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Security Association Financials
Attached is a summary of the Security Association audited financial statements for the years 2006-2008. [A copy of the Security Association 2008 audited financial statement is available upon request.] Please note that beginning in 2006 the Security Association financial statements are stated on an accrual basis and its liabilities for those years are based on an actuarial report that includes incurred but not reported (“IBNR”) liabilities for insolvencies that have resulted in claims against the Security Association. The December 31, 2008 actuarial report reflects estimated claims liabilities of $7.67 million based upon insolvencies that had already been referred to the Security Association as of that date. Note that the estimated claims liabilities at December 31, 2008 are approximately $2.44 million less than the $10.11 million claims estimate at December 31, 2007.
Security Association assets are invested pursuant to an investment policy that is reviewed and approved annually by the North Carolina State Treasurer. Again reflecting the 2008 economic downturn the Security Association experienced investment losses of approximately $1.36 million in 2008 and net Security Association assets decreased by approximately $403,000. In the fourth quarter of 2008 the State Treasurer approved the 2009 investment policy.
Member Insolvencies
During 2008, three member self-insurers, Wellman, Inc., Dan River, Inc. (successor to the former self-insurer The Bibb Company) and Flying J filed for bankruptcy protection but continued to pay their respective workers’ compensation liabilities incurred during the period of self-insurance.
The Security Association has continued to work in connection with the 2004 Interstate Brands bankruptcy proceeding to ensure that the debtor continues to post an adequate statutory deposit especially in view of the protracted bankruptcy proceedings. The Security Association worked with the N.C. Department of Insurance in 2008 to maintain Interstate’s security deposit at a level sufficient to cover is approximately $4.6 million in self-insured workers’ compensation liabilities in North Carolina. Interstate has continued to pay its claims during its bankruptcy proceedings.
The Security Association paid covered claims during 2008 brought against the insolvent group self-insurer, American Yarn Spinners (“AYS”). In 2008 The Security Association identified, liquidated and obtained court approval to use the proceeds of a $600,000 letter of credit for AYS claims.
During the course of the year, the Security Association addressed claims transferred from insolvent former member self-insurers, including but not necessarily limited to: American Yarn Spinners Self-Insurance Fund, Burlington Industries, Inc., Collins & Aikman Corporation, Joan Fabrics Corporation, Pillowtex, Inc., SCT Yarns, Vintage Enterprises Inc., WestPoint Stevens, Inc., CMI Industries, Sanders Brothers, Washington Furniture Manufacturing Company and Dan River, Inc. A complete list of member self-insurer insolvencies with active claims is detailed on the Security Association website.
In 2008 the Security Association realized recoveries as a creditor in bankruptcy proceedings and recoveries on surety bonds and excess policies totaling $840,417.
Board of Directors
Pursuant to the Plan of Operation, the Security Association will nominate and elect candidates for its Board of Directors. Board member, Delphine Goines of Duke University is Chair of the Nominating Committee that is reviewing potential candidates. If you are interested in serving or want to recommend a candidate for the Board of Directors, please contact Ms. Goines on or before May 15, 2009 at:
Duke University
Workers' Compensation Administration
P.O. Box 90448
Durham, NC 27708
goine001@mc.duke.edu
(919) 684-6821
The Security Association will elect Directors at its Annual Meeting at 12:00 noon on July 23, 2009./p>
Again, thank you for your continued support of the self-insurance industry. As always, on behalf of the Security Association Board of Directors, we welcome your insight and participation.
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