[February 21, 2018] |
|
Employers Holdings, Inc. Reports Fourth Quarter 2017 Results
Employers Holdings, Inc. ("EHI" or the "Company") (NYSE:EIG)
today reported the following for the fourth quarter of 2017: (i) net
income of $31.3 million ($0.94 per diluted share); (ii) net income
excluding the impact of the LPT of $28.2 million ($0.85 per diluted
share); and (iii) adjusted net income of $35.2 million ($1.06 per
diluted share).
The Company also reported that the Board of Directors declared a first
quarter 2018 dividend and authorized a new $50.0 million share
repurchase program. The first quarter dividend, which was increased to
$0.20 per share, will be paid on March 21, 2018 to stockholders of
record on March 7, 2018. The new share repurchase authorization, which
replaces an expiring program with a remaining authorization of $28.9
million, will expire on February 26, 2020.
The Company's adjusted net income for the fourth quarter of 2017
increased $3.9 million year-over-year. This increase reflects strong
underwriting results highlighted by an 83.0% combined ratio before the
impact of the LPT and a 6% increase in net earned premiums.
The Company's net income and net income before the impact of the LPT for
the fourth quarter of 2017 decreased by $4.2 million and $4.4 million,
respectively, year-over-year. The decreases were the result of a
non-recurring income tax expense of $7.0 million in connection with U.S.
corporate tax reform enacted in December. This incremental income tax
expense represents the impact of re-measurement of the Company's
deferred tax assets and liabilities using the new U.S. statutory tax
rate.
The Company's book value per share of $29.07, book value per share
including the Deferred Gain of $34.09 and adjusted book value per share
of $30.80, increased 13.4%, 9.7% and 7.2% for the year, respectively,
each computed after taking into account dividends declared during 2017.
Chief Executive Officer Douglas D. Dirks commented on the results: "The
fourth quarter marked a strong end to a successful year for EMPLOYERS.
During the fourth quarter we grew written premiums by 8% year-over-year,
lowered our current and prior year loss reserve provisions and increased
the quarterly dividend by 33.3%.
In addition, we have recently initiated a plan of aggressive development
and implementation of new technologies and capabilities that we believe
will fundamentally transform and enhance the digital experience of our
customers. We have chosen to reinvest the expected financial benefits
from corporate income tax reform back into our business over the next
several years by greatly accelerating the development and deployment of
these new digital capabilities. We believe that these new technological
and intellectual capabilities will support our future growth
initiatives, provide us with greater pricing precision and flexibility
and promote long-term value creation.
We expect that the development and implementation of these new
technologies and capabilities will increase our underwriting and other
operating expense ratio by approximately four percentage points in 2018
and two percentage points in 2019, as compared to that experienced in
2017. However, we expect that these increased expenses will be offset by
operational efficiency gains in future periods."
Summary of Fourth Quarter 2017 Results
(All comparisons vs. fourth quarter 2016, unless noted otherwise).
Net earned premiums of $181.6 million increased $9.6 million due
primarily to new business writings and increases in final audit
premiums, partially offset by declines in renewal business premium.
The loss ratio before the impact of the LPT of 48.6% decreased 5.4
percentage points reflecting the continued impacts of key business
initiatives including: an emphasis on settling open claims; diversifying
our risk exposure across geographic markets; and leveraging data-driven
strategies to target, underwrite and price profitable classes of
business across all of our markets.
The commission expense ratio of 13.6% increased 2.0 percentage points
due mainly to increases in agency incentives and in the amount of
business produced by our partnerships and alliances.
The underwriting and other operating expense ratio of 20.8% increased
0.7 percentage points due mainly to increases in fourth quarter
professional fees and incentive accruals.
Net investment income of $19.1 million was unchanged.
Stockholders' Equity including the Deferred Gain
Stockholders' equity including the Deferred Gain was $1,111.3 million,
an increase of 9.4% from December 31, 2016.
Conference Call and Webcast, Reports Filed With
The Securities and Exchange Commission (the "SEC") and Supplemental
Materials
The information in this press release should be read in conjunction with
the Financial Supplement that is attached to this press release and is
available on our website.
Reconciliation of Non-GAAP Financial Measures to GAAP
Within this earnings release we present various financial measures, some
of which are "non-GAAP financial measures." A description of these
non-GAAP financial measures, as well as a reconciliation of such
non-GAAP measures to the Company's most directly comparable GAAP
financial measures is included in the attached Financial Supplement.
Management believes that these non-GAAP measures are meaningful 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. These non-GAAP measures are not a
substitute for GAAP measures and investors should be careful when
comparing the Company's non-GAAP financial measures to similarly titled
measures used by other companies.
The Company will host a conference call on Thursday, February 22, 2018,
at 8:30 a.m. Pacific Standard Time. The conference call will be
available via a live web cast on the Company's web site at www.employers.com.
