Meet the Property and Casualty Initiative: Improving Lives throughout Massachusetts
Hey everyone. Welcome back to Safe and Sound, the Workers' Compensation podcast series. I'm Mark Millett, the Director of Human Resources at A.I.M. Mutual Insurance Companies, and I'm here with Michelle Volpe. Michelle's the President of the Property and Casualty Initiative. And also joining us is Paul Kehoe, who's the Vice President and Chief Financial Officer here at A.I.M Mutual. So today we're going to talk about how the insurance industry has been making an impact in Massachusetts neighborhoods through the Property and Casualty initiative or PCI as it's known. It might surprise you to know that PCI owes its origins to some locally-based insurance companies, including A.I.M. Mutual. PCI is responsible for making hundreds of economic and community development projects possible throughout the Commonwealth. So there's a lot to this story. We're excited to have Michelle and Paul here to bring us some context and describe in more detail how PCI has been making a difference. So, welcome Paul and Michelle.
Thank you. Thank you, Mark.
I really appreciate you taking the time to talk with us about this meaningful and impactful program. So, Michelle, I'll start with you. I understand you've been the president of PCI since April of 2022. Can you tell us what PCI is all about and also what drew you to the role?
Happy to Mark. So I've been at PCI now for nine months, and it's been a really fun and exciting start. I was drawn to the role because I've been in the community development finance industry for about 30 years, and so I've been able to watch PCI get established and really deliver enormous amount of impact into the community development space. And so when the founding president announced her retirement, I was really intrigued to see how I might be able to think about leading the organization into its next chapter. Let me share with you how it all works. It's a really simple, and I think elegant model. Insurance companies like A.I.M. Mutual invested money in PCI in 1999. PCI lends that money to borrowers who are on the ground in communities working to improve lives. These borrowers are nonprofit organizations that run schools, childcare centers, healthcare clinics. They're also developers of affordable and mixed income housing, and sometimes they're small businesses who have an opportunity to grow. So PCI makes loans. Our borrowers repay those loans as agreed and PCI makes new loans with the capital that is returned, gets repaid, lends its money out again. So it's this virtuous cycle that has turned 85 million dollars in initial capital from the insurance industry into about half a billion dollars of lending.
For the past 23 years.
Yeah, it's a beautiful, elegant model.
So I know we're going to talk a little bit more about specifics in a minute, but I wanted to jump to Paul for a second. So Paul, A.IM. Mutual Insurance Companies is one of the founding investors of PCI. Talk about some of the factors that influenced the decision from a business perspective to get involved.
Yeah, thanks Mark. Yeah, as Michelle noted, A.I.M. Mutual's participation started over 20 years ago. So first we made sure that it was a worthwhile mission for the company to be part of and PCI definitely met our criteria there. Then we weighed the financial considerations. So in this case, we had a really strong financial incentive because our participation provides a certain level of relief on our Massachusetts premium taxes. And historically we've also received annual dividend payments, which adds to our overall investment income. So anytime there's been discussion over the years around extending PCI's operating term or continuing our participation, we've been in favor in and support that decision.
Sounds like a win-win, right?
So, so there's the win for A.I.M. Mutual. All right, Michelle, so PCI focuses on four areas, is that correct? And I think you mentioned a couple of them.
That's right. And those four areas were established at our founding through our enabling legislation with the Commonwealth of Massachusetts. And those areas are affordable housing, community services, economic development, and small businesses.
So I'd love to share with you what our priorities are within those four sectors. So, our affordable housing priorities include producing and preserving affordable units, creating more units that are affordable to very low income households, connecting those residents with the services that they want and that they need to thrive. Building wealth through the creation of affordable home ownership units and supporting anti displacement strategies in communities that have longtime residents that are vulnerable to displacement. And so over our 23 year history, PCI has created and preserved over 6,000 units.
Yeah. We're super proud of that. And creating and preserving affordable units of housing is a critical priority for the Commonwealth and for its economic development as well as just a basic human right. In the community services sector, we really focus on healthcare and education in the healthcare area. Our lending expands access to primary care, dental care, and mental health services, primarily through our investments in federally qualified community health centers. In the education space, we finance nonprofits that deliver early education programs out of school time learning opportunities, as well as kindergarten through 12th grade schools. Our lending in the health arena focuses on federally qualified community healthcare centers who provide primary care, dental care, and mental health services to patients who have limited access to quality healthcare. So in this, in this arena, our lending serves 3000 youth annually and 90,000 patients annually.
We're a small fund, but the impact that we've delivered over the past 23 years is really significant. And I, since I'm new to the fund, I can say it's really impressive. (laugh)
Yeah. Amazing causes and yeah, absolutely. Quite the impact for sure. That's awesome.
And Mark, our final sector is one that we often combine, which is economic development and small business. Our focus there really is creating jobs, creating wealth for entrepreneurs, and supporting broad revitalization strategies for communities.
Really impressive, really, really important stuff. So I, I know you love talking about specific projects, so there's about 250 or so projects, right. Give us some examples of projects you're working on.
You are right. PCI has made about 250 loans in its 23 years. And I, it's very hard to choose among my favorite children, (laugh) but there are so many great organizations that we've had the privilege of working with and supporting their great work. So I'll give you a few examples. PCI has had a very long standing relationship with an amazing organization that works in the southeast part of Massachusetts. It's called Father Bill's and Mainspring, and they are laser focused on addressing the homelessness crisis. We are thrilled to be supporting their latest projects in Quincy and Brockton. These projects are really transformative in that they combine three critical pieces of the puzzle. They will be building new shelter facilities, they will be creating very innovative housing resource centers that provide 24 hour seven day a week services for those who are at risk of becoming homeless.
