WHAT
HAT IS
IS A
A FINANCIAL
INANCIAL STABILITY
TABILITY RATING
ATING?
WHAT IS A FINANCIAL STABILITY RATING?
Financial Stability Ratings®® (FSRs) are a leading
®
indicator
of the
financialRatings
stability
of a company.
Financial
Stability
(FSRs)
are a FSRs
leading
areindicator
based upon
series ofstability
quantitative
ratios and
of thea financial
of a company.
FSRs
considerations
usinga series
statutory
financial data
andand
are based upon
of quantitative
ratios
insurance
accounting
principles financial
prescribed
considerations
using statutory
data orand
permitted
by the
National Association
Insurance or
accounting
principles of
prescribed
insurance
Commissioners
FSRs,Association
and the process
by
permitted by (NAIC).
the National
of Insurance
which
they are determined,
have
formally by
Commissioners
(NAIC). FSRs,
andbeen
the process
reviewed
by Fannie Mae,
Mac
which and
theyaccepted
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have Freddie
been formally
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the U.S.and
Department
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accepted byofFannie
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Freddie
Mac
Development.
and the U.S. Department of Housing and Urban
Development.
WHAT
HAT DOES
DOES THE
THE HIGHEST
HIGHEST RATING
RATING -- AAA
UNSURPASSED
-MEAN
?
THE HIGHEST RATING -- AAA
WHAT DOES MEAN
UNSURPASSED
UNSURPASSED -- MEAN?
AAA means that OTARMA possesses unsurpassed
financial
stability
to maintaining
positive
AAA means
thatrelated
OTARMA
possesses unsurpassed
surplus
as regards
policyholders,
liquidity
of
financial
stability to
related
to maintaining
positive
invested
an acceptable
level of liquidity
financial of
surplusassets,
as regards
to policyholders,
leverage,
and loss
investedreasonable
assets, an loss
acceptable
leveladjustment
of financial
expense
reserves
and pricing.
leverage,
reasonable
loss and loss adjustment
expense reserves and pricing.
®
®
WHO
HO ASSIGNS
ASSIGNS FINANCIAL
INANCIAL STABILITY
TABILITY RATINGS
ATINGS ?
WHO ASSIGNS FINANCIAL STABILITY RATINGS®?
Demotech, Inc. is a financial analysis firm that
provides
independent
the financial
Demotech,
Inc. is aopinions
financial onanalysis
firm that
stability
of government
pools, on
property
and
provides
independent risk
opinions
the financial
casualty
insurance
companies,
retention
groupsand
stability
of government
riskriskpools,
property
andcasualty
title underwriters
since 1985.risk
When
compared
insurance companies,
retention
groups
to and
other
ratings
A.M.compared
Best,
titleagencies'
underwriters
since(such
1985. asWhen
Moody’s,
Standard
and Poor’s,
Fitch),
show
to other
agencies'
ratingsand
(such
asFSRs
A.M.
Best,
relative
consistency
factors
drive
Moody’s,
Standardin
andthe
Poor’s,
andthat
Fitch),
FSRsthe
show
ratings.
relative consistency in the factors that drive the
ratings.
RATING
ATING CATEGORIES
ATEGORIES
RATING CATEGORIES
AAA
AAAAA
A AA
BBB
A
BB BBB
B BB
B
Unsurpassed
Very
Good
Unsurpassed
Above
VeryAverage
Good
Average
Above Average
Acceptable
Average
FairAcceptable
Fair
IS
PROUD TO ANNOUNCE THAT
PROUD TO ANNOUNCE THAT
IT HAS ISSUED A 2015
IT HAS ISSUED A 2015
F I N A N C I A L S T A B I L I T Y R A T I N G ®® O® F
FINANCIAL STABILITY RATING OF
IS
AAA
AAA
UNSURPASSED
UNSURPASSED
TO
TO
Demotech, Inc. is a Columbus, Ohio based financial
analysis
firm. Inc.
Financial
Stability Ratings®
(FSRs)
are
Demotech,
is a Columbus,
Ohio based
financial
accepted
sponsored
enterprises.
analysis by
firm.government
Financial Stability
Ratings®
(FSRs) are
Thisaccepted
information
expires on orsponsored
before August
31,
by government
enterprises.
2016.
FSRs can expires
be confirmed
by contacting
This information
on or before
August 31,
Demotech,
2016. Inc.
FSRsat [email protected].
can be confirmed by contacting
Demotech, Inc. at [email protected].
ABOUT
ABOUT
OHIO
OHIO
TOWNSHIP
TOWNSHIP
ASSOCIATION
ASSOCIATION
RISK
RISK
MANAGEMENT
MANAGEMENT
AUTHORITY
AUTHORITY
(OTARMA)
(OTARMA)
SUMMARY
SUMMARY
OF OF
SIGNIFICANT
SIGNIFICANT
FINANCIAL
FINANCIAL
DETAIL
DETAIL
&O
&PINION
OPINION
OTARMA
OTARMA
is aislocal
a local
government
government
riskrisk
pool
pool
thatthat
offers
offers
comprehensive
comprehensiveliability
liabilityandandproperty
propertycoverages
coverages
specifically
specifically
tailored
tailored
to meet
to meet
thethe
needs
needs
of townships
of townships
throughout
throughout
Ohio.
Ohio.
OTARMA
OTARMA
differs
differs
philosophically
philosophically
from
from
traditional
traditional
insurance
insurance
programs
programs
in that
in that
OTARMA
OTARMA
is is
owned
owned
by byits its
members
members
andand
serves
serves
only
only
its its
members’
members’
interests.
interests.OTARMA
OTARMA
is endorsed
is endorsed
by by
thethe
Ohio
Ohio
Township
Township
Association.
