Employers Holdings, Inc. (the “Company”)
(NYSE:EIG), a holding company with subsidiaries that are
specialty providers of workers' compensation insurance and services
focused on select, small businesses engaged in low-to-medium hazard
industries, today reported financial results for its fourth quarter
and year ended December 31, 2023.
Full-Year 2023
Financial Highlights(All comparisons versus
full-year 2022)
- Net income of $118.1
million ($4.45 per diluted share), versus $48.4 million ($1.75 per
diluted share);
- Adjusted net income
of $101.7 million ($3.83 per diluted share), versus $81.0 million
($2.93 per diluted share);
- Net investment
income of $106.5 million, versus $89.8 million;
- Gross premiums
written of $767.7 million, versus $714.2 million;
- Net premiums earned
of $721.9 million, versus $675.2 million;
- Net favorable prior
year loss reserve development of $44.9 million, versus $33.5
million;
- GAAP combined ratio
of 95.0% (96.0% excluding LPT), versus 96.9% (98.1% excluding
LPT);
-
Returned $106.5 million to stockholders through a combination of
share repurchases and regular quarterly dividends;
-
Record number of ending policies in-force of 126,409, versus
121,356; and
- Adjusted Book value
per share of $47.26, up 10.5% including dividends declared.
Fourth Quarter
2023 Financial Highlights(All
comparisons versus fourth quarter 2022)
- Net income of $45.6
million ($1.77 per diluted share), versus $47.2 million ($1.72 per
diluted share);
- Adjusted net income
of $36.1 million ($1.40 per diluted share), versus $34.4 million
($1.25 per diluted share);
- Net investment
income of $26.2 million, versus $27.0 million;
- Gross premiums
written of $178.2 million, versus $173.8 million;
- Net premiums earned
of $187.5 million, versus $181.1 million;
- Net favorable prior
year loss reserve development of $24.9 million, versus $23.2
million;
- GAAP combined ratio
of 88.1% (88.8% excluding LPT), versus 90.6% (91.7% excluding LPT);
and
-
Returned $22.9 million to stockholders through a combination of
share repurchases and regular quarterly dividends.
CEO Commentary
Chief Executive Officer Katherine Antonello
commented: “We are thrilled with our fourth quarter and full-year
2023 results. We closed the year with impressive revenue growth
driven by strong increases in both premium writings and investment
income. Our growth in written premium in 2023 resulted from a 20%
increase in new business coupled with a 9% increase in renewal
business, and solid audit premium recognition. Our investment
performance also contributed nicely to our overall results and
financial strength. Our 2023 net investment income of $106.5
million represented a 19% increase over 2022, and we recognized
$70.9 million of after-tax unrealized gains from our fixed
maturities, common stock and other investments.”
Ms. Antonello continued, “We maintained our
current accident year loss and loss adjustment expense ratio on
voluntary business at 63.3%, an improvement over the 64.0% we
recorded throughout 2022. Our fourth quarter full reserve study led
to the recognition of $24.6 million of net favorable prior year
loss reserve development from our voluntary business. Those
actions, coupled with our continual focus on our underwriting
expenses yielded an ex-LPT combined ratio of 88.8% for the fourth
quarter, down from 91.7% a year ago, and 96.0% for the full year,
down from 98.1% a year ago.
Our active capital management efforts throughout
2023, which consisted of $77.1 million of share repurchases and
$29.4 million of regular quarterly dividends, coupled with the
greater economies of scale we are achieving, further complemented
our success in 2023. Our strong balance sheet and abundant
underwriting capital are highly supportive of our plans for
continued growth and success.
Beyond our financial results, we completed a
full integration of Cerity’s operations into those of Employers
during the fourth quarter. As a result of this action: (i) we will
continue to offer direct-to-consumer policies through the Cerity
brand; (ii) we expect to realize meaningful fixed underwriting
expense savings going forward; and (iii) we have eliminated the
former Cerity segment and have reverted back to being a single
segment reporter. With the Cerity integration complete, we are
well-positioned to focus our efforts in 2024 on further appetite
expansion, and increased self-service options for policyholders,
agents and injured workers.
Finally, I want to thank our highly dedicated
employees for their outstanding efforts in 2023.”
Summary of Consolidated Fourth Quarter
2023 Results(All comparisons
versus fourth quarter 2022, unless otherwise noted)
Gross premiums written were $178.2 million, an
increase of 3%. The increase was primarily due to higher new and
renewal business writings. Net earned premiums were $187.5 million,
an increase of 4%.
Losses and loss adjustment expenses were $92.9 million, an
increase of 2%. The increase was primarily due to higher earned
premium, partially offset by a lower current accident year loss and
loss adjustment expense ratio and higher net favorable prior year
loss reserve development. The Company recognized $24.9 million of
favorable prior year loss reserve development during the quarter
versus $23.2 million a year ago. The Company’s loss and loss
adjustment expense ratio was 49.5% (50.2% excluding LPT) for the
quarter versus 50.4% a year ago (51.5% excluding LPT).
Commission expenses of $26.3 million were highly
consistent with those of a year ago. The Company's commission
expense ratio was 14.0% for the quarter versus 14.4%.
Underwriting and general and administrative
expenses of $46.1 million were consistent with those of a year ago.
The Company's underwriting and general and administrative expense
ratio was 24.6% for the quarter versus 25.8%.
Net investment income was $26.2 million, a
decrease of 3%. The decrease was due to lower invested balances of
fixed maturity securities, short-term investments and cash and cash
equivalents, as measured by amortized cost, partially offset by
higher bond yields.
Net realized and unrealized gains on investments
reflected on the income statement were $12.1 million versus $13.7
million.
Interest and financing expenses were $0.6
million, a decrease of 70%. The decrease resulted from the recent
repayment of all outstanding Federal Home Loan Bank of San
Francisco advances.
Other expenses of $1.6 million consisted of a
non-recurring charge in connection with previously capitalized
cloud computing costs.
Federal and state income tax expense was $12.6
million (21.6% effective rate) versus $8.7 million (15.6% effective
rate). The effective rates in each period reflect income tax
benefits and exclusions associated with tax-advantaged investment
income, LPT adjustments, and deferred gain amortization.
