Facts Regarding State Fund's Financial Strength

December 31, 2008

As we move through these challenging economic times we are confident State Fund will remain a strong and vital resource for California’s economy, providing security for California’s businesses and employees.  State Fund’s financial strength is a result of our strong surplus, solid financial ratios, and our conservative investment strategy.  With more than $20 billion in assets and $5 billion in surplus, State Fund is a rock-solid insurer.

A strong loss reserve and premium to surplus position

• Premium to surplus ratio of .33 to 1.0
• Reserve to surplus ratio of 3 to 1
• A sound reinsurance program in place with A-rated reinsurers

Solid Investment Portfolio

• Conservatively managed and diversified among issuers and sectors
• Invested primarily in U.S. Treasuries, agency debentures and mortgage-backed securities guaranteed by FNMA, FHLMC or GNMA
• Over 60 percent is rated Aaa/AAA
• Average credit rating on the portfolio is AA+ by Standard & Poors
• More than 99 percent of the holdings are rated A or better