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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - OCTOBER 13, 2003 12:00 AM (EDT)
A.M. Best Co. has assigned an initial financial strength rating of A- (Excellent) to Louisiana United Businesses Self Insurers Fund a.k.a. LUBA Workers' Comp (Baton Rouge, LA). The rating outlook is stable.
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' compensation market. These positive rating 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, which have not been returned to the members. The Fund accumulates these earnings in a reserve for member distributions payable, which 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. While controlling its growth, the Fund retains a very high percentage of its members and has become Louisiana's second-largest writer of workers' compensation business in premium volume, offering coverage to a large and diverse population of Louisiana businesses.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.