The Company’s book value per share including the
deferred gain of $43.88 increased by 16.3% during 2023, computed
after taking into account dividends declared. This measure was
favorably impacted by $46.6 million of after-tax unrealized gains
arising from fixed maturity securities (which are reflected on the
balance sheet) and $24.3 million of net after tax unrealized gains
arising from equity securities and other investments (which are
reflected on the income statement). The Company's adjusted book
value per share of $47.26 increased by 10.5% during 2023, computed
after taking into account dividends declared. This measure was
favorably impacted by $24.3 million of net after tax unrealized
gains arising from equity securities and other investments (which
are reflected on the income statement).
Share Repurchases and First Quarter 2024
Dividend Declaration
During the fourth quarter of 2023, the Company
repurchased 400,334 shares of its common stock at an average price
of $38.40 per share. During the period from January 1, 2024 through
February 14, 2024, the Company repurchased a further 123,073 shares
of its common stock at an average price of $39.45 per share. The
Company currently has a remaining share repurchase authorization of
$16.2 million.
On February 14, 2024, the Board of
Directors declared a first quarter dividend of $0.28 per share. The
dividend is payable on March 13, 2024 to stockholders of
record as of February 28, 2024.
Earnings Conference Call and
Webcast
The Company will host a conference call on
Friday, February 16, 2024 at 11:00 a.m. Eastern Standard Time
/ 8:00 a.m. Pacific Standard Time.
To participate in the live conference call you
must first register here. Once registered you will receive dial-in
numbers and a unique PIN number.
The webcast will be accessible on
the Company’s website
at www.employers.com through the “Investors” link.
Reconciliation of Non-GAAP Financial
Measures to GAAP
The information in this press release should be
read in conjunction with the Financial Supplement that is attached
to this press release and available on our website.
Within this earnings release we present various
financial measures, some of which are “non-GAAP financial measures”
as defined in Regulation G pursuant to Section 401 of the Sarbanes
- Oxley Act of 2002. A description of these non-GAAP financial
measures, as well as a reconciliation of such non-GAAP measures to
our most directly comparable GAAP financial measures is included in
the attached Financial Supplement. Management believes that these
non-GAAP measures are important to the Company's investors,
analysts and other interested parties who benefit from having an
objective and consistent basis for comparison with other companies
within our industry. Management further believes that these
measures are more relevant than comparable GAAP measures in
evaluating our financial performance.
Forward-Looking Statements
In this press release, the Company and its
management discuss and make statements based on currently available
information regarding their intentions, beliefs, current
expectations, and projections of, among other things, the Company's
future performance, economic or market conditions, including the
evolving nature of the COVID-19 pandemic, current levels of
inflation, changes in interest rates, labor market expectations,
catastrophic events or geo-political conditions, legislative or
regulatory actions or court decisions, business growth, retention
rates, loss costs, claim trends and the impact of key business
initiatives, future technologies and planned investments. Certain
of these statements may constitute “forward-looking” statements as
that term is defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements can be identified by the
fact that they do not relate strictly to historical or current
facts and are often identified by words such as “may,” “will,”
“could,” “would,” “should,” “expect,” “plan,” “anticipate,”
“target,” “project,” “intend,” “believe,” “estimate,” “predict,”
“potential,” “pro forma,” “seek,” “likely,” or “continue,” or other
comparable terminology and their negatives. The Company and its
management caution investors that such forward-looking statements
are not guarantees of future performance. Risks and uncertainties
are inherent in the Company’s future performance. Factors that
could cause the Company's actual results to differ materially from
those indicated by such forward-looking statements include, among
other things, those discussed or identified from time to time in
the Company’s public filings with the SEC, including the risks
detailed in the Company's Quarterly Reports on Form 10-Q and the
Company's Annual Reports on Form 10-K. Except as required by
applicable securities laws, the Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise.
Filings with the SEC
The Company’s filings with the SEC and its
quarterly investor presentations can be accessed through the
“Investors” link on the Company's website, www.employers.com. The
Company’s filings with the SEC can also be accessed through the
SEC's EDGAR Database at www.sec.gov (EDGAR CIK No.
0001379041).
About Employers Holdings,
Inc.
EMPLOYERS® and America’s small business
insurance specialist® are registered trademarks of EIG Services,
Inc. Employers Holdings, Inc. is a holding company with
subsidiaries that are specialty providers of workers' compensation
insurance and services focused on small and select businesses
engaged in low-to-medium hazard industries. The Company operates
throughout the United States, with the exception of four states
that are served exclusively by their state funds. Insurance is
offered through Employers Insurance Company of Nevada, Employers
Compensation Insurance Company, Employers Preferred Insurance
Company, Employers Assurance Company and Cerity Insurance Company,
all rated A- (Excellent) by the A.M. Best Company. Not all
companies do business in all jurisdictions. See
www.employers.com and www.cerity.com for coverage
availability.