And they're providing on the same campus, permanent housing for formerly homeless with layers of services that will help them thrive. So, really thrilled to be supporting Father Bill's as they transform their model in supporting those who are unhoused. In Boston a couple of years ago we worked with another amazing organization called Community Servings, and our financing helped them build a new 30,000 square foot facility out of which they operate their program, which is really to create and deliver meals that are medically appropriate for individuals or families who are experiencing a health crisis. And that kitchen produces 875,000 meals a year serving about 4,000 critically ill individuals.
And, to me, the icing on the cake there is that in addition to using their facility in their kitchen to create these meals, they also use their kitchen as a training facility to create a pathway to employment for folks who are interested in the food services industry, but have barriers to employment. So they make the most out of that facility.
That is awesome. Boy, I use the terms meaningful and impactful. Some great, great examples of that right there.
It is such a privilege to work with these organizations and the insurance companies that founded PCI and have continued to invest their time and their capital in PCI should feel so proud of the impact that PCI has made. And I specifically need to thank Paul for his personal engagement in PCI over the years on our investment committee and the investment that A.I.M. Mutual made. And it's, you know, it's Paul's commitment, it's A.I.M. Mutual's commitment, it's the other investors that have really generated the impact that PCI has delivered to the Commonwealth.
Hey, Paul you know, we've asked Michelle about being the President of PCI and what's really impressed you about Michelle's leadership so far?
Well, it's been great getting to know Michelle. I really appreciated that she called each of the PCI investors individually as part of her onboarding process, just to start to understand the different perspectives of the group. And she shared some of her ideas about exciting opportunities ahead, which I think, you know, shows her willingness to collaborate and be transparent about PCI's objectives. I also give Michelle credit for very quickly identifying some talented individuals to add to her team so they could hit the ground running and execute their strategy.
And you can certainly feel the passion, like she has so much passion for this, you can just feel it. Right. So Michelle, how do proposals get to you? How do they make their way to you?
PCI and the PCI team have a really deep set of partners, past PCI borrowers, current PCI borrowers, and then folks that we have been lending to in other roles for many, many years. So we've got a wonderful network. And that being said, we are very committed to diversifying our network to making sure that PCI is accessible to folks that we don't know, folks who are outside of our networks, folks who are new to the industry, folks who really are on the ground in communities, but maybe haven't been accessing this complicated web of community development finance. And so that's really being out meeting folks, answering the phone, returning emails; one of the first things that we did was to relaunch our website with a specific intention of making it really accessible to folks who don't know us. So, you know, included in our strategy and our goals is being accessible and approachable.
Awesome. So can you tell us a little bit about PCI's lending approach? Will PCI participate with other lenders to finance a company or a project?
Yeah. Partnership is so important to us as an institution and to our team at PCI. And there's no project really that I can think of that gets done with just one lender. These projects, the ones that I've discussed, they're complicated. They take years. They take public players, they take private investors, they take mission capital like ours. So we are always partnering with other institutions, both public, nonprofit, and for-profit. You know, our mindset really is if a project meets our eligibility criteria, which is basically threefold: Is it consistent with our enabling legislation? Is it a Massachusetts-based project and does it fit within one of those four sectors, affordable housing, community services, economic development, small business? So if the answer to that is yes, then we move to the next question, which is, is the project aligned with our mission and our newly formulated mission, which is really just a new expression of PCI's historic mission to improve the lives of our most vulnerable neighbors by investing capital and expertise in communities to generate opportunities. So is this project supporting a low-income community and helping the individuals or the community thrive?
If it fits the mission test, then we move on to the final tier, which is, can we get repaid? You know, it's critical to our model; we need to lend the money, get repaid so that we can make the next high impact loan.
So if a project hits those three pretty simple criteria, we will work very hard to get to a yes, try to figure out how we can deliver the financing that the project needs, that the borrower needs in order to bring their high impact idea to fruition, to benefit the community.
You mentioned how important the insurance industry is to your financing, right? So Paul, are there plans for A.I.M. Mutual to increase their PCI investment?
Well, we do have plans to make this a topic of conversation at a 2023 Board of Directors meeting. Our investment decisions are overseen by an investment committee, which is a subcommittee of our board. So first we perform due diligence on any new or significant changes in our investment allocation, and then we present those recommendations to the committee. So we haven't finalized a recommendation yet, but I do expect we will.
Awesome. Michelle, you mentioned the website pcifund.com, right?
Is that the best way for people to find out more, get a hold of you and get involved some way?
Yes. That's a great way. We've tried to put a lot of information about the fund on the website, and we also have all of our contact information, telephone numbers, email, and so that's a wonderful way to reach us. We're always interested to hear if there are, you know, projects or borrowers or ideas out there that can benefit low income communities across the Commonwealth.
That's awesome. Well, Michelle, Paul, I want to thank you for your time and your insight into this. PCI's doing great work. I'm really proud to be part of a company that's helping you do that great work. So not only A.I.M.Mutual, but the entire insurance industry helping PCI to make this difference in our communities. I want to thank you for your time. I want to thank our listeners for taking the time to check out our podcast dedicated to emerging issues in workers' compensation. Be sure to check out all of our podcasts on your favorite platform, or you can visit our website at aimmutual.com. Thanks very much. Take care, everyone.