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WIKI ANALYSIS
Delphi Financial Group, Inc. is a holding company whose subsidiaries provide non-medical insurance products and services. Formed in 1987, the company issued Class A common stock held an IPO in 1990. The Company's sells its products throughout the United States and reports results from two segments: group employee benefit products and asset accumulation products.
The group benefits segment (88% of 2006 operating income) manages all aspects of employee absence to enhance client productivity and provides the related insurance coverage: long-term and short-term disability (41% of 2006 premium income), excess and primary workers' compensation (23%), group life (28%), travel accident and dental (4%). The Company markets its group products to employer-employee groups and associations, ranging from 2 to 5,000 individuals, in a variety of industries. The Company markets its employee benefit products on an unbundled basis and as part of an Integrated Employee Benefit program, combining employee benefit insurance coverage and absence management services.
The asset accumulation segment (12% of 2006 operating income) primarily sells fixed annuities to individuals planning for retirement.
Delphi operates through three subsidiaries:
Reliance Standard Life Insurance Company provides group insurance coverage (see Group benefits Segment above) to small to medium-sized employers (50-100 employees). Founded in 1907, Reliance also sells fixed annuities through a wholesale distribution.
Safety National Casualty Corporation provides excess workers' compensation insurance to the self-insured market. Founded in 1942 and located in St. Louis, Missouri, SNCC is one of the oldest continuous writers of excess workers' compensation insurance in the United States.
Matrix Absence Management, Inc., founded in 1987, provides integrated disability and absence management services to the employee benefits market across the United States. Headquartered in San Jose, California, Matrix was acquired by the Company in June 1998.
What is excess workers' compensation?
Excess workers' compensation insurance products provide coverage to employers and groups who self-insure their workers' compensation risks. The coverage applies to losses in excess of the applicable self-insured retentions ("SIR" or deductibles) of employers and groups, whose workers' compensation claims are generally handled by third-party administrators.
Delphi targets less price sensitive portion of market with lower severity claims
Delphi markets primarily to mid-sized companies and other employers, particularly small municipalities, hospitals and schools. The company believes that these employers are less prone to catastrophic workers' compensation exposures and less price sensitive than larger account business. Because excess workers' compensation claim payments do not begin until after the self-insured's total loss payments equal the SIR or deductible, the period from when the claim is incurred to the time the company's claim payments begin averages 15 years. At that point, the payments are primarily for wage replacement, similar to the benefit provided under long-term disability coverage, and any medical payments tend to be stable and predictable. The company also sells large deductible workers' compensation insurance, which provides coverage similar to excess workers' compensation insurance, and a complementary product, workers' compensation self-insurance bonds.
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