Contact Information
Mike Paquette (775) 327-2562 or mpaquette@employers.com
EMPLOYERS HOLDINGS, INC.Table of
Contents |
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Page |
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3 |
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Consolidated Financial
Highlights |
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|
|
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4 |
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Summary Consolidated Balance
Sheets |
|
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5 |
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Summary Consolidated Income
Statements |
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6 |
|
Return on Equity |
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|
|
|
|
7 |
|
Combined Ratios |
|
|
|
|
|
8 |
|
Roll-forward of Unpaid Losses
and LAE |
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|
|
|
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9 |
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Consolidated Investment
Portfolio |
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|
|
|
|
10 |
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Book Value Per Share |
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|
|
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11 |
|
Earnings Per Share |
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|
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|
12 |
|
Non-GAAP Financial
Measures |
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|
EMPLOYERS HOLDINGS,
INC.Consolidated Financial Highlights
(unaudited)$ in millions, except per share
amounts |
|
|
Three Months Ended |
|
|
|
Years Ended |
|
|
|
December 31, |
|
|
|
December 31, |
|
|
|
2023 |
|
2022 |
|
% change |
|
2023 |
|
2022 |
|
% change |
Selected financial
highlights: |
|
|
|
|
|
|
|
|
|
|
|
Gross premiums written |
$ |
178.2 |
|
|
$ |
173.8 |
|
|
3 |
% |
|
$ |
767.7 |
|
|
$ |
714.2 |
|
|
7 |
% |
Net premiums written |
|
176.4 |
|
|
|
171.9 |
|
|
3 |
|
|
|
760.6 |
|
|
|
707.2 |
|
|
8 |
|
Net premiums earned |
|
187.5 |
|
|
|
181.1 |
|
|
4 |
|
|
|
721.9 |
|
|
|
675.2 |
|
|
7 |
|
Net investment income |
|
26.2 |
|
|
|
27.0 |
|
|
(3 |
) |
|
|
106.5 |
|
|
|
89.8 |
|
|
19 |
|
Net income excluding
LPT(1) |
|
44.4 |
|
|
|
45.2 |
|
|
(2 |
) |
|
|
110.9 |
|
|
|
40.1 |
|
|
177 |
|
Adjusted net income(1) |
|
36.1 |
|
|
|
34.4 |
|
|
5 |
|
|
|
101.7 |
|
|
|
81.0 |
|
|
26 |
|
Net income before income
taxes |
|
58.2 |
|
|
|
55.9 |
|
|
4 |
|
|
|
148.4 |
|
|
|
55.8 |
|
|
166 |
|
Net income |
|
45.6 |
|
|
|
47.2 |
|
|
(3 |
) |
|
|
118.1 |
|
|
|
48.4 |
|
|
144 |
|
Comprehensive income
(loss) |
|
116.2 |
|
|
|
67.2 |
|
|
73 |
|
|
|
171.0 |
|
|
|
(151.1 |
) |
|
213 |
|
Total assets |
|
|
|
|
|
|
|
3,550.4 |
|
|
|
3,716.7 |
|
|
(4 |
) |
Stockholders' equity |
|
|
|
|
|
|
|
1,013.9 |
|
|
|
944.2 |
|
|
7 |
|
Stockholders' equity including
the Deferred Gain(2) |
|
|
|
|
|
|
|
1,113.1 |
|
|
|
1,050.3 |
|
|
6 |
|
Adjusted stockholders'
equity(2) |
|
|
|
|
|
|
|
1,199.1 |
|
|
|
1,189.2 |
|
|
1 |
|
Annualized adjusted return on
stockholders' equity(3) |
|
12.2 |
% |
|
|
11.6 |
% |
|
5 |
% |
|
|
8.5 |
% |
|
|
6.6 |
% |
|
29 |
|
Amounts per
share: |
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per
share |
$ |
0.28 |
|
|
$ |
1.51 |
|
|
(81 |
)% |
|
$ |
1.10 |
|
|
$ |
3.28 |
|
|
(66 |
)% |
Earnings per diluted
share(4) |
|
1.77 |
|
|
|
1.72 |
|
|
3 |
|
|
|
4.45 |
|
|
|
1.75 |
|
|
154 |
|
Earnings per diluted share
excluding LPT(4) |
|
1.72 |
|
|
|
1.65 |
|
|
4 |
|
|
|
4.18 |
|
|
|
1.45 |
|
|
188 |
|
Adjusted earnings per diluted
share(4) |
|
1.40 |
|
|
|
1.25 |
|
|
12 |
|
|
|
3.83 |
|
|
|
2.93 |
|
|
31 |
|
Book value per share(2) |
|
|
|
|
|
|
|
39.96 |
|
|
|
34.76 |
|
|
15 |
|
Book value per share including
the Deferred Gain(2) |
|
|
|
|
|
|
|
43.88 |
|
|
|
38.67 |
|
|
13 |
|
Adjusted book value per
share(2) |
|
|
|
|
|
|
|
47.26 |
|
|
|
43.78 |
|
|
8 |
|
Combined ratio
excluding LPT:(5) |
|
|
|
|
|
|
|
|
|
|
|
Loss and loss adjustment
expense ratio: |
|
|
|
|
|
|
|
|
|
|
|
Current year |
|
63.5 |
% |
|
|
64.3 |
% |
|
|
|
|
63.4 |
% |
|
|
64.1 |
% |
|
|
Prior Year |
|
(13.3 |
) |
|
|
(12.8 |
) |
|
|
|
|
(6.2 |
) |
|
|
(5.0 |
) |
|
|
Loss and loss adjustment
expense ratio |
|
50.2 |
% |
|
|
51.5 |
% |
|
|
|
|
57.2 |
% |
|
|
59.1 |
% |
|
|
Commission expense ratio |
|
14.0 |
|
|
|
14.4 |
|
|
|
|
|
13.9 |
|
|
|
14.2 |
|
|
|
