§10508. Extension of Time for Weekends and Holidays.
If the last day for exercising or performing any right or duty to act or respond falls on a weekend, or on a holiday for which the offices of the Workers’ Compensation Appeals Board are closed, the act or response may be performed or exercised upon the next business day.
A focus on workers’ compensation insurance in California has apparently paid off for Berkshire Hathaway Homestate Cos., as A.M. Best last week affirmed a financial strength rating of A, or superior, for the group of six insurers.A.M. Best also affirmed the long-term issuer credit ratings of “aa ” for BHHC, a group that includes Homestate Insurance Co., Brookwood Insurance Co., Continental Divide Insurance Co., Cypress Insurance Co., Oak River Insurance Co., and Redwood Fire and Casualty Insurance Co.
“Aggressive claims management” was one factor contributing to A.M. Best’s affirmation of BHHC’s ratings. Others were effective loss control services, a history of conservative loss reserving standards, and financial flexibility and support provided by the group’s parent company, Berkshire Hathaway Inc. The ratings reflect BHHC’s “strong risk-adjusted capitalization, historically profitable operating performance and the executive team’s successful track record in managing operations,” A.M. Best said.
BHHC is licensed in 50 states and the District of Columbia. In addition to workers’ compensation, lines of business include auto physical, commercial auto liability and commercial multi-peril.
Of the group’s $1.3 billion in direct premiums written in 2015, about 80% was from workers’ compensation business. And nearly half of its premium volume comes from the California workers’ compensation market, A.M. Best said.
However, the California concentration comes with risk. A.M. Best said BHHC has been expanding its book of business outside the California workers’ compensation line in response to market conditions and as a way to spread out its risk. But the diversification slowed starting in 2010 as California workers’ compensation market grew stronger.
A.M. Best said it has some concern about BHHC’s geographic concentration.
But it believes the group is “well positioned to continue generating favorable underwriting results due to its familiarity with the niche, and management’s commitment to maintaining underwriting discipline and adequate reserves,” A.M. Best said in its credit report for the group. “A.M. Best will continue to monitor the performance of the group’s workers’ compensation book of business in California to ensure legislative challenges do not materially affect the group’s operating performance.”
BHHC’s net income has fluctuated over the last five years, from a $38 million loss in 2011 to profits of $202 million in 2014 and $128 million last year, according to figures from A.M. Best.
Berkshire Hathaway has consistently generated underwriting profits that are significantly better than the industry norm in each of its major commercial insurance lines, Fitch Ratings noted in a report on the company last year. Whether Berkshire Hathaway can maintain its level of underwriting profits remains to be seen.
Fitch has noted signs of weakening property/casualty premium rates. And in long-tail business lines such as workers’ compensation, there’s always uncertainty about future adverse loss reserve movement.
In addition, there’s the question of its California concentration.
“California’s a pretty volatile state,” said James Auden, managing director at Fitch Ratings. “And comp is a volatile line, historically.”
Berkshire Hathaway has been “quietly expanding” its business in commercial insurance lines over the past several years, Fitch said in its report last year. The largest individual commercial line for Berkshire is workers’ compensation, which expanded substantially over five years to exceed $2 billion in direct written premiums in 2014.
In addition to the Homestate Cos., Berkshire Hathaway’s Guard Insurance Group writes a significant amount of workers’ compensation business. And its Applied Underwriters unit, which specializes in workers’ compensation for small and midsize businesses, expanded premium volume by more than 500% in the last five years to approach $700 million in 2014, according to Fitch.
Berkshire Hathaway’s increased interest in workers’ compensation comes as other carriers such as American International Group and Liberty Mutual have stepped back somewhat from workers’ comp, Auden said.
Berkshire Hathaway and AmTrust Financial Services have both experienced a swift rise in workers’ compensation over the past five years, according to an April market share report from Fitch. AmTrust passed both Liberty Mutual and AIG to become the fourth-largest writer in 2015, and Berkshire Hathaway moved up ahead of Liberty Mutual to become the sixth-largest writer.