An archived version will be available several hours after the call. The
conference call replay number is (404) 537-3406 or (855) 859-2056 with a
pass code of 5177907.
The Company provides a list of portfolio securities in the Calendar of
Events, "Investors" section of its website at www.employers.com.
The Company also provides its filings with the Securities and Exchange
Commission and its investor presentations on its website.
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, 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. EHI and its management caution
investors that such forward-looking statements are not guarantees of
future performance. Risks and uncertainties are inherent in EHI'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 EHI'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.
The SEC filings for EHI can be accessed through the "Investors" link on
the Company's website, www.employers.com,
or through the SEC's EDGAR Database at www.sec.gov
(EHI EDGAR CIK No. 0001379041).
Copyright © 2018 EMPLOYERS. All rights reserved. EMPLOYERS® and
America's small business insurance specialist. ® are
registered trademarks of Employers Insurance Company of Nevada.
Employers Holdings, Inc. is 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. Insurance subsidiaries include Employers Insurance Company
of Nevada, Employers Compensation Insurance Company, Employers Preferred
Insurance Company, and Employers Assurance Company, all rated A-
(Excellent) by A.M. Best Company.
Additional information can be found at: http://www.employers.com.
|
Employers Holdings, Inc.
|
Fourth Quarter And Full Year 2017
|
Financial Supplement
|
|
EMPLOYERS HOLDINGS, INC.
Table of Contents
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Page
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1
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Consolidated Financial Highlights
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2
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Summary Consolidated Balance Sheets
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3
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Summary Consolidated Income Statements
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4
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Return on Equity
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5
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Combined Ratios
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6
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Roll-forward of Unpaid Losses and LAE
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7
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Consolidated Investment Portfolio
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8
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Book Value Per Share
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9
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Earnings Per Share
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10
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Non-GAAP Financial Measures
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EMPLOYERS HOLDINGS, INC.
Consolidated Financial Highlights (unaudited)
$ in millions, except per share amounts
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Three Months Ended
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Years Ended
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December 31,
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December 31,
|
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2017
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2016
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% change
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2017
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2016
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% change
|
Selected financial highlights:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross insurance premiums written
|
|
$
|
168.4
|
|
|
$
|
155.7
|
|
|
8
|
%
|
|
$
|
729.7
|
|
|
$
|
701.4
|
|
|
4
|
%
|
Net insurance premiums written
|
|
167.0
|
|
|
154.2
|
|
|
8
|
|
|
723.7
|
|
|
694.6
|
|
|
4
|
|
Net insurance premiums earned
|
|
181.6
|
|
|
172.0
|
|
|
6
|
|
|
716.5
|
|
|
694.8
|
|
|
3
|
|
Net investment income
|
|
19.1
|
|
|
19.1
|
|
|
-
|
|
|
74.6
|
|
|
73.2
|
|
|
2
|
|
Underwriting income(1)
|
|
33.9
|
|
|
27.6
|
|
|
23
|
|
|
68.0
|
|
|
57.3
|
|
|
19
|
|
Net income before impact of the LPT(1)
|
|
28.2
|
|
|
32.6
|
|
|
(13
|
)
|
|
89.6
|
|
|
90.1
|
|
|
(1
|
)
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Adjusted net income(1)
|
|
35.2
|
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|
31.3
|
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|
12
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|
95.5
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|
83.0
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|
15
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Net income
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31.3
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35.5
|
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(12
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)
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101.2
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106.7
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(5
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)
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Comprehensive income
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30.4
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(7.6
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)
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n/m
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116.3
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97.6
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19
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Total assets
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3,840.1
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3,773.4
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2
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Stockholders' equity
|
|
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947.7
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840.6
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13
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Stockholders' equity including the Deferred Gain(2)
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|
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1,111.3
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|
1,015.5
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|
9
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|
Adjusted stockholders' equity(2)
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|
|
|
|
|
