SAIF CORPORATION BOARD OF DIRECTORS MEETING. 10:00 a.m. Salem, Oregon

Transcription

1 SAIF CORPORATION BOARD OF DIRECTORS MEETING Wednesday SAIF Corporation 400 High Street SE 10:00 a.m. Salem, Oregon After determining a quorum was present, the meeting was called to order at 10:01 a.m. Roll call: Catherine Travis, Chair Robb Van Cleave, Vice Chair John Endicott Jim Ford Krishna Balasubramani SAIF Corporation personnel present: Brenda JP Rocklin, President and CEO Chris Davie, Vice President of Corporate Policy and External Affairs Ryan Fleming, Vice President of Operations and Human Resources Tami Gagnon, Human Resources Manager Kathy Gehring, Vice President of Claims John Gilkey, Sr. Vice President of Policyholder Services and Programs Michelle Graham, Vice President of Policyholder Services Rick Hanson, Vice President of Information Services and CIO Michael Hartman, Vice President of Policyholder Programs Bruce Hoffman, Vice President of Underwriting Services Gina Manley, Controller Theresa McHugh, Vice President of Financial Services Tracy Meyer, Corporate Projects Coordinator Cathy Pollino, Chief Internal Auditor Shannon Rickard, Vice President of Legal Services Colleen Sealock, Flood Restoration Project Leader Pam Woods, Vice President of Claims Kellie Lute, Assistant to the Board Other attendees: Dennis Cusack, SRG Partnership Inc. Bjorn Clouten, SRG Partnership Inc. Kevin Jensen, Ironworkers Local 29 EXECUTIVE SESSION Pending Litigation At approximately 10:04 a.m., the Chair declared this portion of the meeting to be in Executive Session, pursuant to ORS (2)(f) and ORS (2)(h), to allow the board to discuss pending litigation. SAIF Corporation 400 High St Salem, OR P:

2 Page 2 End of Executive Session At approximately 10:08 a.m., the Chair announced the conclusion of Executive Session. REGULAR BUSINESS MEETING Approval of board minutes Motion Mr. Ford, second Mr. Endicott, to approve the minutes from the meetings of September 18, 2013, and October 21, The vote was unanimous, and the motion was carried. Update on Salem campus study Ryan Fleming reported that SAIF has contracted with SRG Partnership Inc. (SRG), a full services architecture firm, to provide a comprehensive review of the Salem campus. The Salem campus includes the High Street building, the Parkway building, the Church Street building, and the parking structure. The buildings are almost 40 years old. The systems in each building are at the end of their designed life, and becoming costly to maintain. In addition, the workforce dynamics are shifting with telecommuting and alternative work schedules, and office space is not being utilized effectively in the buildings. Mr. Fleming introduced Dennis Cusack and Bjorn Clouten with SRG. Mr. Cusack reported that SRG has studied the Salem campus, and has met with SAIF executives several times over the last four months. An overview of their findings was presented to the board. Mr. Clouten reported that SRG developed five options for the Salem campus based on a holistic, balanced analysis that looked at functional issues, environmental issues, and economic issues for the next 25 years. Options range from continued maintenance, renovations, consolidation of offices, additions to buildings, removal of buildings, and sale of buildings. Project schedules and approximate costs for each option were provided. After a general discussion, the board agreed that we should continue to refine the options proposed by SRG for the Salem campus. Motion Mr. Ford, second Mr. Endicott, to approve further study of SRG options B1 and B4. The vote was unanimous, and the motion was carried. Update on Bend office lease Mr. Fleming reported that the lease for the Bend office expires at the end of this year. SAIF has leased the current space since The office now has more space than needed for the 15 employees, and the floor plan no longer meets the employee needs. With the assistance of real estate brokers Cushman & Wakefield, executive team members looked at available office space in Bend. After visiting numerous locations, the team narrowed their search to three office locations. Mr. Fleming will present a plan to the board for the relocation of the Bend office at either the December or January board meeting. In the interim, the current lease has been extended for three months.

