43, % 21 Sandoval 203, , % , , % 47 Santa Fe 486, , % ,494 1,096, % 129 Sierra 62, , % 1_7 63,219 11, % 8 Socorro 130, , % ,615 16, % 23 Taos 157, , % ,667 47, % 49 Torrance 96,965 35, % 8 93,134 14, % 11 Union 25,403 12, % 3 24,400 3, % 1 Valencia 234, , % ,372 47, % 33 TOTAL 4,765,496 $5,395, % 1_725 4,955,790 $4,550, % 805 Reserved $209,794 Reserved $0 Previous Rpt $5,395, % 1 Previous Rpt $4,550, % 96

97 NMCIA-MULTI LINE POOL LOSS RATIOS BY COUNTY As of June 30, 2013 FY 19 (2007) SIR $350K FY 20 (2008) SIR $500K Total Total COUNTY Loss Fund Incurred Loss Total Loss Fund Incurred Loss Total Contrib Losses Ratio Claims Contrib Losses Ratio Claims Bernalillo 1,281,351 1,104, % 1_182 1,325,703 1,086, % 2_152 Catron 45,850 31, % 6 48,653 10, % 5 Chaves 213, , % ,715 21, % 14 Cibola 106,324 46, % ,646 15, % 5 Colfax 60,736 10, % 8 74,117 4, % 4 Curry 74, , % 6 83,280 35, % 7 De Baca 30,128 11, % 6 35,168 5, % 4 Dona Ana 562,953 1,563, % 1_93 627, , % 2_64 Eddy 207, , % ,316 86, % 21 Grant 178,740 73, % ,668 85, % 20 Guadalupe 48,039 6, % 4 49,702 56, % 4 Harding 29, % 1 31,320 4, % 1 * * * * * 37,030 12, % 1 Lincoln 99, , % 1_19 105, , % 11 Luna 169,702 11, % 6 207,090 14, % 7 McKinley 224, , % , , % 1_20 Mora 66,592 28, % 5 70,663 14, % 5 Otero 200, , % ,218 37, % 17 Quay 59, , % 11 64, % 3 Roosevelt 59,505 3, % 3 64, % 3 San Miguel 91,700 6, % , , % 1_19 Sandoval 248, , % , , % 63 Santa Fe 567, , % 2_ , , % 1_90 Sierra 69,469 13, % 8 75,560 7, % 10 Socorro 167,629 10, % ,432 28, % 12 Taos 193, , % 1_25 235,538 18, % 32 Torrance 95,031 13, % 15 95,799 48, % 4 Union 26,173 10, % 6 29,162 13, % 3 Valencia 299,735 82, % , , % 37 TOTAL 5,477,876 $6,658, % 6_843 6,054,350 $3,680, % 7_630 Reserved $432,047 Reserved $303,895 Previous Rpt $6,638, % 6 Previous Rpt $3,706, % 8 97

98 NMCIA-MULTI LINE POOL LOSS RATIOS BY COUNTY As of June 30, 2013 FY 21 (2009) SIR $500K FY 22 (2010) SIR $500K Total Total COUNTY Loss Fund Incurred Loss Total Loss Fund Incurred Loss Total Contrib Losses Ratio Claims Contrib Losses Ratio Claims Bernalillo 1,191,499 1,554, % 4_109 1,143,347 2,488, % 8_151 Catron 45,844 75, % 5 41,792 4, % 3 Chaves 223,991 48, % , , % 2_23 Cibola 125,315 34, % 1_8 126,263 13, % 7 Colfax 69,838 11, % 7 63,665 7, % 8 Curry 86, , % 16 86, , % 14 De Baca 33,138 16, % 1 30, % 0 Dona Ana 635, , % , , % 1_37 Eddy 217,962 75, % , , % 9 Grant 178,718 13, % ,921 42, % 12 Guadalupe 46,832 9, % 1 42,693 59, % 4 Harding 29,512 22, % 1 25, % 0 Hidalgo 69,784 16, % 6 66,964 1, % 2 Lincoln 114,385 20, % 8 126,227 11, % 7 Luna 204, , % 1_13 196, , % 1_11 McKinley 259,228 79, % , , % 3_31 Mora 66,584 26, % 7 60,699 50, % 1_9 Otero 190, , % , , % 23 Quay 64,087 90, % 2 62,526 7, % 3 Roosevelt 60,985 36, % 7 53, , % 1_5 San Miguel 115, , % 1_22 114, , % 1_18 Sandoval 328, , % 2_17 346, , % 2_11 Santa Fe 639, , % 1_100 0 * * * Sierra 71,197 27, % 9 64,904 7, % 12 Socorro 163, , % 1_15 148,974 7, % 8 Taos 255, , % ,671 98, % 2_23 Torrance 90,268 29, % 9 82, , % 11 Union 28,852 66, % 2_5 27,686 1, % 3 Valencia 344, , % 1_46 314, , % 2_61 TOTAL 5,952,658 $6,021, % 14_575 5,074,021 $6,074, % 24_506 Reserved $389,453 Reserved $915,365 Previous Rpt $6,020, % 16 Previous Rpt $6,140, % 28 98

