Gov. Bill Ritter Jr. has floated the idea of selling off Pinnacol in recent months in order to shore up an estimated $1.3 billion shortfall for the fiscal year that begins in July. The governor's office met with Morgan Stanley to appraise the insurer's worth, which was deemed as being between $304 million and $376 million.
In February, Pinnacol Assurance proposed giving Colorado $200 million to terminate the insurer's status as a political subdivision of the state and become a private mutual insurance company owned by its policyholders. Under the terms of the proposal, Pinnacol pledged to continue being the residual carrier in Colorado. State lawmakers, however, brushed off the proposal, saying it was too low.
Pinnacol's board of directors recently increased the offer to $330 million. Ken Ross, president and CEO, said the proposed separation would not detrimentally affect Pinnacol's ability to ensure that workers' comp insurance is always available to every Colorado business at an affordable cost or its plan on future rate reductions and dividends to policyholders.
"Nor will this updated proposed transaction imperil Pinnacol's financial ability to maintain adequate reserves in order to meet its obligations to injured workers and policyholders," he said. "To the contrary, our proposed plan will allow Pinnacol to continue to be a nationwide leader in the workers' compensation industry."
Ritter's office is reviewing the proposal.
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May 3, 2010
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