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2CALIFORNIA WATER INSURANCE FUNDMINUTES OF THE ANNUAL BOARD OF DIRECTORS MEETINGSEPTEMBER 23, 2021MINUTES of above referenced annual meeting of the Board of Directors of CaliforniaWater Insurance Fund (“Company”) held at 2100 Professional Drive, Roseville, CA95661 on September 23, 2021 at 10:02 PM and remote sites via Zoom.CONFIRMATION OF NOTICE AND QUORUMThe Chairman of the Board confirms the notice of the meeting and announced there was aquorum. All the Directors were present.CWIF BOARD OF DIRECTORS IN ATTENDANCECHAIRMAN: E. G. “Jerry” Gladbach, Santa Clarita Valley Water AgencyVICE-CHAIR: J. Bruce Rupp, Humboldt Bay Municipal Water DistrictLorin Barker, Kirton McConkieFred R. Bockmiller, Jr., Mesa Water DistrictBrent Hastey, Yuba Water AgencyAndy Morris, Santa Rosa Regional Resources AuthorityScott Quady, Calleguas Municipal Water DistrictCWIF OFFICERS IN ATTENDANCEPRESIDENT: Walter “Andy” Sells, JPIA Chief Executive OfficerVICE PRESIDENT: Robert Greenfield, JPIA General CounselTREASURER: David deBernardi, JPIA Director of FinanceSECRETARY: Lorin Barker, Kirton McConkieJPIA STAFF IN ATTENDANCEPatricia Slaven, JPIA Director of Human Resources and AdministrationDan Steele, JPIA Finance ManagerChimene Camacho, JPIA Executive Assistant to the CEOOTHERS PRESENTNone.KEY ITEMS DISCUSSED Reappoint of Company OfficersCWIF activity updateMinutes of the Annual CWIF Board of Directors Meeting, September 23, 2021Page 1

3 Dividend Policy presentation for approvalLiability 2021-22 Reinsurance Agreement renewal presentationPlan 2021-22 Annual Board MeetingRESOLVED:Re-appointment of Company Officers for term October 1, 2021 to September 30, 2022:President: Andy Sells, ACWA JPIAVice President: Robert Greenfield, ACWA JPIASecretary: Lorin Barker, Kirton McConkieTreasurer: David deBernardi, ACWA JPIARESOLVED:Approved the Company Dividend Policy, as presented, with approval of actual dividends beforedistribution by the Utah Insurance Department.RESOLVED:Approved the renewed 2021-2022 Liability Program Reinsurance Agreement.ADJOURNMENTThere being no further business, Chairman Gladbach adjourned the meeting.APPROVAL OF MINUTESThe Board reviewed and approved these minutes.Lorin C. BarkerCompany SecretaryMinutes of the Annual CWIF Board of Directors Meeting, September 23, 2021Page 2

4CWIFInvestment Portfolio UpdateMay 2, 2022BACKGROUNDIn December 2019, PFM began managing CWIF’s investment portfolio.CURRENT SITUATIONPFM will present a summary of the investment portfolio. This presentation will includecommentary on the current market and thoughts about managing the investments goingforward.RECOMMENDATIONNone, informational only.Prepared by: David deBernardi, Director of FinanceDate Prepared: April 11, 2022

5CWIFInvestment PolicyMay 2, 2022BACKGROUNDCWIF created an investment policy in October of 2019. The investment policy has notbeen significantly changed since then.CURRENT SITUATIONThere are proposed changes summarized by PFM, CWIF investment advisor, to theinvestment policy. PFM is proposing an increase to the top range of domestic andinternational equity from 10% to 20%.The current policy continues to outline a split of 65/35 percent between equity and fixedincome securities. It also has objectives based on a time horizon of twenty years orlonger. The objectives are as follows:1. All transactions are undertaken with the sole interest of ACWA JPIAbeneficiaries. Assets to be diversified to minimize impact of large losses.2. Funding for anticipated withdrawals3. Enhance value of CWIF assets4. Annual return of 7% or greaterRECOMMENDATIONThat the CWIF Board of Directors approve the proposed changes to the InvestmentPolicy, as presented.Prepared by: David deBernardi, Director of FinanceDate prepared: April 15, 2022

