As a member of TBG, when the fund does well you do well by way of a dividend. During the last several years, losses have been low, resulting in increased funds in the account dividends are paid from – Member Distribution Payable (MDP). This is one of the many benefits of being a member.
Dividend Distribution Approval:
At the first board meeting after July 1st of each year, the TBG Board of Directors will determine if a dividend distribution is warranted, the amount of the distribution if any and the eligible fund year(s). If TBG approves a dividend distribution, that declaration must be sent to the Minnesota Department of Commerce for approval. Once approval is received, the TBG Board of Directors will determine the timing and method of payout.
Dividend Payment Breakdown:
- Once the first payment of a fund year is made, the balance is paid over a six year period.
- Every year the remaining dividend amount is recalculated using 12/31 YTD data to take into account the claims development of that year.
Dividend Policy FAQ’s
How Is The Total Dividend Amount Calculated?
An expense ratio is calculated to come up with the “breakeven” loss ratio: the amount needed to cover the expenses of that year. The total dividend amount available each year is determined after reviewing the expenses and income.
How Are Individual Member’s Dividend Calculated?
An individual member’s dividend is performance based – the better the loss ratio, the more dividend they receive. Simply put, the more profit you contribute the more money you get back.
How Do I Know If I’m Eligible For A Dividend?
To receive a dividend you must have been a member of TBG during the year the dividend is being paid, be an active member on the date the payment is made, and have a loss ratio less than the breakeven loss ratio of that fund year.
When Will I Know The Amount Of The Dividend I Will Receive?
When you renew your policy or when the dividend is paid, you’ll receive a “Dividend Scorecard”. Your dividend scorecard will let you know if you qualify for a dividend, provide you with an estimate of how much you will receive and an estimate of any remaining dividends.
Annual Dividend Payout Schedule
Once a dividend has been authorized for a fund year, distributions will be made per the following schedule:
- 1st Year – 20% of the total authorized dividend
- 2nd Year – 10% of the total authorized dividend
- 3rd Year – 10% of the total authorized dividend
- 4th Year – 15% of the total authorized dividend
- 5th Year – 15% of the total authorized dividend
- 6th Year – 15% of the total authorized dividend
- 7th Year – Balance of the total authorized dividend
The TBG Board of Directors has the authority to suspend the payment of dividends if, in their opinion, the payment would adversely affect the financial integrity of the fund. Dividends are not guaranteed and members are jointly and severally liable for any and all losses the fund incurs.
Members are jointly and severally liable for their proportionate share of obligations for the group and will be assessed on an individual and proportionate share basis for any deficit created by the group. Dividends are not guaranteed.