Nevada | 04-3850065 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
10375 Professional Circle | ||
Reno, | Nevada | 89521 |
(Address of principal executive offices and zip code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, $0.01 par value per share | EIG | New York Stock Exchange |
Large | R | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
Emerging growth company | ☐ |
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Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
(in millions, except ratios) | ||||||||||||
Net premiums written | $ | 694.6 | $ | 689.3 | $ | 687.6 | ||||||
Total revenues | 779.8 | 752.1 | 773.5 | |||||||||
Net income | 106.7 | 94.4 | 100.7 | |||||||||
Combined ratio | 91.8 | % | 94.1 | % | 97.0 | % | ||||||
Impact of the LPT Agreement(1) | 2.3 | % | 3.0 | % | 8.0 | % | ||||||
Combined ratio before the impact of the LPT Agreement(1) | 94.1 | % | 97.1 | % | 105.0 | % |
Years Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
Net premiums written | $ | 691.5 | $ | 742.8 | $ | 723.7 | ||||||
Total revenues | 835.9 | 800.4 | 801.4 | |||||||||
Net income | 157.1 | 141.3 | 101.2 |
State of Domicile | |
Employers Insurance Company of Nevada (EICN) | Nevada |
Employers Compensation Insurance Company (ECIC) | California |
Employers Preferred Insurance Company (EPIC) | Florida |
Employers Assurance Company (EAC) | Florida |
Cerity Insurance Company (CIC) | New York |
2016 | 2015 | 2014 | 2019 | 2018 | 2017 | |||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||
Gross premiums earned | $ | 701.6 | $ | 698.8 | $ | 694.6 | $ | 701.2 | $ | 737.2 | $ | 722.5 | ||||||||||||
Less: Final audit and retroactive adjustments | $ | 72.6 | $ | 66.5 | $ | 55.8 | 27.1 | 61.1 | 85.5 | |||||||||||||||
Less: Involuntary premium | $ | 10.4 | $ | 12.8 | $ | 10.9 | 9.5 | 9.9 | 10.2 | |||||||||||||||
In-force premium | $ | 618.6 | $ | 619.5 | $ | 627.9 | $ | 664.6 | $ | 666.2 | $ | 626.9 |
Hazard Group | 2016 | Percentage of 2016 Total | 2015 | Percentage of 2015 Total | 2014 | Percentage of 2014 Total | 2019 | Percentage of 2019 Total | 2018 | Percentage of 2018 Total | 2017 | Percentage of 2017 Total | ||||||||||||||||||||||||||||||
(in millions, except percentages) | (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||
A | $ | 162.6 | 26.3 | % | $ | 159.6 | 25.8 | % | $ | 165.6 | 26.4 | % | $ | 185.4 | 27.9 | % | $ | 189.5 | 28.4 | % | $ | 176.9 | 28.2 | % | ||||||||||||||||||
B | 161.0 | 26.0 | 159.2 | 25.7 | 159.3 | 25.4 | 175.9 | 26.5 | 171.6 | 25.8 | 159.4 | 25.4 | ||||||||||||||||||||||||||||||
C | 195.7 | 31.7 | 203.5 | 32.8 | 207.5 | 33.0 | 183.2 | 27.6 | 188.7 | 28.3 | 188.0 | 30.0 | ||||||||||||||||||||||||||||||
D | 88.0 | 14.2 | 86.0 | 13.9 | 82.6 | 13.2 | 103.4 | 15.6 | 100.5 | 15.1 | 91.9 | 14.7 | ||||||||||||||||||||||||||||||
E | 9.8 | 1.6 | 9.7 | 1.6 | 11.0 | 1.7 | 14.1 | 2.1 | 12.2 | 1.8 | 9.4 | 1.5 | ||||||||||||||||||||||||||||||
F | 1.3 | 0.2 | 1.4 | 0.2 | 1.8 | 0.3 | 2.0 | 0.3 | 3.2 | 0.5 | 1.0 | 0.2 | ||||||||||||||||||||||||||||||
G | 0.2 | <0.1 | 0.1 | <0.1 | 0.1 | <0.1 | 0.6 | <0.1 | 0.5 | 0.1 | 0.3 | <0.1 | ||||||||||||||||||||||||||||||
Total | $ | 618.6 | 100.0 | % | $ | 619.5 | 100.0 | % | $ | 627.9 | 100.0 | % | $ | 664.6 | 100.0 | % | $ | 666.2 | 100.0 | % | $ | 626.9 | 100.0 | % |
Employer Classifications | In-force Premiums | Percentage of Total | |||||
(in millions, except percentages) | |||||||
Restaurants | $ | 159.4 | 25.8 | % | |||
Hotels, Motels, and Clubs | 52.6 | 8.5 | |||||
Automobile Service or Repair Shops | 50.0 | 8.1 | |||||
Dentists, Optometrists, and Physicians | 32.8 | 5.3 | |||||
Stores | 29.7 | 4.8 | |||||
Real Estate Management | 22.2 | 3.6 | |||||
Wholesale Stores | 19.9 | 3.2 | |||||
Professional Services | 19.4 | 3.1 | |||||
Groceries and Provisions | 17.8 | 2.9 | |||||
Schools – Colleges and Religious Organizations | 16.0 | 2.6 | |||||
Total | $ | 419.8 | 67.9 | % |
Employer Classifications | In-force Premiums | Percentage of Total | |||||
(in millions, except percentages) | |||||||
Restaurants and Other Eating Places | $ | 164.4 | 24.7 | % | |||
Hotels, Motels and Clubs | 52.1 | 7.8 | |||||
Automobile Dealers | 29.1 | 4.4 | |||||
Automotive Repair and Maintenance | 24.3 | 3.7 | |||||
Real Estate Management | 21.1 | 3.2 | |||||
Offices of Physicians | 19.1 | 2.9 | |||||
Other Store Retailers | 15.9 | 2.4 | |||||
Schools | 15.5 | 2.3 | |||||
Wholesale Stores | 15.3 | 2.3 | |||||
Grocery Stores | 13.4 | 2.0 | |||||
Total | $ | 370.2 | 55.7 | % |
2016 | 2015 | 2014 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||||||||||||
