September 2020 – Shareholder Update

September 2020 – CHI/Optima Shareholder Update from Diane Abbett

The 32nd annual CHI shareholder meeting was held on 9/9/20 – thank you to all the shareholders who attended the company’s first virtual shareholder meeting – it was great to “see” you all.  This communication is being sent to all CHI owners to provide an update for those shareholders who were unable to attend as well as to share with you an article featuring CHI that was recently published.

Risk Retention Reporter Article:  CHI was featured in the August 2020 edition of The Risk Retention Reporter (RRR) publication.  RRR is considered the “authoritative journal for the risk retention marketplace” and has been published since 1987.  Please CLICK HERE for the article that celebrates CHI’s 32-year history as a leading risk retention group in health care professional liability.

COVID-19 Update:  Optima staff were deployed to remote (home) offices on 3/18/20 and continue to work remotely.  We are committed to focusing on the future, getting through this together, and ensuring that we continue to offer the best products and services to our owners.

Effective 3/1/20, in response to the pandemic, a CHI endorsement was automatically added to each hospital/health care entity policy to extend coverage to include volunteer (unpaid) health care professionals responding to the COVID-19 crisis.  Normally these health care professionals do not have coverage under the CHI policy unless specifically scheduled by endorsement.  The new endorsement eliminated the need to schedule the volunteer health care professionals providing services under your direction, associated with COVID-19.

A.M. Best Rating:  A.M. Best reaffirmed CHI’s rating of A- (Excellent) with a “Stable” outlook in late June.  CHI has maintained this rating for the past 15 years.  The company’s Financial Size Category (FSC) is VII.

New Owners:  Through September 1st, we are very excited to welcome two new owners as we slowly and methodically branch out to other states – Foundation Health (Alaska) and Wallowa Memorial Hospital (Oregon). Welcome!

Claims Update:  Claims results half-way through 2020 reflect a decrease in overall frequency, with relatively minor overall severity development.  While our single-year closed claim severity average is lower, there has been just one $1M+ total incurred claim close (3-4 more expected by year end).  No cases have been taken through trial this year and with the closure of courthouses for several weeks, the difficulty of currently assembling juries and the current court precedence of criminal over civil matters, it is doubtful our program will see a case go through trial in 2020.

Frequency of new EPL claims reported through June has remained high, slightly more than last year, yet the actual number of new EPL claims was 24 (one less than last year).  Newly reported Obstetrics claims in 2020 is very low, at just 5 year-to-date (average is 16 per year); and OB severity has been relatively mild so far this year.  We have not yet seen an influx of COVID-19 related claims.

Financial Update:  After-tax income of $566K (through June 30th) is below budget by $291K, primarily due to a decision to take a realized investment loss of $474K for tax purposes in early 2020. Optima’s operating income through July of $179K is better than budget by $26K.  Projections for 2020 indicate the consolidated companies will beat budget by approximately $400K, primarily due to operating expense savings from the moratorium on travel and remote work as well as a Payment Protection Program loan which is expected to be forgiven.

2021 Owners Retreat:  The 2021 Owners Retreat, which was scheduled to take place September 9-10, 2021 at the Ritz-Carlton Lake Tahoe, CA, will be postponed to 2022.  Please watch for save-the-date information which will be released soon.  Although we are disappointed to make this decision, we feel it is in the best interest of all the CHI owners and Optima staff to postpone the retreat.

On behalf of the Optima staff, we want to express our gratitude to you, the health care heroes who tirelessly work every day to keep their communities healthy and strong. We want you to know that you have our support; we are in this together.  Please contact me if you have any questions.