By Christa Severns, SCF Arizona
PHOENIX, May 31, 2007 – SCF Arizona's Board of Directors unanimously approved a $50 million dividend for 2007 to qualified policyholders, even as the state's largest workers' compensation provider begins taking steps to strengthen reserves in response to rising medical costs.
SCF President & CEO Don Smith said dividends are not guaranteed and they are dependent on the company's financial performance for that year, which is most dramatically impacted by workplace safety and the cost of medical care.
“We congratulate all of our policyholders that will earn a dividend,” Smith said. “They have done so by keeping their workplaces safe and through good management practices.”
Arizona continues to become a safer place for workers, as the number of workplace injuries has been declining. Unfortunately, the cost of treating those injuries continues to spiral upward.
“We are very pleased to be able to pay out dividends again, for the 36 th straight year,” Smith said. “We also respect the prudent decision made by the Board after careful consideration and deliberation regarding our reserve capacity. With medical and healthcare costs continuing to rise into the foreseeable future, we believe that it is essential and prudent to recognize this trend in our reserving practices.
“The workers' compensation business can be volatile and investment returns uncertain, that is why dividends are always subject to business conditions,” Smith emphasized.
Each qualified policyholder receives an amount that is determined by its annual premium and incurred losses (claims). SCF has returned a dividend to qualified policyholders every year since 1970, exceeding more than $1.2 billion.
SCF Board Chair Jim Weeks expressed concern over rising healthcare costs, but tempered that concern with praise. “We are able to offer a dividend again because of the effectiveness and efficiency of the SCF management team, its employees and the prudent investments the company makes. On behalf of the entire board, I want to thank them and congratulate them on another tremendous year.”
SCF Arizona provides workers' compensation insurance to more than 57,000 businesses statewide, representing nearly 70 percent of the market. As a major advocate of workplace safety – and presenter of five statewide Safety Works Expos – the company has offices in Flagstaff, Lake Havasu City, Phoenix, Prescott, Show Low, Tucson and Yuma.
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