Internal Administration (EX1) Subcommittee
December 2, 2007

The Internal Administration (EX1) Subcommittee met on Sunday, December 2, 2007.

During the meeting, the Subcommittee:

    1. Adopted teleconference minutes of the Nov. 6, 2007 Public Hearing on the proposed 2008 Budget. Minutes included adoption of the proposed budget by the Subcommittee as well.

    2. Received final report on the selection process for a new independent auditor. The Subcommittee adopted the recommendation of the Audit Committee, which was to engage Mayer Hoffman McCann PC.

    3. Received a report from the Audit Committee, which included a report on the defined benefit plan’s (Plan) investment returns through Oct. 31, 2007, adoption of a funding policy statement relative to the Plan, as well as the financial results and investment performance of the NAIC through Oct. 31, 2007.

      • Following considerable discussion on the adopted defined benefit plan funding policy, which sought to fully fund the plan by Jan. 1, 2010, the Subcommittee unanimously agreed to move to fully fund the plan by Jan. 1, 2008.

      • NAIC financial staff also reported the Association should achieve a 70% reserve ratio by year-end 2007. The Subcommittee has set a target ratio of 80%.

    4. Received a report from the NAIC’s EVP/CEO regarding various administrative, operational, and management activities of the NAIC since the Fall National Meeting in Washington, D.C. Of particular note, the Association has made solid progress toward filing the open Secondee position to the IAIS; it has achieved a full staff level in the Government Relations and Information Systems Divisions; and great success was experienced at the 2007 Financial Summit and IAIS Annual Conference.

    5. Approved an extension of a line of credit to the Interstate Insurance Product Regulation Commission (IIPRC) by $850,000, to further support the Commission’s start-up operations.

    6. Received a status report from NAIC staff regarding plans to reconstitute an EX1 Working Group to review the filing fee structure of the SVO, particularly the industry assessment, which has been in place since 2004. Staff has drafted a proposed charge and has assembled background information to help launch the group’s work. We are expecting a final recommendation from the group by June 2008.