M O V I N G A H E A D N O R T H C A R O L I N A H O U S I N G A U T H O R I T I E S R I S K R E T E N T I O N P O O L ANNUAL REPORT 2011 NCHARRP

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1 ANNUAL REPORT 2011 M O V I N G A H E A D N O R T H C A R O L I N A H O U S I N G A U T H O R I T I E S R I S K R E T E N T I O N P O O L NCHARRP

2 MISSION North Carolina Housing Authorities Risk Retention Pool exists to provide, on a long term basis, protection for housing authorities risk inherent in the property/casualty and workers compensation area; to provide stability, availability, reasonable cost, the broadest coverage concurrent with prudent management and financial stability, and to assist each participant to minimize risk through a full risk management program. CONTENTS Report to the Owners Overview Property/Casualty Workers Compensation Board of Trustees Management Team Directory of Participants

3 REPORT TO OWNERS OF NCHARRP... The North Carolina Housing Authorities Risk Retention Pool Board of Trustees and Staff are pleased to present to you the 2011 Annual Report of your Pool s operations and finances. We appreciate your continued support of NCHARRP and strive to provide for you the most complete coverage and services at the most reasonable costs possible. Because of unusual storm activity and other claims, 2011 has been the most costly to your Pool in its twenty four year history. Even so, your Pool remains financially viable with no threat to its financial future. During 2011 your Board of Trustees made decisions in two areas which are to benefit NCHARRP s members greatly: 1) to provide appraisals on all property owned by its members. The project is scheduled to begin early in 2012 and to be completed by September 1, When this evaluation is complete, each of you will have a list of the real values of each structure in your authority. 2) to provide each of you with a complete safety inspection and recommendations which will reduce the number and size of your claims. This also is to be completed by year end This will insure that each of you will benefit toward the ultimate goals we all subscribe to, making us the most successful Pool in the country. The Board and Staff thank you again and look forward to another successful year. James W. Meacher Chairman of the Board Freida L. Jackson Chief Executive Officer 1

4 OVERVIEW Our theme for 2011 is moving ahead. NCHARRP is ONWARDS AND UPWARDS. The definition of this is continuing to be successful or making progress. SURPLUS The Property/Casualty Section of NCHARRP ends the year of 2011 insuring a total of $2.7 billion in property values and 36,265 conventional units and 31,064 other. The Property/ Casualty Pool ends the year with an increase over last year with a surplus of $41,276,608. The Workers Compensation Section ended with a total payroll of $72 million and over 2,000 employees. The Workers Compensation Section had a surplus of $2,580,486. INVESTMENTS 2012 was our third straight year of positive performance after a tumultuous Both Pools had a net return of less than1%. The bonds and CD s were basically flat for the year but netted dividends of about 2%. As the stock market continued its recovery from the Great Recession, we kept at our legal maximum of 20% of the total accounts invested in domestic and foreign stocks. One-fifth diversifying piece of stocks brought down the bond return as some of our smaller companies and foreign stocks were down as much as 10% in Negative stock returns and 2% bond/cd returns netted us the barely positive performance numbers for the year for each account. The end of the year performance is a little deceiving since the accounts were up over 10% in the spring and were down as much as 8% in the late summer before recovering and ending the year basically flat. European economic issues and US budget issues were the main drivers of this year of great volatility. 2

5 HOUSING AUTHORITIES RISK RETENTION POOL ANNUAL REPORT NORTH CAROLINA 11 REINSURANCE MARKET 2011 saw a record amount of property reinsurance losses which was consistent with experience realized by the Pool. With insured losses in excess of $100 billion nationwide and reinsured losses over $50 billion, 2011 was the second worst year on record for catastrophe and man-made losses. The majority of the catastrophe claims arose from either unmodeled or inadequately modeled perils or territories. Three of the top 15 most expensive catastrophes in world history occurred within 18 months of each other: Earthquake and Tsunami in Japan, Earthquake in New Zealand and Earthquake in Chile. Hurricane Irene s losses in the US were over $4.5 billion with New Jersey and North Carolina having the most costly damages. We saw a hardening of the market by as much as 15%. These increases were especially in the earthquake and named windstorm exposed portfolios. NCHARRP s reinsurance is marketed and each year the NCHARRP Board and CEO review all the proposals provided by the broker to make their decision regarding reinsurance. MOVING FORWARD The Pool strives to support its members during these times. The NCHARRP team is hard at work in many areas to achieve this. We will not stand still based on the success achieved in the past but we will move forward seeking to improve and hoping to emerge a much stronger organization for the coming year. 3