Association.
2014
2014
Balance
Balance
Sheet
Sheet
Summary
Summary
(Property
(Property
& Casualty):
& Casualty):
TheThe
Pool
Pool
uses
uses
reinsurance
reinsurance
andand
excess
excess
risk-sharing
risk-sharing
arrangements
arrangements
to reduce
to reduce
its its
exposure
exposure
to loss.
to loss.
These
These
agreements
agreementspermit
permitrecovery
recoveryof ofa aportion
portionof of
OTARMA’s
OTARMA’s
claims
claims
from
from
reinsurers
reinsurers
andand
from
from
a riska risksharing
sharing
arrangement.
arrangement.
TheThe
reinsurance
reinsurance
arrangement
arrangement
is well
is well
structured
structured
andand
hashas
adequate
adequate
funds
funds
to to
meet
meet
thetheneeds
needsof ofthethegroup.
group.TheThereinsurance
reinsurance
arrangement
hadhad
$36,601,559
in in
netnet
position
at at
arrangement
$36,601,559
position
2014
year
end.
2014
year
end.
Year
after
year,
OTARMA
hashas
metmet
all of
operating
Year
after
year,
OTARMA
all its
of its
operating
andandclaim
claimpayment
paymentobligations
obligationswhile
whilebuilding
building
substantial
substantialfinancial
financialequity
equityfor forits itsmembers.
members.
OTARMA
hashas
957957
members
andand
a high
member
OTARMA
members
a high
member
retention
raterate
(99.8%
in 2014).
Availability
of broad
retention
(99.8%
in 2014).
Availability
of broad
coverage,
consistency
in price
andand
high
quality
riskrisk
coverage,
consistency
in price
high
quality
management
andand
claims
handling
services
areare
areas
management
claims
handling
services
areas
where
OTARMA
thrives.
where
OTARMA
thrives.
In addition
to Demotech’s
independent
review,
other
In addition
to Demotech’s
independent
review,
other
entities
entitiesanalyze
analyzeandandaudit
auditOTARMA’s
OTARMA’sfinancial
financial
operations,
such
as: as:
operations,
such
• • Plante
Plante
Moran,
Moran,
PLLC
PLLC
audited
audited
thethe
2014
2014
financial
financial
statements
statements
of the
of the
Pool
Pool
andand
issued
issued
an an
unmodified
unmodified
opinion
opinion
(the(the
highest
highest
opinion).
opinion).
• • TheThe
Government
Government
Finance
Finance
Officers
Officers
Association
Association
awarded
awarded
OTARMA
OTARMA
a Certificate
a Certificate
of Achievement
of Achievement
for for
Excellence
Excellence
in Financial
in Financial
Reporting
Reporting
in 2014.
in 2014.
ForFor
more
more
information
information
about
about
OTARMA,
OTARMA,
please
please
contact
contact
Burnham
Burnham
& Flower
& Flower
Insurance
Insurance
Group
Group
(800-748-0554).
(800-748-0554).
NetNet
Position
Position
Claim
Claim
Reserves
Reserves
$27,057,831
$27,057,831
$ 8,270,806
$ 8,270,806
2014
2014
Operations
Operations
Summary
Summary
(Property
(Property
& Casualty):
& Casualty):
Member
Member
Contributions
Contributions
Claims
Claims
Expense
Expense
$13,995,532
$13,995,532
$ 5,347,119
$ 5,347,119
® ®
Financial
Financial
Stability
Stability
Rating
Rating
: Based
: Based
on on
a review
a review
of data
of data
included
included
or or
referenced
referenced
in in
thisthis
report,
report,
Demotech
Demotech
® ®
of: of:
assigned
assigned
OTARMA
OTARMA
a Financial
a Financial
Stability
Stability
Rating
Rating
AAA
AAA
(Unsurpassed)
(Unsurpassed)
Loss
Loss
Reserve
Reserve
Opinion:
Opinion:
Based
Based
on on
a review
a review
andand
analysis
analysis
of of
thethe
Intergovernmental
Intergovernmental
Contract
Contract
andand
thethe
Pool's
Pool's
lossloss
reserves,
reserves,
Demotech
Demotech
assessed
assessed
OTARMA’s
OTARMA’s
lossloss
reserve
reserve
adequacy
adequacy
as: as:
AAA
AAA
(Unsurpassed)
(Unsurpassed)
Administration:
Administration: Based
Based on on an an independent
independent
investigation
review
procedures
investigation
andand
review
of of
thethe
procedures
andand
controls
utilized
administrator
OTARMA,
controls
utilized
by by
thethe
administrator
of of
OTARMA,
Demotech assigned
assigned an an opinion
opinion of: of:
Demotech
AAA
(Unsurpassed)
AAA
(Unsurpassed)
Overall
Performance:
Based
above
opinions,
Overall
Performance:
Based
on on
thethe
above
opinions,
analysis
overall
Pool
history,
Demotech
assigned
analysis
andand
overall
Pool
history,
Demotech
assigned
overall
rating
AAA
(Unsurpassed)
an an
overall
rating
of: of:
AAA
(Unsurpassed)
th
ForFor
thethe
26th
26consecutive
consecutive
year,
year,
OTARMA
OTARMA
hashas
® ®
received
received
a 2015
a 2015
Financial
Financial
Stability
Stability
Rating
Rating
of of
AAA
AAA
(Unsurpassed),
(Unsurpassed),
thethe
highest
highest
rating
rating
given
given
by by
Demotech,
Demotech,
Inc.Inc.
Additional
Additional
copies
copies
of this
of this
brochure
brochure
areare
available
available
on on
thethe
OTARMA
OTARMA
Website
Website
at www.otarma.org.
at www.otarma.org.