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4 <br /> court decisions and the fact that very few new DPPA claims have been submitted means that <br /> the uncertainty of these claims has lessened. This in turn means that LMCIT is now able to <br /> release some of the extra funds. When these claims are ultimately resolved, LMCIT hopes to <br /> be able to return the rest to cities too. <br /> Dividend Determination <br /> Every year the LMCIT Board determines whether a dividend can be returned, and if so,how <br /> much.A number of considerations are weighed,with the ultimate decision involving a comparison <br /> of the LMCIT year-end fund balance(also known as member equity or surplus)to a targeted <br /> amount of fund balance. <br /> Typically the major driver behind whether a dividend can be returned is how rates in recent years <br /> compare to LMCIT's loss experience. Premium rates are designed to pay for projected losses, <br /> expenses, and a safety marginin case losses turn.out to be greater than expected. If losses turn out <br /> to be at or below LMCIT's projections,then the safety margin isn't needed and can either be <br /> returned to members as a dividend or used to strengthen LMCIT's fund balance. <br /> Dividend Calculation <br /> The first step the LMCIT Board takes in determining the dividend amount is to look at LMCIT's <br /> actual fund balance compared to the fund balance targets the Board has established. This year the <br /> Trustees determined that$25 million could be returned to member cities. <br /> The next step is to calculate the dividend.The formula for calculating the dividend is designed to <br /> return proportionally greater amounts to members that have been with LMCIT for a longer period <br /> of time and that have been most successful in avoiding and controlling losses. Here are the steps to <br /> determine the dividend for each individual member: <br /> Step 1: Each member's adjusted losses are subtracted from its gross earned premiums. <br /> Step 2: After calculating Step 1,the remaining dollar amount for each member is added together. <br /> This is the total that is used to calculate each individual dividend amount. <br /> Step 3: The amount for each member calculated in Step 1 is then divided by the sum of all <br /> members calculated in Step 2. This results in each member's percentage, or share,of the <br /> $25 million total that's available as a dividend this year. <br /> The enclosed data sheet shows the exact figures,including your percentage of the dividend share, <br /> that were used to calculate your dividend. A few definitions may help as you look at this <br /> information. <br /> Wage <br /> 138 <br />