State | In-force Premiums | Policies In-force | In-force Premiums | Policies In-force | In-force Premiums | Policies In-force | In-force Premiums | Policies In-force | In-force Premiums | Policies In-force | In-force Premiums | Policies In-force | ||||||||||||||||||||||||||||||
(dollars in millions) | (dollars in millions) | |||||||||||||||||||||||||||||||||||||||||
California | $ | 348.3 | 42,120 | $ | 352.2 | 44,080 | $ | 370.8 | 47,093 | $ | 329.8 | 43,079 | $ | 357.1 | 41,988 | $ | 349.4 | 40,573 | ||||||||||||||||||||||||
Florida | 35.2 | 5,263 | 29.4 | 4,735 | 23.7 | 4,128 | 36.3 | 5,822 | 41.0 | 5,833 | 41.8 | 5,625 | ||||||||||||||||||||||||||||||
Illinois | 30.6 | 3,106 | 32.5 | 3,286 | 31.6 | 3,102 | ||||||||||||||||||||||||||||||||||||
Other (33 states and D.C.) | 204.5 | 34,333 | 205.3 | 32,395 | 201.8 | 30,979 | ||||||||||||||||||||||||||||||||||||
New York | 31.7 | 5,679 | 23.9 | 3,663 | 12.3 | 2,038 | ||||||||||||||||||||||||||||||||||||
Other (43 states and D.C.) | 266.8 | 44,104 | 244.2 | 40,014 | 223.4 | 37,258 | ||||||||||||||||||||||||||||||||||||
Total | $ | 618.6 | 84,822 | $ | 619.5 | 84,496 | $ | 627.9 | 85,302 | $ | 664.6 | 98,684 | $ | 666.2 | 91,498 | $ | 626.9 | 85,494 |
2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||
Net reserves for losses and LAE | (in millions) | ||||||||||||||||||||||||||||||||
Originally estimated | $ | 1,209.7 | $ | 1,217.1 | $ | 1,430.1 | $ | 1,373.2 | $ | 1,323.7 | $ | 1,331.5 | $ | 1,426.2 | $ | 1,587.4 | $ | 1,700.2 | $ | 1,719.3 | $ | 1,721.0 | |||||||||||
Net cumulative amounts paid as of: | |||||||||||||||||||||||||||||||||
One year later | 109.1 | 127.9 | 214.5 | 206.7 | 218.6 | 225.5 | 261.7 | 319.7 | 355.2 | 354.1 | |||||||||||||||||||||||
Two years later | 186.0 | 219.5 | 342.2 | 361.0 | 371.1 | 390.5 | 456.5 | 558.7 | 590.9 | ||||||||||||||||||||||||
Three years later | 249.1 | 295.6 | 449.9 | 472.8 | 485.6 | 515.1 | 610.8 | 713.2 | |||||||||||||||||||||||||
Four years later | 302.9 | 354.9 | 532.1 | 557.8 | 577.0 | 619.4 | 708.8 | ||||||||||||||||||||||||||
Five years later | 345.8 | 405.6 | 598.5 | 628.9 | 656.4 | 687.5 | |||||||||||||||||||||||||||
Six years later | 384.5 | 448.1 | 656.1 | 692.1 | 711.4 | ||||||||||||||||||||||||||||
Seven years later | 417.6 | 484.7 | 708.4 | 737.7 | |||||||||||||||||||||||||||||
Eight years later | 447.6 | 521.3 | 746.6 | ||||||||||||||||||||||||||||||
Nine years later | 475.9 | 548.4 | |||||||||||||||||||||||||||||||
Ten years later | 498.0 | ||||||||||||||||||||||||||||||||
Net reserves re-estimated as of: | |||||||||||||||||||||||||||||||||
One year later | 1,149.6 | 1,151.2 | 1,378.8 | 1,359.0 | 1,324.8 | 1,333.3 | 1,433.2 | 1,592.0 | 1,693.1 | 1,700.9 | |||||||||||||||||||||||
Two years later | 1,085.4 | 1,100.7 | 1,352.0 | 1,340.4 | 1,313.1 | 1,334.0 | 1,429.8 | 1,603.8 | 1,669.5 | ||||||||||||||||||||||||
Three years later | 1,035.0 | 1,079.9 | 1,320.0 | 1,324.8 | 1,312.3 | 1,329.6 | 1,428.7 | 1,596.9 | |||||||||||||||||||||||||
Four years later | 1,010.4 | 1,046.6 | 1,303.0 | 1,305.2 | 1,302.5 | 1,305.2 | 1,429.6 | ||||||||||||||||||||||||||
Five years later | 973.9 | 1,038.7 | 1,277.7 | 1,291.3 | 1,258.7 | 1,304.6 | |||||||||||||||||||||||||||
Six years later | 962.8 | 1,004.4 | 1,263.7 | 1,235.2 | 1,262.2 | ||||||||||||||||||||||||||||
Seven years later | 921.9 | 987.2 | 1,199.6 | 1,241.0 | |||||||||||||||||||||||||||||
Eight years later | 904.1 | 927.3 | 1,206.2 | ||||||||||||||||||||||||||||||
Nine years later | 837.1 | 934.4 | |||||||||||||||||||||||||||||||
Ten years later | 839.3 | ||||||||||||||||||||||||||||||||
Net cumulative redundancy (deficiency): | 370.4 | 282.7 | 223.9 | 132.2 | 61.5 | 26.9 | (3.4 | ) | (9.5 | ) | 30.7 | 18.4 | — | ||||||||||||||||||||
Gross reserves - December 31 | 2,307.8 | 2,269.7 | 2,506.5 | 2,425.7 | 2,279.7 | 2,272.4 | 2,231.5 | 2,330.5 | 2,369.7 | 2,347.5 | 2,301.0 | ||||||||||||||||||||||
Reinsurance recoverable, gross | 1,098.1 | 1,052.6 | 1,076.4 | 1,052.5 | 956.0 | 940.8 | 805.4 | 743.1 | 669.5 | 628.2 | 580.0 | ||||||||||||||||||||||
Net reserves - December 31 | 1,209.7 | 1,217.1 | 1,430.1 | 1,373.2 | 1,323.7 | 1,331.5 | 1,426.2 | 1,587.4 | 1,700.2 | 1,719.3 | 1,721.0 | ||||||||||||||||||||||
Gross re-estimated reserves | 1,722.4 | 1,781.1 | 2,062.8 | 2,057.1 | 2,017.4 | 2,020.1 | 2,110.9 | 2,252.7 | 2,297.4 | 2,306.4 | 2,301.0 | ||||||||||||||||||||||
Re-estimated reinsurance recoverables | 883.1 | 846.7 | 856.7 | 816.1 | 755.2 | 715.5 | 681.3 | 655.8 | 627.9 | 605.5 | 580.0 | ||||||||||||||||||||||
