Missouri Employers Mutual Insurance Co. plans to pay about $2 million in dividends to 11,033 policyholders this spring, the state-sponsored workers’ compensation company announced today.
It will be the company’s first dividend since its creation by the Missouri Legislature in 1993 to encourage competition and lower workers’ compensation premiums for employers, particularly small businesses.
“It took many years of successful operation before we established the financial strength needed to pay a dividend,” Jim Owen, the insurer’s president and chief executive, said in a written statement.
The dividend recognizes members whose policies were effective in 2009, company officials said. Policyholders at all premium levels will receive a percentage of the premium they paid based on their loss ratio results. Dividends will not be paid to policyholders whose policies had too high a loss ratio.
MEM’s decision to pay a dividend occurred a month after Missouri state auditor Tom Schweich issued a report that criticized the firm for giving out huge severance checks to former executives and hefty bonuses to other employees.
His audit also found that the firm had bankrolled business jaunts to Hawaii and Mexico, along with sports tickets and suites for its board members, executives, employees and guests payday loans for self employed.
The insurer operates like a private entity, while enjoying federal tax-exempt status and other advantages that its private competitors lack, the audit found.
As an “independent public corporation,” the firm has avoided about $50 million in federal taxes since 1993, enabling the firm to build a $163 million surplus and increase its market share to 16 percent, the largest in the Missouri’s workers’ comp insurance market.
Schweich undertook the audit after the Post-Dispatch raised questions last year about MEM’s policies and expenditures.
Meanwhile, Sen. Jim Lembke, R-Lemay, who held a hearing on MEM last year, has introduced legislation that would require the insurer to sever its close ties to state government, which could threaten the firm’s nonprofit status and its lucrative tax breaks.