The MCIT Board of Directors is committed to maintaining a financially sound, fully funded program. With the realization of rate reductions during the past two years, coupled with a reduction in investment income, which affects MCIT’s financial position, the board discussed the prospect of declaring a dividend in 2017 with its actuary during its June 9 meeting.
Based on Actuarial Advisors President Mark Doepke’s report, the board determined that a total 2017 dividend of $10.332 million was appropriate. Doepke’s report to the board each June is the product of a comprehensive actuarial review of MCIT’s reserving and rate levels, net investment income and rate of return, and claims and operational performance. MCIT is consistent in its message to members that dividends are never guaranteed but, according to Doepke, the current financial outlook of the organization is favorable.
The 2017 dividend announcement marks the 27th consecutive year MCIT has returned fund balance to its membership, bringing total dividends paid to more than $322 million. Member loyalty and commitment to claims and risk management play an important part in making this possible.
Factors Contributing to Decision
This year the board reviewed the actuary’s report mindful of several factors, including:
- volatility of investment income as a result of rising interest rates by the Federal Reserve Bank.
- changes in property, casualty and workers’ compensation claim reserves as claims, including those arising from Driver’s Privacy Protection Act (DPPA) and those affected by pending workers’ compensation legislation, work their way through the system.
- potential impact of MCIT system conversion and reorganization on the cost of operations.
- year-over-year rate reductions, generating reduced member contributions available for investment.
- recent enhancements to member services, such as the introduction of a cyber-coverage program in January 2017 and the development of the no-cost Resilience II member training developed in partnership with MCIT’s EAP provider, Sand Creek
At the conclusion of his report, Doepke opined that MCIT is in the financial position to once again return fund balance to the membership. With this reassurance and recognizing the financial challenges facing members, the board voted unanimously to return:
- $4.046 million for the workers’ compensation division.
- $6.286 million for the property/casualty division.
Members are reminded that there is no guarantee of future dividends, but the MCIT Board of Directors will evaluate the merits of returning fund balance on an annual basis. Dividends will be announced only when it is determined to be fiscally sound and financially prudent.
Member Notices Mailed This Month
Each member will receive notice of its specific 2017 dividend in late July, and the dividend checks will be mailed to members in November. Members are encouraged to use electronic funds transfer to receive their dividend.