Underwriting and general and
administrative expense ratio |
|
24.6 |
|
|
|
25.8 |
|
|
|
|
|
24.9 |
|
|
|
24.8 |
|
|
|
Combined ratio excluding
LPT |
|
88.8 |
% |
|
|
91.7 |
% |
|
|
|
|
96.0 |
% |
|
|
98.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See Page 5
for calculations and Page 12 for information regarding our use of
Non-GAAP Financial Measures. |
(2) See Page 10
for calculations and Page 12 for information regarding our use of
Non-GAAP Financial Measures. |
(3) See Page 6
for calculations and Page 12 for information regarding our use of
Non-GAAP Financial Measures. |
(4) See Page 11
for calculations and Page 12 for information regarding our use of
Non-GAAP Financial Measures. |
(5) See Page 7
for calculations and Page 12 for information regarding our use of
Non-GAAP Financial Measures. |
|
EMPLOYERS HOLDINGS, INC.Summary
Consolidated Balance Sheets (unaudited)$ in
millions, except per share amounts |
|
|
December 31,2023 |
|
December 31,2022 |
ASSETS |
|
|
|
Available for sale: |
|
|
|
Investments, cash and cash equivalents |
$ |
2,504.7 |
|
|
$ |
2,658.2 |
|
Accrued investment income |
|
16.3 |
|
|
|
19.0 |
|
Premiums receivable, net |
|
359.4 |
|
|
|
305.9 |
|
Reinsurance recoverable, net
of allowance, on paid and unpaid losses and LAE |
|
433.8 |
|
|
|
451.3 |
|
Deferred policy acquisition
costs |
|
55.6 |
|
|
|
48.3 |
|
Deferred income taxes,
net |
|
43.4 |
|
|
|
62.7 |
|
Contingent commission
receivable—LPT Agreement |
|
14.2 |
|
|
|
13.9 |
|
Other assets |
|
123.0 |
|
|
|
157.4 |
|
Total assets |
$ |
3,550.4 |
|
|
$ |
3,716.7 |
|
|
|
|
|
LIABILITIES |
|
|
|
Unpaid losses and LAE |
$ |
1,884.5 |
|
|
$ |
1,960.7 |
|
Unearned premiums |
|
379.7 |
|
|
|
339.5 |
|
Commissions and premium taxes
payable |
|
66.0 |
|
|
|
58.2 |
|
Deferred Gain |
|
99.2 |
|
|
|
106.1 |
|
FHLB Advances(1) |
|
— |
|
|
|
182.5 |
|
Other liabilities |
|
107.1 |
|
|
|
125.5 |
|
Total liabilities |
$ |
2,536.5 |
|
|
$ |
2,772.5 |
|
|
|
|
|
STOCKHOLDERS'
EQUITY |
|
|
|
Common stock and additional
paid-in capital |
$ |
420.4 |
|
|
$ |
415.2 |
|
Retained earnings |
|
1,384.3 |
|
|
|
1,295.6 |
|
Accumulated other
comprehensive loss, net |
|
(86.0 |
) |
|
|
(138.9 |
) |
Treasury stock, at cost |
|
(704.8 |
) |
|
|
(627.7 |
) |
Total stockholders’
equity |
|
1,013.9 |
|
|
|
944.2 |
|
Total liabilities and
stockholders’ equity |
$ |
3,550.4 |
|
|
$ |
3,716.7 |
|
|
|
|
|
Stockholders' equity including the Deferred Gain(2) |
$ |
1,113.1 |
|
|
$ |
1,050.3 |
|
Adjusted stockholders'
equity(2) |
|
1,199.1 |
|
|
|
1,189.2 |
|
Book value per share(2) |
$ |
39.96 |
|
|
$ |
34.76 |
|
Book value per share including
the Deferred Gain(2) |
|
43.88 |
|
|
|
38.67 |
|
Adjusted book value per share(2) |
|
47.26 |
|
|
|
43.78 |
|
|
|
|
|
(1) FHLB = Federal
Home Loan Bank |
(2) See Page 10
for calculations and Page 12 for information regarding our use of
Non-GAAP Financial Measures. |
|
EMPLOYERS HOLDINGS, INC.Summary
Consolidated Income Statements (unaudited)$ in
millions |
|
|
Three Months Ended |
|
Years Ended |
|
December 31, |
|
December 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Revenues: |
|
|
|
Net premiums earned |
$ |
187.5 |
|
|
$ |
181.1 |
|
|
$ |
721.9 |
|
|
$ |
675.2 |
|
Net investment income |
|
26.2 |
|
|
|
27.0 |
|
|
|
106.5 |
|
|
|
89.8 |
|
Net realized and unrealized
gains (losses) on investments(1) |
|
12.1 |
|
|
|
13.7 |
|
|
|
22.7 |
|
|
|
(51.8 |
) |
Other (loss) income |
|
(0.1 |
) |
|
|
— |
|
|
|
(0.2 |
) |
|
|
0.3 |
|
Total revenues |
|
225.7 |
|
|
|
221.8 |
|
|
|
850.9 |
|
|
|
713.5 |
|
Expenses: |
|
|
|
|
|
|
|
Losses and LAE incurred |
|
92.9 |
|
|
|
91.2 |
|
|
|
405.7 |
|
|
|
391.0 |
|
Commission expense |
|
26.3 |
|
|
|
26.0 |
|
|
|
100.0 |
|
|
|
95.9 |
|
Underwriting and general and
administrative expenses |
|
46.1 |
|
|
|
46.7 |
|
|
|
180.0 |
|
|
|
167.3 |
|
Interest and financing
expenses |
|
0.6 |
|
|
|
2.0 |
|
|
|
5.8 |
|
|
|
3.5 |
|
Other expenses |
|
1.6 |
|
|
|
— |
|
|
|
11.0 |
|
|
|
— |
|
Total expenses |
|
(167.5 |
) |
|
|
(165.9 |
) |
|
|
(702.5 |
) |
|
|
(657.7 |
) |
Net income before income
taxes |
|
58.2 |
|
|
|
55.9 |
|
|
|
148.4 |
|
|
|
55.8 |
|
Income tax expense |
|
(12.6 |
) |
|
|
(8.7 |
) |
|
|
(30.3 |
) |
|
|
(7.4 |
) |
Net
income |
|
45.6 |
|
|
|
47.2 |
|
|
|
118.1 |
|
|
|
48.4 |
|
Unrealized AFS investment
gains (losses) arising during the period, net of tax |
|
66.6 |
|
|
|
19.9 |
|
|
|
46.6 |
|
|
|
(202.3 |
) |
Reclassification adjustment
for realized AFS investment gains in net income, net of tax |
