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THE TRUST: OUTSTANDING FINANCIAL PERFORMANCE
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When the Trust was created by the Arizona legislature in 1986 the mandate was to build a financially strong organization that could guarantee public schools long-term stable cost for property and liability insurance protection. The legislature did not provide any startup capital for the Trust, but rather relied on the fiscal responsibility of public schools to make the right choices in building their program. Today, the 1986 legislature would be very pleased with the result.
In addition to the
continued growth in assets the Trust has also achieved the impressive
financial performances as measured by the median contribution per student and
comparison with other insurance companies. The Trust has done this while providing an increase in products and services over the years.
In the early years of
operation, the Trust's only measurement of success was how well it protected
and served its members while at the same time progressed financially year to
year. By that measurement progress was always impressive. With the exception
of the 1987/88 year, the Trust has never had to resort to utilizing one
dollar of fund balance to meet its legal liabilities and other financial
obligations.
 To put that achievement
in perspective, it is best to compare the Trust to the private commercial
insurance industry whose actions necessitated the need for the Trust in the
first place. Each year, the Trust requires that its outside auditor compare
its financial performance against an index of mutual insurance companies, an
index of 33 similarly sized private commercial insurers, and a group known as
the Ward 50. The Ward 50 are insurers that have been rated by the Ward
Consulting Group of Cincinnati, Ohio
as the 50 insurers with the best financial performance in the United States. For year ending June 30,
2004 the Trust compared very favorably to these other groups of insurers.
Comparing just against the Ward 50 the Trust was able to commit 57.3% of net
contributions of its members to fund current and future losses. This compares
with 60.6% of the premiums earned by the Ward 50 Group being set aside for
the same purpose. For the five-year period ending June 30, 2004 the Trust
contributed 53.5% of its net contributions to its loss fund compared to 64.3%
for the Ward 50.
Even while depositing more of its net contributions to its loss fund the Trust has achieved a 6.4% underwriting gain for the year ending June 30, 2004 and a 8.3% underwriting gain for the five year period ending June 30, 2004. None of the benchmarked groups of insurers do as well as the Trust.
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