(CA) State's workers' comp insurers see rising profits
By Kelly Johnson
Silicon Valley/San Jose Business Journal
June 21, 2006
California's workers' compensation insurers are no longer among those with the lowest profits in the nation.
Workers' comp carriers in the Golden State moved up to 11th place in 2004 -- the most recent state-by-state figures available -- the California Workers' Compensation Institute reported Tuesday after analyzing a national report.The insurers had ranked No. 42 in 2003, and last or second-to-last from 1996 to 2002 in a comparison of profits of the other 45 states without a monopolistic state fund.
CWCI, a trade group, enlisted an industry consultant to analyze the results of the National Association of Insurance Commissioners' "Report on Profitability by Line by State."
"The NAIC figures confirm that, as expected, California workers' comp insurers' after-tax return on surplus did improve for a second straight year in 2004," the institute said. "After getting battered by negative returns from 1999 through 2002, the state's workers' comp insurers made it to positive ground in 2003 with a 3.1 percent return on surplus, followed by a 13-percent return in 2004."
This was only the second time in six years that the industry recorded an after-tax gain, the trade group found. And 2004 marked the first time that California's results weren't dismal compared to the rest of the country.
"From 1995 until 2004, the industry returns in California ranged from a high of a 10.2 percent in 1995 to a low of negative 11.5 percent in 2002, whereas the nationwide returns ranged from a high of 14.4 percent to a low of 0.2 percent," the institute said.
Although results are looking up for California's workers' comp carriers, the Golden State still ranks 39th out of 44 states in an average of return on surplus for 1995 through 2004. California comes in 37th for the five years ending in 2004, with a negative 1.6 percent. It was the only state among the 10 states with the largest earned premium that had a negative average return on surplus for that five-year period.
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