6 PROPERTY/CASUALTY FINANCIAL HIGHLIGHTS SUMMARY OF COVERAGES The following is a synopsis of the coverage. Refer to policy for actual coverage. PROPERTY Coverage is on an all risk, blanket, agreed amount, replacement cost basis. This means there is no coinsurance and no depreciation to deal with. Limits of $40,000,000 per accurrence applies. BOILER & MACHINERY This coverage is for loss caused by mechanical or electrical equipment breakdown. It is included in the property coverage at no additional cost. Limits are $40,000,000 per accident. INLAND MARINE This coverage is to insure exposures that cannot be conveniently or reasonably confined to a fixed location. It is an actual cash basis and covered where specifically scheduled. LOSS OF RENTS This is time element insurance that reimburses the housing authority for the rent it loses in the event an insured property becomes unusable as a result of damage by an insured peril. This is covered where specifically scheduled. CRIME This coverage protects the housing authority for monies and securities loss inside and outside the premises and provides despositors forgery coverage. COMMERCIAL GENERAL LIABILITY NCHARRP S liability coverage is written on a broad form for limits of $5 million. It covers operations usual and incidental to public housing authorites. DIRECTORS AND OFFICERS A housing authority should not be without this coverage. It covers the housing authority officers and directors when a claim is made against them due to action(s) they have taken in their capacity as a board member. It is on a claims made form. There is no charge for this coverage as it is included in the commercial general liablity premium. BUSINESS AUTO LIABILITY collision coverage. This auto coverage includes liability with a $5 million limit plus PUBLIC EMPLOYEE DISHONESTY BOND Covers money, securities, and property other than money and securities caused by Employee Dishonesty. This coverage is based on one occurence. The limit is *$300,000 with a $1,000 deductible. *This limit can be increased if needed. PUBLIC OFFICIALS BOND Guarantees that the specified public offical covered will faithfully perform his/her official duties, including accounting for all funds entrusted to his/her care. 4

7 HOUSING AUTHORITIES RISK RETENTION POOL ANNUAL REPORT NORTH CAROLINA 11 FINANCIAL STATEMENTS Consolidated Statements of Income (Loss) For the year ended December 31, ,148,428 1,454, ,859 $6,693, , ,435 $8,604,809 $7,698,885 Loss and Loss Expense Other Operating Expenses 6,987,383 1,415,270 $1,470,562 1,415,480 Total Expenses Dividends to policyholders 8,402,653 $2,886,042 (300,000) 202,156 $4,512,843 Revenues Net Earned Premiums Net Investment Income Other Income Gain on Loan Total Revenues Expenses Net Income (Loss) 5

8 WORKERS COMPENSATION FINANCIAL HIGHLIGHTS SUMMARY OF COVERAGES The following is a synopsis of the coverage. Refer to policy for actual coverage. Workers compensation is a form of insurance that provides wage replacement and medical benefits for employees who are injured on the job. NCHARRP s coverage is based on North Carolina no fault statutory benefits. The Workers Compensation Act requires by law that a business obtain insurance or qualify as self-insureds for possible compensation liability to their employees. Based on the Act, all businesses employing three or more employees on a regular basis are covered. Employees are entitled to benefits if, while carrying out activities for the benefit of their employer, they suffer an injury by accident, or an occupational disease. All injuries must arise out of and in the course and scope of the covered employment, to be compensable. FINANCIAL STATEMENTS Consolidated Statements of Income (Loss) For the year ended December 31, Net Earned Premiums Net Investment Income 1,435, ,733 $1,444, ,117 Total Revenues 1,619,400 $1,583,152 Loss and Loss Expense Other Operating Expenses 1,279, ,049 $1,751,201 $230,871 Total Expenses 1,522,395 $1,982,072 97,005 ($398,920) Revenues Expenses Net Income (Loss) 6

HOUSING AUTHORITIES RISK RETENTION POOL ANNUAL REPORT BOARD OF TRUSTEES NORTH CAROLINA 11 ABOUT THE BOARD Seated: Larry Russell, Vice Chairman (Term 2009-2014-Rocky Mount), Jim Meacher, Chairman

NCHARRP Board of Trustees is comprised of five members. Each board member serves a five-year term and these terms are staggered. The election is based on a majority vote of the membership.

9 HOUSING AUTHORITIES RISK RETENTION POOL ANNUAL REPORT BOARD OF TRUSTEES NORTH CAROLINA 11 ABOUT THE BOARD Seated: Larry Russell, Vice Chairman (Term Rocky Mount), Jim Meacher, Chairman (Term Lumberton) Standing: Ernest Mangum, Trustee (Term Burlington), Wendy Ellis, Secretary (Term Farmville), Gary Foster, Treasurer (Term Gastonia) The NCHARRP Board of Trustees is comprised of five members. Each board member serves a five-year term and these terms are staggered. The election is based on a majority vote of the membership. The business and affairs of the Pool are managed under the direction of this board. THE NCHARRP TEAM The following service providers are contracted by the Pool: ARM GROUP, INC. Third Party Administrators to NCHARRP: Administrators to the Pool; handles the day-today operations regarding administration, claims and risk management. Additional Service Providers Caroll Finianicial Services: Financial investment services Root & Root, P.L.L.C.: Legal Counsel Shores, Tagman & Company, P.A.: External auditing services Seated: Kim Wrenn (Senior Manager), Freida Jackson (CEO), Sandra Duncan (Account Administrator) Standing: Crystal Ammons (Claims Representative), Sherry Bower (Claims Assistant), Jim Spivey (Consultant), Connie Campbell (Workers Compensation Administrator), Al Root (Board Attorney) Willis Insurance Service of Georgia, Inc.: Insurance brokerage services 7