Net re-estimated reserves | 839.3 | 934.4 | 1,206.1 | 1,241.0 | 1,262.2 | 1,304.6 | 1,429.6 | 1,596.9 | 1,669.5 | 1,700.9 | 1,721.0 | ||||||||||||||||||||||
Gross reserves for losses and LAE | |||||||||||||||||||||||||||||||||
Originally estimated | 2,307.8 | 2,269.7 | 2,506.5 | 2,425.7 | 2,279.7 | 2,272.4 | 2,231.5 | 2,330.5 | 2,369.7 | 2,347.5 | 2,301.0 | ||||||||||||||||||||||
Gross cumulative amounts paid as of: | |||||||||||||||||||||||||||||||||
One year later | 152.9 | 170.6 | 258.4 | 269.8 | 260.8 | 263.6 | 296.9 | 355.4 | 386.3 | 385.9 | |||||||||||||||||||||||
Two years later | 272.5 | 304.1 | 449.2 | 466.4 | 451.4 | 463.7 | 527.3 | 625.5 | 653.7 | ||||||||||||||||||||||||
Three years later | 377.5 | 422.9 | 599.2 | 616.2 | 601.0 | 624.0 | 712.7 | 811.8 | |||||||||||||||||||||||||
Four years later | 473.8 | 522.3 | 719.4 | 736.3 | 728.1 | 759.4 | 842.5 | ||||||||||||||||||||||||||
Five years later | 557.0 | 609.8 | 821.0 | 843.2 | 838.6 | 859.2 | |||||||||||||||||||||||||||
Six years later | 632.5 | 686.1 | 914.3 | 937.4 | 925.4 | ||||||||||||||||||||||||||||
Seven years later | 699.3 | 754.2 | 997.6 | 1,014.8 | |||||||||||||||||||||||||||||
Eight years later | 760.9 | 819.8 | 1,067.6 | ||||||||||||||||||||||||||||||
Nine years later | 817.5 | 876.3 | |||||||||||||||||||||||||||||||
Ten years later | 868.5 | ||||||||||||||||||||||||||||||||
Gross reserves re-estimated as of: | |||||||||||||||||||||||||||||||||
One year later | 2,233.2 | 2,200.7 | 2,470.7 | 2,373.5 | 2,299.7 | 2,164.6 | 2,196.1 | 2,282.7 | 2,342.5 | 2,306.4 | |||||||||||||||||||||||
Two years later | 2,162.7 | 2,148.4 | 2,405.8 | 2,370.6 | 2,178.1 | 2,123.4 | 2,139.2 | 2,279.8 | 2,297.4 | ||||||||||||||||||||||||
Three years later | 2,110.6 | 2,110.2 | 2,386.4 | 2,245.5 | 2,136.2 | 2,067.7 | 2,128.5 | 2,252.7 | |||||||||||||||||||||||||
Four years later | 2,074.5 | 2,094.1 | 2,260.0 | 2,185.5 | 2,076.4 | 2,038.5 | 2,110.9 | ||||||||||||||||||||||||||
Five years later | 2,050.2 | 1,983.2 | 2,194.8 | 2,122.7 | 2,030.9 | 2,020.1 | |||||||||||||||||||||||||||
Six years later | 1,936.4 | 1,906.2 | 2,132.8 | 2,067.9 | 2,017.4 | ||||||||||||||||||||||||||||
Seven years later | 1,857.2 | 1,840.9 | 2,073.3 | 2,057.1 | |||||||||||||||||||||||||||||
Eight years later | 1,791.6 | 1,782.0 | 2,062.8 | ||||||||||||||||||||||||||||||
Nine years later | 1,726.2 | 1,781.1 | |||||||||||||||||||||||||||||||
Ten years later | 1,722.4 | ||||||||||||||||||||||||||||||||
Gross cumulative redundancy: | $ | 585.4 | $ | 488.6 | $ | 443.7 | $ | 368.6 | $ | 262.3 | $ | 252.3 | $ | 120.6 | $ | 77.8 | $ | 72.3 | $ | 41.1 | $ | — |
Reinsurer | A.M. Best Rating(1) | Total Losses and LAE Paid | Total Unpaid Losses and LAE | Total | ||||||||||
(in millions) | ||||||||||||||
ACE Property & Casualty Insurance Company | A++ | $ | — | $ | 2.3 | $ | 2.3 | |||||||
American Healthcare Indemnity Company | N/R | — | 2.3 | 2.3 | ||||||||||
Aspen Insurance UK Limited | A | 0.2 | 5.7 | 5.9 | ||||||||||
Chubb Bermuda Insurance Limited | A++ | 0.7 | 46.5 | 47.2 | ||||||||||
Everest Reinsurance Company | A+ | — | 1.2 | 1.2 | ||||||||||
Finial Reinsurance | A- | — | 4.5 | 4.5 | ||||||||||
Hannover Ruck SE | A+ | 0.3 | 12.9 | 13.2 | ||||||||||
Lloyd's Syndicates | A | 0.3 | 45.5 | 45.8 | ||||||||||
Markel Bermuda Limited | A | — | 1.7 | 1.7 | ||||||||||
Munich Reinsurance America, Inc. | A+ | 0.1 | 4.2 | 4.3 | ||||||||||
National Indemnity Company | A++ | 3.8 | 256.0 | 259.8 | ||||||||||
National Union Fire Insurance Co of Pittsburgh | A | 0.1 | 2.6 | 2.7 | ||||||||||
ReliaStar Life Insurance Company | A | 0.1 | 1.5 | 1.6 | ||||||||||
Safety National Casualty Corporation | A+ | — | 2.6 | 2.6 | ||||||||||
ST Paul Fire & Marine Insurance Company | A++ | 0.1 | 4.3 | 4.4 | ||||||||||
Swiss Reinsurance America Corporation | A+ | 0.2 | 9.2 | 9.4 | ||||||||||
Tokio Marine America Insurance Company (TMAIC) (US) | A++ | 0.1 | 7.5 | 7.6 | ||||||||||
XL Bermuda Ltd | A | 2.4 | 162.9 | 165.3 | ||||||||||
All Other | Various | 0.2 | 6.6 | 6.8 | ||||||||||
Total | $ | 8.7 | $ | 580.0 | $ | 588.7 |
2016 | 2015 | |||||||||||||||||||||||
Stock Price | Cash Dividends Declared | Stock Price | Cash Dividends Declared | |||||||||||||||||||||
Quarter Ended | High | Low | High | Low | ||||||||||||||||||||
March 31 | $ | 29.21 | $ | 22.58 | $ | 0.09 | $ | 27.22 | $ | 20.62 | $ | 0.06 | ||||||||||||
June 30 | 30.53 | 27.07 | 0.09 | 27.65 | 22.28 | 0.06 | ||||||||||||||||||
September 30 | 32.03 | 27.01 | 0.09 | 26.40 | 21.46 | 0.06 | ||||||||||||||||||
