PUBLIC UTILITY RISK
MANAGEMENT SERVICES
JOINT SELF-INSURANCE FUND
TABLE OF CONTENTS
MANAGEMENT’S DISCUSSION
FINANCIAL STATEMENTS
LIABILITY,
PROPERTY
Comparative Balance Sheet 4
NOTES
TO FINANCIAL STATEMENTS 7 – 13
REQUIRED SUPPLEMENTAL INFORMATION
OTHER SUPPLEMENTAL INFORMATION
MEMBER
DISTRICTS 19
DIRECTORY
OF OFFICIALS 20
COMBINING
FINANCIAL STATEMENTS 2004
Liability, Property and Health &
Welfare Pools Balance Sheet 21
Liability, Property and Health &
Welfare Pools Statement of Revenues,
Expenses and Change in Fund Equity 22
Liability, Property and Health &
Welfare Pools Statement of Cash Flows 23
COMBINING
FINANCIAL STATEMENTS 2003
Liability, Property and Health &
Welfare Pools Balance Sheet 24
Liability, Property and Health &
Welfare Pools Statement of Revenues,
Expenses and Change in Fund Equity 25
Liability, Property and Health &
Welfare Pools Statement of Cash Flows 26
PUBLIC UTILITY RISK
MANAGEMENT SERVICES
JOINT SELF-INSURANCE FUND
MANAGEMENT’S DISCUSSION
This discussion and
analysis is designed to provide an overview of Public Utility Risk Management
Services (PURMS) Joint Self-Insurance Fund’s financial activities for the year
ended
PURMS is a public entity
risk pool organized on
FINANCIAL SUMMARY
PURMS does not own any
capital assets and does not have any outstanding debt. Assets are comprised of cash in checking and
certificates of deposit, accounts receivable owed by members (including future
assessments) and interest receivable.
Liabilities reflect the total of known and IBNR claims and fees payable
as of
Revenue includes
assessments from members (including future assessments) and interest on
investments. General and administrative
expenses consist of excess/stop loss insurance premiums, administrator,
broker, attorney and PPO network fees.
Selected Financial Data
|
|
2004 |
2003 |
|
Assets |
$5,782,033 |
$5,854,084 |
|
Liabilities |
2,735,526 |
3,171,876 |
|
Fund Equity |
3,046,507 |
2,682,208 |
|
|
|
|
|
Revenue |
$8,484,527 |
$8,708,476 |
|
Claims & Claim Adjustment Expense |
4,756,389 |
5,944,765 |
|
General &
Administrative Expense |
3,366,339 |
3,096,176 |
|
Excess of Revenue over
Expenses |
361,799 |
-332,465 |
During 2004, the overall
financial position of PURMS has not changed.
All three pools increased their equity position; liability by 12%,
property by 51% and health & welfare by less than 1%. The property pool is currently funding a
$250,000 increase in its reserve balance.
As of
PUBLIC UTILITY RISK MANAGEMENT SERVICES
JOINT SELF-INSURANCE FUND
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED
NOTE 1 - GENERAL
The
Public Utility Risk Management Services Joint Self-Insurance Fund (known
formerly as Washington Public Utility Districts’ Utilities System Joint Self-Insurance Fund) was organized as
of
Liability and Property Pools
- The members, through the Fund, provide liability self-insurance for the first
$1,000,000 of individual loss claims.
Effective
Assessments
for the liability pool are based upon a formula whose elements include; basic
fees, historic claims experience and workers hours. Assessments for the
property pool are based upon a formula whose elements include; basic fees,
property values and risk based rates.
The assessments include amounts for excess insurance premiums, claims
experience, and operating costs. The
member districts are obligated to replenish the liability program to a level of
$2,000,000 through annual assessments.
Interim assessments are levied whenever the level of the liability program is reduced to an amount
less than $1,500,000. For the property
program, member districts are obligated to replenish to a level of $750,000
through annual assessments. Interim
assessments are levied whenever the level of the property program is reduced to
an amount less than $500,000. At the
Members
that withdraw continue to receive coverage from the Fund for occurrences that
happened while they were a member.
Withdrawn members continue to be responsible for their share of assessments
for occurrences that happen to all members while they were a member.
Health and Welfare Pool - On
Member Changes and Participation
– Thurston County PUD became a member of PURMS effective
NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
The
accounting policies of the Fund conform to generally accepted accounting
principles as applicable to proprietary funds of governmental units (in most
respects). The following is a summary of
the more significant policies.
Basis Of Accounting And Presentation - The Fund prepares its financial
statements on the full accrual basis. Under the full accrual basis, revenues
are recognized when earned and expenses are recognized when incurred.
The
accounting records of the Pool are maintained in accordance with methods
prescribed by the State Auditor’s Office under the authority of Chapter 43.09
RCW. The Pool also follows the
accounting standards established by the Governmental Accounting Standards Board
(GASB) Statement 10, Accounting And
Financial Reporting For Risk Financing And Related Insurance Issues, as
amended by the GASB Statement 30, Risk
Financing Omnibus. In 1999
the GASB issued Statement 34, Basic Financial Statements – and Management’s
Discussion and Analysis – for State and Local Governments. The presented financial statements (including
notes) reflect this and consecutive statements.
In
accordance with the ongoing application of Governmental Accounting Standards
Board Statement No. 10, the Fund’s Balance Sheet reflects both “Known” and
“Incurred But Not Reported” Claims Payable.
