MINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS CAWCD INSURANCE COMPANY, INC.

Transcription

1 MINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS OF CAWCD INSURANCE COMPANY, INC. At the Offices Marsh Management Services Inc. 745 Fort Street, Suite 1100 Honolulu, Hawaii And at the Central Arizona Project Headquarters Building Legal Conference Room North Seventh Street Phoenix, Arizona Directors Present: James M. Holway, Douglas A. Dunlap, and Kimberly A. Grouse Others Present by Invitation: Deborah Jo Maust (Vice President, Chief Operating Officer, and General Manager); Cheryl Visconti (Central Arizona Project); Ronald Stearns and Jean Deitrich (both CliftonlarsonAllen LLP); Annie Woo (Marsh Management Services Inc.); and Gerald C. Yoshida, Esq. (Char Hamilton Yoshida & Shimomoto) CALL TO ORDER The Special Meeting the Board Directors (the "Corporation") was called to order by James M. Holway at approximately 8:09 a.m., Hawaiian Standard Time (11:09 a.m., Mountain Standard Time), immediately following the conclusion the Special Meeting the Membership the Corporation. Mr. Holway chaired the meeting. Some attendees participated via conference call, by which all attendees could clearly and simultaneously hear each other for the duration the conference call and the meeting. QUORUM PRESENT A quorum the Corporation's directors (collectively, the "Board") was present BD Mtg - Minutes Special Mtg-vf.docx ID: (Version 4)

2 Page 2 5 RESIGNATION OF FRANK FAIRBANKS SR. AND ELECTION OF NEW CHAIRMAN OF THE BOARD The first order business was the acceptance the resignation Frank A. Fairbanks, Sr., as Chairman the Board, and the election a new Chairman the Board the Corporation to fill the vacancy created by Mr. Fairbank's resignation. Mr. Holway was nominated to serve as Chairman the Board the Corporation until the next Annual Meeting the Board, or until his successor is duly elected and qualified. Motion, Seconded, and Carried ("MSC"): Ta adapt the following resolution: RESOLVED, that the Board accept the resignation af Frank A. Fairbanks, Sr., effective January 1, 2017, and elect James M. Ha/way as Chairman the Board the Corporation, ta serve until the next Annual Board Directors meeting or until his successor is duly elected and qualified. APPROVAL OF MINUTES OF OCTOBER 11, 2016 ANNUAL MEETING OF THE BOARD The next order business was to approve the prior meeting minutes, included in the meeting materials. The Minutes the Annual Meeting the Board the Corporation held on October 11, 2016 were presented and considered for approval. To approve the Minutes the October 11, 2016 Annual Meeting the Board, as written. REVIEW AND AUTHORIZE PUBLICATION OF 2016 AUDITED FINANCIAL STATEMENTS Ronald Stearns CliftonlarsonAllen LLP, the Corporation's independent auditors, discussed the audit the Corporation's financial statements for the year ending December 31, Among other things, Mr. Stearns noted that CliftonlarsonAllen LLP will issue an unmodified or clean opinion and referred to a draft copy the audited financial statements (Statements Net Position) the Corporation as December 31, 2016 and 2015, and the accompanying Independent Auditors' Report thereon (collectively, the "Draft Audited Financial Statements for the Calendar Year Ended December 31, 2016"), in the meeting materials. He further noted that there were no findings fraud or irregular transactions during the audit and that the meeting materials contained a copy the management's discussion and analysis. Mr. Stearns reviewed various aspects the Draft Audited Financial Statements for the Calendar Year Ended December 31, 2016, including items in Statement Net Position, Statements Revenues, Expenses, and Changes in Net Position, and Statements Cash Flows, and various Notes to the same. A brief discussion ensued regarding the finalization the Draft Audited Financial Statements for the Calendar Year Ended December 31, 2016.