December 31 | 39.75 | 29.25 | 0.09 | 28.35 | 20.86 | 0.06 |
Period | Total Number of Shares Purchased | Average Price Paid Per Share(1) | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet be Purchased Under the Program(2) | ||||||||||
(in millions) | ||||||||||||||
October 1 – October 31, 2016 | 67,222 | $ | 30.41 | 67,222 | $ | 29.4 | ||||||||
November 1 – November 30, 2016 | 15,135 | 30.27 | 15,135 | 28.9 | ||||||||||
December 1 – December 31, 2016 | — | — | — | 28.9 | ||||||||||
Total | 82,357 | $ | 30.39 | 82,357 |
Period | Total Number of Shares Purchased | Average Price Paid Per Share(1) | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet be Purchased Under the Program(2) | ||||||||||
(in millions) | ||||||||||||||
October 1 – October 31, 2019 | 55,789 | $ | 42.23 | 55,789 | $ | 45.7 | ||||||||
November 1 – November 30, 2019 | 207,521 | 42.19 | 207,521 | 36.9 | ||||||||||
December 1 – December 31, 2019 | 202,040 | 42.48 | 202,040 | 28.3 | ||||||||||
Total | 465,350 | $ | 42.32 | 465,350 |
(1) | Includes fees and commissions paid on stock repurchases. |
(2) | On February |
Period Ending | Period Ending | |||||||||||||||||||||||||||||||||||||||||||||
12/31/2011 | 12/31/2012 | 12/31/2013 | 12/31/2014 | 12/31/2015 | 12/31/2016 | 12/31/2014 | 12/31/2015 | 12/31/2016 | 12/31/2017 | 12/31/2018 | 12/31/2019 | |||||||||||||||||||||||||||||||||||
Employers Holdings, Inc. | $ | 100.00 | $ | 115.34 | $ | 179.03 | $ | 134.50 | $ | 157.68 | $ | 231.58 | $ | 100.00 | $ | 117.24 | $ | 172.18 | $ | 195.83 | $ | 188.65 | $ | 191.63 | ||||||||||||||||||||||
S&P 500 | 100.00 | 116.00 | 153.58 | 174.60 | 177.01 | 198.18 | 100.00 | 101.38 | 113.51 | 138.29 | 132.23 | 173.86 | ||||||||||||||||||||||||||||||||||
S&P 500 P&C Insurance Index | 100.00 | 120.11 | 166.10 | 192.25 | 210.57 | 243.65 | 100.00 | 109.53 | 126.73 | 155.10 | 147.83 | 186.07 |
Years Ended December 31, | |||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
Income Statement Data | (in millions, except per share amounts and ratios) | ||||||||||||||||||
Revenues: | |||||||||||||||||||
Net premiums earned | $ | 694.8 | $ | 690.4 | $ | 684.5 | $ | 642.3 | $ | 501.5 | |||||||||
Net investment income | 73.2 | 72.2 | 72.4 | 70.8 | 72.4 | ||||||||||||||
Net realized gains (losses) on investments | 11.2 | (10.7 | ) | 16.3 | 9.5 | 5.0 | |||||||||||||
Other income | 0.6 | 0.2 | 0.3 | 0.9 | 0.3 | ||||||||||||||
Total revenues | 779.8 | 752.1 | 773.5 | 723.5 | 579.2 | ||||||||||||||
Total expenses | 639.1 | 652.7 | 666.9 | 670.4 | 481.6 | ||||||||||||||
Net income before income taxes | 140.7 | 99.4 | 106.6 | 53.1 | 97.6 | ||||||||||||||
Income tax expense (benefit) | 34.0 | 5.0 | 5.9 | (10.7 | ) | (9.3 | ) | ||||||||||||
Net income | $ | 106.7 | $ | 94.4 | $ | 100.7 | $ | 63.8 | $ | 106.9 | |||||||||
Earnings per common share: | |||||||||||||||||||
Basic | $ | 3.29 | $ | 2.94 | $ | 3.19 | $ | 2.05 | $ | 3.40 | |||||||||
Diluted | 3.24 | 2.90 | 3.14 | 2.00 | 3.37 | ||||||||||||||
Selected Operating Data | |||||||||||||||||||
Gross premiums written(1) | $ | 701.4 | $ | 697.7 | $ | 697.7 | $ | 689.9 | $ | 580.3 | |||||||||
Net premiums written(2) | $ | 694.6 | $ | 689.3 | $ | 687.6 | $ | 678.5 | $ | 569.7 | |||||||||
Net income before impact of the LPT Agreement(3)(4)(5) | $ | 90.1 | $ | 74.0 | $ | 45.7 | $ | 25.9 | $ | 7.0 | |||||||||
Earnings per common share before impact of the LPT Agreement(6) | |||||||||||||||||||
Basic | $ | 2.78 | $ | 2.31 | $ | 1.45 | $ | 0.83 | 0.22 | ||||||||||
Diluted | 2.73 | 2.27 | 1.43 | 0.81 | 0.22 | ||||||||||||||
Cash dividends declared per common share | 0.36 | 0.24 | 0.24 | 0.24 | 0.24 |
As of December 31, | |||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
Balance Sheet Data | (in millions) | ||||||||||||||||||
Cash and cash equivalents | $ | 67.2 | $ | 56.6 | $ | 103.6 | $ | 34.5 | $ | 140.7 | |||||||||
Total investments | 2,552.6 | 2,487.2 | 2,448.4 | 2,344.8 | 2,149.5 | ||||||||||||||
Reinsurance recoverable on paid and unpaid losses | 588.7 | 635.9 | 680.2 | 751.1 | 814.9 | ||||||||||||||
Total assets | 3,773.4 | 3,755.8 | 3,769.7 | 3,643.5 | 3,511.3 | ||||||||||||||
Unpaid losses and loss adjustment expense | 2,301.0 | 2,347.5 | 2,369.7 | 2,330.5 | 2,231.5 | ||||||||||||||
Unearned premiums | 310.3 | 308.9 | 310.8 | 304.0 | 265.2 | ||||||||||||||
Deferred reinsurance gain–LPT Agreement(3)(4) | 174.9 | 189.5 | 207.0 | 249.1 | 281.0 | ||||||||||||||
Notes payable | 32.0 | 32.0 | 92.0 | 102.0 | 112.0 | ||||||||||||||
Total liabilities | 2,932.8 | 2,995.0 | 3,082.9 | 3,074.8 | 2,971.9 | ||||||||||||||
