The California State Compensation Insurance Fund, reported it ended 2009 with $1.25 billion in net premium earned, and $143 million in net income, compared with $75 million in net income earned in 2008, Doug Stewart, interim president and CEO announced.
The company’s loss adjustment expense (LAE) ratio increased to 46 percent in 2009, up from 36.7 percent in 2008, contributing significantly to a 161.5 percent combined ratio in 2009.
Stewart attributed this increase to a “substantial legacy of open claims dating from 2001 to 2006, when many carriers either became insolvent or left the California market. State Fund assumed an unusually high market share to ensure California’s businesses and injured workers would be covered. Although the LAE and resultant combined ratio are above industry benchmarks, State Fund is successfully managing through this challenge. We expect these ratios to return to more traditional levels over the next few years as these claims are resolved,” he said.
Nevertheless, Stewart said, “I’m particularly pleased with our financial and operational performance this past year given the challenges we face.” He added that State Fund’s conservative and steady-handed approach “has allowed us to maintain a strong capital base while making needed investments in our organization.”
Stewart said 99.8 percent of State Fund’s investment portfolio was rated NAIC 1, the highest rating that the National Association of Insurance Commissioners gives to investments.
SCIF is California’s largest provider of workers’ compensation insurance and does business with more than 4,000 California brokerages.
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