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Established in 1914 by the state legislature, State Fund is California's most reliable provider of workers' compensation insurance and a vital asset to California businesses. State Fund supports California's entrepreneurial spirit and plays a stabilizing role in the economy by providing fairly priced workers' compensation insurance, helping California employers keep their workplaces safe, and restoring injured workers.




State Fund: Financially Sound in These Challenging Times

November 19, 2008

For nearly 100 years and through many economic cycles, State Fund has continually served California’s employers and employees. Our strong financial position is the direct result of a conservatively managed investment portfolio that is diversified among issuers and sectors, and carries average credit quality equivalent to an S&P rating of AA+. Our customers don’t have to worry about risky investments. And in these challenging and uncertain times there is at least one constant: State Compensation Insurance Fund, California’s most stable workers’ compensation carrier.

We here at State Fund felt our customers would appreciate knowing more about our strong financial position, so we’ve put together a fact sheet providing specific information about our investment portfolio, cash flow and reserves.

Investment Portfolio

  • Conservatively managed and diversified among issuers and sectors.
  • Carries an average credit quality equivalent to an S&P rating of AA+.
  • More than 99 percent A or better.
  • Nearly 64 percent is Aaa/AAA.
  • Made up primarily of U.S. Treasuries, agency debentures and mortgage-backed securities guaranteed by FNMA, FHLMC or GNMA.
  • Portfolio balance consists primarily of corporate bonds rated A2/A or better at the time of purchase.
  • No single issuer makes up more than 0.75 percent of the aggregate portfolio.
  • Yields approximately 5 percent.

Cash Flow

  • Bond portfolio of relatively short duration provides a steady stream of incoming cash flow supplementing our normal underwriting cash flow.
  • Bonds provide strong liquidity which gives us the ability to hold investments to maturity allowing us to meet our payment obligations.

Reserves

  • A strong loss reserve position.
  • Premium to surplus ratio of .33 to 1.0.
  • Reserve to surplus ratio of 3 to 1.
  • A sound reinsurance program in place.
  • A-rated reinsurers protecting not only capital but policyholders against catastrophic loss.

As we move forward, Californians can be assured State Fund will remain a vital and necessary resource for California’s economy, providing security for California’s businesses and employees.

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