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President's Letter

Our response to more than three years of disruption and change has made us an even stronger organization.

In 2022, we were proud to declare a dividend for the fourth consecutive year. We will be returning approximately $58.5 million to policyholders with a policy inception date in 2022. This is money that will go directly to the bottom lines of large and small businesses all across our state and will help them invest in their organizations by creating jobs, upgrading equipment, or paying down debt. Given the current state of economic uncertainty that many businesses face, as well as the increased cost of borrowing, this support could not come at a better time for our policyholders.

I am very proud that over the last four years State Fund has declared approximately $391.5 million in dividends in total. We also provided an additional $44 million to policyholders in the form of safety grants during the first year of the COVID-19 pandemic. And since our creation, we've returned well over $5 billion to our policyholders.

Key Actions and Results in 2022

In addition to declaring a dividend for the fourth year in a row, we also demonstrated significant progress across a number of initiatives and demonstrated positive results in key operational areas. Here are a few examples:

  • We wrote $1,060 million in total Estimated Annual Premium (EAP) in 2022. New business continued to slow and was down by 21.7% compared to 2021. But we renewed $902 million in EAP, which was stronger than we anticipated given the rate increases we implemented in some poorer performing classes in 2022. Overall, it was a challenging year to write new business given the continuing soft market in California and the broader economic environment, but we believe we performed well given those challenges.
  • Our combined ratio of 134.4% and operating ratio of 91.3% were both better than we planned. We ended the year with $80 million in net income after declaring dividends for the 2021 and 2022 policy years. And our loss and loss adjustment expense reserves and policyholders' surplus remained strong.
  • We successfully launched our new BindNow online quote and bind system for brokers. In 2022, brokers used our BindNow system to instantly bind more than 4,000 policies.
  • We continued our work to increase our use of automation, artificial intelligence, and other technologies to become faster and more efficient and to provide our customers with better experiences. These initiatives will also allow us to scale up our operational capacity quickly if needed without incurring significant new expenses. In addition to BindNow, we launched or expanded technology in areas such as our direct channel quote and bind tool, our premium audit platform, prior coverage check automation, online payments, Online Safety UniversitySM, and our web-based Injury Illness Prevention Plan (IIPP) BuilderSM.
  • Nearly 1,500 employers signed up for our Online Safety UniversitySM by the end of 2022. That includes more than 3,000 employees and--because most employees sign up for multiple classes--more than 5,500 courses completed overall. We also added several new classes last year, including our first offerings in Spanish.
  • More than 7,000 employers in California used our IIPP BuilderSM. Cal/OSHA continues to link to our tool from their website, and last year we added even more features, including a new section to help employers make their IIPPs more accessible to their employees.
  • We had our best policyholder customer satisfaction and customer effort scores since we started measuring them and both far exceeded our goals for the year. We believe this success is due to our continued focus on improving our technology and our efforts to maintain and improve our customer-centric culture.
  • We adopted a remote work platform after having the opportunity to see how well our teams performed in that environment over the last several years. This positions us well to hire and retain the best talent throughout California.
  • We exceeded the Finance and Insurance industry benchmark for our overall employee engagement score for the fourth year in a row. Culture has been at the core of what we do for many years and, while we're pleased to maintain our momentum, we continue to look at ways we can strengthen and deepen the connections our employees feel to our purpose, core values, and vision.

Financial Highlights

Here are our 2022 financial highlights, which are described in more detail in this report:

  • Net premiums earned were $1,175 million in 2022, which is about 5% lower than the prior year.
  • Our combined ratio of 134.4% was about 9 points lower than the prior year.
  • Our net investment income was $506 million, about $9 million lower than the prior year.
  • Our net income before dividends was $181 million. That was about $16 million higher than the prior year.

As I consider 2023 and beyond, I continue to be confident that State Fund is well positioned to serve its purpose both over the near term and well into the future. Thank you for the trust you place in our staff, our leaders, and our executive team.


Vern Steiner
President & CEO