Aon Brokers Reinsurance Deal for Two Decades of State Fund Risk
By Robert Warne - September 13, 2002California Insurance Commissioner Harry Low made it clear in a letter May 29 to the State Compensation Insurance Fund (State Fund) that he expected the company to get on with a loss portfolio transfer pronto.
State Fund had been working towards such an arrangement leading up to the commissioner’s public comments that received much attention.
In a Dec. 31, 2001 letter thanking employees State Fund President and CEO Kenneth C. Bollier said, “For the longer term, several financial reinsurance alternatives are under discussions. These include retrospective approaches such as loss portfolio transfers and quota share and excess of loss.”
And on May 2 in a letter to clients, Bollier said, “We are finalizing plans to transfer some of our loss portfolio that will increase current and future surplus.”
Now four months later, the anticipated transaction has gone down.
Aon Corporation announced Sept. 12 that it had completed a $1.450 billion excess of loss reinsurance program for State Fund. The deal, which was underwritten by XL Financial Solutions Ltd. reinsures all losses incurred from 1980 through 1998 up to a $1.450 billion limit.
David M. Kelley, Vice Chairman of Aon Re Inc. (Aon Re Worldwide's US operation) commented, “State Compensation Insurance Fund of California's efforts to maintain stability in the California workers’ compensation marketplace created a very exciting and challenging opportunity for Aon Re. This unique transaction was made possible for our client by our entrepreneurial approach and the leverage of Aon's vast resources.''
Daniel L. Sussman, CEO of XL Financial Solutions Ltd stated, “We were extremely pleased to partner with both Aon and State Compensation Insurance Fund to develop a strategically significant solution that sustains the important role played by State Compensation Insurance Fund.”
Bollier added, “We are very pleased with the completion of this transaction which enables State Compensation Insurance Fund to continue to successfully serve the employers of California during this transitional time in the California workers compensation marketplace.” | 
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