99 NMCIA-MULTI LINE POOL LOSS RATIOS BY COUNTY As of June 30, 2013 FY 23 (2011) SIR $1 Million FY 24 (2012) SIR $1 Million Total Total COUNTY Loss Fund Incurred Loss Total Loss Fund Incurred Loss Total Contrib Losses Ratio Claims Contrib Losses Ratio Claims Bernalillo 1,117,597 1,812, % 20_136 1,154,940 1,244, % 38_119 Catron 37,820 6, % 2 42,499 13, % 4 Chaves 194, , % 2_18 197,761 79, % 1_11 Cibola 95, , % 3_14 113,268 20, % 1_4 Colfax 53,784 10, % 8 54,107 33, % 5 Curry 84,898 85, % 20 92,867 54, % 2_16 De Baca 25, % 0 29,257 1, % 1 Dona Ana 579,929 1,582, % 9_44 656, , % 9_39 Eddy 171, , % 2_18 187,627 70, % 2_12 Grant 151,171 42, % 1_12 146, , % 2_13 Guadalupe 41,699 2, % 3 43,416 19, % 1_3 Harding 22, % 0 24,759 39, % 1 Hidalgo 65,404 63, % 1_4 64, , % 5_6 Lincoln 128, , % 1_10 134, , % 1_11 Luna 192,032 17, % 1_9 199, , % 4_8 McKinley 251, , % 4_24 264, , % 7_25 Mora 57,740 24, % 13 61, , % 1_3 Otero 142, , % 2_21 176, , % 1_15 Quay 50,305 20, % 4 60, , % 3_7 Roosevelt 49,740 31, % 5 50,311 13, % 4 San Miguel 116,470 92, % 2_32 122, , % 5_17 Sandoval 314, , % , , % 3_7 Santa Fe * * * * * * Sierra 43,460 3, % 6 58,224 99, % 1_5 Socorro 127, , % 3_18 129, , % 1_17 Taos 202, , % 4_22 248, , % 9_25 Torrance 63,295 57, % 9 75,314 41, % 3_7 Union 23,924 10, % 3 26,845 10, % 2 Valencia 263, , % 3_54 319, , % 9_43 TOTAL 4,667,546 $6,802, % 58_522 5,074,021 $5,842, % 109_430 Reserved $1,769,638 $2,813,928 Previous Rpt $6,692, % 66 $5,275, %

