State Fund will begin issuing dividend payments to eligible policyholders in early July. The $100 million dividend will be paid on the 2012 policy year; eligible policyholders will receive approximately 10% of their 2012 estimated annual premium.

“The dividend is a direct result of sound investment returns and improved efficiencies at State Fund,” said Tom Rowe, State Fund President and CEO. “We are committed to helping make California business possible and this dividend supports a brighter future for employers.”

Last year, State Fund declared a $50 million dividend. Since its inception in 1914, State Fund has paid more than $5 billion in dividends to policyholders – a record unparalleled among all California workers’ compensation insurance carriers.

State Fund’s Annual Report for 2012 was released last April. The report shows a significant increase in net income for California’s largest workers’ comp insurer. For 2012, State Fund’s income before dividends totaled $458 million, which was $279 million more than the prior year.

The report also indicates that State Fund reduced annual fixed expenses by $150 million dollars compared to 2009, and expects to achieve annual savings of more than $300 million by the end of 2014. These savings will help State Fund maintain fair pricing and bring value to a larger swath of the available market. State Fund announced a rate reduction of 7% effective March 1, 2013.

State Fund maintained a balanced investment portfolio that was focused on both credit quality and investment yield (99.3% of the $18.2 billion bond portfolio was rated NAIC 1, the NAIC’s highest quality credit class). The weighted average credit quality of the overall bond portfolio was Aa1/AA by Moody’s and Standard and Poor’s, respectively. Book yield at December 31, 2012 was 4.10%, down from 4.43% at December 31, 2011.