Annual Report 2011 - SNL Financial

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Annual Report 2011 - SNL Financial

The increase in consolidated revenue primarily reflects new business of $32.7 million, an increase in realized gains

related to the sale of investments, and a decline in other-than-temporary investment impairments, partially offset by a

decrease in net investment income.

The components of consolidated net income, by segment, for the years ended December 31, 2010 and 2009 were as

follows (in thousands):

2010 2009

Workers’ compensation insurance ....................................... $6,328 $ 9,120

Segregated portfolio cell reinsurance .................................... — —

Corporate/other ..................................................... (3,398) (3,189)

Consolidated net income .......................................... $2,930 $ 5,931

The decrease in consolidated net income primarily reflects an increase in the loss ratio from 60.0% in 2009 to 71.1% in

2010, audit premiums returned to customers, and a decrease in net investment income. These items, which contributed to the

decrease in the Company’s operating results, were partially offset by a decrease in other-than-temporary investment

impairments and a decrease in the expense ratio from 35.5% in 2009 to 32.7% in 2010.

WORKERS’ COMPENSATION INSURANCE

The following table represents the operations of the workers’ compensation insurance segment for the years ended

December 31, 2010 and 2009 (in thousands).

2010 2009

Revenue:

Direct premiums written ........................................ $126,843 $110,108

Reinsurance premiums assumed ................................. 1,434 1,086

Ceded premiums written (1) ..................................... (37,170) (34,241)

Net premiums written .......................................... 91,107 76,953

Change in unearned premiums ................................... (6,660) (3,740)

Net premiums earned .......................................... 84,447 73,213

Net investment income ......................................... 2,421 3,313

Change in equity interest in limited partnerships ..................... 891 845

Net realized investment gains (losses) ............................. 2,479 (237)

Total revenue ............................................ $ 90,238 $ 77,134

Expenses:

Losses and LAE incurred ....................................... $ 59,275 $ 43,843

Acquisition and other underwriting expenses ....................... 5,330 6,207

Other expenses ............................................... 15,416 13,754

Policyholder dividend expense ................................... 1,040 432

Total expenses ........................................... $ 81,061 $ 64,236

Income before income taxes ......................................... 9,177 12,898

Income tax expense ............................................... 2,849 3,778

Net income ...................................................... $ 6,328 $ 9,120

(1) Ceded premiums written include premiums ceded to the segregated portfolio cell reinsurance segment of $28,798 and

$28,661 for the years ended December 31, 2010 and 2009, respectively.

The workers’ compensation insurance ratios were as follows for the years ended December 31, 2010 and 2009:

2010 2009

Loss and LAE ratio ........................................................ 70.2% 59.9%

Expense ratio ............................................................ 24.6% 27.2%

Policyholder dividend expense ratio .......................................... 1.2% 0.6%

Combined ratio ........................................................... 96.0% 87.7%

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