S&P Removes State Fund from Credit Watch

Standard & Poor’s (S&P) removed State Compensation Insurance Fund (SCIF), California’s largest workers’ comp carrier, from “Credit Watch” status and reaffirmed the company’s A financial strength rating.

In May, S&P cited a California Workers’ Compensation Insurance Rating Bureau (WCIRB) study indicating a gross loss reserve deficiency of $4.7 billion for the state’s workers’ comp market and placed State Fund and several other w/c carriers with significant exposure to the California market on “Credit Watch.” After an analysis of State Fund’s operations, S&P issued a press release stating the “outlook on SCIF is stable.”

The A rating cites State Fund’s “extremely strong” capitalization and “very conservative operating leverage.” S&P also noted the company’s “strong business position…and dominant standing in the California market” and concluded that State Fund’s reserves are reasonable and the carrier is capable of absorbing some adverse loss development.

Established by the California Legislature in 1914, San Francisco-based SCIF guarantees the availability of workers’ comp coverage to all California employers and private carriers.