GEM A Progress Report September 27, 2013. A Brief History Governmental Entities Mutual, Inc. (GEM)...
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Transcript of GEM A Progress Report September 27, 2013. A Brief History Governmental Entities Mutual, Inc. (GEM)...
GEM A Progress Report
September 27, 2013
A Brief History
Governmental Entities Mutual, Inc. (GEM) is a captive domiciled in Washington, DC
Incorporated 12/24/2002 and licensed to write liability, workers compensation and property insurance and reinsurance
GEM launched its liability reinsurance program on 1/1/2003, property and workers’ compensation programs followed in 2005
Converted to a Protected Cell Corporation as of 1/1/2010
GEM completed its tenth year of operations on 12/31/2012
17 member pools and 10 Member Board comprised of Designated Member Representatives from our member pools.
Financial StabilityGEM is a regulated captive insurance company
GEM is required to maintain adequate Risk-Based Capital (RBC) ratios
GEM is member-owned and governedMembers have access to GEM’s financial information on a monthly basisAnnually GEM has an independent audit and actuarial loss reserve opinion
Members make a long-term capital commitment to GEM
Management provides an annual risk profile report to the Board of Directors
All profits inure to the benefit of the Members
GEM Financial PerformanceGAAP Basis(000 omitted)
8/31/2013 12/31/2012 Difference1
(unaudited)
Total Assets $85,555 $88,967 ($3,412)
Members' Equity $28,086 $28,457 ($371)
Investable Assets $69,241 $70,139 ($898)
Loss & LAE Reserves $52,438 $52,669 ($231)
Net Earned Premiums $5,316 $8,169 ($195)
Net Income $2,054 $2,486 $595
Loss Ratio 65.5% 81.9% -16.4%
Expense Ratio 21.0% 21.9% -0.9%
Combined Ratio 86.5% 103.8% -17.4%
1 Annualized for NEP and Net Income
Members’ Equity
Return on Members’ Equity
The GEM/WSTIP Relationship
All Founding and Premier members are required to contribute a minimum of $500,000 or 70% of gross written premium as surplus to GEM. WSTIP has contributed capital of $750,000.
2013 Liability Reinsurance– WSTIP Retention: $ 1,000,000 per occurrence – Limit Retained by GEM: 83% Q.S. $3,000,000 x $1,000,000– GEM Net Written Premium: $ 862,000
2012 Member Accounting– Member Surplus Accounts $ 1,182,501– Member Policy Accounts $ 240,904
Expected Outcomes ofWSTIP’s Investment
Maintenance of an economically sound company while providing long term cost-effective reinsurance and service
Member control of the Company through member elected Board
Follow form coverage eliminating differences in conditions, retention of claims handing authority at the pool level
High quality claims, underwriting and pool support services provided by staff and service providers with extensive pool & public entity experience
Stabilization or reduction of the overall cost of reinsurance in GEM’s retained layer through the law of large numbers and risk distribution
Building mutual strength of pools to retain higher limits before accessing the commercial reinsurance market
GEM Value Added ServicesClaims Audits
Underwriting Reviews
HR Sentry & John Salisbury Grants through NAGEP
Building Mutual Strength Among PoolsGovernance – Summer 2007Finance – Fall 2007Member Services – Summer 2008Coverage Documents – Summer 2009Economic Outlook and Fixed Income Markets – Winter 2010,2011 & 2012Risk Management – Summer 2011Risk Management –Summer 2013
Future Directions for GEM
Increase capacity to assume risk - $38-40 million member equity goal by 2020, net of unrealized capital gains. Net retention increases to $5 million
Actively market GEM to attract new members including looking at expanding outside of the US
Develop a generative Board process
Actively seek ability to collaborate with NCL Mutual and CRL
Integrate technology into how GEM delivers services to the membership
Remember our roots
In Conclusion
GEM – A Member Driven Reinsurer
Building Mutual Strength