May 30, 2007: State Treasurer Accepts PRC Recommendation

Bank of Albuquerque Picked to Hold Insurance Deposits
State Treasurer Accepts PRC Recommendation

SANTA FE, N.M. – State Treasurer James B. Lewis on Wednesday awarded Bank of Albuquerque a contract to handle more than $380 million in insurance deposits that the PRC’s Insurance Division requires from insurance companies operating in New Mexico.

Bank of Albuquerque was one of three financial institutions that submitted competitive bids for the one-year contract, which gives the PRC and state Treasurer’s Office an option to renew. Century Bank and Wells Fargo were the other two bidders.

Last year, the PRC directed its Insurance Division to issue a request for proposals for the contract, currently held by Century Bank. An evaluation committee, which was comprised of representatives from the PRC and state Treasurer’s Office, submitted a unanimous recommendation to Lewis that Bank of Albuquerque be awarded the contract. Lewis was responsible for a final decision on the award.

“I am satisfied the selection process for the custodial bank was open, fully competitive and transparent to the citizens of New Mexico and the insurance industry,” Lewis said.

PRC Chairman Ben R. Lujan noted that the Commission and state Treasurer’s Office are “working together to strengthen the integrity of the Insurance Division and to restore public faith in the bidding process.”

“I commend the Insurance Division and state Treasurer’s Office for conducting an exhaustive and welldocumented review of the bidders,” added District 4 Commissioner Carol Sloan.

The PRC’s Insurance Division requires insurance company deposits to protect New Mexico policy holders and creditors. In its search for a financial institution to hold the funds, the PRC followed the state of New Mexico’s stringent procurement procedures, even though the Commission may not have been required to do so by law, since Bank of Albuquerque will be compensated by private rather than public funds.

Bank of Albuquerque will earn roughly $650,000 per year in fees under the new contract.

“The low-point for this contract was when the former Superintendent of Insurance quietly raised the fees to the bank by $180,000. But even before that, this contract was an opportunity for a favored bank to make a nice little profit at a non-competitive fee. The PRC rolled back that illegal $180,000 increase, and now, by putting this contract out to a real competitive bid, we will save an additional $100,000. We’ve cleaned up other Insurance Division contracts over the past two years. Under this Commission, the `back-door’ to the Insurance Division is now closed,” District 1 Commissioner Jason Marks said.