3 Page 3 Financial reports 2013 third-quarter financial report Theresa McHugh reported that financial results for the third quarter were favorable. After paying a policyholder dividend of $129.1 million, surplus declined from $1.08 billion at the end of the second quarter to $985.9 million at the end of the third quarter. Excluding the dividend, surplus would have increased $35.2 million for the quarter, primarily due to investment gains. Earned and written premium continues to grow at a steady rate, and new sales and retention rates continue to be very positive. The year-to-date investment income was 7.3 percent less than the first three quarters of This decline was expected given the low interest rate environment. Claim counts for serious claims were slightly higher during the first three quarters compared to the same period last year, although total medical payments have continued to decrease. Third-quarter investment report Gina Manley reported that all markets were positive during the third quarter. The total return on SAIF s investment portfolio was a positive 1.7 percent for the third quarter, and a positive.28 percent year-to-date. SAIF s fixed income portfolio had a positive return of 0.99 percent for the quarter. SAIF s equity portfolio was up 8.40 percent for the quarter. The low interest rate environment continues to put downward pressure on investment income, and it is likely this decline will continue for some time. Budget report Ms. McHugh reported that direct operating expenses are under budget by approximately $3.6 million as of September 30, 2013, and are projected to be under budget by approximately $3.2 million at year end. Major items contributing to the year-to-date savings are employee costs, services and supplies, and equipment and facility expenses. Policyholder credit card fees continue to be higher than anticipated. CEO s leave and expenses The board reviewed a summary of Ms. Rocklin s leave and expenses for the third quarter of Ms. Rocklin noted that she has asked the chief internal auditor to perform a CEO exit audit of her expenses and leave. There were no questions. Dividend update John Gilkey reported that the dividend team applied the eligibility criteria and distribution formula approved by the board to determine the precise amount of the dividend and the number of eligible policyholders. The work commenced immediately following the dividend declaration on September 18, 2013, and was completed in early October. It resulted in the exclusion of 164 policies that were in default at the time of declaration. The final payout totaled $129,144,717 to 43,551 participating policyholders. SAIF s Internal Audit staff validated the work of the dividend team leading up to the distribution. A copy of that report was provided to board members. The checks were printed on October 15, and mailed to recipients on October 16.

4 Page 4 Review and approve Corporate Strategic Plan Chris Davie gave a brief overview of the Corporate Strategic Plan (CSP), from its inception through Of the nine tactics in the CSP, four will be completed by year end. Mr. Davie presented the CSP to the board for their approval, and noted that the plan has seven tactics. There are two new tactics, and five are carried over from the current plan. Motion Mr. Van Cleave, second Mr. Ford, to approve the Corporate Strategic Plan. The vote was unanimous, and the motion was carried. CSP tactic team presentation Internal Career Paths Tami Gagnon reported that five internal career paths were developed in response to employee satisfaction surveys, succession planning, and future recruitment needs. They are designed to offer something for all SAIF employees, regardless of where they are in their careers, and to be available when career goals change. The one-page path descriptions, listed below, are available on SAIF s intranet site. A full training calendar and professional development library are ready to support these paths. 1. Grow in job 2. Try a new job 3. Explore interest in management 4. Explore interest in leadership 5. Grow in leadership A supplemental piece to the career paths is an explore jobs worksheet. This is designed to help employees get more detailed information about a job and, potentially, be more competitive when a job becomes available. Jobs with high turnover and hard-to-fill jobs have been targeted as a starting place for these worksheets. Initial budget discussion Ms. McHugh reported that the proposed 2014 budget will include an increase over the current-year budget is primarily due to costs related to the growth in business. The two major increases are for agent commissions and costs related to additional FTE needed to respond to workload increases. The three-year trend of premium growth is expected to continue in 2014 and the preliminary forecast for commissions for 2014 is $26.0 million. This is a 10.2 percent increase over the 2013 budget. During the course of 2013, 13 positions have been added. It is anticipated that 43 new positions will be created in As a result, the preliminary 2014 employee budget is based on 933 FTE. Over half of the increase are Claims Division staff to respond to the increase in incoming claims. Also, in response to the litigation anticipated to follow the increase in claims, positions will be added to Legal Services. In response to new business, Policyholder Services also will add several new positions. The remaining FTE proposed are spread across the company. Many of the new positions will be phased in throughout Details of the proposed budget will be provided at the December board meeting. Mr. Van Cleave asked if the addition of three attorneys is tied to the increase in claims, or if the need can be justified without the increase in claims. Shannon Rickard replied that Legal