|
4.0 |
|
|
|
0.1 |
|
|
|
6.3 |
|
|
|
2.8 |
|
Total Comprehensive income (loss) |
$ |
116.2 |
|
|
$ |
67.2 |
|
|
$ |
171.0 |
|
|
$ |
(151.1 |
) |
Net income |
$ |
45.6 |
|
|
$ |
47.2 |
|
|
$ |
118.1 |
|
|
$ |
48.4 |
|
Amortization of the Deferred
Gain - losses |
|
(1.5 |
) |
|
|
(1.7 |
) |
|
|
(6.3 |
) |
|
|
(6.8 |
) |
Amortization of the Deferred
Gain - contingent commission |
|
(0.3 |
) |
|
|
(0.3 |
) |
|
|
(1.5 |
) |
|
|
(1.5 |
) |
LPT reserve adjustment |
|
0.9 |
|
|
|
— |
|
|
|
0.9 |
|
|
|
— |
|
LPT contingent commission
adjustments |
|
(0.3 |
) |
|
|
— |
|
|
|
(0.3 |
) |
|
|
— |
|
Net income excluding
LPT Agreement(2) |
$ |
44.4 |
|
|
$ |
45.2 |
|
|
$ |
110.9 |
|
|
$ |
40.1 |
|
Net realized and unrealized
(gains) losses on investments |
|
(12.1 |
) |
|
|
(13.7 |
) |
|
|
(22.7 |
) |
|
|
51.8 |
|
Lease termination and asset
impairment charges |
|
1.6 |
|
|
|
— |
|
|
|
11.0 |
|
|
|
— |
|
Income tax expense (benefit)
related to items excluded from Net income |
|
2.2 |
|
|
|
2.9 |
|
|
|
2.5 |
|
|
|
(10.9 |
) |
Adjusted net income(2) |
$ |
36.1 |
|
|
$ |
34.4 |
|
|
$ |
101.7 |
|
|
$ |
81.0 |
|
|
|
|
|
|
|
|
|
(1) Includes
unrealized gains (losses) on equity securities and other invested
assets of $17.8 million and $16.9 million for the three months
ended December 31, 2023 and 2022, respectively, and $36.2 million
and $(72.3) million for the year ended December 31, 2023 and 2022,
respectively |
(2) See Page 12
regarding our use of Non-GAAP Financial Measures. |
|
|
|
|
|
|
|
|
EMPLOYERS HOLDINGS, INC.Return on
Equity (unaudited)$ in
millions |
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31, |
|
December 31, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
Net income |
A |
$ |
45.6 |
|
|
$ |
47.2 |
|
|
$ |
118.1 |
|
|
$ |
48.4 |
|
Impact of the LPT
Agreement |
|
|
(1.2 |
) |
|
|
(2.0 |
) |
|
|
(7.2 |
) |
|
|
(8.3 |
) |
Net realized and unrealized
(gains) losses on investments |
|
|
(12.1 |
) |
|
|
(13.7 |
) |
|
|
(22.7 |
) |
|
|
51.8 |
|
Lease termination and asset
impairment charges |
|
|
1.6 |
|
|
|
— |
|
|
|
11.0 |
|
|
|
— |
|
Income tax expense (benefit)
related to items excluded from Net income |
|
|
2.2 |
|
|
|
2.9 |
|
|
|
2.5 |
|
|
|
(10.9 |
) |
Adjusted net income(1) |
B |
$ |
36.1 |
|
|
$ |
34.4 |
|
|
$ |
101.7 |
|
|
$ |
81.0 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity - end of
period |
|
$ |
1,013.9 |
|
|
$ |
944.2 |
|
|
$ |
1,013.9 |
|
|
$ |
944.2 |
|
Stockholders' equity -
beginning of period |
|
|
919.0 |
|
|
|
919.0 |
|
|
|
944.2 |
|
|
|
1,213.1 |
|
Average stockholders' equity |
C |
$ |
966.5 |
|
|
$ |
931.6 |
|
|
$ |
979.1 |
|
|
$ |
1,078.7 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity - end of
period |
|
$ |
1,013.9 |
|
|
$ |
944.2 |
|
|
$ |
1,013.9 |
|
|
$ |
944.2 |
|
Deferred Gain - end of
period |
|
|
99.2 |
|
|
|
106.1 |
|
|
|
99.2 |
|
|
|
106.1 |
|
Accumulated other
comprehensive loss, before taxes - end of period |
|
|
108.9 |
|
|
|
175.8 |
|
|
|
108.9 |
|
|
|
175.8 |
|
Income tax related to
accumulated other comprehensive loss - end of period |
|
|
(22.9 |
) |
|
|
(36.9 |
) |
|
|
(22.9 |
) |
|
|
(36.9 |
) |
Adjusted stockholders' equity
- end of period |
|
|
1,199.1 |
|
|
|
1,189.2 |
|
|
|
1,199.1 |
|
|
|
1,189.2 |
|
Adjusted stockholders' equity
- beginning of period |
|
|
1,175.8 |
|
|
|
1,186.0 |
|
|
|
1,189.2 |
|
|
|
1,266.9 |
|
Average adjusted stockholders'
equity(1) |
D |
$ |
1,187.5 |
|
|
$ |
1,187.6 |
|
|
$ |
1,194.2 |
|
|
$ |
1,228.1 |
|
|
|
|
|
|
|
|
|
|
Return on stockholders'
equity |
A / C |
|
4.7 |
% |
|
|
5.1 |
% |
|
|
12.1 |
% |
|
|
4.5 |
% |
Annualized return on
stockholders' equity |
|
|
18.9 |
|
|
|
20.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted return on
stockholders' equity(1) |
B / D |
|
3.0 |
|
|
|
2.9 |
|
|
|
8.5 |
|
|
|
6.6 |
|
Annualized adjusted return on stockholders'
equity(1) |
|
|
12.2 |
|
|
|
11.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See Page 12
for information regarding our use of Non-GAAP Financial
Measures. |
EMPLOYERS HOLDINGS, INC.Combined
Ratios (unaudited)$ in millions, except per share
amounts |
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31, |
|
December 31, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
Net premiums earned |
A |
$ |
187.5 |
|
|
$ |
181.1 |
|
|
$ |
721.9 |
|
|
$ |
675.2 |
|
Losses and LAE incurred |
B |
|
92.9 |
|
|
|
91.2 |
|
|
|
405.7 |
|
|
|
391.0 |
|
Amortization of deferred
reinsurance gain - losses |