To counter this expense, the Fund also records entries to “General
Assessments - Future” and “Accounts Receivable - Future Assessments.”
Fixed Assets
And Depreciation - The Fund owns no fixed assets.
Unpaid Claims Liabilities - The Fund establishes claims liabilities based
on estimates of the ultimate cost of claims, including future claim adjustment
expenses, that have been reported but not settled, and of claims that have been
incurred but not reported. The length of
time for which such costs must be estimated varies depending on the coverage
involved. Because actual claims costs
depend on such complex factors as inflation, changes in doctrines of legal
liability, and damage awards, the process used in computing claims liabilities
does not result in an exact amount, particularly for coverages such as general
liability. Claims liabilities are
recomputed periodically using a variety of actuarial and statistical techniques
to produce current estimates that reflect recent settlements, claim frequency,
and other economic and social factors. A
provision for inflation in the calculation of estimated future claims costs is
implicit in the calculation because reliance is placed both on actual
historical data that reflect past inflation and on other factors that are
considered to be appropriate modifiers of past experience. Adjustments to claims liabilities are charged
or credited to expense in the periods in which they are made. [See Note 6]
Use of Estimates
- The preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from
those estimates.
Claims Reserves - Claims are charged to
income as incurred. Claim reserves
represent the accumulation of estimates for reported, unpaid claims (Known),
plus a provision for claims incurred, but not reported (IBNR). These estimates are continually reviewed and
updated, and any resulting adjustments are reflected in current earnings. For the Liability and Property Pool, all
known claims have a reserve set when the claim is reported. The IBNR is set based on an actuarial report. Health and Welfare claims are generally not
reserved. The IBNR for the Health and
Welfare program is the average monthly claims paid plus half of the average
monthly prescription claims paid multiplied by the average number of days from
the date incurred to the date reported.
Exemption From Federal And State Taxes - Pursuant
to Revenue Ruling 90-74, income of Municipal Risk Funds is excluded from gross
income under IRC Section 115(1).
Chapter
48.62 RCW exempts the Fund from insurance premium taxes, and business and
occupation taxes imposed pursuant to Chapter 82.04 RCW.
Cash And Cash Equivalents - For
purposes of the Statement of Cash Flows, the Fund considers all operating funds
to be cash equivalents.
Inter-pool Loans - Effective
NOTE 3 - DEPOSITS AND
INVESTMENTS
It
is the Fund’s policy to invest and hold until maturity all funds. Investments are stated at cost and the value
of such investments as of
As
required by State Law, all deposits and investments are obligations of the U.S.
Government, deposits with
The
Fund’s deposits and certificates of deposit were covered by Federal Depository
Insurance and the State Public Deposit Protection Commission.
NOTE 4 - SELF-INSURED
RETENTION
The
Fund retains responsibility for the payment of claims within specified
self-insured retention limits prior to the application of coverage provided by
its excess insurance contracts. If a
claim exceeds the self-insured retention the Fund will pay the claim and is
reimbursed by the excess insurance carrier.
Amounts paid in excess of the retention are reflected on the balance
sheet as an account receivable.
NOTE 5 - EXCESS
INSURANCE POLICIES
The
Fund purchases excess liability insurance.
This policy applies to losses in excess of $1,000,000 for each
Member. Information on this excess
insurance coverage is as follows:
|
Policy
Dates |
Insurance
Company |
Type
of Coverage |
Limits: Occurrence/ Aggregate are the same limit. |
Underlying
Amount |
Policy
Number |
|
|
AEGIS |
General Liability and Professional Liability |
GL
- $35,000,000. PL - $10,000,000. |
$
1, 000,000. |
X0354A1A03
E0354A1A03 |
|
|
AEGIS |
General Liability and Professional Liability |
GL
- $35,000,000. PL - $10,000,000. |
$
1, 000,000. |
X0354A1A04
E0354A1A04 |
|
|
AEGIS |
General Liability and Professional Liability |
GL
- $35,000,000. PL - $10,000,000. |
$
1, 000,000. |
X0354A1A05
E0354A1A05 |
GL
- General Liability
PL
– Professional Liability
Additionally,
each Fund Member is provided the option of purchasing various types of
insurance and limits of coverage during the year within a subgroup. The following are the subgroup policies:
|
Policy
Dates |
Insurance
Company |
Type
of Coverage |
Limits: Occurrence/ Aggregate |
Underlying
Amount |
Policy
Number |
|
|
EIM |
Excess General Liability |
$25,000,000. |
$35,000,000. |
501143-01GL |
|
|
EIM |
Excess General Liability |
$25,000,000. |
$35,000,000. |
501429-04GL |
|
|
EIM |
Excess General Liability |
$25,000,000. |
$35,000,000. |
501596-05GL |
|
|
AEGIS |
Directors & Officers Liability |
$10,000,000./
$35,000,000. |
$ 500,000. |
D0354A1A02 |
|
|
AEGIS |
Directors & Officers Liability |
$10,000,000./
$35,000,000. |
$ 500,000. |
D0354A1A03 |
|
|
AEGIS |
Directors & Officers Liability |
$10,000,000./
$35,000,000. |
$ 500,000. |
D0354A1A04 |
The
Fund Members who participate in the property program purchase excess property
coverage as follows:
|
Policy
Dates |
Insurance
Company |
Type
of Coverage |
Limits: Occurrence/ Aggregate |
Underlying
Amount |
Policy
Number |
|
|