100 NMCIA-MULTI LINE POOL LOSS RATIOS BY COUNTY As of June 30, 2013 FY 25 (2013) SIR $1 Million YTD Total COUNTY Loss Fund Loss Fund Incurred Loss Total Contrib Contrib Losses Ratio Claims Bernalillo 1,086, , , % 33_54 Catron 43,349 21,675 16, % 3 Chaves 207, ,824 30, % 2_2 Cibola 115,533 57,766 15, % 3_3 Colfax 55,189 27,594 58, % 5_9 Curry 100,297 50,148 91, % 5_7 De Baca 29,842 14,921 1, % 1 Dona Ana 634, ,015 29, % 5_12 Eddy 191,379 95,690 62, % 3_3 Grant 149,076 74,538 5, % 2_8 Guadalupe 46,889 23,444 46, % 1 Harding 25,254 12, % 0 Hidalgo 66,152 33,076 14, % 2_3 Lincoln 145,565 72,782 64, % 5_9 Luna 203, ,969 24, % 2_6 McKinley 277, ,826 30, % 1_5 Mora 66,664 33,332 85, % 2_2 Otero 190,773 95,387 67, % 3_8 Quay 61,768 30, , % 3_4 Roosevelt 51,317 25,659 3, % 1_2 San Miguel 132,031 66,016 34, % 3_5 Sandoval 364, ,173 84, % 4_14 Santa Fe * * * * Sierra 59,388 29,694 2, % 1 Socorro 132,451 66,225 11, % 1_2 Taos 253, ,705 91, % 6_14 Torrance 76,821 38,410 26, % 2_4 Union 28,993 14, % 0 Valencia 325, ,949 86, % 5_10 TOTAL 5,122,397 2,561,198 $1,371, % 98_192 Reserved $861,981 Previous Rpt $824, % 79_

101 NMCIA MULTILINE POOL LOSS RATIOS BY COUNTY As of FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 Bernalillo 68.48% 85.84% % % 86.18% 81.94% % % % % Catron 83.82% 12.48% % 18.08% 67.70% 22.37% % 11.41% 18.16% 32.86% Chaves 29.11% % 43.03% 55.16% % 8.99% 21.67% % % 40.28% Cibola % 78.93% 1.46% 94.99% 43.87% 13.63% 27.78% 10.98% % 17.66% Colfax 40.56% 90.50% 78.54% 21.07% 16.67% 5.58% 17.07% 12.28% 19.58% 61.78% Curry 16.83% 10.98% % 70.24% % 42.61% % % % 58.40% De Baca 19.47% 17.24% 39.12% 22.03% 39.82% 16.43% 49.57% 0.00% 0.00% 4.14% Dona Ana 86.55% 37.46% % % % 42.02% 58.29% % % 48.77% Eddy % 62.41% 60.08% 16.63% % 37.24% 34.66% 67.15% 89.40% 37.79% Grant * * % 14.47% 41.07% 44.83% 7.82% 25.82% 28.15% % Guadalupe * 33.10% 5.49% 11.69% 13.45% % 19.47% % 6.50% 43.88% Harding % 63.56% % 62.34% 0.00% 13.32% 75.85% 0.00% 0.00% % Hidalgo * * * * * 33.99% 23.12% 2.53% 96.32% % Lincoln 71.34% 41.73% % % % % 18.23% 8.88% % % Luna 3.95% % % % 6.89% 7.16% % 70.93% 8.97% 86.65% McKinley 86.00% 97.94% % 51.49% 63.12% 75.97% 30.78% % % 86.08% Mora 68.10% % % 97.70% 42.75% 19.95% 40.20% 82.60% 41.63% % Otero 32.38% 15.72% 12.33% 49.25% 56.29% 18.39% % 64.29% % % Quay 28.04% 21.30% 21.33% 48.01% % 0.00% % 12.21% 40.02% % Roosevelt % 0.00% 20.16% 53.36% 6.69% 0.00% 60.39% % 62.38% 27.41% San Miguel 37.97% % 78.81% 54.44% 7.34% % % % 79.02% % Sandoval 37.92% % 53.99% % % 42.18% 82.41% 42.24% % 42.61% Santa Fe % 68.65% 34.46% % % 58.07% % * * * Sierra 84.99% % % 17.50% 19.26% 9.83% 38.62% 11.06% 8.11% % Socorro % % 96.44% 11.64% 6.20% 16.25% % 5.22% % 77.30% Taos 20.23% % % 28.55% % 7.73% % 42.44% % % Torrance 54.81% 68.81% 36.52% 15.76% 14.06% 50.86% 33.19% % 91.13% 55.65% Union 31.79% 9.96% 48.53% 15.07% 39.01% 47.47% % 4.71% 43.26% 37.25% Valencia % 55.23% % 18.05% 27.59% % % % 46.09% % TOTAL 84.02% 88.94% % 91.82% % 60.78% % % % % 101