6April 14, 2022MemorandumTo:Board of DirectorsCalifornia Water Insurance FundFrom:Lauren BrantEllen ClarkPFM Asset Management LLCRE:Investment Policy Review and Recommend ChangesAs part of our regular review of the Investment Policy Statement (“IPS”) for CaliforniaWater Insurance Fund (“CWIF”), PFM Asset Management LLC (“PFMAM”)recommends making a few minor revisions/updates. A redline version of the IPS isattached for your convenience.Section 5 - Asset Allocation, page 2Recommendation: Expand Allowable Range on Domestic and InternationalEquityThe current top range for domestic and international equity allow -20%/ 10%.PFMAM recommends expanding the range to be -20%/ 20%. If the Board isuncomfortable with expanding to 20%, we request at least expanding to 15%.The rationale for requesting additional flexibility on the upside is because thenarrower range has not allowed the CWIF portfolio to drift higher when PFMAM hastaken a tactical overweight. Expanding the range would result in the CWIF portfolioexperiencing the full benefit of PFMAM’s decisions. While increasing the range hasthe potential to increase the risk of the portfolio as well as increase the potentialreturn of the portfolio. Ideally, PFMAM is looking to increase our allocation toequities when we think equities have a high likelihood of adding to the overall returnof the portfolio. In the later part of 2021, the portfolio was positioned with anoverweight to domestic equity allocation; in order to keep the portfolio with anoverweight to domestic equity (and due to the rise in the domestic equity market) webegan bumping up on the CWIF maximum asset weight to domestic equity.1 of 2

7The expansion of the range also impacts minimum allocation to Fixed Income andthe maximum allocation to Growth Assets. We recommend changing theminimum allocation to Fixed Income from 25% to 15% and maximum allocationto Growth Assets from 75% to 80%.Section 7 - Limitations on Managers’ Portfolios, page 3Changes to this section are information-oriented to clarify and align the description ofasset classes with the asset allocation table presented on page 2.PFMAM recommends adopting these changes to the IPS as they areinformational in nature—providing clarification and no material change to theIPS.In addition to these recommended changes, CWIF may want to update the signaturepage of the IPS.2 of 2

8California Water Insurance FundInvestment Policy StatementAdopted October 28, 2019Revised May 2, 2022ACWA JPIA has established an insurance captive known as California WaterInsurance Fund (CWIF). The creation of CWIF will create greater independencefor excess and reinsurance coverage placement, and provide greater efficienciesfor managing and financing risk. The California Water Insurance Fund Board (the“Board”) has been appointed to oversee certain policies related to the operationand administration of CWIF. The purpose of this Investment Policy Statement is todocument investment objectives and establish an appropriate investment strategyincluding an investment time horizon, asset allocation targets and ranges,performance expectations and periodic performance reporting requirements.1. Investment Objectivesa. To invest assets of CWIF in a manner consistent with the following fiduciarystandards: (a) all transactions undertaken must be for the sole interest ofACWA JPIA beneficiaries, and (b) assets are to be diversified in order tominimize the impact of large losses from individual investments.b. To provide for funding and anticipated withdrawals on a continuing basisfor payment of long-term liabilities and reasonable expenses ofoperation of CWIF.c. To enhance the value of CWIF assets over the long term through assetappreciation and income generation, while maintaining a reasonableinvestment risk profile.d. To achieve a long-term level of return commensurate withcontemporary economic conditions and equal to or exceeding anaverage annual target of 7% over a 20-year period.2. Time HorizonCWIF’s investment objectives are based on a long-term investment horizon (“TimeHorizon”) of twenty years or longer. Interim fluctuations should be viewed withappropriate perspective. The long-term investment horizon contemplates risksand duration of investment losses, which are carefully weighed against the longterm potential for appreciation of assets.3. Liquidity and DiversificationIn general, CWIF may hold some cash, cash equivalent, and/or money marketfunds for near-term liabilities and expenses (the “CWIF Distributions”). Remainingassets will be invested in longer-term investments and shall be diversified with theintent to minimize the risk of long-term investment losses. Consequently, the totalportfolio will be constructed and maintained to provide diversification with regard tothe concentration of holdings in individual issues, issuers, countries, governmentsor industries.1