Total stockholders' equity | 840.6 | 760.8 | 686.8 | 568.7 | 539.4 | ||||||||||||||
Other Financial Data | |||||||||||||||||||
Total stockholders' equity including deferred reinsurance gain–LPT Agreement(3)(4)(6) | $ | 1,015.5 | $ | 950.3 | $ | 893.8 | $ | 817.8 | $ | 820.4 |
Years Ended December 31, | |||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Income Statement Data | (in millions, except per share amounts) | ||||||||||||||||||
Revenues: | |||||||||||||||||||
Net premiums earned | $ | 695.8 | $ | 731.1 | $ | 716.5 | $ | 694.8 | $ | 690.4 | |||||||||
Net investment income | 88.1 | 81.2 | 74.6 | 73.2 | 72.2 | ||||||||||||||
Net realized and unrealized (losses) gains on investments(1) | 51.1 | (13.1 | ) | 7.4 | 11.2 | (10.7 | ) | ||||||||||||
Gain on redemption of notes payable | — | — | 2.1 | — | — | ||||||||||||||
Other income | 0.9 | 1.2 | 0.8 | 0.6 | 0.2 | ||||||||||||||
Total revenues | 835.9 | 800.4 | 801.4 | 779.8 | 752.1 | ||||||||||||||
Total expenses | 642.1 | 630.9 | 657.4 | 639.1 | 652.7 | ||||||||||||||
Net income before income taxes | 193.8 | 169.5 | 144.0 | 140.7 | 99.4 | ||||||||||||||
Income tax expense(2) | 36.7 | 28.2 | 42.8 | 34.0 | 5.0 | ||||||||||||||
Net income | $ | 157.1 | $ | 141.3 | $ | 101.2 | $ | 106.7 | $ | 94.4 | |||||||||
Earnings per common share: | |||||||||||||||||||
Basic | $ | 4.89 | $ | 4.30 | $ | 3.11 | $ | 3.29 | $ | 2.94 | |||||||||
Diluted | 4.83 | 4.24 | 3.06 | 3.24 | 2.90 | ||||||||||||||
Cash dividends declared per common share | 0.88 | 0.80 | 0.60 | 0.36 | 0.24 |
(1) |
(2) |
Years Ended December 31, | |||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
(in millions) | |||||||||||||||||||
Net income | $ | 106.7 | $ | 94.4 | $ | 100.7 | $ | 63.8 | $ | 106.9 | |||||||||
Less amortization of the Deferred Gain related to losses | 9.7 | 9.5 | 11.2 | 12.9 | 15.4 | ||||||||||||||
Less amortization of the Deferred Gain related to contingent commission | 2.0 | 1.9 | 1.9 | 1.7 | 1.6 | ||||||||||||||
Less impact of LPT Reserve Adjustments(a) | 3.1 | 6.4 | 31.1 | 19.0 | 73.3 | ||||||||||||||
Less impact of LPT Contingent Commission Adjustments(b) | 1.8 | 2.6 | 10.8 | 4.3 | 9.6 | ||||||||||||||
Net income before impact of the LPT Agreement | $ | 90.1 | $ | 74.0 | $ | 45.7 | $ | 25.9 | $ | 7.0 |
As of December 31, | |||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Balance Sheet Data | (in millions) | ||||||||||||||||||
Cash and cash equivalents | $ | 154.9 | $ | 101.4 | $ | 73.3 | $ | 67.2 | $ | 56.6 | |||||||||
Total investments | 2,778.4 | 2,727.7 | 2,677.7 | 2,552.6 | 2,487.2 | ||||||||||||||
Reinsurance recoverable on paid and unpaid losses | 539.7 | 511.1 | 544.2 | 588.7 | 635.9 | ||||||||||||||
Total assets | 4,004.1 | 3,919.2 | 3,840.1 | 3,773.4 | 3,755.8 | ||||||||||||||
Unpaid losses and loss adjustment expense | 2,192.8 | 2,207.9 | 2,266.1 | 2,301.0 | 2,347.5 | ||||||||||||||
Unearned premiums | 337.1 | 336.3 | 318.3 | 310.3 | 308.9 | ||||||||||||||
Deferred reinsurance gain—LPT Agreement | 137.1 | 149.6 | 163.6 | 174.9 | 189.5 | ||||||||||||||
Notes payable | — | 20.0 | 20.0 | 32.0 | 32.0 | ||||||||||||||
Total liabilities | 2,838.3 | 2,901.0 | 2,892.4 | 2,932.8 | 2,995.0 | ||||||||||||||
Total stockholders' equity | 1,165.8 | 1,018.2 | 947.7 | 840.6 | 760.8 |
As of December 31, | |||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
(in millions) | |||||||||||||||||||
Total stockholders' equity | $ | 840.6 | $ | 760.8 | $ | 686.8 | $ | 568.7 | $ | 539.4 | |||||||||
Deferred Gain | 174.9 | 189.5 | 207.0 | 249.1 | 281.0 | ||||||||||||||
Total stockholders' equity including the Deferred Gain | $ | 1,015.5 | $ | 950.3 | $ | 893.8 | $ | 817.8 | $ | 820.4 |
December 31, | |||||||
2016 | 2015 | ||||||
(in millions, except share data) | |||||||
GAAP stockholders' equity | $ | 840.6 | $ | 760.8 | |||
Deferred reinsurance gain–LPT Agreement | 174.9 | 189.5 | |||||
Less: Accumulated other comprehensive income, net | 74.5 | 83.6 | |||||
Adjusted stockholders' equity(1) | $ | 941.0 | $ | 866.7 |
Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Gross premiums written | $ | 696.9 | $ | 748.9 | $ | 729.7 | |||||
Net premiums written | $ | 691.5 | $ | 742.8 | $ | 723.7 | |||||
Net premiums earned | $ | 695.8 | $ | 731.1 | $ | 716.5 | |||||
Net investment income | 88.1 | 81.2 | 74.6 | ||||||||
Net realized and unrealized gains (losses) on investments | 51.1 | (13.1 | ) | 7.4 | |||||||
Gain on redemption of notes payable | — | — | 2.1 | ||||||||
Other income | 0.9 | 1.2 | 0.8 | ||||||||
Total revenues | 835.9 | 800.4 | 801.4 | ||||||||
