Calif. State Fund Placed on CreditWatch

November 20, 2001

Standard & Poor’s yesterday placed its ratings on California State Compensation Insurance Fund on CreditWatch with negative implications. The counterparty credit and financial strength ratings on the fund are “BBB+.”

This action reflects the fund’s very rapid growth in written premiums in 2001, which leads to concerns about pricing and reserve adequacy for accident year 2001 and strain on capital adequacy. S&P will be meeting with the fund’s management in the near future to discuss these issues.

California State Compensation Insurance Fund is a Security Circle insurer, which means that it voluntarily underwent Standard & Poor’s most comprehensive analysis and was assigned a rating in one of the top four categories for financial security.

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