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1,003.9
|
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|
941.0
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|
|
7
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|
Annualized adjusted return on stockholders' equity(3)
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14.1
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%
|
|
13.5
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%
|
|
4
|
%
|
|
9.8
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%
|
|
9.2
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%
|
|
7
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|
Amounts per share:
|
|
|
|
|
|
|
|
|
|
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Cash dividends declared per share
|
|
$
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0.15
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|
$
|
0.09
|
|
|
67
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%
|
|
$
|
0.60
|
|
|
$
|
0.36
|
|
|
67
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%
|
Earnings per diluted share(4)
|
|
0.94
|
|
|
1.08
|
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(13
|
)
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3.06
|
|
|
3.24
|
|
|
(6
|
)
|
Earnings per diluted share before impact of the LPT(4)
|
|
0.85
|
|
|
0.99
|
|
|
(14
|
)
|
|
2.71
|
|
|
2.73
|
|
|
(1
|
)
|
Adjusted earnings per diluted share(4)
|
|
1.06
|
|
|
0.95
|
|
|
12
|
|
|
2.89
|
|
|
2.52
|
|
|
15
|
|
Book value per share(2)
|
|
|
|
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29.07
|
|
|
26.16
|
|
|
11
|
|
Book value per share including the Deferred Gain(2)
|
|
|
|
|
|
|
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34.09
|
|
|
31.61
|
|
|
8
|
|
Adjusted book value per share(2)
|
|
|
|
|
|
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30.80
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29.29
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|
5
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|
Combined ratio before impact of the LPT:(5)
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Loss and loss adjustment expense ratio:
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|
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|
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|
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Current year
|
|
58.5
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%
|
|
63.8
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%
|
|
|
|
62.4
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%
|
|
65.2
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%
|
|
|
Prior year
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(9.9
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)
|
|
(9.8
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)
|
|
|
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(2.6
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)
|
|
(2.7
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)
|
|
|
Loss and loss adjustment expense ratio
|
|
48.6
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%
|
|
54.0
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%
|
|
|
|
59.8
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%
|
|
62.5
|
%
|
|
|
Commission expense ratio
|
|
13.6
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|
|
11.6
|
|
|
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12.8
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|
12.0
|
|
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Underwriting and other operating expense ratio
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|
20.8
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|
20.1
|
|
|
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|
19.5
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19.7
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Combined ratio before impact of the LPT
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83.0
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%
|
|
85.6
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%
|
|
|
|
92.1
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%
|
|
94.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See Page 3 for calculations and Page 10 for information
regarding our use of Non-GAAP Financial Measures.
|
(2) See Page 8 for calculations and Page 10 for
information regarding our use of Non-GAAP Financial Measures.
|
(3) See Page 4 for calculations and Page 10 for information
regarding our use of Non-GAAP Financial Measures.
|
(4) See Page 9 for calculations and Page 10 for information
regarding our use of Non-GAAP Financial Measures.
|
(5) See Page 5 for calculations and Page 10 for information
regarding our use of Non-GAAP Financial Measures.
|
|
|
EMPLOYERS HOLDINGS, INC.
Summary Consolidated Balance Sheets (unaudited)
$ in millions, except per share amounts
|
|
|
|
|
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|
December 31, 2017
|
|
December 31, 2016
|
ASSETS
|
|
|
|
|
Investments, cash and cash equivalents
|
|
$
|
2,752.0
|
|
|
$
|
2,623.4
|
|
Accrued investment income
|
|
19.6
|
|
|
20.6
|
|
Premiums receivable, net
|
|
326.7
|
|
|
304.7
|
|
Reinsurance recoverable on paid and unpaid losses
|
|
544.2
|
|
|
588.7
|
|
Deferred policy acquisition costs
|
|
45.8
|
|
|
44.3
|
|
Deferred income taxes, net
|
|
28.7
|
|
|
59.4
|
|
Contingent commission receivable-LPT Agreement
|
|
31.4
|
|
|
31.1
|
|
Other assets
|
|
91.7
|
|
|
101.2
|
|
Total assets
|
|
$
|
3,840.1
|
|
|
$
|
3,773.4
|
|
|
|
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LIABILITIES
|
|
|
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|
Unpaid losses and LAE
|
|
$
|
2,266.1
|
|
|
$
|
2,301.0
|
|
Unearned premiums
|
|
318.3
|
|
|
310.3
|
|
Commissions and premium taxes payable
|
|
55.3
|
|
|
48.8
|
|
Deferred Gain
|
|
163.6
|
|
|
174.9
|
|
Notes payable
|
|
20.0
|
|
|
32.0
|
|
Other liabilities
|
|
69.1
|
|
|
65.8
|
|
Total liabilities
|
|
$
|
2,892.4
|
|
|
$
|
2,932.8
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
Common stock and additional paid-in capital
|
|
$
|
381.8
|
|
|
$
|
372.6
|
|
Retained earnings
|
|
842.2
|
|
|
777.2
|
|
Accumulated other comprehensive income, net
|
|
107.4
|
|
|
74.5
|
|
Treasury stock, at cost
|
|
(383.7
|
)
|
|
(383.7
|
)
|
Total stockholders' equity
|
|
947.7
|
|
|
840.6
|
|
Total liabilities and stockholders' equity
|
|
$
|
3,840.1
|
|
|
$
|
3,773.4
|
|
|
|
|
|
|
Stockholders' equity including the Deferred Gain (1)
|
|
$
|
1,111.3
|
|
|
$
|
1,015.5
|
|
Adjusted stockholders' equity (1)
|
|
1,003.9
|
|
|
941.0
|
|
Book value per share (1)
|
|
$
|
29.07
|
|
|
$
|
26.16
|
|
Book value per share including the Deferred Gain (1)
|
|
34.09
|
|
|
31.61
|
|
Adjusted book value per share (1)
|
|
30.80
|
|
|
29.29
|
|
|
|
|
|
|
(1) See Page 8 for calculations and Page 10 for information
regarding our use of Non-GAAP Financial Measures.
|
|
|
EMPLOYERS HOLDINGS, INC.
