BWC Continues Change in Investments Infrastructure

Ohio’s Bureau of Workers’ Compensation (BWC) has taken additional steps to fortify the infrastructure of its investment department in preparation for the Governor’s Management Review Team to begin its analysis of all 156 investments.

BWC’s interim Administrator Tina Kielmeyer has confirmed that Ennis Knupp has agreed to a contract and will provide staff and resources to the bureau beginning Monday.

Additionally, she has also contacted J.P. Morgan Chase to ask them to assume management of the $1.1 billion in ancillary funds previously managed by BWC investment staff. These funds are set aside for injured workers who have certain long-term conditions resulting from specific work environments.

“While we realize we’re facing a tremendous challenge as we try to build in accountability to our investment operations, we must also support the day-to-day tasks that must continue in the interim,” Kielmeyer said. “By bringing in Ennis Knupp to both support and review our operations, I am confident we can successfully navigate short-term challenges while working tirelessly to create a modern investment model that has proper controls and procedures to prevent past events from occurring again.”

Knupp has no affiliations with any brokerage, investment management or investment banking firms. In operation since 1981, they serve more than 140 clients with aggregate assets of $480 billion. Their focus will be in the areas of operations, performance reporting, and personnel.

Kielmeyer also made the decision to divest BWC from two American Express hedge funds which were managing approximately $540 million. The contracts to create the hedge funds were executed in May 2000 and September 2002, respectively, while the bureau did not have the authority to invest in hedge funds until August 2004.

In addition, BWC has also:

* Formalized the investment contract review process to ensure all contractual matters are reviewed by the appropriate legal staff;
informed all employers of a 50/50 payment plan for the next pay period;
* Held a safety seminar in Athens for businesses to stress the importance of workplace safety.

BWC also is continuing to work with the Management Review Team to review each and every investment made. Jointly, they will examine whether the investment is appropriate, sufficient controls are in place, and if its performance is consistent with key benchmarks.

The Management Review Team will report their initial findings back to the Governor around Aug. 1.