102 Multi-Line Pool Employment Claim Analysis Employment Claim Analysis By Policy Year # of # of Opened Total Policy Year Claims Claims Incurred Avg. Cost Per Claim Employment Claims By Claim Type # of Claims Total Incurred Avg. Cost Per Claim Claim Type FY $1,574,420 $32,131 CR Constitutional Deprivation 9 $153,081 $17,009 FY $1,661,547 $33,231 CR Employment Related 87 $3,531,221 $40,589 FY $2,369,588 $34,342 CR Non-Employment 18 $191,816 $10,656 FY $1,752,395 $25,034 CR Sexual Harassment 10 $420,828 $42,083 Total $7,357,950 $30,916 CR Title VII 114 $3,061,004 $26,851 Total 238 $7,357,950 $30, Employment Claims Frequency FY 2009 FY 2010 FY 2011 FY 2012 # of Claims Employment Claims Severity $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 FY 2009 FY 2010 FY 2011 FY 2012 Percentage of Total Incurred By Claim Type CR Title VII 41% CR Sexual Harassment 6% CR Constitutional Deprivation CR Non-Employment CR Title VII CR Constitutional Deprivation 2% CR Non- Employment 3% CR Employment Related CR Sexual Harassment CR Employment Related 48% Claim Severity Data As of 102 July 31, 2013

103 Employment Claims By Department County Departments # of Claims Total Incurred Avg. Cost Per Claim % of Total Incurred Sheriffs 59 $2,649,246 $44,902 36% Adult Detention 60 $1,424,177 $23,736 19% Administration 23 $770,893 $33,517 10% Juvenile Detention 3 $391,517 $130,506 5% Public Works 7 $329,607 $47,087 4% Dept. of Substance Abuse 2 $293,722 $146,861 4% County Manager 6 $211,576 $35,263 3% Planning & Zoning 6 $201,524 $33,587 3% Roads 5 $189,321 $37,864 3% Commission 11 $172,000 $15,636 2% Health Services 3 $154,052 $51,351 2% Fire Fighters 4 $107,027 $26,757 1% Clerk 4 $92,323 $23,081 1% Dispatchers 1 $83,000 $83,000 1% Assessor 6 $74,900 $12,483 1% Treasurer 3 $52,248 $17,416 1% Emergency Management 1 $51,000 $51,000 1% Animal Control 5 $46,741 $9,348 1% Housing Authority 2 $30,549 $15,275 0% EMS 2 $23,375 $11,688 0% Finance 4 $5,000 $1,250 0% Other Community Services 2 $3,968 $1,984 0% Building Code Enforcement 1 $176 $176 0% Building Inspections 1 $0 $0 0% Communications 1 $0 $0 0% Community Services 2 $0 $0 0% Custodian 1 $0 $0 0% DWI 1 $0 $0 0% Facility Maintenance 1 $0 $0 0% Fleet Management 1 $0 $0 0% HR 4 $0 $0 0% IT/Data Processing 1 $0 $0 0% Other Admin. Departments 1 $0 $0 0% Parks & Rec 1 $0 $0 0% Public Information Officer 1 $0 $0 0% Senior Programs 1 $0 $0 0% Solid Waste/Transfer 1 $0 $0 0% Total 238 $7,357,942 $30, % 103

