Royal_Oak_RHC_Actuary_Audit_RFP_2026.docx

CITY OF ROYAL OAK RETIREE HEALTH CARE PLAN

REQUEST FOR PROPOSALS FOR ACTUARIAL AUDIT

RE: ACTUARIAL SERVICES

A. OVERVIEW

The Board of Trustees of the City of Royal Oak Retiree Health Care Plan (“Board” or “Board of Trustees”) is seeking information about your firm’s ability to perform an actuarial audit of the current actuarial consultant for the Plan. The purpose of this Request for Proposals (RFP) is to outline the Board's requirements for actuarial auditing services and solicit information from which the Board may evaluate such services. This request is issued in accordance with the Board’s fiduciary duty to conduct actuarial due diligence under Michigan Public Act 202 of 2017 (“PA 202”).

B. PLAN PROFILE

The City of Royal Oak Retiree Health Care Plan (“Plan”) consists of approximately Seventy (70) active members and Four Hundred Twenty Nine (429) retired members and beneficiaries, and has assets of over One Hundred Seventy Five Million ($175,000,000.00) Dollars as of December 31, 2025. A copy of the Plan’s most recent actuarial report is included for reference.

C. MINIMUM QUALIFICATIONS

The Board of Trustees requires that all prospective service providers have strong credentials, be in good financial standing, and be an enrolled actuary.

D. SCOPE OF SERVICES

The Board of Trustees is attempting to identify an actuary that has the ability to provide Actuarial Auditing services.

When responding to the RFP, the Board of Trustees encourages you to describe the ways in which you believe your service capability is special or distinctive.

E. SUBMISSION REQUIREMENTS

To achieve a uniform review process and obtain the maximum degree of comparability, it is required that the report be organized in the following manner:

1. Title Page:

Please indicate the RFP subject, the name of your organization, address, telephone number, name of contact person and date.

2. Table of Contents:

Clearly identify the material by section and page number.

3. Letter of Transmittal:

Limit to one or two pages.

a. Briefly state your organization's understanding of the nature of the work.

b. Give the names of the persons who will be authorized to make presentations for your organization, their titles, addresses, email addresses, and telephone numbers.

4. Submission:

The Board of Trustees requests that a total number of 6 complete sets of your information be submitted.

Responses must be emailed to _____________________ and tmichaud@vmtlaw.com as well as hard copies presented in a sealed envelope clearly marked as follows:

Your response to this RFP must be received at the above address by 4:00 p.m. on ______________________, 2026.

All inquiries about the RFP should be in writing and brought to the attention of Thomas Michaud, the Board’s legal counsel, at the address above or by email to tmichaud@vmtlaw.com.

ORGANIZATION BACKGROUND

1) How long has your company been in existence?

2) How many major accounts do you have? What is your definition of a major account? List five of your largest client relationships.

3) How many municipal Plans accounts do you service? How many of those are located in Michigan and how long have you provided service to each system?

4) How many accounts has your organization lost within the past three years? Nationally? Locally? What are the reasons for these losses?

5) Please state the name, title, address, and telephone number(s) of the person(s) we may contact for any questions about your response to this RFP.

6) Who would be responsible for our account? Please describe this person’s background. What or whom is the backup source for this person?

7) From what geographic location will our account be serviced?

8) What significant organizational changes have occurred at the local and national level in the last twelve months?

9) What percentage of the organization’s overall revenue is attributable to actuarial services?

ADMINISTRATION

10) Tell us about your administrative, actuarial, and operations staffs. How many administrative and actuarial personnel do you employ? What is your process for assigning personnel to your clients?

11) Provide the names, titles and credentials of the individuals who would be assigned to the Plan’s account. What are their specific responsibilities? Provide the names of other clients that they serve.

12) Describe how you monitor the performance of the individuals who would be assigned to work on our Account.

13) What is the average turnover of your staff?

MANAGEMENT COMMITMENT

14) Outline your organization’s commitment to servicing the public sector market. What capital investments have occurred in the last three years? What capital investments are budgeted for in the current and following year?

15) Does your organization have a total quality management program? If yes, please describe the program and explain how it differentiates from your competition.

16) Do you survey your clients? If yes, provide the results for the last three years.

17) Describe other methods you use to monitor client satisfaction.

RISK MANAGEMENT

18) Describe your system of controls to assure the accuracy of the processing and reporting of information? Do you have documented policies and procedures?

19) Describe the various types of insurance and indemnification provided to protect clients of service(s) proposed, including (Be sure to include specific dollar coverages):

20) What steps do you take to ensure the confidentiality of client data?

REFERENCES

21) Please provide the names, contacts, and phone numbers of clients that are of similar size as the Plan who will share with the Board their first-hand experiences regarding your services (preferably public Plans).