5 Page 5 Services has not added attorneys for several years, and that the need can be justified at this time, without the projected increase in claims. President s report Preliminary 2014 board calendar Ms. Rocklin asked the board to review the proposed dates for the 2014 board calendar. Final approval will be requested at the December board meeting. Mr. Van Cleave stated that an additional board meeting may be needed when the new CEO starts in February. Forward-looking calendar Ms. Rocklin informed the board that the December board meeting will focus on the 2014 operating and capital budgets, and key loss reserve assumptions. SAIF s 100 th Anniversary Mr. Gilkey reported that a team of employee volunteers and Executive Council members have been developing a strategy for commemoration of SAIF s 100 th anniversary. It includes the following components: Advertising campaign: The tag line for the campaign is 100 Faces of Change and features the personal stories of people and organizations who have contributed to the evolution of workers compensation in Oregon. Oregon Historical Society (OHS): SAIF is working with OHS to design an exhibition for the Oregon History Museum based on the 100 Faces of Change theme. Companywide celebration: A celebration for all SAIF employees is scheduled at the Salem Conference Center on July 1, Mr. Davie reported that the theme for SAIF s 2014 calendar is Celebrating 100 Years of Oregon history. Each month represents a decade, and features a policyholder chosen to represent major industries or cultural movements of that decade. Calendars will be mailed to policyholders the week of November 25. Beginning the week of December 2, Ms. Rocklin and several Executive Council members will travel around the state to hand deliver calendars to the policyholders featured in the calendar. Contract report The board was provided with the pending contracts list. Ms. Rocklin highlighted the Geotechnical Resources, Inc. contract and noted that $50,000 has been set aside in the 2014 budget due to the ongoing water quality remediation work required by the Department of Environmental Quality for the Salem campus. There were no questions. Review and approve Microsoft Corporation contract Rick Hanson informed the board that the current enterprise software agreement with Microsoft expires on December 31, Microsoft products are used as the foundation of SAIF s business online applications and data warehouse. They are also used in the

6 Page 6 application development environment (.net), support collaboration (SharePoint), desktop computer applications (Windows), and desktop productivity and communication (Office). SAIF proposes to sign a new three-year contract with Microsoft Corporation. The estimated cost of the contract is $1,050,000. The actual cost will vary each year depending on the number of employees employed by SAIF. Mr. Endicott asked for an explanation of the cost per employee. Mr. Hanson stated that each employee has access to a number of devices with Microsoft products and that Microsoft audits SAIF annually to confirm that SAIF is paying for the correct number of employees. The contract price includes all product upgrades. Mr. Hanson added that the contract provides the largest possible discount on Microsoft software because we are able to take advantage of the pricing contract with the State of Oregon based on the combined purchasing power of SAIF, the State of Oregon, and other agencies. Motion Mr. Ford, second Mr. Balasubramani, to approve the Microsoft Corporation contract. The vote was unanimous, and the motion was carried. Miscellaneous Ms. Rocklin reported that she has had several conversations with John Plotkin, SAIF s next CEO. She also met with him during a recent AASCIF conference. Mr. Plotkin will be in Portland on December 8 to meet Executive Council members, and will be in Salem on December 9 for a surprise visit to meet employees during a year-end SAIF Live event. Mr. Gilkey provided board members with a copy of the Top 25 Workers Comp Carriers article from Insurance Networking News. The article ranked SAIF at 20. Mr. Gilkey stated that SAIF s ranking should be higher next year, since SAIF has written $36,000,000 in new business this year, which is higher than the previous two years combined. Adjournment Motion Mr. Ford, second Mr. Endicott, to adjourn the meeting. The vote was unanimous, and the motion was carried. There being no further business, the meeting was adjourned at 12:32 p.m. Kellie Lute, Executive Assistant to the Board