Employers Insurance Company of Nevada, A Mutual Company (the “Company”), a leading provider of workers’ compensation products and services, reported its statutory financial results for the fourth quarter and full year ended Dec. 31, 2002, including the statutory financial position as of Dec. 31, 2002 for its wholly-owned subsidiary, Fremont Employers Insurance Company (“Fremont Employers”).
The company’s consolidated net premiums written were $55.2 million for the three months ended Dec. 31, 2002, compared to $18.5 million in the year ago quarter, an increase of 198 percent. For the full year ended Dec. 31, 2002, the company reported $185.5 million in consolidated net premiums written, compared with $113.3 million in 2001, a 64 percent increase. “The increase in premiums was the result of the Company’s acquisition of the on-going workers’ compensation business of Fremont Compensation Insurance Group,” said Employers Insurance Company of Nevada Chief Executive Officer Douglas Dirks.
That acquisition, completed in June 2002, resulted in the formation of Fremont Employers Insurance Company, a wholly-owned subsidiary of the Company. “The California workers’ compensation market has experienced significant increases in premium rate levels, while market conditions in Nevada have remained virtually unchanged over the past year,” said Dirks. “Despite the current turbulence in the California market, Fremont Employers’ financial stability allows us to provide policyholders with the reliable and unsurpassed customer service that is the hallmark of our Company. We remain committed to a long-term presence in California, the nation’s largest worker’s compensation market.”
On a consolidated basis, the company reported a net loss of $13.4 million for the year ended Dec. 31, 2002, compared to a net income of $32.4 million for 2001. The combined ratio increased slightly to 113 percent for 2002 as compared to 111 percent for 2001. The main factors contributing to the decrease in net income and higher combined ratio in 2002 included: $31.4 million in lower favorable loss and loss adjustment expense reserve development relating to prior accident years for the Nevada business, $10.3 million in lower investment income resulting primarily from a general decline in interest rates, $20.6 million for write-offs of obsolete fixed assets and uncollectible premium, and $4.3 million in certain non-recurring costs associated with the acquisition of Fremont Compensation Insurance Group’s workers’ compensation operation.
The company’s financial position remains strong with assets of $1.2 billion and policyholder surplus of $215 million at Dec. 31, 2002, which represents an increase in surplus of $6 million over the previous year-end. Fremont Employers’ financial position is similarly strong with $81 million in policyholder surplus.
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