104 Employment Claims By ML Pool Member Small Size Counties Operating Budgets: Million - $13 Million # of Claims Total Incurred Avg. Cost Per Claim # of Employees County Payroll Loss Rate Catron 4 $77,122 $19, $1,625,741 $47.44 Colfax 4 $9,749 $2, $3,142,590 $3.10 Curry 4 $92,906 $23, $5,420,925 $17.14 DeBaca 0 $0 $0 54 $1,165,729 $0.00 Guadalupe 0 $0 $0 53 $1,657,338 $0.00 Harding 1 $39,281 $39, $807,880 $48.62 Hidalgo 7 $215,346 $30, $2,389,326 $90.13 Mora 2 $164,501 $82, $1,065,604 $ Quay 0 $0 $0 66 $1,968,197 $0.00 Roosevelt 3 $215,500 $71, $3,035,380 $71.00 Torrance 2 $39,324 $19, $3,075,192 $12.79 Union 0 $0 $0 37 $1,365,017 $0.00 Total 27 $853,729 $31,620 1,003 $26,718,919 $31.95 Medium Size Counties Operating Budgets: $14 Million - $45 Million # of Claims Total Incurred Avg. Cost Per Claim # of Employees County Payroll Loss Rate Chaves 2 $86,000 $43, $9,214,990 $9.33 Cibola 1 $3,024 $3, $4,346,778 $0.70 Grant 5 $39,281 $7, $7,624,500 $5.15 Lincoln 1 $0 $0 140 $3,922,689 $0.00 Luna 10 $516,550 $51, $8,397,000 $61.52 Otero 3 $215,500 $71, $9,007,721 $23.92 San Miguel 9 $214,229 $23, $4,025,869 $53.21 Sierra 4 $59,991 $14, $2,757,928 $21.75 Socorro 4 $15,000 $3, $3,407,454 $4.40 Taos 11 $226,373 $20, $8,503,789 $26.62 Valencia 13 $551,809 $42, $7,944,645 $69.46 Total 63 $1,927,757 $30,599 2,301 $69,153,363 $

105 Large Size Counties Operating Budgets: Million - $300 Million # of Claims Total Incurred Avg. Cost Per Claim # of Employees County Payroll Loss Rate Bernalillo 98 $2,538,974 $25,908 2,688 $115,955,927 $21.90 Dona Ana 14 $1,101,376 $78, $33,249,250 $33.12 Eddy 6 $107,605 $17, $12,986,117 $8.29 McKinley 17 $288,160 $16, $9,972,243 $28.90 Sandoval 5 $252,939 $50, $17,306,435 $14.62 Total 140 $4,289,054 $30,636 4,707 $189,469,972 $

106 Multi-Line Pool General Liability Claim Analysis General Liability Claim Analysis By Policy Year # of # of Opened Total Avg. Cost Per Policy Year Claims Claims Incurred Claim General Liability Claims By Claim Type # of Claims Total Incurred Avg. Cost Per Claim Claim Type FY $1,732,851 $6,849 Bodily Injury Only 203 $2,334,582 $11,500 FY $1,348,113 $6,329 Both Bodily Injury & Property 115 $2,140,547 $18,613 FY $1,385,771 $6,793 Crime 1 $14,465 $14,465 FY $916,232 $5,873 Errors & Ommission 42 $361,232 $8,601 Total $5,382,967 $6,517 Premises Medical 9 $11,853 $1,317 Property Damage Only 456 $520,288 $1,141 Total 826 $5,382,967 $6, General Liability Claim Frequency FY 2009 FY 2010 FY 2011 FY 2012 Percentage of Total Incurred By Claim Type Errors & Ommission 7% Property Damage Only 10% Bodily Injury Only 43% $2,000,000 $1,500,000 $1,000,000 $500,000 General Liability Claim Severity Both Bodily Injury & Property 40% Bodily Injury Only Crime Premises Medical Both Bodily Injury & Property Errors & Ommission Property Damage Only $0 FY 2009 FY 2010 FY 2011 FY 2012 Data As of 106 July 31, 2013

