LaSalle County Insurance Trust reviews investment report, cash position and fees

Sandy Billard, serving as temporary chair, called the LaSalle County Insurance Trust meeting to order March 20 and asked the board to accept the quarterly investment report presented by Mike Nugent.

The investment report showed the trust held $466,000 in cash awaiting disbursement and, separately, about $680,000 in cash balances that are earning approximately 4.2–4.6 percent. “As the account goes down, our fees go down, and, it equals about 23 basis points,” Nugent said, describing the trust’s investment advisory and custody charges.

Nugent told trustees the account’s bond maturities are concentrated in 2026–2028 and that, without new inflows or favorable claims experience, the trust could face a funding shortfall within roughly two to three years. “I’ve been saying for the last 3 years, I predict that, you're gonna be short. You're gonna run out of money,” Nugent said, and recommended waiting until the current fiscal year’s results are complete before deciding whether to pursue a bond issue.

Nut graf: The presentation framed three near-term issues for trustees: (1) the trust’s current cash position and how much to hold in cash; (2) recurring investment and administrative fees (investment fees were described as roughly 23 basis points); and (3) a projected concentration of bond maturities in the mid-2020s that could require action—potentially a bond issuance—if claims and reserves do not improve.

Trustees asked clarifying questions about fees and the account’s expenditures. A board member said the total cost to run the trust “seems like a lot,” and Nugent replied that the investment management portion represented about $25,000 last year while other non-investment fees combined were “just under a hundred and sixty thousand.” He also noted that total insurance costs paid through the trust last year were about $2,035,000, compared with an estimate of roughly $4.5 million for a standard commercial insurance purchase.

Nugent introduced Philip Sullivan, who joined his firm in recent months and will assist with portfolio management. Philip Sullivan attended the meeting to meet trustees.

The board voted to accept and place on file Nugent’s quarterly investment report. The motion carried following a request from the chair; Doug moved and Grama seconded the motion.

Ending: Trustees agreed to revisit the investment and fee discussion periodically and suggested scheduling presentations from the trust’s consultants to explain services and costs to new members. Nugent said he would raise the question of a possible bond issuance “probably this summer” if financial conditions warrant it.