Summary Consolidated Income Statements (unaudited)
$ in millions, except per share amounts
|
|
|
|
|
|
Three Months Ended
|
|
Years Ended
|
|
December 31,
|
|
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Underwriting revenues:
|
|
|
|
Gross premiums written
|
$
|
168.4
|
|
|
$
|
155.7
|
|
|
$
|
729.7
|
|
|
$
|
701.4
|
|
Premiums ceded
|
(1.4
|
)
|
|
(1.5
|
)
|
|
(6.0
|
)
|
|
(6.8
|
)
|
Net premiums written
|
167.0
|
|
|
154.2
|
|
|
723.7
|
|
|
694.6
|
|
Net premiums earned
|
181.6
|
|
|
172.0
|
|
|
716.5
|
|
|
694.8
|
|
Underwriting expenses:
|
|
|
|
|
|
|
|
Losses and LAE incurred
|
(85.2
|
)
|
|
(89.9
|
)
|
|
(417.2
|
)
|
|
(417.9
|
)
|
Commission expense
|
(24.7
|
)
|
|
(20.0
|
)
|
|
(91.4
|
)
|
|
(83.5
|
)
|
Underwriting and other operating expenses
|
(37.8
|
)
|
|
(34.5
|
)
|
|
(139.9
|
)
|
|
(136.1
|
)
|
Underwriting income
|
33.9
|
|
|
27.6
|
|
|
68.0
|
|
|
57.3
|
|
Net investment income
|
19.1
|
|
|
19.1
|
|
|
74.6
|
|
|
73.2
|
|
Net realized gains on investments
|
-
|
|
|
2.1
|
|
|
7.4
|
|
|
11.2
|
|
Gain on redemption of notes payable
|
-
|
|
|
-
|
|
|
2.1
|
|
|
-
|
|
Other income
|
0.3
|
|
|
-
|
|
|
0.8
|
|
|
0.6
|
|
Interest expense
|
(0.3
|
)
|
|
(0.4
|
)
|
|
(1.4
|
)
|
|
(1.6
|
)
|
Other expenses
|
-
|
|
|
-
|
|
|
(7.5
|
)
|
|
-
|
|
Income tax expense
|
(21.7
|
)
|
|
(12.9
|
)
|
|
(42.8
|
)
|
|
(34.0
|
)
|
Net income
|
31.3
|
|
|
35.5
|
|
|
101.2
|
|
|
106.7
|
|
Net unrealized (losses) gains on investments arising during the
period, net of tax
|
(0.9
|
)
|
|
(41.7
|
)
|
|
19.9
|
|
|
(1.8
|
)
|
Reclassification adjustment for net realized gains in net income,
net of tax
|
-
|
|
|
(1.4
|
)
|
|
(4.8
|
)
|
|
(7.3
|
)
|
Comprehensive income (loss)
|
$
|
30.4
|
|
|
$
|
(7.6
|
)
|
|
$
|
116.3
|
|
|
$
|
97.6
|
|
Net income
|
$
|
31.3
|
|
|
$
|
35.5
|
|
|
$
|
101.2
|
|
|
$
|
106.7
|
|
Amortization of the Deferred Gain - losses
|
(2.3
|
)
|
|
(2.4
|
)
|
|
(9.3
|
)
|
|
(9.7
|
)
|
Amortization of the Deferred Gain - contingent commission
|
(0.5
|
)
|
|
(0.5
|
)
|
|
(2.0
|
)
|
|
(2.0
|
)
|
LPT reserve adjustment
|
-
|
|
|
-
|
|
|
-
|
|
|
(3.1
|
)
|
LPT contingent commission adjustments
|
(0.3
|
)
|
|
-
|
|
|
(0.3
|
)
|
|
(1.8
|
)
|
Net income before impact of the LPT Agreement (1)
|
$
|
28.2
|
|
|
$
|
32.6
|
|
|
$
|
89.6
|
|
|
$
|
90.1
|
|
Net realized gains on investments
|
-
|
|
|
(2.1
|
)
|
|
(7.4
|
)
|
|
(11.2
|
)
|
Gain on redemption of notes payable
|
-
|
|
|
-
|
|
|
(2.1
|
)
|
|
-
|
|
Write-off of previously capitalized costs
|
-
|
|
|
-
|
|
|
7.5
|
|
|
-
|
|
Amortization of intangibles
|
-
|
|
|
0.1
|
|
|
0.3
|
|
|
0.4
|
|
Income tax benefit related to items excluded from Net income
|
-
|
|
|
0.7
|
|
|
0.6
|
|
|
3.7
|
|
Net impact of tax reform
|
7.0
|
|
|
-
|
|
|
7.0
|
|
|
-
|
|
Adjusted net income (1)
|
$
|
35.2
|
|
|
$
|
31.3
|
|
|
$
|
95.5
|
|
|
$
|
83.0
|
|
|
|
|
|
|
|
|
|
(1) See Page 10 regarding our use of Non-GAAP Financial Measures.
|
|
|
|
|
|
|
|
|
|
EMPLOYERS HOLDINGS, INC.
