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New York State Motor Truck Association Compensation Trust

New York State Motor Truck Association Compensation Trust. Agenda. Background Trustee History Financial History Last 5 Active Years Prior Assessments Financial Timeline Next Steps. Background. Trust established: 7/1/1994 Membership at Termination 170 Members

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New York State Motor Truck Association Compensation Trust

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  1. New York State Motor Truck Association Compensation Trust

  2. Agenda • Background • Trustee History • Financial History Last 5 Active Years • Prior Assessments • Financial Timeline • Next Steps

  3. Background • Trust established: 7/1/1994 • Membership at Termination 170 Members • Termination Date: 12/31/2011 92 Open Claims • Last filing: 12/31/201461 Open Claims • Accounting firm: • Bonadio & Co., LLP 2013 to present • Stulmaker, Kohn & Richardson, LLP 1995 to 2012 • Actuary: • Liscord, Ward & Roy 1995 to 2008 • Madison Consulting 2011 to Present • Administrator: • Hughes Affiliates 1995 to 2008 • First Niagara Risk Management 2009 to Present • Current Contact: • First Niagara Risk Management Inc. (203) 379-3833 Robert Fortenbaugh robert.fortenbaugh@fnrm.com 726 Exchange Street-Suite 900 Buffalo NY 14210

  4. Trustee History

  5. Financial History: Last 5 Active Years

  6. Financial History: Run-off Years

  7. Prior Assessments • Date Assessed: Issued 9/15/2011 • Total Amount of Assessment: $1,946,760 • Total Collections to Date as of 12/31/15: $1,646,868 • Members Participating: 73 of 78 • Rate of Participation: 93% • % Collected as of 12/31/15: 85% • Date Assessed: Issued 10/30/12 • Total Amount of Assessment: $586,220 • Total Collections to Date as of 12/31/15: $425,130 • Members Participating: 40 of 57 • Rate of Participation: 70% • % Collected as of 12/31/15: 73%

  8. Prior Assessments • Date Assessed: May 6, 2014 • Total Amount of Assessment: $2,379,828 • Total Collections to Date as of 12/31/15: $1,615,219 • Members Participating: 35 • Rate of Participation: 64% • % Collected as of 12/31/15: 68% • Payment Terms: 10 payments

  9. Financial Timeline 2002NYS Motor Trust is deemed to have no funding issues with a Regulatory funding ratio of 112%. 2003 Level II review performed by PricewaterhouseCoopers, LLP. The trust was deemed to have no funding issues. A WCB level 1 report was also performed; the trust is deemed to have no funding issues with a Regulatory funding ratio of 101%. 2004-2009 Trust is deemed to have no funding issues. 2010Trust is deemed to be underfunded with a Regulatory funding ratio of 79.48%. 2011 Level II review performed by Bickmore Risk Service for examination of continued status as an active group trust. The years analyzed were from 2000-2009. WCB identifies the trust for potential continuation as a GSIT under new regulations. On September 15 2011, the Trust issued assessment to 70 members in the amount of $ 1,946,759.35 to raise funds for security deposit needed to continue as a group trust. The Trust’s application for continued group status was rejected by the WCB because the trust did not have the funds necessary to post the security deposit.

  10. Financial Timeline 2012October 2012- Trust issued assessment encompassing the years 07/01/06-07 (13); 07/01/07-08 (14); 07/01/08-09 (15). The total assessment amount is $586,219 with 57 members invoiced. Out of these 57 members 16 were previously referred for collections. The terms are 5%-30 or 10 equal payments starting 01/01/2013. 201312/31/2013-Trust has a GAAP deficit of $3,023,345 and 19.28 months of cash available. 2014March 2014- The Trust has 14.58 months of cash available. Pursuant to Circular 2011-5, when a trust falls below 18 months of cash, they are required to assess members. NYS Motor Freight management agreed that an assessment is warranted. May 2014-Trustissued assessment to members for $2.4 million.

  11. Financial Timeline 2015 April 2015-The trust has 17.51 months of cash remaining. WCB again requested that the trust submit an assessment proposal to WCB within 45 days. June 2015- Trustees and Administrator requested additional time for submittal of assessment to investigate a potential Assumed Liability Policy, which may significantly alter the amount of the deficit assessment. August 2015- Trustees have requested that the assessment proposal be delayed until the September 21st Trustee meeting. WCB granted this request, but communicated to the Trustees that the WCB will move to transition the trust to WCB if it falls below the 9 month threshold as stated in the Circular 2011-5. October 2015- WCB is informed that the Trustees approved a $5.2 million deficit assessment to be invoiced in December. November 2015- After discussions between the trustees, its administrator and the WCB, the WCB was informed that the Trustees will resign from Trust and move to transition the assets and liabilities to the WCB. The Trust also sent communication to its members outlining the transition. The trust’s ultimate goal is to purchase an assumption of liability policy with a final liability for its members.

  12. Claims Administration Upon transition to the WCB, NCAComp, Inc. the WCB contract administrator, will be responsible for: Claims Handling of approximately 58 open claims. Annual Financial/Actuarial Reports and tax filings. Submission of Monthly Cash Flows to WCB. Collection of prior issued assessments. Members will be given full credit for any amounts paid to NCA against future deficit assessments. If the Trust is declared insolvent by the WCB (has less than six months of cash to pay claims), assist with the issuance and collection of WCB issued estimated deficiency. The WCB has assumed the overall administration of the trust, and is responsible for overseeing the contract administrator. During this period, the WCB will also pursue the feasibility of purchasing an Assumption of Liability Policy (ALP).

  13. Next Steps Forensic Review • The WCB procured forensic vendor, Lumsden and McCormick (Lumsden), will Conduct a Performance/Operational and Financial review of the Trust. • Lumsden will reconstruct the Trust from date of inception to date of termination. Outcome • Each year will be evaluated based on comparison of the contributions received to the claims and related expenses for that year. • Shortfalls/Surpluses will be allocated only to the members that were actively participating in that year. • Payments on past assessments will be factored in to any billing, members will receive full credit against deficit assessment invoices to be issued by WCB. • Payment term options will be established. • A forensic membership meeting will be held to discuss findings.

  14. Information Available via Web • http://www.wcb.ny.gov/content/terminated-self-insuredtrusts/DocumentsToPrint/MotorTruck_Trust/MotorTruck_Trust.jsp Information that may be found at this web address includes: • All financial statements filed 1995-2014 • All actuarial statements filed 2000-2014 • Trust agreement & amendments • Trust By-Laws • Listing of Trustees (historical) • Membership Roster

  15. Contact Information: Questions? NCA Comp, Inc. 716-842-0045 NYS Workers’ Compensation Board Self-Insurance Office 518-402-0247

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