Employers Holdings Reports Balanced Earnings Call Insights

Employers Holdings ((EIG)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call of Employers Holdings reflected a balanced sentiment with notable achievements in premium growth and investment performance, contrasted by challenges such as increased loss ratios and reduced favorable prior year loss reserve development.

Record High Written and Earned Premium

Employers Holdings reported the highest levels of written and earned premium in its history. The gross written premium, excluding audit premiums, increased by 3% in the fourth quarter and 6% for the full year, showcasing the company’s robust performance in premium generation.

Strong Investment Performance

The company saw impressive results in its investment portfolio, with net investment income totaling $27 million for the fourth quarter and $107 million for the year. This strong performance was bolstered by significant net unrealized gains from common stock and other investments.

Underwriting Profit for Tenth Consecutive Year

Employers Holdings achieved a combined ratio of 95.5% for Q4 and 98.6% for the year, underlining its steadfast underwriting profitability for the tenth consecutive year. This achievement highlights the company’s effective risk management and operational efficiency.

Expense Ratio Improvements

The company successfully reduced its underwriting and general administrative expense ratios to 23.2% for Q4 and 23.5% for the full year, down from the previous year’s figures. These improvements were primarily due to cost savings from the Cerity integration plan.

AM Best Rating Upgrade

AM Best upgraded the financial strength ratings of each insurance company to A, reinforcing Employers Holdings’ capability to provide reliable, high-quality coverage and enhancing its reputation in the insurance industry.

Shareholder Returns

Employers Holdings returned $72 million to its shareholders through share repurchases and regular quarterly dividends, reflecting a commitment to enhancing shareholder value and demonstrating strong financial health.

Lower Favorable Prior Year Loss Reserve Development

The company reported a decrease in favorable prior year loss reserve development, with $9 million for Q4 and $18 million for the year, down from $25 million and $45 million respectively in the previous year, indicating a shift in reserve development trends.

Increase in Loss and LAE Ratios

The company experienced an increase in the loss and LAE ratios, which rose to 59.5% for Q4 and 61.6% for the full year, compared to 50.2% and 57.2% a year ago. This rise points to challenging conditions in managing losses and expenses.

Realized and Unrealized Investment Losses

Net realized and unrealized investment losses were less than $1 million for the quarter, a sharp contrast to the net gains of $12 million a year ago, reflecting market volatility and changes in investment strategy.

Forward-Looking Guidance

Looking ahead, Employers Holdings shared optimistic guidance, emphasizing its highest historical levels of written and earned premiums, and net investment income. The company plans to continue its cost-saving strategies from the Cerity integration, despite a competitive rate environment. The anticipated increase in the 2025 accident year loss and LAE ratio aligns with industry trends, indicating proactive adaptation to market conditions.

In conclusion, the earnings call of Employers Holdings painted a picture of balanced sentiment with substantial achievements and certain challenges. The company’s strong premium growth and investment performance stand out as highlights, while the rise in loss ratios and lower favorable prior year loss reserve development present areas of concern. Overall, Employers Holdings remains a robust player in the insurance industry, with a strategic outlook focused on growth and profitability.