Return on Equity (unaudited)
$ in millions, except per share amount
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Years Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Net income
|
A
|
$
|
31.3
|
|
|
$
|
35.5
|
|
|
$
|
101.2
|
|
|
$
|
106.7
|
|
Impact of the LPT Agreement
|
|
(3.1
|
)
|
|
(2.9
|
)
|
|
(11.6
|
)
|
|
(16.6
|
)
|
Net realized gains on investments
|
|
-
|
|
|
(2.1
|
)
|
|
(7.4
|
)
|
|
(11.2
|
)
|
Gain on redemption of notes payable
|
|
-
|
|
|
-
|
|
|
(2.1
|
)
|
|
-
|
|
Write-off of previously capitalized costs
|
|
-
|
|
|
-
|
|
|
7.5
|
|
|
-
|
|
Amortization of intangibles
|
|
-
|
|
|
0.1
|
|
|
0.3
|
|
|
0.4
|
|
Income tax benefit related to items excluded from Net income
|
|
-
|
|
|
0.7
|
|
|
0.6
|
|
|
3.7
|
|
Net impact of tax reform
|
|
7.0
|
|
|
-
|
|
|
7.0
|
|
|
-
|
|
Adjusted net income(1)
|
B
|
$
|
35.2
|
|
|
$
|
31.3
|
|
|
$
|
95.5
|
|
|
$
|
83.0
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity - end of period
|
|
$
|
947.7
|
|
|
$
|
840.6
|
|
|
$
|
947.7
|
|
|
$
|
840.6
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity - beginning of period
|
|
917.1
|
|
|
850.1
|
|
|
840.6
|
|
|
760.8
|
|
|
|
|
|
|
|
|
|
|
Average stockholders' equity
|
C
|
$
|
932.4
|
|
|
$
|
845.4
|
|
|
$
|
894.2
|
|
|
$
|
800.7
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity - end of period
|
|
$
|
947.7
|
|
|
$
|
840.6
|
|
|
$
|
947.7
|
|
|
$
|
840.6
|
|
Deferred Gain - end of period
|
|
163.6
|
|
|
174.9
|
|
|
163.6
|
|
|
174.9
|
|
Accumulated other comprehensive income - end of period
|
|
(136.0
|
)
|
|
(114.6
|
)
|
|
(136.0
|
)
|
|
(114.6
|
)
|
Income tax related to accumulated other comprehensive income - end
of period
|
|
28.6
|
|
|
40.1
|
|
|
28.6
|
|
|
40.1
|
|
Adjusted stockholders' equity - end of period
|
|
1,003.9
|
|
|
941.0
|
|
|
1,003.9
|
|
|
941.0
|
|
Adjusted stockholders' equity - beginning of period
|
|
992.9
|
|
|
910.3
|
|
|
941.0
|
|
|
866.7
|
|
Average adjusted stockholders' equity(1)
|
D
|
$
|
998.4
|
|
|
$
|
925.7
|
|
|
$
|
972.5
|
|
|
$
|
903.9
|
|
|
|
|
|
|
|
|
|
|
Return on stockholders' equity
|
A / C
|
3.4
|
%
|
|
4.2
|
%
|
|
11.3
|
%
|
|
13.3
|
%
|
Annualized return on stockholders' equity
|
|
13.4
|
%
|
|
16.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted return on stockholders' equity(1)
|
B / D
|
3.5
|
%
|
|
3.4
|
%
|
|
9.8
|
%
|
|
9.2
|
%
|
Annualized adjusted return on stockholders' equity(1)
|
|
14.1
|
%
|
|
13.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See Page 10 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,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net premiums earned
|
A
|
$
|
181.6
|
|
|
$
|
172.0
|
|
|
$
|
716.5
|
|
|
$
|
694.8
|
|
Losses and LAE incurred
|
B
|
85.2
|
|
|
89.9
|
|
|
417.2
|
|
|
417.9
|
|
Amortization of the Deferred Gain - losses
|
|
2.3
|
|
|
2.4
|
|
|
9.3
|
|
|
9.7
|
|
Amortization of the Deferred Gain - contingent commission
|
|
0.5
|
|
|
0.5
|
|
|
2.0
|
|
|
2.0
|
|
LPT reserve adjustment
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3.1
|
|
LPT contingent commission adjustments
|
|
0.3
|
|
|
-
|
|
|
0.3
|
|
|
1.8
|
|
Losses and LAE before impact of the LPT (1)
|
C
|
$
|
88.3
|
|
