Closing 2023 and Opening 2024
I hope your Christmas and New Year’s celebrations were relaxing, joyous, and shared with family. Mine was and, as a bonus, it appears I made it through the family get-together without picking up a cold from the grandkids. In my limited grandparent experience, I have been unsuccessful at staying healthy after visits with grandkids. It also appears that grandkids, until the age of six, have a constant runny nose and some sort of cold. After thorough research, I find that no one has solved this dilemma.
Before we jump into the New Year, let me tell you about some important member items that took place at MTM last month. December is consistently the busiest month of the year for MTM staff and on December 7th, the MTM Board Finance Committee met. One of the primary topics of this meeting is to discuss the anticipated financial numbers for 12/31 including estimates for December claims. This information gives us a first look at what our member dividend might look like for calendar year 2023. We go through this process so that we can have an early partial dividend recommendation for our annual member dividend.
On December 27th, the Committee recommendation was sent to the MTM Board for final approval. The reason for this twenty-day delay is so that we can see if any significant events occur that might change the claims profile for the calendar year. Is there something that we didn’t know December 7th that might have happened the last couple days of the year. I am pleased to report that we had no significant events, and the Finance Committee recommendation from December 7th was still valid for Board approval on December 27th. By declaring a dividend in December, even though it is not paid until March, we get to deduct that amount as a business expense. For a declaration of $1.25 million in December, we get a tax deduction of $260,000 which magnifies the dividend amount and makes it a $1.5 million member benefit.
After this initial early dividend declaration, we work closely with our outside actuarial firm in the month of January. We know that we have $1.5 million in dividends approved and by working with the Actuary, we can get a precise financial impact to further add monies to the dividend. We have used this process for 9 years to give us an early tax credit while also providing a conservative first look at what the dividend might look like. Finally after we have the final Actuarial results we have the ability to add a second dividend amount at the February Board meeting.
IN SUMMARY:
- December: Dividend recommendation is completed by the MTM Board Finance Committee. This year, that equaled $1.25 million.
- January: MTM management works with our outside actuary to finalize the actual claims loss numbers for the year and the 2023 company profit.
- February: MTM management meets with the Board Finance Committee, the Board Marketing/Underwriting Committee and then, finally, the full Board.
- March 21st: Dividend checks are handed out at the MTM Annual Members’ Meeting.
Our best wishes for a successful 2024, and we look forward to seeing you soon with dividend checks in hand. — John