Losses and LAE | 365.9 | 376.7 | 417.2 | ||||||||
Commission expense | 88.1 | 94.2 | 91.4 | ||||||||
Underwriting and general and administrative expenses | 187.5 | 158.5 | 139.9 | ||||||||
Interest and financing expenses | 0.6 | 1.5 | 1.4 | ||||||||
Other expense | — | — | 7.5 | ||||||||
Total expenses | 642.1 | 630.9 | 657.4 | ||||||||
Net income before income taxes | 193.8 | 169.5 | 144.0 | ||||||||
Income tax expense | 36.7 | 28.2 | 42.8 | ||||||||
Net income | $ | 157.1 | $ | 141.3 | $ | 101.2 |
• | Net investment income increased 8.5% in 2019 and 8.8% in 2018, each compared to the previous year; |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(in millions) | |||||||||||
Gross premiums written | $ | 701.4 | $ | 697.7 | $ | 697.7 | |||||
Net premiums written | $ | 694.6 | $ | 689.3 | $ | 687.6 | |||||
Net premiums earned | $ | 694.8 | $ | 690.4 | $ | 684.5 | |||||
Net investment income | 73.2 | 72.2 | 72.4 | ||||||||
Net realized gains (losses) on investments | 11.2 | (10.7 | ) | 16.3 | |||||||
Other income | 0.6 | 0.2 | 0.3 | ||||||||
Total revenues | 779.8 | 752.1 | 773.5 | ||||||||
Losses and LAE | 417.9 | 429.4 | 453.4 | ||||||||
Commission expense | 83.5 | 85.4 | 81.4 | ||||||||
Underwriting and other operating expenses | 136.1 | 135.2 | 129.1 | ||||||||
Interest expense | 1.6 | 2.7 | 3.0 | ||||||||
Income tax expense | 34.0 | 5.0 | 5.9 | ||||||||
Total expenses | 673.1 | 657.7 | 672.8 | ||||||||
Net income | $ | 106.7 | $ | 94.4 | $ | 100.7 | |||||
Less amortization of the Deferred Gain related to losses | 9.7 | 9.5 | 11.2 | ||||||||
Less amortization of the Deferred Gain related to contingent commission | 2.0 | 1.9 | 1.9 | ||||||||
Less impact of LPT Reserve Adjustments(1) | 3.1 | 6.4 | 31.1 | ||||||||
Less impact of LPT Contingent Commission Adjustments(2) | 1.8 | 2.6 | 10.8 | ||||||||
Net income before impact of the LPT Agreement(3) | $ | 90.1 | $ | 74.0 | $ | 45.7 |
Percentage Change 2016 Over 2015 | Percentage Change 2015 Over 2014 | ||||||||||||||||
Overall | California | All Other States | Overall | California | All Other States | ||||||||||||
In-force premiums | (0.1 | )% | (1.1 | )% | 1.1 | % | (1.3 | )% | (5.0 | )% | 4.0 | % | |||||
In-force policy count | 0.4 | (4.4 | ) | 5.7 | (0.9 | ) | (6.4 | ) | 5.8 | ||||||||
Average in-force policy size | (0.5 | ) | 3.5 | (4.3 | ) | (0.4 | ) | 1.5 | (1.7 | ) | |||||||
In-force payroll exposure | 0.6 | 1.1 | 0.3 | 1.4 | (5.7 | ) | 6.0 | ||||||||||
Net rate(1) | (0.7 | ) | (2.2 | ) | 0.8 | (2.7 | ) | 0.7 | (1.9 | ) |
Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
($ in millions) | |||||||||||
Gross premiums written | $ | 696.8 | $ | 748.9 | $ | 729.7 | |||||
Net premiums written | $ | 691.4 | $ | 742.8 | $ | 723.7 | |||||
Net premiums earned | $ | 695.8 | $ | 731.1 | $ | 716.5 | |||||
Net investment income | 84.1 | 78.6 | 73.3 | ||||||||
Net realized and unrealized gains (losses) on investments | 47.7 | (13.9 | ) | 7.4 | |||||||
Gain on redemption of notes payable | — | — | 2.1 | ||||||||
Other income | 0.9 | 1.0 | 0.8 | ||||||||
Total revenues | 828.5 | 796.8 | 800.1 | ||||||||
Losses and LAE | 378.6 | 391.3 | 428.8 | ||||||||
Commission expense | 88.1 | 94.2 | 91.4 | ||||||||
Underwriting expenses | 153.2 | 135.0 | 123.7 | ||||||||
Interest and financing expenses | 0.6 | 1.5 | 1.4 | ||||||||
Other expense | — | — | 7.5 | ||||||||
Total expenses | 620.5 | 622.0 | 652.8 | ||||||||
Net income before income taxes | $ | 208.0 | $ | 174.8 | $ | 147.3 | |||||
Underwriting income | $ | 75.9 | $ | 110.6 | $ | 72.6 | |||||
Combined ratio | 89.1 | % | 84.9 | % | 89.9 | % |
Percentage Change 2019 Over 2018 | Percentage Change 2018 Over 2017 | ||||||||||||||||
Overall | California | All Other States | Overall | California | All Other States | ||||||||||||
In-force premiums | (0.2 | )% | (7.6 | )% | 8.3 | % | 6.3 | % | 2.2 | % | 11.4 | % | |||||
In-force policy count | 7.8 | 2.6 | 12.1 | 7.0 | 3.5 | 10.2 | |||||||||||
Average in-force policy size | (7.4 | ) | (10.0 | ) | (3.4 | ) | (0.7 | ) | (1.2 | ) | 1.1 | ||||||
In-force payroll exposure | 17.5 | 10.7 | 21.8 | 22.0 | 24.4 | 20.5 |
Years Ended December 31, | Years Ended December 31, | |||||||||||||||
2016 | 2015 | 2014 | 2019 | 2018 | 2017 | |||||||||||
Loss and LAE ratio | 60.1 | % | 62.2 | % | 66.2 | % | 54.4 | % | 53.5 | % | 59.8 | % | ||||
Underwriting and other operating expenses ratio | 19.7 | 19.5 | 18.9 | |||||||||||||
Underwriting expense ratio | 22.0 | 18.5 | 17.3 | |||||||||||||
Commission expense ratio | 12.0 | 12.4 | 11.9 | 12.7 | 12.9 | 12.8 | ||||||||||
