• Net Premium Earned: $183 million, a decrease of 1% compared to the previous year.
• Gross Premiums Written: $212 million, an increase of 1% year-over-year.
• Net Investment Income: $32 million, a 20% increase from the previous year.
• Current Accident Year Loss and LAE Ratio: 66%, up from 64% in 2024.
• Underwriting Expense Ratio: 23.4%, down from 25% a year ago.
• Net Income: $12.8 million, impacted by $9 million of net after-tax unrealized investment losses.
• Adjusted Net Income: $21.3 million, a 24% increase from $17.2 million last year.
• Stock Repurchase: $21 million of common stock repurchased at an average price of $49.69 per share.
• New Stock Repurchase Program: Authorized up to $125 million over 20 months.
• Dividend Increase: 7% increase to $0.32 per share.
• Book Value Per Share: Increased 14% to $48.25, adjusted book value per share increased by 9% to $50.75.

• Warning! GuruFocus has detected 6 Warning Sign with EIG.

Release Date: May 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Employers Holdings Inc (NYSE:EIG) achieved a record number of policies in force with a year-over-year growth rate of 4%.
• Net investment income increased by 20% to $32 million, marking the highest in the company's history as a publicly traded entity.
• The underwriting expense ratio improved to 23.4% from 25% a year ago, indicating effective expense management.
• The company declared a 7% increase in its quarterly dividend to $0.32 per share, reflecting confidence in financial strength.
• A new stock repurchase program was authorized, allowing for the repurchase of up to $125 million of common stock over 20 months.

Negative Points

• Net premiums earned decreased by 1% to $183 million, indicating challenges in new business and audit premiums.
• The current accident year loss and LAE ratio increased from 64% to 66%, reflecting ongoing competitive rate environments and rising claims.
• Net income was negatively impacted by $9 million of net after-tax unrealized investment losses due to US capital market fluctuations.
• The company faced pressure from cumulative trauma claims in California, contributing to increased loss ratios.
• Despite improvements, the overall industry trends show a decrease in favorable development, impacting reserve redundancies.

Q & A Highlights

Q: Kathy, could you talk about any specifics regarding the loss trends and actions taken to protect the balance sheet and focus on profitability? A: Katherine Antonello, CEO, explained that the increase in the accident year loss and LAE ratio from 64% to 66% reflects several factors: a competitive rate environment, pressure on accident years 2023 and 2024, a rise in cumulative trauma claims in California, and a decrease in favorable development. These factors are consistent with industry trends, and Employers Holdings has taken targeted pricing and underwriting actions to address them.

Q: How about underlying medical inflation, frequency, severity, and cost of treatments? A: Katherine Antonello noted that claim frequencies have generally trended downward, although there was an uptick in California due to cumulative trauma claims. Severity values have held steady, with medical severity lower than pre-pandemic levels, and indemnity severity trending with wage inflation.

Q: Is there a macroeconomic contribution to the rise in cumulative trauma claims? A: Katherine Antonello stated that the rise in cumulative trauma claims is a California-specific issue, not linked to macroeconomic conditions in 2024. California allows cumulative trauma claims post-termination, which often come with high permanent disability and attorney involvement.

Q: What impact might the WCIRB's recommended 11.2% increase in pure premium rates have? A: Katherine Antonello explained that while the WCIRB's rate filings are advisory, they may influence carrier behavior. Employers Holdings will consider its own book of business and exercise flexibility in California, where there is a significant range for schedule rating.

Q: What are your expectations for the NCCI's State of the Line report regarding industry fundamentals? A: Katherine Antonello anticipates that while reserve redundancies remain significant, carriers may be reducing them less, possibly as a cautionary measure. Employers Holdings' internal rates were flat year-over-year but up 4% to 5% over the last six months, aligning with broader industry trends.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.