Outlook Stable for LUBA Workers’ Comp

November 3, 2003

A.M. Best assigned an initial financial strength rating of “A-” (excellent) to Louisiana United Businesses Self Insurers Fund, also known as LUBA Workers’ Comp, based in Baton Rouge, La.. The outlook is stable.

Best said the rating reflects LUBA Workers’ Comp’s strong risk-adjusted capitalization, its profitable underwriting and excellent operating performance, as well as
its strong business profile in the Louisiana workers’ comp market. The positive factors are somewhat mitigated by the Fund’s business concentration in a single line and state, which magnifies its exposure to competition and potentially adverse economic and regulatory changes. With disciplined underwriting and a focus on risk management, LUBA Workers’ Comp has produced excellent underwriting and operating results, building a solid surplus position through retained earnings and generating strong operating cash flows and good liquidity.

The Fund’s surplus consists of earnings from prior years that have not been returned to the members. The Fund accumulates these earnings in a reserve that effectively represents the equity of the members. LUBA Workers’ Comp maintains moderate leverage measures and its balance sheet strength is supported by a low-risk investment portfolio, conservative reserving practices and a prudent reinsurance program. The Fund has a high retention rate and is Louisiana’s second-largest writer of workers’ comp business in premium volume, offering coverage to a large and diverse population of Louisiana businesses.

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