CHARLESTON -- BrickStreet Insurance announced on Friday $185 million in earnings for 2007. West Virginia workers' compensation insurer also asked the state Insurance Commissioner if it can pay an extra $50 million to $60 million toward its debt to the state.
In 2006, the state loaned BrickStreet $200 million, in the form of a surplus note, to create a new private company. Now, along with a $40 million payment that BrickStreet plans to make on July 1, it would like to pay up to $60 million extra by the end of the year.
It had already paid $15 million.
"Part of the terms of the surplus note is we have to meet their approval (before paying it off at a quicker pace)," said BrickStreet President and CEO Greg Burton. "Once we pay that, we can't get it back, so they want to make sure we're financially stable."
But it's important to get that surplus note paid off as quickly as possible, Burton said, because the interest rate on the 10-year note changes from 1.5 percent to the prime rate in January 2009.
"The faster we get the surplus note paid off, the faster we can pay dividends to policyholders," Burton said. Early payoff of the note also can help eliminate the Old Fund liabilities of the state more quickly, which improves the overall business climate, he said.
Meanwhile, BrickStreet currently has tax-exempt status because of the transition from a state fund to a private market. That status will change at the end of 2008, and the company will begin paying a 35 percent tax rate in 2009.
"As the market opens for competition, BrickStreet will experience higher underwriting costs and, with the loss of tax-exempt status, it will be difficult for BrickStreet to sustain these profit levels in the future," a release from the company said.
The success of the company so far is a pleasant surprise, Burton said.
"When we started BrickStreet in '06, I don't think anybody thought we'd be this successful," he said. "To have $252 million profit in the first two years was a surprise, but a lot of hard work went into that."
Some of its changes included streamlining the company and developing a new business model, as well as more aggressively going after fraud and handling claims more efficiently, Burton said.
Over the past two years, the workers' compensation market place has experienced an overall reduction in rates, while claims handling has been improved and injured workers receive care and their indemnity checks more quickly, the release from BrickStreet said.
"Injured workers -- we're able to work with them and get them to return to work quicker," Burton said.
It switched to a team-based system to improve communication about each worker's claim.
"They work together to make sure that the policy is taken care of," he said. "Instead of transferring around to get an answer, you get answer."
For additional information, visit www.brickstreet.com.
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