3 Page 3 5 A discussion was had regarding new accounting literature relating to the disclosures reserves wherein it was noted that the same applies only to commercial insurance entities as opposed to entities that are subject to governmental accounting standards. It was noted that the applicability the new disclosure requirements should be examined further by the auditors, after which a report would be made to the Board. Mr. Stearns also summarized various accounting disclosures set forth in the draft the required auditor communications letter which included, among other things, no significant audit findings, no difficulties encountered in performing the audit, no uncorrected misstatements, and no disagreements with management. Douglas Dunlap thanked and commended those involved in the audit. To adopt the following resolution: RESOLVED, that the Board authorize the publication the Corporation's Audited Financial Statements for the Calendar Year Ended December 31, 2016, as prepared and issued by CliftonlarsonAl/en LLP, as presented. REVIEW ACTUARIAL REPORTS AS OF DECEMBER 31, 2016 Deborah Jo Maust referred to and explained the purposes the following two actuarial reports included in the meeting materials: 1) Select Actuarial Services' Reserve Analysis & Loss Forecast, dated January 30, 2017, ("Select Reserve Analysis & Loss Forecast") for the Corporation's workers' compensation, general liability, automobile liability, public ficials liability with employment practices liability, property, fiduciary, police pressional liability, and non-owned aircraft liability; and 2) Segal Consulting's Plan Premium and Expense Report for January 2016 through November 2016, dated December 22, 2016, ("Segal Consulting Report") used for the Corporation's analysis the health benefits program. Ms. Maust discussed items from the Select Reserve Analysis & Loss Forecast wherein she noted that the Corporation's experience is higher than expected due to two outstanding claims. Ms. Maust also discussed certain items in the Segal Consulting Report, including the graph comparing year over year cumulative surplus for the 2015 and 2016 calendar years, and noted that the first quarter 2017 appears to be trending lower than comparable periods the years prior. Discussion ensued wherein Ms. Maust noted that the health benefits program is fully funded.

4 Page45 REVIEW AND ACCEPTANCE OF ACTUARIAL OPINIONS AS OF DECEMBER 31, 2016 Ms. Maust presented and summarized key aspects the actuarial opinions noted below, both which were included in the meeting materials. Brief discussion ensued regarding the Corporation's IBNR (incurred but not reported) estimates. To adopt the following resolution: RESOLVED, that the Board accept the following Actuarial Opinions the Corporation for the Calendar Year Ended December 31, 2016, as presented: 1) Opinion prepared and issued by Select Actuarial Services, dated April 11, 2017, for the Corporation's workers' compensation, general liability, automobile liability, public ficials liability with employment practices liability, property, fiduciary, police pressional liability, and nonowned aircraft liability; and 2) Opinion prepared and issued by Segal Consulting, dated January 19, 2017, for the health benefits program. CAPTIVE MANAGER'S REPORT Annie Woo Marsh Management Services Inc., presented the captive manager's report. She referred to and discussed certain items in the unaudited comparative balance sheet, statement operations, and investments and cash exhibit, all as March 31, 2017 and December 31, Ms. Woo noted that the largest fluctuations on the balance sheet and statement operations relate to the loss and allocated loss expense reserve account, and that these fluctuations are due to two claims in the Corporation's workers' compensation program. Brief discussion ensued regarding the same. FINANCIAL REPORT OF SELF-INSURED WORKERS' COMPENSATION TRUST Ms. Maust reported on the financial statements the Self-Insured Workers' Compensation Trust as March 31, 2017, referencing various revenue, expense, and reserve items therein. Ms. Maust explained that the two largest expenses relate to the cost reinsurance and premium taxes. She further noted that the Corporation has been able to reduce workers' compensation premiums significantly. Ms. Maust also reported on the number open workers' compensation claims. discussion ensued regarding the same. A brief

5 Page 5 5 CHIEF FINANCIAL OFFICER'S REPORT Mr. Dunlap presented the Chief Financial Officer's report wherein he noted that the Corporation has met all statutory requirements and has an adequate buffer in the reserves. OTHER BUSINESS Legislative Update Mr. Yoshida Char Hamilton Yoshida & Shimomoto presented and summarized various items in the Char Hamilton Yoshida & Shimomoto 2017 Spring Legislative Report contained in the meeting materials Meetings Ms. Maust noted that the next regularly scheduled Board meeting is tentatively scheduled for Tuesday, October 17, 2017, in conjunction with the annual Hawai'i Captive Insurance Council Forum. There was discussion regarding changing the meeting date to Monday, October 16, 2017 at 11:00 a.m., Hawaiian Standard Time, (2:00 p.m., Mountain Standard Time). ADJOURNMENT There being no further business to conduct the meeting was adjourned at approximately 9:05 a.m., Hawaiian Standard Time (12:05 p.m., Mountain Standard Time). Respectfully submitted: