regulator’s view - a tale of two group self insurance funds
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REGULATOR’S VIEW - A tale of two Group Self Insurance Funds. HP Consulting Services, LLC Paul Cooksey [email protected]. Fund Year Cash Flow. Allocation of Investment Income According to Fund Year Cash Flows. Mississippi Benchmark Database MASI’s 14 th Annual Conference. - PowerPoint PPT PresentationTRANSCRIPT
REGULATOR’S VIEW -A tale of two Group Self Insurance Funds
HP Consulting Services, LLCPaul Cooksey
Surplus
0500,000
1,000,0001,500,0002,000,0002,500,0003,000,0003,500,000
Fund Year End
Surp
lus
-10.0
-5.0
0.05.0
10.0
15.0
20.0
Writ
ings
Rat
io Fund Year Surplus
Cummulative Surplus
Writings Ratio (Gross)
Surplus
(500,000)
0
500,000
1,000,000
1,500,000
Fund Year End
Surp
lus
-10.0
-5.0
0.05.010.0
15.0
20.0
Writ
ings
Rat
io
Fund Year SurplusCummulative Surplus
Writings Ratio (Gross)
Earned Premium
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
Fund Year End
Prem
ium
Earned Premium
0500,000
1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,000
20012002
200320
042005
20062007
20082009
2010
Fund Year End
Prem
ium
GENERAL & ADMINISTRATIVE EXPENSE
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Fund Year End
% P
rem
ium
Expense Before ExcessInsurance
GENERAL & ADMINISTRATIVE EXPENSE
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Fund Year End
% P
rem
ium
Expense Before ExcessInsurance
Loss Fund - Available to Pay Losses
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%
Fund Year
Rat
io
Expense Ratio
XS Insurance Ratio
Amount Available to PayLosses
Loss Fund - Available to Pay Losses
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Fund Year
Rat
io
Expense Ratio
XS Insurance Ratio
Amount Available to PayLosses
Loss Fund Compared to Actual Ultimate Losses
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%
Fund Year End
Rat
io Amount Available to Pay LossesUltimate Loss Ratio
Loss Fund Compared to Actual Ultimate Losses
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%
Fund Year End
Rat
io Amount Available to Pay LossesUltimate Loss Ratio
Underwriting Gain (Loss)
0
200,000
400,000
600,000
800,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Fund Year End
U/W
Gai
n (L
oss)
50.0%
55.0%
60.0%
65.0%
70.0%
Ultim
ate
L/R
Underwriting Gain (Loss) Loss Ratio
Underwriting Gain (Loss)
(1,500,000)(1,000,000)
(500,000)0
500,0001,000,0001,500,000
Fund Year End
U/W
Gai
n (L
oss)
0.0%20.0%40.0%60.0%80.0%100.0%
Ultim
ate
L/R
Underwriting Gain (Loss) Loss Ratio
Average Ultimate Loss
0
5,000
10,000
15,000
20,000
25,000
30,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fund Year End
Ave
rage
Los
s
Average Ultimate Loss
0
5,000
10,000
15,000
20,000
25,000
30,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fund Year End
Ave
rage
Los
s
ClaimFrequency Trends
-5.0
10.015.020.025.030.035.040.045.0
Fund Year End
# C
laim
s
0.00
0.501.00
1.502.00
2.503.00
3.50
# C
laim
s Per 1,000,000 of PremiumPer 1,000,000 of Payroll
ClaimFrequency Trends
-20.040.060.080.0
100.0120.0140.0160.0
Fund Year End
# Cla
ims
0.00
2.00
4.00
6.00
8.00
10.00
# Claim
s Per 1,000,000 of PremiumPer 1,000,000 of Payroll
Payroll - Last 10 FYs & Bulk Rate
-2.0004.0006.0008.000
10.00012.00014.000
Fund Year
Bulk
Rat
e
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
Payr
oll
Bulk Rate ChargedPayroll
Payroll - Last 10 FYs & Bulk Rate
-
2.000
4.000
6.000
8.000
10.000
Fund Year
Bulk
Rat
e
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
Payr
oll Bulk Rate Charged
Payroll
10 FY Underwriting Gain (Loss) Compared to Rate Charged
0100,000200,000300,000400,000500,000600,000700,000800,000
Fund Year
Gai
n (L
oss)
-
2.000
4.000
6.000
8.000
10.000
12.000
14.000
FY Underwriting Gain (Loss)FY Bulk Rate Charged
10 FY Underwriting Gain (Loss) Compared to Rate Charged
(1,500,000)
(1,000,000)
(500,000)
0
500,000
1,000,000
1,500,00020
0120
0220
0320
0420
0520
0620
0720
0820
0920
10Fund Year
Gai
n (L
oss)
-1.0002.0003.0004.0005.0006.0007.0008.0009.00010.000
FY Underwriting Gain (Loss)FY Bulk Rate Charged
Fund Year Cash Flow
Fund Year Cash Flow
(500,000)
0
500,000
1,000,000
1,500,000
2,000,000
Fund Year End
Cash
Flo
w
Allocation of Investment Income According to Fund Year Cash Flows
Investment Income Allocation
(100,000)
0
100,000
200,000
300,000
400,000
500,000
Fund Year End
Inve
stm
ent I
ncom
e
Allocated Investment Income Calendar Year Investment Income
Loss Development (Redundancy)
-60.0%-50.0%-40.0%-30.0%-20.0%-10.0%
0.0%10.0%20.0%
% Premium
Fund
Yea
r End
1st to Last Report % 2nd to Last Report % 3rd to Last Report %4th to Last Report % 5th to Last Report %
Loss Development Redundancy
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
Fund Year End
% C
hang
e
1st to last % Change 2nd to last % Change 3rd to last % Change4th to last % Change 5th to last % Change
Mississippi Benchmark Database
MASI’s 14th Annual Conference
Christopher J. Burkhalter, FCAS, MAAABickerstaff, Whatley, Ryan & Burkhalter, Inc.
September 30, 2011
Benchmark Database
• Source of data– Audited Financial Statements– Actuarial Reserve & Rate Analyses– Additional Data Requests
• Definition of “Fund Year Ending”
• Minimum / Maximum / Average
Mississippi Benchmark Database
MASI’s 14th Annual Conference
Christopher J. Burkhalter, FCAS, MAAABickerstaff, Whatley, Ryan & Burkhalter, Inc.
September 30, 2011