NU Online News Service, March 12, 3:18 p.m. EST
California's workers' compensation fund, the State Compensation Insurance Fund, reported net income for 2009 increased 91 percent over 2008 despite a combined ratio exceeding 160.
In a report to more than 4,000 California brokerages doing business with State Fund, Doug Stewart, interim president and chief executive officer, said the state's largest provider of workers' comp insurance ended 2009 with $1.25 billion in net premium earned and $143 million in net income.
The net income figure for 2009 is significantly higher than the $75 million in net income that State Fund earned in 2008.
Mr. Stewart said in a statement, "I'm particularly pleased with our financial and operational performance this past year given the challenges we face."
He credited the fund's financial condition to a "conservative and steady-handed approach" that "has allowed us to maintain a strong capital base while making needed investments in our organization." He added that its performance was helped by its highly rated investment portfolio.
Despite the gain in net income, company's loss adjustment expense (LAE) ratio increased 46 percent in 2009, up from 36.7 percent in 2008, contributing significantly to a 161.5 percent combined ratio in 2009.
Mr. Stewart attributed this increase to legacy issues from 2001 to 2006, when many carriers either became insolvent or left the California market. He said the fund assumed an unusually high market share of workers' comp policies during that period.
In the future, he said, "We expect these ratios to return to more traditional levels over the next few years as these claims are resolved."