107 General Liability Claims By Department County Departments # of Claims Total Incurred Avg. Cost Per Claim % of Total Incurred Roads 436 $3,015,968 $6,917 56% Solid Waste/Transfer 22 $477,900 $21,723 9% Administration 55 $436,253 $7,932 8% Public Works 120 $352,129 $2,934 7% Parks & Rec 31 $257,862 $8,318 5% EMS 7 $160,000 $22,857 3% Commission 6 $147,325 $24,554 3% General Services 1 $124,694 $124,694 2% Assessor 20 $107,529 $5,376 2% Adult Detention 21 $73,639 $3,507 1% Planning & Zoning 3 $64,727 $21,576 1% Sheriffs 10 $48,488 $4,849 1% Clerk 7 $41,925 $5,989 1% Fire Fighters 15 $17,326 $1,155 0% Health Services 30 $15,000 $500 0% Community Services 3 $14,872 $4,957 0% Facility Maintenance 5 $14,783 $2,957 0% Utilities 7 $4,354 $622 0% Emergency Management 1 $4,193 $4,193 0% Animal Control 7 $2,084 $298 0% Senior Programs 3 $1,917 $639 0% Building Inspections 1 $0 $0 0% County Manager 1 $0 $0 0% Dispatchers 1 $0 $0 0% Environmental Health 1 $0 $0 0% Housing Authority 4 $0 $0 0% Other Admin. Departments 1 $0 $0 0% Other Community Services 1 $0 $0 0% Other General Services 1 $0 $0 0% Other Operational Services 2 $0 $0 0% Risk Management 1 $0 $0 0% Transit 2 $0 $0 0% Total 826 $5,382,968 $6, % 107

108 Multi-Line Pool Auto Claim Analysis Auto Claim Analysis By Policy Year # of # of Opened Total Policy Year Claims Claims Incurred Avg. Cost Per Claim Auto Claims By Claim Type # of Claims Total Incurred Avg. Cost Per Claim Claim Type FY $1,976,286 $10,240 1st Party Physical Damage 423 $4,982,433 $11,779 FY $3,493,317 $20,310 3rd Party Bodily Injury & Property 58 $816,549 $14,078 FY $1,665,758 $10,887 3rd Party Bodily Injury Only 28 $2,438,975 $87,106 FY $1,783,800 $12,562 3rd Party Property Damage Only 151 $681,204 $4,511 Total $8,919,161 $13,514 Total 660 $8,919,161 $13, Auto Claim Frequency $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 FY 2009 FY 2010 FY 2011 FY 2012 Auto Claim Severity FY 2009 FY 2010 FY 2011 FY 2012 Percentage of Total Incurred By Claim Type 3rd Party Bodily Injury Only 27% 3rd Party Bodily Injury & Property 9% 3rd Party Property Damage Only 8% 1st Party Physical Damage 3rd Party Bodily Injury Only 1st Party Physical Damage 56% 3rd Party Bodily Injury & Property 3rd Party Property Damage Only Note: FY 2010 has two auto claims with total incurred over $1 Million each Data As of 108 July 31, 2013

109 Property Claim Analysis By Policy Year # of # of Opened Total Policy Year Claims Claims Incurred Multi-Line Pool Property Claim Analysis Avg. Cost Per Claim Property Claims By Claim Type # of Claims Total Incurred Avg. Cost Per Claim Claim Type FY $602,511 $9,269 All Risk Buildings 100 $1,763,034 $17,630 FY $636,313 $10,785 All Risk Contents 35 $451,232 $12,892 FY $1,243,080 $19,731 All Risk Other 67 $399,037 $5,956 FY $965,090 $33,279 Fire Building 7 $781,198 $111,600 Total $3,446,994 $15,958 Fire Contents 7 $52,493 $7,499 Total 216 $3,446,994 $15, Property Claim Frequency FY 2009 FY 2010 FY 2011 FY 2012 Percentage of Total Incurred By Claim Type All Risk Other 12% Fire Building 23% Fire Contents 1% All Risk Buildings 51% $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Property Claim Severity FY 2009 FY 2010 FY 2011 FY 2012 All Risk Contents 13% All Risk Buildings All Risk Contents All Risk Other Fire Building Fire Contents Note: FY 2011 has one claim with Total Incurred Over $350K; 2 water damage claim total Incurred over $100K; 2 fire damage claim with total incurred over $100K Data As of 109 July 31, 2013