BBSI Proclaims a New Insurance coverage Program that Materially Reduces its Staff’ Compensation … | Information

Also enters into a $ 53 million transfer of additional entitlement liabilities

VANCOUVER, Wash., July 6, 2021 (GLOBE NEWSWIRE) – Barrett Business Services, Inc. (“BBSI” or the “Company”) (NASDAQ: BBSI), a leading provider of business management solutions and one of the largest professional employers’ organizations (PEO) in the United States announced that they had entered into a new workers ‘compensation program effective July 1, 2021, under which they no longer retain any risk of loss from workers’ compensation claims.

The new program enables premium adjustments depending on the overall portfolio performance. If claims development is favorable, BBSI can participate in savings of up to US $ 20 million for a period of twelve months. In the event of a negative claims development, the additional premium for a twelve-month insurance period is limited to 7.5 million US dollars. This structure limits potential downtrends and continues to allow BBSI to benefit from its industry leading underwriting, risk mitigation and claims management practices.

Approximately 82% of BBSI’s worker accident exposure will be covered by this new program.

The cancellation of the loss retention is not expected to have any impact on personnel expenses, as the premium for the new program corresponds to the existing loss provision rate that it is replacing. The agreement includes a multi-year commitment until June 2023.

BBSI also announced that it has entered into a loss portfolio transfer (LPT) agreement to remove an additional $ 53 million in outstanding employee compensation claims from its balance sheet. This transaction consists primarily of claims from 2018 and reduces BBSI’s outstanding workers’ compensation liability by approximately 15%. The LPT will result in a corresponding reduction in locked cash and investments of $ 52 million and a gain on the transaction of $ 1 million.

BBSI is not exposed to unfavorable developments on these claims, but the agreement allows participation in future favorable developments. As a reminder, in June 2020 the company entered into a similar LPT to remove outstanding employee compensation claims obligations for claims that arose between February 1, 2014 and December 31, 2017.

These transactions will result in a one-time increase in unrestricted cash and investments of approximately $ 13 million in July 2021, with additional cash flow benefits expected to be realized throughout the life of the program.

“This milestone is the culmination of many years of hard work executing our long-term strategy to reduce risk in our business model,” said Gary Kramer, President and CEO of BBSI. “The opportunity to close these transactions, including another major LPT, speaks once again of the quality and consistency of our employee compensation program. We pride ourselves on making our financial results even more predictable while continuing to provide the same great service to our small business customers. “

Forward-Looking Statements Statements in this press release regarding future events or performance, including expectations regarding the effects of the reduction in employee indemnity claims and loss retention levels, are forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that could cause the company’s actual results to differ materially from the future results expressed or implied in such forward-looking statements. These factors relating to the business include our ability to retain existing customers and attract new customers, difficulties associated with integrating customers into our operations, economic trends in our service areas, the potential for material deviations from the expected future claims experience of employees, changes in the regulatory environment for employee compensation in our main markets, security breaches or failures in the company’s IT systems, collectibility of receivables, changes in effective wage and income tax rates at federal and state levels, book values ​​of deferred income tax claims and goodwill (that of our future operating results), the effects and possible changes in the law on patient protection and affordable care, rising medical costs and other legislative initiatives in health care on our business äft, the impact of global capital market conditions on our equity portfolio and the availability of capital, borrowing capacity of our revolving credit facility or letters of credit required to meet government bond requirements to maintain our qualified self-insured employer status for the Maintain employee accident insurance or our insurance program with insurance coverage. Additional risk factors that affect our business are discussed in Item 1A of Part I of our 2020 Annual Report on Form 10-K and in subsequent reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934. While forward-looking statements help provide complete information about the company, readers should be cautioned that forward-looking statements will be less reliable than historical information. The company undertakes no obligation to update or revise any forward-looking statements in this press release to reflect events or changes in circumstances that occur after the date of this press release.

About BBSI BBSI (NASDAQ: BBSI) is a leading provider of business management solutions that combines human resource outsourcing and professional management consulting to create a unique operational platform that differentiates itself from the competition. The company’s integrated platform is based on expertise in the areas of payroll, social benefits, employee compensation, risk management and occupational safety programs, as well as human resources management. BBSI’s partnerships help companies of all sizes improve the efficiency of their operations. The company works with more than 7,500 customers from all business areas in 40 states. More information is available at www.bbsi.com.

Media relations: Lorin Gelfand Tel 1-360-869-4052 [email protected]

Investor Relations: Cody Slach Tel. 1-949-574-3860 [email protected]

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