MINUTES OF THE BOARD OF TRUSTEES
Special Board Meeting
June 19, 2008
CALL TO ORDER
President David Marino called the Special Board Meeting to order at 11:20 a.m.
David Marino mentioned to the Board that the Investment Committee for the past year has been looking into Alternative investments as part of the LAFRA portfolio and to adjust allocations.
Kurt Stabel addressed the Board on a potential fund which falls into the category of “alternative investments”. He mentioned that he and Robert Steinbacher had met with Scott Martin at PIMCO and Jennifer Bergwell, Executive V.P. and Product Specialist. He indicated that they spoke with Scott about trying to diversify our investment portfolio in an effort to increase our total return. He mentioned that this fund was brought to their attention by PIMCO. PIMCO has started this fund in anticipation of buying mortgaged-back securities that are distressed because of the current turmoil in the credit markets. They will only buy triple and double A-rated bonds in this fund. He indicated that they discussed the two main kinds of risks effecting this market, credit risk and liquidity risk. He stated that these bonds were not suffering from credit risk but simply suffering from a liquidity event in the market. He also mentioned that it was a private equity vehicle that would technically be considered part of the bond portfolio but for asset allocation purposes will fall into the “alternative investment” category.
He indicated that there would be a three-year lock up period because the fund is liquidity driven and PIMCO doesn’t want individuals getting in and out of the fund which will create more liquidity problems in the market.
Kurt has mentioned that they have looked into other vehicles in the “alternatives” space but the committee was concerned with the potential risks associated with these other investments. This is a very low-risk opportunity with the potential for substantial upside over the anticipated three year period. He also indicated that Garth has been encouraging us to invest in alternatives for some time and the investment committee has been evaluating this space for over one year.
Kurt stated that PIMCO has upcoming capital calls and indicated that the fund will close on June 20th. He indicated that the first capital call is July 30th. He suggested that we commit to the minimum initial investment but stated that the total capital commitment is $5 million over 1 ½ to 2 years. He indicated that the initial investment is anticipated to be $1.5 million.
David Peters motioned to move an initial $1.5 million and increase up to a total of $5 million within the next two years to the proposed PIMCO Distressed Senior Credit Opportunities Fund. Chris Stine seconded the motion. There was no discussion or objections.
Motion carried to move an initial $1.5 million and increase up to $5 million within the next two years to the proposed PIMCO Distressed Senior Credit Opportunities Fund.
David Marino informed the Board that the insurance policies were about to expire. He mentioned that David Smith and Todd Layfer had met with a couple of brokers to discuss coverage and premiums. He mentioned that the Board had given the Administrative Committee authority to negotiate and approve the insurance policy.
David Marino entertained a motion to approve and ratify the Administrative Committee’s approval of the insurance policy negotiations. Warren Braun so moved. Gary Matsubara seconded the motion. There was no discussion or objections.
Motion carried to approve and ratify the Administrative Committee’s approval of the insurance policy negotiations.
BRADAWN, INC. FEE INCREASE
David Peters informed the Board that Bradawn Inc., medical consultants, had proposed a fee increase. He mentioned that their claims to savings for the Medical Plan in the last five years have been significantly higher than the requested increase. He informed that the Medical and Administrative Committees have both approved the increase.
David Peters stated that the committee recommends and he so moves to approve the annual increase for Bradawn, Inc. as of July 1, 2008. There was no discussion or objections.
Motion carried to approve the annual fee increase for Bradawn Inc. as of July 1, 2008.
MEDICAL PREMIUM LETTERS
David Marino referred to COBRA members and our Relief Medical Members with outstanding delinquent balances. He mentioned that he was directed by the Medical Committee to review each member and send a letter informing them of their delinquency. He presented the standard letter that went to the members and indicated that they had until tomorrow by 12 midnight to respond or make payments. He stated that there had been two members that have sent payments and all others have not been heard from. He stated that the Medical Committee again directed him to send another letter to those members informing them that their Medical Insurance has been suspended until their balance has been paid. Chris Hart mentioned that Dawna Gray had also suggested going back to the providers for payment of those claims from members that have not paid their claims. The providers would then seek payment from those individuals.
President David Marino entertained a motion to adjourn the Special Board Meeting. Trustee David Peters so moved. Trustee Kurt Stabel seconded the motion. There was no discussion and no objections.
Motion carried to adjourn the Special Board meeting at 11:49 a.m.
David Marino, President