MISCELLANEOUS

22) Is your organization a member of MAPERS and/or NCPERS? What other affiliations does your organization maintain to keep informed on unique issues and developments affecting public employee Plans?

23) Has your organization been investigated by any state or federal regulatory or law enforcement agency in the last ten years? If yes, please describe in detail the substance and results of each such investigation.

24) Has your organization been a party to any lawsuit, including suits involving misfeasance or professional negligence, within the last ten years? If so, please describe the substance and results of each suit.

25) Please describe the transition process when taking on a new client previously serviced by another actuarial firm. Please discuss computer systems and data issues.

26) Are the individuals whom you intend to assign to the system enrolled actuaries?

AUDITING SERVICES

PA 202 requires that beginning July 1, 2018, local units of government that sponsor defined benefit type of arrangements, at least every 8 years, do at least one of the following: (1) Retain the services of an independent actuarial firm other than the plan actuary, to conduct an actuarial audit of the plan, or (2) replace the plan actuary. PA 202 does not define or provide guidance as to the scope or requirements of the “actuarial audit”. Please provide information related to auditing services that assists the Board evaluate those services.

Scope of Audit Requirements

The purpose of this audit is to audit the work of the Plan’s current actuary, Gabriel, Roeder, Smith & Company. The audit will review the most recent annual valuation and experience study for the Plan to express an opinion and assure that the results presented are sound and reasonable. The Board requests that the bid be on a fixed fee basis.

The Board understands that there are essentially three (3) different levels of actuarial audits. The Board has not resolved which level of audit it will contract for and requests that responses address and quote a fee for each audit level.

Level 3 Audit - Review of Report In a Level 3, or “Review of Report” actuarial audit, the reviewing actuary examines the consulting actuary’s methods and assumptions for reasonableness and internal consistency, but does not perform actuarial calculations. The audit should:

· Validate that the current actuary is properly credentialed.

· Review the valuation report and experience study for overall completeness and reasonableness.

· Understand changes from the prior year results.

· Comment on the assumptions most critical to the valuation.

· Confirm that PA-202 reporting is consistent with the uniform assumptions prescribed by the State Treasurer.

· Comment on the funding method used and its ability to meet the government’s funding goals.

· Assess the extent to which the plan’s funding policy and/or corrective action plan is being followed.

· Provide a written report of findings, including any recommended changes.

This type of audit will include the following steps:

1. Reviewing the Actuarial Valuation Report:

a. Liabilities, assets, contributions, actuarial assumptions and methods look reasonable compared to the prior valuation.

b. Projections – generally reviewed for reasonability and comments provided regarding conclusions drawn from these projections.

c. Review the premium development method used (retiree health valuation).

2. Content of Report - Does the report include all relevant and required information?

5. Recommendations - Are the recommendations appropriate given the system’s objectives, funded status, etc.?

Level 2 Audit - Sampling Method In a Level 2, or “Sampling Method” actuarial audit, the reviewing actuary does not fully replicate the consulting actuary’s valuation, but instead uses a sampling of the plan’s participant data to test the results of the valuation. The reviewing actuary also examines the consulting actuary’s methods and assumptions for reasonableness and internal consistency.

The Level 2 audit should include each of the items in a Level 3 – Review of Report Audit, PLUS:

· Perform a detailed review of the valuation results for a sampling of participants.

The reviewing actuary does not fully replicate all the calculations from the valuation; calculations are only performed on a sample of the data.

This type of audit will include the following steps:

1. Review of Actuarial Valuation Methods and Procedures - An assessment of whether the actuarial valuation methods and procedures are reasonable, consistent with generally accepted actuarial standards and practices, and appropriate for the structure and funding objectives of the system.

2. Review of Actuarial Assumptions - Review the assumptions and comment on their reasonability.

3. Calculate Liabilities for Sample Plan Participants - For a sample of active, inactive and retired lives selected from the data, through a review of test lives provided by the current actuary, verify that:

· The size or number of sample Plan Participants to be reviewed.

· Benefits are modeled correctly.

· The assumptions disclosed in the report are being used appropriately.

4. Verification of Employer Contribution - Verify that the calculation of the contribution is reasonable given the system’s funding policy.

5. Review Projections - Generally reviewed for reasonability and comments provided regarding conclusions drawn from these projections.

6. Review Actuarial Valuation Report - Verify:

· Content of report - Does it include all relevant and required information?

· Presentation of report - Is the report clear?

· Appropriate disclosures - Does it satisfy Actuarial Standards of Practice?

· Recommendations - Are the recommendations appropriate given the Plan’s objectives, funded status, etc.?