10 DIRECTORY OF PARTICIPANTS Ahoskie HA Burlington HA Gastonia HA Kinston HA Andrews HA Charlotte HA Graham HA Laurinburg HA Asheboro HA Chatham County HA Greensboro HA Lenoir HA Asheville HA Dunn HA Greenville HA Lexington HA Atlantic Beach HA Durham HA Hamlet HA Lincolnton HA Ayden HA Eastern Carolina Reg. HA Hendersonville HA Lumberton HA Beaufort HA Elizabeth City HA Hertford HA Madison HA Belmont HA Fairmont HA Hickory HA Madison County HA Benson HA Farmville HA Hot Springs HA Mars Hill HA Boone HA Fayetteville Metro HA Joint Municipal Housing Co. Marshall HA Brevard HA Forest City HA Kings Mountain HA Maxton HA Post Office Box 1195 Roanoke Rapids, NC Phone (252) Fax (252) Whitaker Lane Andrews, NC Phone (828) Fax (828) Post Office Box 609 Asheboro, NC Phone (336) Fax (336) Post Office Box 1898 Asheville, NC Phone (828) Fax (828) th Avenue South Post Office Box 171 North Myrtle Beach, SC Phone (843) Fax (843) Post Office Box 482 Ayden, NC Phone (252) Fax (252) Mulberry Street Beaufort, NC Phone (252) Fax (252) Post Office Box 984 Belmont, NC Phone (704) Fax (704) Williams Drive Benson, NC Phone (919) Fax (919) Post Office Box 1787 Boone, NC Phone (828) Fax: W. Morgan Street Brevard, NC Phone (828) Fax (828) N. Ireland Street Burlington, NC Phone (336) Fax (336) Post Office Box Charlotte, NC Phone (704) Fax (704) West Street Pittsboro, NC Phone (919) Fax (919) Post Office Box 1028 Dunn, NC Phone (910) Fax (910) East Main Street Durham, NC Phone (919) Fax (919) Post Office Box 1315 Goldsboro, NC Phone (919) Fax (919) Post Office Box 1485 Elizabeth City, NC Phone (252) Fax (252) Post Office Box 661 Fairmont, NC Phone (910) Fax (910) Anderson Avenue Farmville, NC Phone (252) Fax (252) Wiley Street Fayetteville, NC Phone (910) Fax (910) East Spruce St., Box 2 Forest City, NC Phone 828/ Fax 828/ Post Office Box 2398 Gastonia, NC Phone (704) Fax (704) Post Office Box 88 Graham, NC Phone (336) Fax (336) Post Office Box Greensboro, NC Phone (336) Fax (336) Post Office Box 1426 Greenville, NC Phone (252) Fax (252) Post Office Box 1188 Hamlet, NC Phone (910) Fax (910) N. Justice Street Hendersonville, NC Phone (828) Fax (828) Post Office Box 146 Hertford, NC Phone (252) Fax (252) S. Center Street Hickory, NC Phone (828) Fax (828) Post Office Box 296 Hot Springs, NC Phone (828) Fax (828) Post Office Box 339 Bladenboro, NC Phone (910) Fax (910) McGill Court Kings Mountain, NC Phone (704) Fax (704) Post Office Box 697 Kinston, NC Phone (252) Fax (252) Post Office Box 1437 Laurinburg, NC Phone (910) Fax (910) Post Office Box 1526 Lenoir, NC Phone (828) Fax (828) Post Office Box 1085 Lexington, NC Phone (336) Fax (336) Post Office Box 753 Lincolnton, NC Phone (704) Fax (704) Post Office Drawer 709 Lumberton, NC Phone (910) Fax (910) Post Office Box 9 Madison, NC Phone (704) Ivy Ridge Apts Dr Box C-3 Mars Hill, NC Phone (828) Fax (828) Post Office Box 186 Mars Hill, NC Phone (828) Post Office Box 176 Marshall, NC Phone (828) Fax same as phone Post Office Box 1437 Laurinburg, NC Phone (910) Fax (910)

