The Corporation recognizes Portfolio earnings primarily
from investments in public and private passive invest-
ments including marketable securities, private equity
placements and a number of commercial real estate
investments located primarily in Anchorage, Alaska.
The Portfolio is managed pursuant to an investment
policy which calls for an asset allocation as follows: 50%
equity securities, 45% alternative investments, 3% fixed
income securities, and 2% cash. Real estate and alterna-
tive investments are often private, non-publicly-traded
equity interests. The allocation to each of these four
investment classes was developed with the help of the
Corporation’s external investment advisor using modern
portfolio theory. The established policy allocation to dif-
ferent investment classes is designed to achieve a target
annual return of 8.4% while exposing the Corporation to
the lowest level of risk possible. At March 31, 2019, the
total market value of the Portfolio was $225.8 million
compared to $223.1 million at March 31, 2018. Portfolio
holdings in private, non-publicly traded investments
were $75.0 million at March 31, 2019, compared to $72.4
million at March 31, 2018. The Corporation’s Portfolio
generated investment earnings of $11.4 million, reflective
of the broader trends in the equity markets, during 2019.
The Corporation’s Portfolio returns are benchmarked
against a custom index that approximates our investment
allocation targets.
NATURAL RESOURCE MANAGEMENT
The following table displays results of Natural Resource earnings for the fiscal year ended (in thousands):
FISCAL YEAR
2019 2018 2017
11,319 10,375 6,713
434 302 191
11,753 10,677 6,904
REVENUES
Natural Resources
7(i) revenue sharing net of 7(j) distributions
$
Natural Resources
Earnings from Natural Resources
Natural Resource earnings consist primarily of 7(i) revenue
sharing, net of the 50% distribution to village corporations
and at-large shareholders that the Corporation receives
from other regional Alaska Native Corporations. 7(i)
receipts received are primarily from NANA Regional
Corporation and Arctic Slope Regional Corporation. The
Corporation distributes 50% of these receipts to village
corporations and at-large shareholders as 7(j) payments.
Revenue from the sale of the Corporation’s natural
resources, primarily sand and gravel, is driven largely by
$
resource development and infrastructure improvement
activities in the Bristol Bay region. Revenues from the sale
of natural resources tend to fluctuate from year-to-year.
The Corporation continues to advocate for responsible
development of natural resources on BBNC lands and
other lands within the Bristol Bay region. We are commit-
ted to supporting a strong business climate that encour-
ages investment in natural resource activities throughout
the entire state of Alaska.
GENERAL AND ADMINISTRATIVE EXPENSES
Corporate general and administrative (G&A) expenses
decreased from $23.4 million in FY2018 to $17.5 million
in FY2019. G&A expenses are incurred by the Corpora-
tion in its efforts to provide corporate governance and
oversight of its increasingly complex subsidiary opera-
tions, pursue new investments, protect the Corporation’s
assets and provide shareholder services. Corporate G&A
expenses decreased by $5.9 million, primarily as a result
of reductions of health insurance claims incurred on the
Corporation’s self-insured plans in FY2019. G&A expenses
as a percentage of revenue was 1.0%, 1.4% and 1.3% in
FY2019, FY2018 and FY2017, respectively.
M anagement ' s D iscussion and A nalysis
33