94. Use of an Investment AdvisorAn investment advisor (“Advisor”) may be hired to assist CWIF in the investmentprocess and to maintain compliance. The Advisor may assist CWIF in establishinginvestment policy objectives and guidelines. The Advisor will adjust assetallocation for CWIF subject to the guidelines and limitations set forth in thisInvestment Policy Statement. The Advisor will also select investment managersand strategies consistent with its role as fiduciary. The investment vehiclesallowed may include exchange traded funds (“ETFs”), mutual funds, commingledtrusts, collective trusts, separate accounts, limited partnerships and otherinvestment vehicles deemed to be appropriate by the Advisor. The Advisor is alsoresponsible for monitoring and reviewing investment managers; measuring andevaluating performance; and other tasks as deemed appropriate in its role asAdvisor for CWIF.5. Asset AllocationTo achieve the greatest likelihood of meeting CWIF’s investment objectives andthe best balance between risk and return for optimal diversification, assets will beinvested in accordance with the targets for each asset class as follows to achievean average total annual rate of return that is equal to or greater than CWIF’starget rate of return over the long term.Asset WeightingsAsset ClassesGrowth AssetsDomestic EquityInternational EquityOtherIncome AssetsFixed IncomeOtherReal Return AssetsCash EquivalentsRangeTarget22% - 52%62%3% - 33%43%0% - 10%42%23%0%25-15% – 70%0% – 10%0% – 10%0% – 20%35%0%0%0%The total allocation to Growth Assets may not exceed 8075% of the overallportfolio. Additionally, the total allocation to Other Assets is limited to 20% of theoverall portfolio. The asset allocation range represents a long-term perspective. Assuch, rapid unanticipated market shifts or changes in economic conditions maycause the asset mix to fall outside these ranges. When allocations breach thespecified ranges, the Advisor will rebalance the assets within the specifiedranges. The Advisor may also rebalance based on market conditions.2

106. Prohibited InvestmentsExcept for purchase within authorized investments, securities having the followingcharacteristics are not authorized and shall not be purchased: letter stock andother unregistered securities, direct commodities or commodity contracts, orprivate placements (with the exception of SEC Rule 144A securities). Further,derivatives, options, or futures for the sole purpose of direct portfolio leveraging areprohibited. Direct ownership of natural resource properties such as oil, gas ortimber and the purchase of collectibles is also prohibited.7. Limitations on Managers’ PortfoliosEvery effort shall be made by the Advisor, to the extent practical, prudent andappropriate, to select investments that have investment objectives and policies thatare consistent with this Investment Policy Statement. Given the nature of theinvestments, it is recognized that there may be deviations between this InvestmentPolicy Statement and the objectives of these investments. If deviations occur, theAdvisor shall notify CWIF.GROWTH ASSETSEquities. No more than the greater of 5% or weighting in the relevant index(Russell 3000 Index for U.S. issues and MSCI ACWI ex-U.S. for non-U.S. issues)of the total equity portfolio valued at market may be invested in the commonequity of any one corporation; ownership of the shares of one company shall notexceed 5% of those outstanding; and not more than 40% of equity valued at marketmay be held in any one sector, as defined by the Global Industry ClassificationStandard (GICS).Domestic Equities. Other than the above constraints, there are no quantitativeguidelines as to issues, industry or individual security diversification. However,prudent diversification standards should be developed and maintained by theManager.International Equities. The overall non-U.S. equity allocation should include adiverse global mix of the equity of companies from multiple countries, regions andsectors.Other*. Publicly traded asset classes like REITs, and non-traditional asset classeslike private equity, whose primary risk and return characteristics are equity like andfocused on capital appreciationINCOME ASSETSFixed Income. Fixed income securities of any one issuer shall not exceed 5% of thetotal bond portfolio at time of purchase. The 5% limitation does not apply to issuesof the U.S. Treasury or other Federal Agencies. The overall rating of the fixedincome assets as calculated by the Advisor shall be investment grade, based onthe rating of one Nationally Recognized Statistical Rating Organization(“NRSRO”).3

