BBSI will not be coming back up. The change in self insurance status in California has been largely downplayed. They are not bringing on new customers as anticipated in that market and they have thousands of open workers compensation claims. California accounted for about 80% of their business at one point. What % is that today? That is one of the reasons they are having problems. Just one of many.
Shares are getting dumped because they know that this is the end of their game.
diewarheit: "The change in self insurance status in California has been largely downplayed. They are not bringing on new customers as anticipated in that market and they have thousands of open workers compensation claims. California accounted for about 80% of their business at one point. What % is that today?"
To answer your question , here are the California revenue percentages (taken from the last 13 conference calls):
The percentage of CA revenues has increased, not decreased. In light of the evidence to the contrary, the question for diewarheit is: What is the basis for your claim that "They are not bringing on new customers as anticipated"?
I'm not sure you understood my point. California being that large of a % is a bad thing because that is the state where the regulations have changed and costs have increased. To answer your question I'm not naïve enough to take the word of the BBSI corporate office as the ultimate source of information on the company.
More? The original response to the changes in California regulation from the corporate office and CEO were to no longer use the term PEO in California. That was the entire plan. Hearnthar has a fairly good grip on it. The rapid growth at a faster pace was/is fueled by BBSI paying brokers larger commissions to bring the business. Because of the commission structure the brokers brought/bring all BBSI can handle. State of California apparently figured this out and closed the loophole.
As a self insured PEO, a majority of this company's revenue has been from acting as an insurance company without either the stator surplus an insurance company requires, or the regulatory oversight that is par for the course if it were a real insurance company. Departments of Insurance do not do a perfect job of regulating workers comp insurers (see Tower, Meadowbrook, Ulico, etc.) but they would have shut BBSI down a long time ago for lack of enough surplus. Typically, what eventually happens is the losses develop much more than expected and the company is now broke. They only way they can stay ahead of the game is to continue to grow rapidly at a faster and faster pace. Now that they are insured on a large deductible their insurance costs are greater and they have other expenses related to reporting to Bureaus, so things are slowing down. On the good side for the client company, at least, the claims are guaranteed to be paid by ACE if BBSI ever runs out of cash. As far as those that were part of their self insurance plan, I suspect the clients could end up being liable for their claims even though they paid BBSI for "coverage."