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JBC asks staff to draft bill to explore Pinnacle conversion, proceeds to fund PERA; committee seeks valuations and guardrails
Summary
The Joint Budget Committee directed staff to draft legislation authorizing negotiations to convert Pinnacle Assurance into a fully private mutual and to transfer proceeds into PERA; the committee asked for outside valuations, clarified possible discount‑rate impacts on PERA disaffiliation costs, and voted 6–0 to proceed with drafting.
The Joint Budget Committee held an extended discussion with Pinnacle Assurance, the governor’s office and the Public Employees’ Retirement Association (PERA) about a proposed conversion of Pinnacle from a state‑affiliated mutual to a fully independent mutual insurer and the treatment of proceeds.
Mark Ferrendino (Office of State Planning and Budgeting) framed the administration’s proposal: seek a conversion that would produce a one‑time proceeds payment to the state, place funds into PERA to bolster pension funding, and provide Pinnacle additional business flexibility to compete in an increasingly multistate workforce environment. Pinnacle representatives (chair Akasha Absher; CEO John O’Donnell; CFO Kathy Krantz) said the company has above‑market customer‑satisfaction and safety investments but faces structural constraints that limit its ability to write multistate coverage and compete for employers whose workforces span states.
PERA Executive Director Sharon Roth described the disaffiliation‑cost calculation required if an employer disaffiliates from PERA and noted three discount‑rate scenarios the actuaries had used; staff and PERA agreed the chosen discount rate materially affects the disaffiliation cost. The governor’s office said it will commission independent valuations (documented quotes requested; draft reports due in early March) to narrow a reasonable sale/conversion range; administration materials and Pinnacle estimated a range of roughly $300 million to $500 million of gross proceeds, with potential allocation to PERA and residual state receipts.
Committee members expressed repeated concerns about timing, valuation certainty, statutory detail, protection for Pinnacle policyholders, and PERA solvency. The committee voted 6–0 to authorize staff to draft legislation to enable negotiations and to begin working with Pinnacle and OLLS on bill language; staff said they would return with independent valuation reports, a recommended allocation approach for proceeds, and statutory guardrails to ensure PERA receives protected funding and that Pinnacle remains adequately capitalized to serve Colorado workers.