11Other*. Assets (“Alternatives”). APublicly traded asset classes like preferredstock and lternatives may consist of non-traditional asset classes such as, privateequity, private debt, whose risk and return characteristics are align with riskmitigation and income generation.real estate and inflation hedge. Prior to adding anallocation to any of these asset classes, with the exception of publicly-traded mutualfunds or ETFs, the Advisor shall receive approval from the Board.REAL RETURN ASSETS. Real return assets may consist of collection ofinvestments and/or asset classes whose primary risk and return characteristics arefocused on real returns after inflation.CASH EQUIVALENTS. Cash equivalents are investments designed to provideliquidity. Investments may include funds complying with Rule 2(a)-7 of theInvestment Company Act of 1940.*Prior to adding an allocation to any non-publicly traded asset classof these assetclasses, with the exception of publicly-traded mutual funds or ETFs, the Advisorshall receive approval from the Board.8. SafekeepingAll assets of CWIF shall be held by a custodian approved for safekeepingassets. The custodian shall produce statements on a monthly basis, listing thename and value of all assets held, and the dates and nature of all transactions inaccordance with the terms in the Agreement. Investments of CWIF not held asliquidity or investment reserves shall, at all times, be invested in interest-bearingaccounts. Investments and portfolio securities may not be loaned.9. Performance ExpectationsOver the long-term the performance objective will be to achieve an average totalannual rate of return that is equal to or greater than 7%. Additionally, it is expectedthat the annual rate of return on CWIF assets will be commensurate with thethen prevailing investment environment. Measurement of this return expectationwill be judged by reviewing returns in the context of industry standard benchmarks,peer universe comparisons for individual investments and blended benchmarkcomparisons in its entirety.The Advisor shall compare the investment results on a quarterly basis toappropriate peer universe benchmarks, as well as market indices in both equityand fixed income markets. The Advisor shall report the investment performanceto the Board and officers on a quarterly basis. In addition, the Advisor will beresponsible for keeping the Board and officers advised of any material change ininvestment strategy, Managers, and other pertinent information potentiallyaffecting performance of the portfolio.10. Review of Investment Policy StatementThe Advisor shall review annually and report to the Board and officers theappropriateness of this Investment Policy Statement for achieving CWIF’s stated4

12objectives.Adopted by: California Water Investment Fund Board:Thomas A. CuquetE.G. Jerry GladbachChairman, CWIF BoardDateLorin BarkerBrent AndrewsenSecretary, CWIF BoardDate5

13CWIFAudited Financial StatementsYear Ending September 30, 2021May 2, 2022BACKGROUNDEach year by Utah law, CWIF provides for an independent audit of the CWIF’s financialstatements. Gilbert Associates performed the annual audit of CWIF for the fiscal year ofOctober 1, 2020 through September 30, 2021.CURRENT SITUATIONCWIF is receiving an unmodified opinion. The opinion states that the financialstatements present fairly, in all material respects, the financial position of CWIF as ofSeptember 30, 2021, and the results of its operations and cash flows for the year thenended in conformity with accounting principles generally accepted in the United Statesof America.This is CWIF’s second audit. CWIF’s financial numbers will be consolidated into theJPIA’s annual audit report.RECOMMENDATIONThat the CWIF Board of Directors approve the 2020/2021 audited financial statements,as presented.Prepared by: David deBernardi, Director of FinanceDate Prepared: April 11, 2022

14CWIFCalifornia Water Insurance FundFINANCIAL REPORTFor the Year EndedSeptember 30, 2021

15CWIFCalifornia Water Insurance FundFor Year Ended September 30, 2021Table of ContentsPage(s)Cover Page & Table of Contents1-2Independent Auditor’s Report3Management’s Discussion & Analysis5Financial Statements:Statement of Net Position11Statement of Revenues, Expenses, and Changes in Net Position12Statement of Cash Flows13Notes to the Financial Statements14Required Supplementary Information:Reconciliation of Claims Liabilities by Type of ContractSchedules of Ten Years Claims Development InformationNotes to Required Supplementary Information2425-2627Supplementary Information:Statement of Revenues, Expenses, and Changes in Net Position by Program29Report on Internal Controls Over Financial Reporting and on Compliance - Gilbert CPAs30Findings and Recommendations33

16Tax. AuditAdvisory.Relax.We. gotthis.SMTax. AuditAdvisory.Relax.We. gotthis.SMINDEPENDENT AUDITOR’S REPORTBoard of DirectorsCalifornia Water Insurance FundSalt Lake City, UtahReport on the Financial StatementsWe have audited the accompanying financial statements of the California Water Insurance Fund (CWIF)as of and for the year ended September 30, 2021, and the related notes to the financial statements, whichcollectively comprise CWIF’s basic financial statements as listed in the table of contents.Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements inaccordance with accounting principles generally accepted in the United States of America; this includesthe design, implementation, and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, w

Conference Schedule Monday — May 2, 2022 8:30 a.m. - California Water Insurance Fund (CWIF) Board Meeting Magnolia 10:00 a.m. 10:15 a.m. - Executive Committee Meeting Magnolia 11:15 a.m. 11:30 a.m. - Pre-Board Meeting Lunch - with Keynote Speakers: Gardenia 1:00 p.m. Faith Lane Borges, California Advocates, and Robin Flint, JPIA Risk Control Manager