11 Monroe HA Pembroke HA Rowan County HA Thomasville HA Mooresville HA Plymouth HA Roxboro HA Troy HA Morganton HA Princeville HA Salisbury HA Valdese HA Mount Airy HA Raleigh HA Sanford HA Vance County HA Mount Gilead HA The New Randleman HA Selma HA Wadesboro HA Mount Holly HA Reidsville HA Shelby Department of Housing Wake County HA Mount Olive HA Roanoke-Chowan Reg. HA Smithfield HA Waynesville HA Murphy HA Roanoke Rapids HA Southern Pines HA Whiteville HA New Bern HA Robeson County HA Spruce Pine HA Williamston HA North Wilkesboro HA Robersonville HA Star HA Wilmington HA Northwestern Regional HA Rockingham HA Statesville HA Wilson HA Oxford HA Rocky Mount HA Tarboro Redev. Comm. Winston-Salem HA Post Office Box 805 Monroe, NC Phone (704) Fax (704) Post Office Box 1087 Mooresville, NC Phone (704) Fax (704) First Street Morganton, NC Phone (828) Fax (828) Post Office Box 767 Mount Airy, NC Phone (336) Fax (336) Post Office Box 158 Mount Gilead, NC Phone (910) Noles Drive Mount Holly, NC Phone (704) Fax (704) West Main Street Mount Olive, NC Phone (919) Fax (919) Post Office Box 357 Murphy, NC Phone (828) Fax (828) Post Office Box 1486 New Bern, NC Phone (252) Fax (252) Post Office Box 1373 North Wilkesboro, NC Phone (336) Fax (336) Coverage P/C; W/C Post Office Box 2510 Boone, NC Phone (828) Fax (828) Post Office Box 616 Oxford, NC Phone (919) Fax (919) Post Office Drawer 910 Pembroke, NC Phone (910) Fax (910) W. Water Street Plymouth, NC Phone (252) Fax (252) Pioneer Court Princeville, NC Phone: (252) Fax: ( Post Office Box Raleigh, NC Phone (919) Fax (919) South Main Street Randleman, NC Phone (336) Fax (336) Third Ave Reidsville, NC Phone (336) Fax (336) Post Office Box 516 Gaston, NC Phone (252) Fax (252) Post Office Box 1195 Roanoke Rapids, NC Phone (252) Fax (252) Post Office Box 1088 Lumberton, NC Phone (910) Fax (910) Post Office Box 637 Robersonville, NC Phone (252) Fax (252) Post Office Box 160 Rockingham, NC Phone (910) Fax (910) Post Office Box 4717 Rocky Mount, NC Phone (252) Fax (252) Long Meadow Dr. Salisbury, NC Phone (704) Fax (704) Post Office Box 996 Roxboro, NC Phone (336) Fax (336) Post Office Box 159 Salisbury, NC Phone (704) Fax (704) Post Office Box 636 Sanford, NC Phone (919) Fax (919) Lizzie Street Selma, NC Phone (919) Fax (919) Post Office Box 1192 Shelby, NC Phone (704) South Fifth Street Smithfield, NC Phone: 919/ Fax: 919/ S. Mechanic St. Southern Pines, NC Phone (910) Fax (910) Post Office Box 645 Spruce Pine, NC Phone (828) Fax (828) Post Office Box 7 Star, NC Phone (910) Fax West Allison Street Statesville, NC Phone (704) Fax (704) Post Office Box 1144 Tarboro, NC Phone: 252/ Fax: 252/ James Avenue Thomasville, NC Phone (336) Fax (336) South Main Street Troy, NC Phone (910) Fax (910) Post Office Box 310 Valdese, NC Phone (828) Fax (828) Post Office Box M Henderson, NC Phone (252) Fax (252) Post Office Box 211 Wadesboro, NC Phone (704) Fax (704) Post Office Box 399 Zebulon, NC Phone (919) Fax (919) Post Office Box 418 Waynesville, NC Phone (828) Fax (828) Burkhead Street Whiteville, NC Phone (910) Fax (910) Post Office Box 709 Williamston, NC Phone (252) Fax (252) Post Office Box 899 Wilmington, NC Phone (910) Post Office Box 185 Wilson, NC Phone (252) Fax (252) East 4th Street, Suite 300 Winston-Salem, NC Phone (336) Fax (336)

12 NORTH CAROLINA HOUSING AUTHORITIES RISK RETENTION POOL 7301 Carmel Executive Park, Suite 220, Charlotte, North Carolina Phone: 704/ Fax: 704/ Toll Free: 800/ ncharrp.com

NCHARRP deductible. money. insurance. property. casualty. coverage. boiler and machinery. claims. loss. value. all risk. assets.

NCHARRP deductible. money. insurance. property. casualty. coverage. boiler and machinery. claims. loss. value. all risk. assets. insurance all risk experience rating deductible automobile loss value replacement cost property NCHARRP 2012 indemnity contract adjusters premium public employee dishonesty bond assets claims crime casualty