State of West Virginia - West Virginia Legislature

STATE OF WEST VIRGINIADEPARTMENT OF ADMINISTRATIONBOARD OF RISK AND INSURANCE MANAGEMENT90 MACCORKLE AVENUE SW, Suite 203 (304) 766-2646 ADMINISTRATIONSOUTH CHARLESTON, WV 25303(304) 766 2653 FAX(800) 345-4669 TOLL FREE WVwww.state.wv.us/brimEarl Ray TomblinGovernorRobert Ferguson, Jr.Charles E. Jones, Jr.Cabinet SecretaryExecutive Directorcharles.e.jones@wv.govChief Financial Officer’s ReportFebruary 22, 2011A. P Card Report CD copies contain the supporting detail for “P” card purchases for the months of October,November and December 2010. These totals are:October $60,146.65November $46,910.63December $39,993.44B. Interim Financials – 12/31/10 BRIM’s financial position thru December shows fiscal year to date net income of $10.5million vs. $15.5 million last year, with both years results being driven by investment returns. Investment earnings of $11.2 million for FY’11 benefited from the steadily improving equitymarkets. This compares to year to date investment earnings of $15.0 million for FY’10 whenearnings were derived primarily from the fixed income market rally. Claims expense thru December reflects the actual claims payments made for the first sixmonths of the fiscal year as well as a slight decrease of $0.2 million in the estimatedoutstanding claims reserves since fiscal year ending June 30, 2010. This compares with anoverall decrease of $6.2 million in the estimated outstanding claims reserves last year thatsignificantly reduced total claims expense for the same six months period.C. AIG/Chartis Update Near the end of 2010, AIG entered into $4.3 billion in loan agreements with 36 banks – asign it can raise money from private investors. On January 12, 2011, Moody’s downgraded the insurance financial strength of AIG’sproperty and casualty company, Chartis, by one notch from “Aa3” to “A1” but changed therating outlook from negative to stable. This action came following AIG’s announcement thatit expects to complete its recapitalization by mid-year – a critical step toward independencefrom government support. Moody’s said “that while the core insurance operations havestabilized over the past year, they have not yet improved sufficiently to justify the previousratings in the absence of continued government support.” On January 19, 2011, AIG issued about 75 million 10-year warrants to shareholders, whichgives shareholders the opportunity to buy common stock at $45 per share. As part of therecapitalization plan, the U.S. Treasury currently owns about 92% of AIG. On February 9, 2011, AIG announced that it will record a $4.1 billion charge in the fourthquarter of 2010 in order to bolster loss reserves for its Chartis property and casualty unit.The need to strengthen Chartis’ reserves is due to adverse development on prior accidentyears in certain business classes. AIG will report its fourth-quarter earnings for 2010 on Feb. 24 th .