Executive Director
Dewey R. Preslar, ARM
Board of Directors
Thomas R. Yarboro,
Chairman of the Board
Maxwell Family Holding Company System
Kevin F. Walsh,
Vice-Chairman
RTI International
Diane Harrington, Secretary/Treasurer
Progress Energy
Christine Carroll
Piedmont Natural Gas
Delphine D. Goines
Duke University
John Hughes
Alex Lee, Inc.
Robert Johnson
Century Furniture Industries, Inc.
Mary Kossel
Food Lion, LLC
Thomas R. Krebs
Blue Cross and Blue Shield
of North Carolina
Tia Schweikert
Lowe’s Companies, Inc.
Carla J. Stevens
WakeMed
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December 20, 2011
To: North Carolina Member Self-Insurers
From: Dewey Preslar, Executive Director North Carolina Self-Insurance Security
Association ("Association")
Re: 2011 Association Aggregate Security System ("2011 AASS")
During the course of 2011, the leadership of the Association has worked diligently to address the needs of the self-insurance industry being ever mindful of volatile economic times.
The Association successfully worked with the North Carolina Commissioner of Insurance and the North Carolina General Assembly to eliminate some of the previous regulatory requirements. These legislative changes should streamline Association operations and reduce costs especially in connection with the implementation of the annual AASS.
Pursuant to its statutory mandate, the Association has completed its annual process of discernment to determine the most effective and cost efficient methodology to secure the aggregate portfolio of member self-insurer workers' compensation liabilities and to protect the interests of all member self-insurers.
After careful consideration, the Board of Directors of the Association established the parameters for the 2011 AASS and determined that it was prudent to implement a blended program by purchasing additional financial guarantees for designated member companies to supplement the comprehensive coverage provided by an ongoing reinsurance contract. The 2011 AASS Implementation Plan allows the Association to extend participation to all member self-insurers who have complied with all applicable North Carolina statutory obligations.
In accordance with the enabling legislation of the Association, all individual member self-insurers were included in the AASS unless they were excluded by the Board of Directors based on North Carolina law. For the 2011 AASS, the Board of Directors determined there would not be a minimum rating requirement for participation, but that member self-insurers would be assessed based upon the requisite risk that the companies brought to the aggregate portfolio. Costs to member self-insurers varied based upon outstanding workers' compensation liabilities and credit ratings.
The published credit ratings from Moody's and Standard & Poor's as of the October 14, 2011 Lock-Down Date were used to determine the assessment level for each participating self-Insurer. If the Moody's and Standard & Poor's ratings conflicted, then the most recent rating was used. If conflicting ratings were issued the same day, then the lower rating was used. If companies did not have a published credit rating, equivalent credit ratings were determined in accordance with customized credit evaluation products from Moody's. Moreover, the Association used the rating of a parental guarantor to determine the relevant credit rating for the member self-insurer assessment only if the parental guarantor had submitted and the North Carolina Department of Insurance had accepted a parental guarantee as of the Lock-Down Date.
Certain member self-insurers that were excluded from participation in the 2010 AASS were included in the 2011 AASS. In accordance with North Carolina law, excluded self-insurers are required to post statutory deposits. Thus, the Department authorized the release of any previously posted statutory deposits after participating member self-insurers paid their 2011 AASS assessments.
In conclusion, the 2011 AASS allowed for full participation of all member self-insurers while maintain a program to protect all members in the event of potential insolvencies.
2010 AASS
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