Dividends

Rewarding Members

For the past 29 consecutive years, the Kentucky AGC Self Insurers’ Fund has provided more than $250 million in dividends to its qualifying members.

A dividend is a share of surplus allocated to policyholders in a participating insurance policy. Any excess in premuim over liabilities for a given policy year, may be distributed in the form of a dividend to those members who qualify. The Fund waits four (4) years to return a dividend for a given policy year to accurately determine the liabilities in a given policy year.

Eligibility

In order to be eligible for a dividend return, a member must meet the following criteria:

must have been a Fund Member in the year for which the dividend is being paid and;
must be a current member at the time in which the dividend payment is made and;
must have had a loss ratio of less than 100% for the year for which the dividend is being paid and;
must be current in all their payment obligations to the Fund and to their Trade Association

Timing

Historically, dividends are paid at the end of March to early April.

Calculation

Kentucky AGCSIF “Dividend Plan (Formula)”

Determine the total amount of dividend to be paid.
Determine employers that are eligible for a dividend
Determine the sum of all eligible employers’ excesses (sum of each employer’s premiums minus their losses).
Determine the DRF (Dividend Return Factor) by dividing #1 result by #3 result.
Determine each member’s dividend by multiplying its excess by the DRF.
Determine each member’s Funding Commission tax refund by multiplying the dividend by the appropriate Funding Commission tax rate (ex: 9%).
Determine the total amount to be returned to each member by adding #5 and #6.Example:  Total Dividend to be paid = $8,500,000  Sum of all eligible employers’ excesses (premiums minus losses) = $15,000,000  DRF = 0.5667 (8,500,000/15,000,000)  Member’s excess = $5,000  Member’s dividend = $2,833.50 (0.5667 * $5,000)  Tax refund = $255.02 (assume 9% Funding Commission rate for dividend year)  Member’s total dividend refund = $3,088.52 ($2,833.50 + $255.02)