Level 1 Audit - Full Replication In a Level 1, or the “Full Replication” actuarial audit, the reviewing actuary fully replicates the original actuarial valuation, based on the same census data, assumptions, and actuarial methods used by the plan’s consulting actuary. In addition, the reviewing actuary examines the consulting actuary’s methods and assumptions for reasonableness and internal consistency.

Includes each of the items in a Level 3 – Reviewing Report Audit, PLUS:

· Replicate the actuary’s actuarial valuation using the same participant data, plan provisions, assumptions and methods; and performing independent recalculations of the current actuary’s results.

· Comment on the future funded status projections if provided in the valuation.

Full Replication audit will include the following steps:

1. Data Validation - Verify that the data used in the actuarial valuation is reasonable compared to the raw data provided by the system, accounting for any modifications made by the current actuary.

2. Review of Actuarial Valuation Methods and Procedures - An assessment of whether the actuarial valuation methods and procedures are reasonable, consistent with generally accepted actuarial standards and practices and appropriate for the structure and funding objectives of the system.

3. Review of Actuarial Assumptions - Review the assumptions and comment on their reasonability.

4. Calculation of the Liabilities:

• Reviewing sample test lives for actives, inactive members, and retirees (this will verify that benefits are modeled correctly).

•Compare total liabilities to the liabilities generated by the Board’s current consulting actuary to see if the difference is reasonable.

•Verify that the liabilities appropriately reflect the assumptions disclosed in the valuation report.

5. Verification of Employer Contribution - Verify that the calculation of the contribution is reasonable given the system’s funding policy.

6. Review of Projections if Provided in the Valuation - Generally reviewed for reasonability and comments provided regarding conclusions drawn from these projections.

7. Disclosure of findings – Disclose the materiality of any audit findings.

8. Review of Actuarial Valuation Report/Content of Report - Does it include all relevant and required information?

•Recommendations - Are the recommendations appropriate given system’s objectives, funded status, etc.?

To assist the Board determine which level of audit should be conducted please comment on (i) the components of each level of audit, (ii) what each level covers if they are the selected auditing actuary, (iii) what type of report the Board should expect, and (iv) are there any additional costs the Board may incur.

All levels of audits must include a determination and opinion of whether the actuarial methods, considerations and analyses used by the current consulting actuary in preparing the most recent actuarial valuation are technically sound and conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board. This determination should include:

a. A review of the demographic and economic actuarial assumptions for consistency, reasonability, and compatibility.

b. A review and analysis of the valuation results, including an evaluation of the data used for reasonableness and consistency.

c. Verification that all appropriate benefits have been valued and valued accurately.

d. Verification that the data provided by the system is consistent with data used by the current consulting actuary.

a. Evaluation of the actuarial cost method and actuarial asset valuation method in use and whether other methods would be more appropriate for the Plan as a whole or for particular funds.

e. Verification of the reasonableness of the calculation of the unfunded actuarial accrued liability and the amortization period.

f. Comparison of results between the current actuary and the auditing actuary with an explanation of deviations.

g. Any recommendations for improvement in the report presentation should be included.

The level of audit and review described above will result in a final written report and opinion containing the findings, the materiality of any audit findings, recommendations, and conclusions of the auditing actuary. The Board’s current consulting actuary will be given the opportunity to prepare a written response, if they so desire. Their response will be included in the final report submitted to the Board of Trustees. The auditing actuary will be required to present a formal presentation summarizing their written report to the Board.

F. OTHER REQUIREMENTS

1) Request for or receipt of information does not assume a “pre-qualification” of any responder. And the Board of Trustees will not be liable for any costs incurred in preparation of responses.

2) By submitting a response, the responder certifies that he/she has fully read and understands the “Request for Proposals” and has full knowledge of the scope, nature, quantity, and quality of work to be performed. Unless specified to the contrary, submitting a response will be interpreted as agreement to all provisions in and requirements of the RFP.

3) The responder shall furnish such additional information as the Board of Trustees may reasonably require. The Board reserves the right to investigate the qualifications of all responders as it deems appropriate.

4) The Board of Trustees reserves the right to conduct pre-contract negotiations with any or all responders.

5) The Board of Trustees reserves the right to reject any or all responses, the right in its sole discretion to accept a response which it considers most favorable to the Board’s interest, and the right to waive minor irregularities in the procedures. The Board of Trustees further reserves the right to seek new responses when such a procedure would be in its best interest.

6) All responses submitted shall be binding for one-hundred and eighty (180) calendar days following the above due date for receipt of responses to allow for evaluation and award of contract.

7) Responses received by the Board of Trustees after the time specified for response opening may not be considered.

8) All information required by the Request for Proposals shall be supplied to constitute an acceptable response. Failure to submit a complete response may result in the disqualification of your response.

The Board of Trustees appreciates the time and effort you have expended in responding to this RFP.