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Gevity Announces Returns of Workers' Compensation Funding and Reinsurance Recovery

12 Dec, 2008 WorkersCompensation.com

                               
Bradenton, FL (CompNewsNetwork) - Gevity, a leading professional employer organization (PEO) that provides HR services to businesses nationwide, today announced it expects to receive an additional return of $26 million in workers' compensation funds from AIG Commercial Insurance ("AIGCI") by the end of January 2009. A substantial portion of this return is incremental to the amount included in the short-term workers' compensation receivable previously reported in the Company's balance sheet as of September 30, 2008. In addition, the Company received a refund of $4.7 million in November from AIGCI arising from lower program costs for the 2003 through 2007 policy years.

Gevity's expected receipt of approximately $26 million relates to its workers' compensation policy years 2000-2002. This return of funds reflects the favorable relationship between the amount of funding held for these policy years, the relative low number of open claims and the maturing values of the estimated future costs for such claims. Moreover, an additional material return of funds from these policy years is contractually scheduled for 2011. Today's announcement follows a receipt of $33.1 million of excess workers' compensation collateral in September, coupled with AIGCI's agreement to waive Gevity's approximate $14.0 million in workers' compensation collateral payments during the fourth quarter of 2008. These returns reflect the Company's favorable claims cost trends, which are largely the result of its effective underwriting practices, risk prevention measures and claims management controls.

"We are very pleased to have made further progress in our objective to accelerate the return of our excess workers' compensation funding from our insurance program," commented Garry J. Welsh, Chief Financial Officer. "In a span of three quarters, we will have strengthened our balance sheet by over $70 million from these efforts."

Gevity also announced it received a cash recovery of $2.0 million pursuant to a court-approved settlement arising from a liquidation proceeding related to the Bermuda reinsurance company formerly responsible for covering a specific layer of Gevity's workers' compensation claims exposure in 2006. Gevity previously recognized a loss of $4.65 million under this reinsurance arrangement in 2006 and subsequent recoveries have now fully offset this loss. The $2.0 million recovery will benefit the Company's fourth quarter 2008 operating results. The Company expects to receive no additional recovery at this time.

About Gevity

As a leading provider of HR solutions, Gevity helps small businesses nationwide maximize performance through its world-class HR expertise and services -- including payroll, benefits, administrative processing, risk management, policies and procedures, new hire support, performance management, and employee development and retention. 

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