|
$
|
92.8
|
|
|
$
|
428.8
|
|
|
$
|
434.5
|
|
Prior year loss reserve development
|
|
(18.0
|
)
|
|
(16.9
|
)
|
|
(18.5
|
)
|
|
(18.4
|
)
|
Losses and LAE before impact of the LPT - current accident year
|
D
|
$
|
106.3
|
|
|
$
|
109.7
|
|
|
$
|
447.3
|
|
|
$
|
452.9
|
|
Commission expense
|
E
|
$
|
24.7
|
|
|
$
|
20.0
|
|
|
$
|
91.4
|
|
|
$
|
83.5
|
|
Underwriting and other operating expenses
|
F
|
37.8
|
|
|
34.5
|
|
|
139.9
|
|
|
136.1
|
|
Combined ratio:
|
|
|
|
|
|
|
|
|
Loss and LAE ratio
|
B/A
|
46.9
|
%
|
|
52.3
|
%
|
|
58.2
|
%
|
|
60.1
|
%
|
Commission expense ratio
|
E/A
|
13.6
|
|
|
11.6
|
|
|
12.8
|
|
|
12.0
|
|
Underwriting and other operating expense ratio
|
F/A
|
20.8
|
|
|
20.1
|
|
|
19.5
|
|
|
19.7
|
|
Combined ratio
|
|
81.3
|
%
|
|
84.0
|
%
|
|
90.5
|
%
|
|
91.8
|
%
|
Combined ratio before impact of the LPT: (1)
|
|
|
|
|
|
|
|
|
Loss and LAE ratio before impact of the LPT
|
C/A
|
48.6
|
%
|
|
54.0
|
%
|
|
59.8
|
%
|
|
62.5
|
%
|
Commission expense ratio
|
E/A
|
13.6
|
|
|
11.6
|
|
|
12.8
|
|
|
12.0
|
|
Underwriting and other operating expense ratio
|
F/A
|
20.8
|
|
|
20.1
|
|
|
19.5
|
|
|
19.7
|
|
Combined ratio before impact of the LPT
|
|
83.0
|
%
|
|
85.6
|
%
|
|
92.1
|
%
|
|
94.1
|
%
|
Combined ratio before impact of the LPT: current accident year: (1)
|
|
|
|
|
|
|
|
|
Loss and LAE ratio before impact of the LPT
|
D/A
|
58.5
|
%
|
|
63.8
|
%
|
|
62.4
|
%
|
|
65.2
|
%
|
Commission expense ratio
|
E/A
|
13.6
|
|
|
11.6
|
|
|
12.8
|
|
|
12.0
|
|
Underwriting and other operating expense ratio
|
F/A
|
20.8
|
|
|
20.1
|
|
|
19.5
|
|
|
19.7
|
|
Combined ratio before impact of the LPT: current accident year
|
|
93.0
|
%
|
|
95.5
|
%
|
|
94.7
|
%
|
|
96.8
|
%
|
|
|
|
|
|
|
|
|
|
(1) See Page 10 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,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Unpaid losses and LAE at beginning of period
|
|
$
|
2,298.9
|
|
|
$
|
2,330.0
|
|
|
$
|
2,301.0
|
|
|
$
|
2,347.5
|
|
Reinsurance recoverable on unpaid losses and LAE
|
|
553.1
|
|
|
591.5
|
|
|
580.0
|
|
|
628.2
|
|
Net unpaid losses and LAE at beginning of period
|
|
1,745.8
|
|
|
1,738.5
|
|
|
1,721.0
|
|
|
1,719.3
|
|
Losses and LAE incurred:
|
|
|
|
|
|
|
|
|
Current year losses
|
|
106.3
|
|
|
109.8
|
|
|
447.3
|
|
|
452.9
|
|
Prior year losses on voluntary business
|
|
(17.4
|
)
|
|
(17.0
|
)
|
|
(17.4
|
)
|
|
(17.0
|
)
|
Prior year losses on involuntary business
|
|
(0.6
|
)
|
|
0.1
|
|
|
(1.1
|
)
|
|
(1.4
|
)
|
Total losses incurred
|
|
88.3
|
|
|
92.9
|
|
|
428.8
|
|
|
434.5
|
|
Losses and LAE paid:
|
|
|
|
|
|
|
|
|
Current year losses
|
|
31.7
|
|
|
35.9
|
|
|
76.9
|
|
|
78.7
|
|
Prior year losses
|
|
73.3
|
|
|
74.5
|
|
|
343.8
|
|
|
354.1
|
|
Total paid losses
|
|
105.0
|
|
|
110.4
|
|
|
420.7
|
|
|
432.8
|
|
Net unpaid losses and LAE at end of period
|
|
1,729.1
|
|
|
1,721.0
|
|
|
1,729.1
|
|
|
1,721.0
|
|
Reinsurance recoverable on unpaid losses and LAE
|
|
537.0
|
|
|
580.0
|
|
|
537.0
|
|
|
580.0
|
|
Unpaid losses and LAE at end of period
|
|
$
|
2,266.1
|
|
|
$
|
2,301.0
|
|
|
$
|
2,266.1
|
|
|
$
|
2,301.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMPLOYERS HOLDINGS, INC.
