In an annual statement filed with the California Department of Insurance, State Compensation Insurance Fund documented that its policyholder surplus–assets minus claims reserves and other liabilities–increased by $776 million. Policyholder surplus increased to $2.862 billion from $2.086 billion at year-end 2003. Like all insurers, State Fund is required to maintain a policyholder surplus fund that provides an appropriate level of protection for policyholders against unforeseen developments such as a natural disaster. State Fund has focused on increasing policyholder surplus since 2000, as thousands of employers turned to State Fund to obtain coverage, which was unavailable through other carriers. Unlike private carriers, State Fund can’t increase policyholder surplus via the capital marketplace or decrease surplus requirements by refusing to underwrite certain businesses. The 2004 financial highlights include: net income was $909 million compared to $712 million for fiscal year 2003; earned premium grew to $7.9 billion from $7.6 billion; reserves increased by 22.5 percent; total disbursements were nearly $7.6 billion; and total assets increased 24.1 percent to $18.9 billion of which $16.4 billion were in long term investments.
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