|
|
1.5 |
|
|
|
1.7 |
|
|
|
6.3 |
|
|
|
6.8 |
|
Amortization of deferred
reinsurance gain - contingent commission |
|
|
0.3 |
|
|
|
0.3 |
|
|
|
1.5 |
|
|
|
1.5 |
|
LPT reserve adjustment |
|
|
(0.9 |
) |
|
|
— |
|
|
|
(0.9 |
) |
|
|
— |
|
LPT contingent commission
adjustments |
|
|
0.3 |
|
|
|
— |
|
|
|
0.3 |
|
|
|
— |
|
Losses and LAE excluding
LPT(1) |
C |
$ |
94.1 |
|
|
$ |
93.2 |
|
|
$ |
412.9 |
|
|
$ |
399.3 |
|
Prior year loss reserve
development |
|
|
(24.9 |
) |
|
|
(23.2 |
) |
|
|
(44.9 |
) |
|
|
(33.5 |
) |
Losses and LAE excluding LPT -
current accident year |
D |
$ |
119.0 |
|
|
$ |
116.4 |
|
|
$ |
457.8 |
|
|
$ |
432.8 |
|
Commission expense |
E |
$ |
26.3 |
|
|
$ |
26.0 |
|
|
$ |
100.0 |
|
|
$ |
95.9 |
|
Underwriting and general and administrative expense |
F |
$ |
46.1 |
|
|
$ |
46.7 |
|
|
$ |
180.0 |
|
|
$ |
167.3 |
|
GAAP combined ratio: |
|
|
|
|
|
|
|
|
Loss and LAE ratio |
B/A |
|
49.5 |
% |
|
|
50.4 |
% |
|
|
56.2 |
% |
|
|
57.9 |
% |
Commission expense ratio |
E/A |
|
14.0 |
|
|
|
14.4 |
|
|
|
13.9 |
|
|
|
14.2 |
|
Underwriting and general and
administrative expense ratio |
F/A |
|
24.6 |
|
|
|
25.8 |
|
|
|
24.9 |
|
|
|
24.8 |
|
GAAP
combined ratio |
|
|
88.1 |
% |
|
|
90.6 |
% |
|
|
95.0 |
% |
|
|
96.9 |
% |
Combined ratio excluding
LPT:(1) |
|
|
|
|
|
|
|
|
Loss and LAE ratio excluding
LPT |
C/A |
|
50.2 |
% |
|
|
51.5 |
% |
|
|
57.2 |
% |
|
|
59.1 |
% |
Commission expense ratio |
E/A |
|
14.0 |
|
|
|
14.4 |
|
|
|
13.9 |
|
|
|
14.2 |
|
Underwriting and general and
administrative expense ratio |
F/A |
|
24.6 |
|
|
|
25.8 |
|
|
|
24.9 |
|
|
|
24.8 |
|
Combined ratio excluding LPT |
|
|
88.8 |
% |
|
|
91.7 |
% |
|
|
96.0 |
% |
|
|
98.1 |
% |
Combined ratio excluding LPT: current accident
year:(1) |
|
|
|
|
|
|
|
|
Loss and LAE ratio excluding
LPT |
D/A |
|
63.5 |
% |
|
|
64.3 |
% |
|
|
63.4 |
% |
|
|
64.1 |
% |
Commission expense ratio |
E/A |
|
14.0 |
|
|
|
14.4 |
|
|
|
13.9 |
|
|
|
14.2 |
|
Underwriting and general and
administrative expenses ratio |
F/A |
|
24.6 |
|
|
|
25.8 |
|
|
|
24.9 |
|
|
|
24.8 |
|
Combined ratio excluding LPT: current accident year |
|
|
102.1 |
% |
|
|
104.5 |
% |
|
|
102.2 |
% |
|
|
103.1 |
% |
|
|
|
|
|
|
|
|
|
(1) See Page 12
for information regarding our use of Non-GAAP Financial
Measures. |
|
EMPLOYERS HOLDINGS,
INC.Roll-forward of Unpaid Losses and LAE
(unaudited)$ in millions |
|
|
Three Months Ended |
|
Years Ended |
|
December 31, |
|
December 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
Unpaid losses and LAE at beginning of period |
$ |
1,913.4 |
|
|
$ |
1,979.9 |
|
|
$ |
1,960.7 |
|
|
$ |
1,981.2 |
|
Less reinsurance recoverable
on unpaid losses and LAE |
|
426.6 |
|
|
|
456.4 |
|
|
|
445.4 |
|
|
|
476.9 |
|
Net unpaid losses and LAE at
beginning of period |
|
1,486.8 |
|
|
|
1,523.5 |
|
|
|
1,515.3 |
|
|
|
1,504.3 |
|
Losses and LAE incurred: |
|
|
|
|
|
|
|
Current year |
|
119.1 |
|
|
|
116.5 |
|
|
|
457.8 |
|
|
|
432.8 |
|
Prior years - voluntary business |
|
(24.6 |
) |
|
|
(22.5 |
) |
|
|
(44.6 |
) |
|
|
(32.1 |
) |
Prior years - involuntary business |
|
(0.3 |
) |
|
|
(0.7 |
) |
|
|
(0.3 |
) |
|
|
(1.4 |
) |
Total losses incurred |
|
94.2 |
|
|
|
93.3 |
|
|
|
412.9 |
|
|
|
399.3 |
|
Losses and LAE paid: |
|
|
|
|
|
|
|
Current year |
|
47.6 |
|
|
|
42.1 |
|
|
|
111.7 |
|
|
|
92.5 |
|
Prior years |
|
77.3 |
|
|
|
59.4 |
|
|
|
360.4 |
|
|
|
295.8 |
|
Total paid losses |
|
124.9 |
|
|
|
101.5 |
|
|
|
472.1 |
|
|
|
388.3 |
|
Net unpaid losses and LAE at
end of period |
|
1,456.1 |
|
|
|
1,515.3 |
|
|
|
1,456.1 |
|
|
|
1,515.3 |
|
Reinsurance recoverable,
excluding CECL allowance, on unpaid losses and LAE |
|
428.4 |
|
|
|
445.4 |
|
|
|
428.4 |
|
|
|
445.4 |
|
Unpaid losses and LAE at end
of period |
$ |
1,884.5 |
|
|
$ |
1,960.7 |
|
|
$ |
1,884.5 |
|
|
$ |
1,960.7 |
|
|
Total losses and
LAE shown in the above table exclude amortization of the Deferred
Gain, LPT Reserve Adjustments, and LPT Contingent Commission
Adjustments, which totaled $1.2 million and $2.0 million for the
three months ended December 31, 2023 and 2022, respectively, and
$7.2 million and $8.3 million for the year ended December 31, 2023
and 2022, respectively. |
|
EMPLOYERS HOLDINGS,
INC.Consolidated Investment Portfolio
(unaudited)$ in millions |
|
|
December 31, 2023 |
|
December 31, 2022 |
Investment
Positions: |
Cost or
AmortizedCost(1) |
|
Net Unrealized Gain (Loss) |
|
Fair Value |
|
% |
|
Fair Value |
|
% |
Fixed maturity securities |
$ |
2,048.0 |
