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c c c Florida Municipal Insurance Trust MANAGEMENT'S DISCUSSION & ANALYSIS For the Year Ended September 30,2010 The following discussion and analysis will provide an overview of the financial activities of the Florida Municipal Insurance Trust (the Trust) for the fiscal year ended September 30, 2010, Please read this in addition to the financial statements, notes to the financial statements, and other supplementary information provided herein, Financial HiQhliQhts · Assets exceeded Trust liabilities at September 30, 2010 by $225,3 million, Of this amount, $1,05 million is being held as collateral for a surety bond that has been issued to the Florida Municipal Loan Council and is considered restricted, The Trust's governing Board of Trustees determines if, how much, and when fund equity distributions are to be made, based on the Trust's long-term financial needs, · Fund equity increased by $5,2 million in 2009-2010 in part due to continuing improvement in investment income, · The Trust invests more than $400 million, primarily in the various portfolios of the Florida Municipal Investment Trust (FMlvT), an external investment pool, as allowed under the Trust's investment policy, Income derived from these investments is used to fund incentive credits and offset certain administrative expenses. Given the nature of the Trust's operations and the integral part investment income plays in those operations, it would be inappropriate for the Trust to exclude investment income from operating activities, Basic Financial Statements The Trust is an independent reporting entity accounted for as an enterprise fund in accordance with U,S, generally accepted accounting principles for governments as established by the Governmental Accounting Standards Board (GASB), These governmental accounting rules require the Trust to prepare a series of financial statements, The Balance Sheet provides information about the assets and liabilities at a specific point in time, in this case, September 30, 2010, The Statement of Revenues, Expenses, and Changes in Fund Equity provides information about revenues (additions to fund equity) and expenses (deductions from fund equity) recorded during the entire fiscal period from October 2009 through September 2010, The Trust uses the flow of economic resources measurement focus and the accrual basis of accounting, Under this method, revenues are recorded when earned and expenses are recorded at the time the liabilities are incurred, Notes to the financial statements. The footnotes provide additional information essential to the understanding of the financial statements. Supplemental information. In addition to the basic financial statements and accompanying notes, this report also presents certain supplementary information regarding the Trust's ten-year claims development history. Setting member premium rates today to cover the assumed risk of possible future loss occurrences is largely guided by claims development. Analysis of trends in claims development indicates whether losses are increasing, decreasing or static. 3