Combined ratio | 91.8 | % | 94.1 | % | 97.0 | % | 89.1 | % | 84.9 | % | 89.9 | % |
Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
($ in millions) | |||||||||||
Losses and LAE | $ | 378.6 | $ | 391.3 | $ | 428.8 | |||||
Prior accident year favorable development, net | 77.5 | 66.2 | 18.5 | ||||||||
Current accident year losses and LAE | $ | 456.1 | $ | 457.5 | $ | 447.3 | |||||
Current accident year loss ratio | 65.6 | % | 62.6 | % | 62.4 | % |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(in millions) | |||||||||||
Prior accident year favorable (unfavorable) development, net | $ | 18.4 | $ | 7.2 | $ | (4.6 | ) | ||||
Amortization of the Deferred Gain related to losses | $ | 9.7 | $ | 9.5 | $ | 11.2 | |||||
Amortization of the Deferred Gain related to contingent commission | 2.0 | 1.9 | 1.9 | ||||||||
Impact of LPT Reserve Adjustments | 3.1 | 6.4 | 31.1 | ||||||||
Impact of LPT Contingent Commission Adjustments | 1.8 | 2.6 | 10.8 | ||||||||
Total impact of the LPT | 16.6 | 20.4 | 55.0 | ||||||||
Total losses and LAE reserve adjustments | $ | 35.0 | $ | 27.6 | $ | 50.4 |
Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Gross premiums written | $ | 0.1 | $ | — | $ | — | |||||
Net premiums written | $ | 0.1 | $ | — | $ | — | |||||
Net premiums earned | $ | — | $ | — | $ | — | |||||
Net investment income | 0.3 | — | — | ||||||||
Net realized and unrealized gains on investments | 0.1 | — | — | ||||||||
Other income | — | 0.2 | — | ||||||||
Total revenues | 0.4 | 0.2 | — | ||||||||
Underwriting expenses | 16.0 | 5.9 | 1.1 | ||||||||
Total expenses | 16.0 | 5.9 | 1.1 | ||||||||
Net loss before income taxes | $ | (15.6 | ) | $ | (5.7 | ) | $ | (1.1 | ) | ||
Underwriting loss | $ | (16.0 | ) | $ | (5.9 | ) | $ | (1.1 | ) | ||
Combined ratio | n/m | n/m | n/m | ||||||||
n/m - not meaningful |
Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Net investment income | 3.7 | 2.6 | 1.3 | ||||||||
Net realized and unrealized gains on investments | 3.3 | 0.8 | — | ||||||||
Total revenues | 7.0 | 3.4 | 1.3 | ||||||||
Losses and LAE - LPT | (12.7 | ) | (14.6 | ) | (11.6 | ) | |||||
General and administrative expenses | 18.3 | 17.6 | 15.1 | ||||||||
Total expenses | 5.6 | 3.0 | 3.5 | ||||||||
Net income (loss) before income taxes | $ | 1.4 | $ | 0.4 | $ | (2.2 | ) |
Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Amortization of the Deferred Gain related to losses | $ | 8.9 | $ | 9.9 | $ | 9.3 | |||||
Amortization of the Deferred Gain related to contingent commission | 1.8 | 2.0 | 2.0 | ||||||||
Impact of LPT Reserve Adjustments(1) | 1.8 | 2.2 | — | ||||||||
Impact of LPT Contingent Commission Adjustments(2) | 0.2 | 0.5 | 0.3 | ||||||||
Total impact of the LPT | $ | 12.7 | $ | 14.6 | $ | 11.6 |
(1) | LPT Reserve Adjustments result in a cumulative adjustment to the Deferred Gain, which is recognized in losses and LAE incurred on our Consolidated Statements of Comprehensive Income, such that the Deferred Gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the LPT Agreement. (See Note 2 in the Notes to our Consolidated Financial Statements.) |
(2) | LPT Contingent Commission Adjustments result in a cumulative adjustment to the Deferred Gain, which is recognized in losses and LAE incurred on our Consolidated Statements of Comprehensive Income, such that the Deferred Gain reflects the balance that would have existed had the revised contingent profit commission been recognized at the inception of the LPT Agreement. (See Note 2 in the Notes to our Consolidated Financial Statements.) |
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||
2016 | 2015 | 2014 | 2019 | 2018 | 2017 | |||||||||||||||||
Cash and cash equivalents provided by (used in): | (in millions) | |||||||||||||||||||||
Cash, cash equivalents, and restricted cash provided by (used in): | (in millions) | |||||||||||||||||||||
Operating activities | $ | 122.8 | $ | 116.4 | $ | 171.9 | $ | 123.1 | $ | 180.2 | $ | 142.3 | ||||||||||
Investing activities | (88.6 | ) | (101.2 | ) | (86.7 | ) | 49.2 | (119.6 | ) | (112.8 | ) | |||||||||||
Financing activities | (23.6 | ) | (62.2 | ) | (16.1 | ) | (119.1 | ) | (32.9 | ) | (26.0 | ) | ||||||||||
Increase (decrease) in cash and cash equivalents | $ | 10.6 | $ | (47.0 | ) | $ | 69.1 | |||||||||||||||
Increase in cash, cash equivalents, and restricted cash | $ | 53.2 | $ | 27.7 | $ | 3.5 |
December 31, | December 31, | |||||||||||||||||||||
2016 | 2015 | 2014 | 2019 | 2018 | 2017 | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||