|
|
$ |
(109.0 |
) |
|
$ |
1,936.3 |
|
|
77 |
% |
|
$ |
2,186.3 |
|
|
82 |
% |
Equity securities |
|
131.9 |
|
|
|
85.3 |
|
|
|
217.2 |
|
|
9 |
|
|
|
203.7 |
|
|
8 |
|
Other invested assets |
|
82.5 |
|
|
|
9.0 |
|
|
|
91.5 |
|
|
4 |
|
|
|
59.7 |
|
|
2 |
|
Short-term investments |
|
33.1 |
|
|
|
— |
|
|
|
33.1 |
|
|
1 |
|
|
|
119.1 |
|
|
4 |
|
Cash and cash equivalents |
|
226.4 |
|
|
|
— |
|
|
|
226.4 |
|
|
9 |
|
|
|
89.2 |
|
|
3 |
|
Restricted cash and cash
equivalents |
|
0.2 |
|
|
|
— |
|
|
|
0.2 |
|
|
— |
|
|
|
0.2 |
|
|
— |
|
Total investments and cash |
$ |
2,522.1 |
|
|
$ |
(14.7 |
) |
|
$ |
2,504.7 |
|
|
100 |
% |
|
$ |
2,658.2 |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Breakout of Fixed
Maturity Securities: |
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasuries and
Agencies |
$ |
62.5 |
|
|
$ |
(2.0 |
) |
|
$ |
60.5 |
|
|
3 |
% |
|
$ |
92.9 |
|
|
4 |
% |
States and Municipalities |
|
212.3 |
|
|
|
(2.1 |
) |
|
|
210.2 |
|
|
11 |
|
|
|
317.6 |
|
|
15 |
|
Corporate Securities |
|
952.8 |
|
|
|
(54.9 |
) |
|
|
895.8 |
|
|
46 |
|
|
|
868.1 |
|
|
40 |
|
Mortgage-Backed
Securities |
|
469.5 |
|
|
|
(43.5 |
) |
|
|
426.0 |
|
|
22 |
|
|
|
415.3 |
|
|
19 |
|
Asset-Backed Securities |
|
131.8 |
|
|
|
(3.8 |
) |
|
|
128.0 |
|
|
7 |
|
|
|
66.1 |
|
|
3 |
|
Collateralized loan
obligations |
|
92.2 |
|
|
|
(0.7 |
) |
|
|
91.5 |
|
|
5 |
|
|
|
260.9 |
|
|
12 |
|
Bank loans and other |
|
126.9 |
|
|
|
(2.0 |
) |
|
|
124.3 |
|
|
6 |
|
|
|
165.4 |
|
|
8 |
|
Total fixed maturity securities |
$ |
2,048.0 |
|
|
$ |
(109.0 |
) |
|
$ |
1,936.3 |
|
|
100 |
% |
|
$ |
2,186.3 |
|
|
100 |
% |
Weighted average ending book yield |
4.3 |
% |
|
3.9 |
% |
Average credit quality (S&P) |
|
A |
|
|
A |
Duration |
4.5 |
|
|
3.9 |
|
(1)
Amortized cost excludes an allowance for current expected credit
losses (CECL) of $2.7 million |
|
|
EMPLOYERS HOLDINGS, INC.Book Value
Per Share (unaudited)$ in millions, except per
share amounts |
|
|
|
December 31,2023 |
|
December 31,2022 |
Numerators: |
|
|
|
|
Stockholders' equity |
A |
$ |
1,013.9 |
|
|
$ |
944.2 |
|
Deferred Gain |
|
|
99.2 |
|
|
|
106.1 |
|
Stockholders' equity
including the Deferred Gain(1) |
B |
|
1,113.1 |
|
|
|
1,050.3 |
|
Accumulated other comprehensive loss, before taxes |
|
|
108.9 |
|
|
|
175.8 |
|
Income taxes related to accumulated other comprehensive loss,
before taxes |
|
|
(22.9 |
) |
|
|
(36.9 |
) |
Adjusted stockholders'
equity(1) |
C |
$ |
1,199.1 |
|
|
$ |
1,189.2 |
|
|
|
|
|
|
Denominator (shares
outstanding) |
D |
|
25,369,753 |
|
|
|
27,160,748 |
|
|
|
|
|
|
Book value per share(1) |
A / D |
$ |
39.96 |
|
|
$ |
34.76 |
|
Book value per share including
the Deferred Gain(1) |
B / D |
|
43.88 |
|
|
|
38.67 |
|
Adjusted book value per
share(1) |
C / D |
|
47.26 |
|
|
|
43.78 |
|
|
|
|
|
|
Cash dividends declared per
share |
|
$ |
1.10 |
|
|
$ |
3.28 |
|
|
|
|
|
|
YTD Change
in:(2) |
|
|
|
|
Book value per share |
|
|
18.1 |
% |
|
|
(13.0 |
)% |
Book value per share including the Deferred Gain |
|
|
16.3 |
|
|
|
(12.3 |
) |
Adjusted book value per share |
|
|
10.5 |
|
|
|
3.0 |
|
|
|
|
|
|
(1) See Page 12
for information regarding our use of Non-GAAP Financial
Measures. |
(2) Reflects the
change per share after taking into account dividends declared in
the period. |
|
EMPLOYERS HOLDINGS, INC.Earnings
Per Share (unaudited)$ in millions, except per
share amounts |
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31, |
|
December 31, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Numerators: |
|
|
|
|
|
|
|
|
Net income |
A |
$ |
45.6 |
|
|
$ |
47.2 |
|
|
$ |
118.1 |
|
|
$ |
48.4 |
|
Impact of the LPT
Agreement |
|
|
(1.2 |
) |
|
|
(2.0 |
) |
|
|
(7.2 |
) |
|
|
(8.3 |
) |
Net income excluding
LPT(1) |
B |
$ |
44.4 |
|
|
$ |
45.2 |
|
|
$ |
110.9 |
|
|
$ |
40.1 |
|
Net realized and unrealized
(gains) losses on investments |
|
|
(12.1 |
) |
|
|
(13.7 |
) |
|
|
(22.7 |
) |
|
|
51.8 |
|
Lease termination and asset
impairment charges |
|
|
1.6 |
|
|
|
— |
|
|
|
11.0 |
|
|
|
— |
|
Income tax expense (benefit)
related to items excluded from Net income |
|
|
2.2 |
|
|
|
2.9 |
|
|
|
2.5 |
|
|
|
(10.9 |
) |
Adjusted net
income(1) |
C |
$ |
36.1 |
|
|
$ |
34.4 |
|
|
$ |
101.7 |
|
|
$ |
81.0 |
|
|
|
|
|
|
|
|
|
|
Denominators: |
|
|
|
|
|
|
|
|
Average common shares
outstanding (basic) |
D |
|
25,645,821 |
|
|
|
27,258,246 |
|
|
|
26,368,801 |
|
|
|
27,503,941 |
|
Average common shares
outstanding (diluted) |
E |
|
25,801,380 |
|
|
|
