EICON’s profits declined in 2001 on lower returns

Tuesday, March 12, 2002 | 11:02 a.m.

CARSON CITY -- Employers Insurance Co. of Nevada, jettisoned as a state agency two years, reported a $20.6 million profit in 2001, down about $6.2 million from the prior year.

But the mutual company, owned by its policyholders, is still healthy. Its assets reached $1.3 billion and its liabilities totaled $1 billion last year. And it has a surplus of $198 million.

Douglas Dirks, president of the company that writes workers compensation insurance, said last week, "Things are going as well as we expected."

The dip in profits, he said was due mainly to the volatility of the stock market.

Employers Insurance was a state operated system covering injured workers since the early 1900s. But the 1999 Legislature, at the suggestion of Gov. Kenny Guinn, converted it to a private company in January 2000.

The company, in its annual report filed with the state Insurance Division last week, said its stock holdings fell from $343 million in 2000 to $277.8 million.

Like many others, Employers Insurance reported a $975,000 loss when it sold its Enron stock Nov. 29 last year.

Its gain from investments dropped from $67.4 million in 2000 to $46.8 million in 2001. But the stock market has rebounded somewhat early this year and Dirks suggested the company is realizing a better return.

Premiums collected from employers fell from $206.7 million in 2000 to $125.5 million in 2001. But losses also dropped from $127.4 million to $75.4 million in 2001. There was a net underwriting loss of $11.6 million, which is about $300,000 lower than in 2000.

The 1999 plan to privatize the company estimated it would write $125 million in policies in 2001, Dirks said. And it is right on target.

The company reported a $6.8 million loss from the operation of the Jean Clark Rehabilitation Center in Las Vegas, which was closed last year. The center and adjoining office building are being sold to UNLV for its new dental school.

Employers Insurance operates two subsidiaries -- Care Network Inc. and Elite Insurance Service Inc. Care Network runs the claim management services and the network of medical providers. Elite places business obtained through independent brokers with Virginia Surety Co Inc.

The company reported it paid $10.3 million in taxes and fees. And it paid its lobbyist Ostrovsky & Associates $118,097 in 2001.