Consolidated Investment Portfolio (unaudited)
$ in millions
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
Investment Positions:
|
|
Cost or Amortized Cost
|
|
Net Unrealized Gain
|
|
Fair Value
|
|
%
|
|
Fair Value
|
|
%
|
Fixed maturities
|
|
$
|
2,421.0
|
|
|
$
|
42.4
|
|
|
$
|
2,463.4
|
|
|
90
|
%
|
|
$
|
2,344.4
|
|
|
89
|
%
|
Equity securities
|
|
116.7
|
|
|
93.6
|
|
|
210.3
|
|
|
8
|
|
|
192.2
|
|
|
7
|
|
Short-term investments
|
|
4.0
|
|
|
-
|
|
|
4.0
|
|
|
-
|
|
|
16.0
|
|
|
1
|
|
Cash and cash equivalents
|
|
73.3
|
|
|
-
|
|
|
73.3
|
|
|
3
|
|
|
67.2
|
|
|
3
|
|
Restricted cash and cash equivalents
|
|
1.0
|
|
|
-
|
|
|
1.0
|
|
|
-
|
|
|
3.6
|
|
|
-
|
|
Total investments and cash
|
|
$
|
2,616.0
|
|
|
$
|
136.0
|
|
|
$
|
2,752.0
|
|
|
100
|
%
|
|
$
|
2,623.4
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Breakout of Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasuries and Agencies
|
|
$
|
147.1
|
|
|
$
|
1.7
|
|
|
$
|
148.8
|
|
|
6
|
%
|
|
$
|
140.2
|
|
|
6
|
%
|
States and Municipalities
|
|
617.0
|
|
|
25.5
|
|
|
642.5
|
|
|
26
|
|
|
851.6
|
|
|
36
|
|
Corporate Securities
|
|
1,103.4
|
|
|
14.6
|
|
|
1,118.0
|
|
|
45
|
|
|
956.7
|
|
|
41
|
|
Mortgage-Backed Securities
|
|
494.8
|
|
|
0.5
|
|
|
495.3
|
|
|
20
|
|
|
353.5
|
|
|
15
|
|
Asset-Backed Securities
|
|
58.7
|
|
|
0.1
|
|
|
58.8
|
|
|
2
|
|
|
42.4
|
|
|
2
|
|
Total fixed maturities
|
|
$
|
2,421.0
|
|
|
$
|
42.4
|
|
|
$
|
2,463.4
|
|
|
100
|
%
|
|
$
|
2,344.4
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average book yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
%
|
|
|
|
|
|
3.1
|
%
|
Weighted average tax equivalent yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.5
|
%
|
|
|
|
|
|
3.6
|
%
|
Average credit quality (S&P)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AA-
|
|
|
|
|
|
AA-
|
Duration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
|
|
|
|
|
4.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMPLOYERS HOLDINGS, INC.