27,435,134 |
|
|
|
26,523,651 |
|
|
|
27,680,988 |
|
|
|
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
|
|
|
Basic |
A / D |
$ |
1.78 |
|
|
$ |
1.73 |
|
|
$ |
4.48 |
|
|
$ |
1.76 |
|
Diluted |
A / E |
|
1.77 |
|
|
|
1.72 |
|
|
|
4.45 |
|
|
|
1.75 |
|
|
|
|
|
|
|
|
|
|
Earnings per share
excluding LPT:(1) |
|
|
|
|
|
|
|
|
Basic |
B / D |
$ |
1.73 |
|
|
$ |
1.66 |
|
|
$ |
4.21 |
|
|
$ |
1.46 |
|
Diluted |
B / E |
|
1.72 |
|
|
|
1.65 |
|
|
|
4.18 |
|
|
|
1.45 |
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share:(1) |
|
|
|
|
|
|
|
|
Basic |
C / D |
$ |
1.41 |
|
|
$ |
1.26 |
|
|
$ |
3.86 |
|
|
$ |
2.95 |
|
Diluted |
C / E |
|
1.40 |
|
|
|
1.25 |
|
|
|
3.83 |
|
|
|
2.93 |
|
|
|
|
|
|
|
|
|
|
(1) See Page 12
for information regarding our use of Non-GAAP Financial
Measures. |
|
Non-GAAP Financial Measures
Within this earnings release we present the
following measures, each of which are "non-GAAP financial
measures." A reconciliation of these measures to the Company's most
directly comparable GAAP financial measures is included herein.
Management believes that these non-GAAP measures are important to
the Company's investors, analysts and other interested parties who
benefit from having an objective and consistent basis for
comparison with other companies within our industry. Management
further believes that these measures are more relevant than
comparable GAAP measures in evaluating our financial
performance.
The LPT Agreement is a
non-recurring transaction that does not result in any meaningful
ongoing cash benefits to the Company. Management believes that
providing non-GAAP measures that exclude the effects of the LPT
Agreement (amortization of deferred reinsurance gain, adjustments
to LPT Agreement ceded reserves and adjustments to contingent
commission receivable) is useful in providing investors, analysts
and other interested parties a meaningful understanding of the
Company's ongoing underwriting performance.
Deferred reinsurance gain (Deferred
Gain) reflects the unamortized gain from the LPT
Agreement. This gain has been deferred and is being amortized using
the recovery method, whereby the amortization is determined by the
proportion of actual reinsurance recoveries to total estimated
recoveries, except for the contingent profit commission, which is
being amortized through June 30, 2024. Amortization is reflected in
losses and LAE incurred.
Adjusted net income (see Page 5
for calculations) is net income excluding the effects of the LPT
Agreement, and net realized and unrealized gains and losses on
investments (net of tax), and any miscellaneous non-recurring
transactions (net of tax). Management believes that providing this
non-GAAP measures is helpful to investors, analysts and other
interested parties in identifying trends in the Company's operating
performance because such items have limited significance to its
ongoing operations or can be impacted by both discretionary and
other economic factors and may not represent operating trends.
Stockholders' equity including the
Deferred Gain (see Page 10 for calculations) is
stockholders' equity including the Deferred Gain. Management
believes that providing this non-GAAP measure is useful in
providing investors, analysts and other interested parties a
meaningful measure of the Company's total underwriting capital.
Adjusted stockholders' equity
(see Page 10 for calculations) is stockholders' equity including
the Deferred Gain, less accumulated other comprehensive income (net
of tax). Management believes that providing this non-GAAP measure
is useful to investors, analysts and other interested parties since
it serves as the denominator to the Company's adjusted return on
stockholders' equity metric.
Return on stockholders' equity and
Adjusted return on stockholders' equity (see Page 6 for
calculations). Management believes that these
profitability measures are widely used by our investors, analysts
and other interested parties.
Book value per share, Book value per
share including the Deferred Gain, and Adjusted book value per
share (see Page 10 for calculations). Management believes
that these valuation measures are widely used by our investors,
analysts and other interested parties.
Net income excluding LPT (see
Page 5 for calculations). Management believes that these
performance and underwriting measures are widely used by our
investors, analysts and other interested parties.
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