Book Value Per Share (unaudited)
$ in millions, except per share amounts
|
|
|
|
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
Numerators:
|
|
|
|
|
Stockholders' equity
|
A
|
$
|
947.7
|
|
|
$
|
840.6
|
|
Plus: Deferred Gain
|
|
163.6
|
|
|
174.9
|
|
Stockholders' equity including the Deferred Gain(1)
|
B
|
1,111.3
|
|
|
1,015.5
|
|
Accumulated other comprehensive income
|
|
(136.0
|
)
|
|
(114.6
|
)
|
Income tax benefit related to accumulated other comprehensive income
|
|
28.6
|
|
|
40.1
|
|
Adjusted stockholders' equity(1)
|
C
|
$
|
1,003.9
|
|
|
$
|
941.0
|
|
|
|
|
|
|
Denominator (shares outstanding)
|
D
|
32,597,819
|
|
|
32,128,922
|
|
|
|
|
|
|
Book value per share(1)
|
A / D
|
$
|
29.07
|
|
|
$
|
26.16
|
|
Book value per share including the Deferred Gain(1)
|
B / D
|
34.09
|
|
|
31.61
|
|
Adjusted book value per share(1)
|
C / D
|
30.80
|
|
|
29.29
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
$
|
0.60
|
|
|
$
|
0.36
|
|
|
|
|
|
|
YTD Change in:(2)
|
|
|
|
|
Book value per share
|
|
13.4
|
%
|
|
12.3
|
%
|
Book value per share including the Deferred Gain
|
|
9.7
|
|
|
8.4
|
|
Adjusted book value per share
|
|
7.2
|
|
|
10.2
|
|
|
|
|
|
|
(1) See Page 10 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,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Numerators:
|
|
|
|
|
|
|
|
|
Net income
|
A
|
$
|
31.3
|
|
|
$
|
35.5
|
|
|
$
|
101.2
|
|
|
$
|
106.7
|
|
Impact of the LPT Agreement
|
|
(3.1
|
)
|
|
(2.9
|
)
|
|
(11.6
|
)
|
|
(16.6
|
)
|
Net income before impact of the LPT (1)
|
B
|
$
|
28.2
|
|
|
$
|
32.6
|
|
|
$
|
89.6
|
|
|
$
|
90.1
|
|
Net realized gains on investments
|
|
-
|
|
|
(2.1
|
)
|
|
(7.4
|
)
|
|
(11.2
|
)
|
Gain on redemption of notes payable
|
|
-
|
|
|
-
|
|
|
(2.1
|
)
|
|
-
|
|
Write-off of previously capitalized costs
|
|
-
|
|
|
-
|
|
|
7.5
|
|
|
-
|
|
Amortization of intangibles
|
|
-
|
|
|
0.1
|
|
|
0.3
|
|
|
0.4
|
|
Income tax benefit related to items excluded from Net income
|
|
-
|
|
|
0.7
|
|
|
0.6
|
|
|
3.7
|
|
Net impact of tax reform
|
|
7.0
|
|
|
-
|
|
|
7.0
|
|
|
-
|
|
Adjusted net income (1)
|
C
|
$
|
35.2
|
|
|
$
|
31.3
|
|
|
$
|
95.5
|
|
|
$
|
83.0
|
|
|
|
|
|
|
|
|
|
|
Denominators:
|
|
|
|
|
|
|
|
|
Average common shares outstanding (basic)
|
D
|
32,641,438
|
|
|
32,247,251
|
|
|
32,501,576
|
|
|
32,434,580
|
|
Average common shares outstanding (diluted)
|
E
|
33,219,850
|
|
|
32,861,090
|
|
|
33,060,760
|
|
|
32,976,835
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
Basic
|
A / D
|
$
|
0.96
|
|
|
$
|
1.10
|
|
|
$
|
3.11
|
|
|
$
|
3.29
|
|
Diluted
|
A / E
|
0.94
|
|
|
1.08
|
|
|
3.06
|
|
|
3.24
|
|
|
|
|
|
|
|
|
|
|
Earnings per share before impact of the LPT:(1)
|
|
|
|
|
|
|
|
|
Basic
|
B / D
|
$
|
0.86
|
|
|
$
|
1.01
|
|
|
$
|
2.76
|
|
|
$
|
2.78
|
|
Diluted
|
B / E
|
0.85
|
|
|
0.99
|
|
|
2.71
|
|
|
2.73
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per share:(1)
|
|
|
|
|
|
|
|
|
Basic
|
C / D
|
$
|
1.08
|
|
|
$
|
0.97
|
|
|
$
|
2.94
|
|
|
$
|
2.56
|
|
Diluted
|
C / E
|
1.06
|
|
|
0.95
|
|
|
2.89
|
|
|
2.52
|
|
|
|
|
|
|
|
|
|
|
(1) See Page 10 for information regarding our use of
Non-GAAP Financial Measures.
|
|
Glossary of 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 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 4 for calculations) is
net income excluding the effects of the LPT Agreement, net realized
gains (losses) on investments (net of tax), net impact of tax reform,
gain on redemption of notes payable (net of tax), and amortization of
intangible assets (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. The Company previously referred to
Adjusted net income as Operating income.
Stockholders' equity including the Deferred Gain 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 8 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
operating return on equity metric.
Return on stockholders' equity and Adjusted return on
stockholders' equity (see Page 4 for calculations).
Management believes that these profitability measures are widely used by
our investors, analysts and other interested parties. The Company
previously referred to Adjusted return on stockholders' equity as
Operating return on adjusted stockholders' equity.
Book value per share, Book value per share including the Deferred
Gain, and Adjusted book value per share (see Page 8 for
calculations). Management believes that these valuation measures are
widely used by our investors, analysts and other interested parties. The
Company previously referred to Book value per share as GAAP book value
per share, and Book value per share including Deferred Gain as Book
value per share.
Net income, Combined ratio, and Combined ratio before impact of
the LPT (see Pages 3 and 5 for calculations). Management
believes that these performance and underwriting measures are widely
used by our investors, analysts and other interested parties.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180221006419/en/
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