Beginning Balance | $ | 760.8 | $ | 686.8 | $ | 568.7 | $ | 1,018.2 | $ | 947.7 | $ | 840.6 | ||||||||||
Stock-based compensation | 5.8 | 4.6 | 6.0 | |||||||||||||||||||
Stock-based obligations | 10.1 | 9.4 | 6.9 | |||||||||||||||||||
Stock options exercised | 9.6 | 7.6 | 2.2 | 0.7 | 1.1 | 6.0 | ||||||||||||||||
Vesting of restricted stock units, net of shares withheld to satisfy minimum tax withholding | (0.6 | ) | (2.7 | ) | (0.6 | ) | ||||||||||||||||
Shares withheld to satisfy minimum tax withholdings for certain stock-based obligations | (3.2 | ) | (2.9 | ) | (2.2 | ) | ||||||||||||||||
Grant date fair value adjustment | — | — | (0.2 | ) | ||||||||||||||||||
Acquisition of common stock | (21.1 | ) | — | — | (67.1 | ) | (4.6 | ) | — | |||||||||||||
Dividends to common stockholders | (11.5 | ) | (7.7 | ) | (7.6 | ) | ||||||||||||||||
Excess tax benefit from stock-based compensation | — | 1.1 | 0.9 | |||||||||||||||||||
Dividends declared | (28.9 | ) | (26.7 | ) | (19.7 | ) | ||||||||||||||||
Net income for the year | 106.7 | 94.4 | 100.7 | 157.1 | 141.3 | 101.2 | ||||||||||||||||
Change in net unrealized gains on investments, net of taxes | (9.1 | ) | (23.3 | ) | 16.5 | |||||||||||||||||
Change in net unrealized gains (losses) on investments, net of taxes | 79.0 | (47.1 | ) | 15.1 | ||||||||||||||||||
Ending Balance | $ | 840.6 | $ | 760.8 | $ | 686.8 | $ | 1,165.8 | $ | 1,018.2 | $ | 947.7 |
Payment Due By Period | |||||||||||||||||||
Total | Less Than 1-Year | 1-3 Years | 4-5 Years | More Than 5 Years | |||||||||||||||
(in millions) | |||||||||||||||||||
Operating leases | $ | 15.6 | $ | 5.1 | $ | 6.8 | $ | 3.6 | $ | 0.1 | |||||||||
Purchased liabilities | 7.0 | 3.9 | 2.3 | 0.8 | — | ||||||||||||||
Notes payable(1) | 60.2 | 1.6 | 3.2 | 3.2 | 52.2 | ||||||||||||||
Capital leases | 0.8 | 0.3 | 0.3 | 0.2 | — | ||||||||||||||
Unpaid losses and LAE reserves(2)(3) | 2,301.0 | 387.0 | 479.9 | 286.2 | 1,147.9 | ||||||||||||||
Total contractual obligations | $ | 2,384.6 | $ | 397.9 | $ | 492.5 | $ | 294.0 | $ | 1,200.2 |
Payment Due By Period | |||||||||||||||||||
Total | Less Than 1 Year | 1-3 Years | 4-5 Years | More Than 5 Years | |||||||||||||||
(in millions) | |||||||||||||||||||
Operating leases | $ | 19.6 | $ | 4.8 | $ | 5.8 | $ | 4.4 | $ | 4.6 | |||||||||
Non-cancellable contracts | 23.0 | 6.0 | 10.3 | 5.9 | 0.8 | ||||||||||||||
Finance leases | 0.6 | 0.2 | 0.3 | 0.1 | — | ||||||||||||||
Unpaid losses and LAE reserves(1)(2) | 2,192.8 | 352.8 | 431.8 | 272.7 | 1,135.5 | ||||||||||||||
Unfunded investment commitments | 41.6 | 41.6 | — | — | — | ||||||||||||||
Total contractual obligations | $ | 2,277.6 | $ | 405.4 | $ | 448.2 | $ | 283.1 | $ | 1,140.9 |
(1) |
Estimated losses and LAE reserve payment patterns have been computed based on historical information. Our calculation of loss and LAE reserve payments by period is subject to the same uncertainties associated with determining the level of reserves and to the additional uncertainties arising from the difficulty of predicting when claims (including claims that have not yet been reported to us) will be paid. For a discussion of our reserving process, see ''–Critical Accounting Policies–Reserves for Losses and LAE.'' Actual payments of losses and LAE by period will vary, perhaps materially, from the above table to the extent that current estimates of losses and LAE reserves vary from actual ultimate claims amounts due to variations between expected and actual payout patterns. |
The unpaid losses and LAE reserves are presented gross of reinsurance recoverables for unpaid losses, which were as follows for each of the periods presented above: |
Recoveries Due By Period | |||||||||||||||||||
Total | Less Than 1 Year | 1-3 Years | 4-5 Years | More Than 5 Years | |||||||||||||||
(in millions) | |||||||||||||||||||
Reinsurance recoverables on unpaid losses and LAE | $ | (580.0 | ) | $ | (30.3 | ) | $ | (57.7 | ) | $ | (53.9 | ) | $ | (438.1 | ) |
Recoveries Due By Period | |||||||||||||||||||
Total | Less Than 1 Year | 1-3 Years | 4-5 Years | More Than 5 Years | |||||||||||||||
(in millions) | |||||||||||||||||||
Reinsurance recoverables on unpaid losses and LAE | $ | (532.5 | ) | $ | (33.7 | ) | $ | (59.1 | ) | $ | (53.5 | ) | $ | (386.2 | ) |
Category | Estimated Fair Value | Percentage of Total | Book Yield | Tax Equivalent Yield | Estimated Fair Value | Percentage of Total | Book Yield | Tax Equivalent Yield(1) | ||||||||||||||||||
(in millions, except percentages) | (in millions, except percentages) | |||||||||||||||||||||||||
U.S. Treasuries | $ | 127.4 | 5.0 | % | 1.8 | % | 1.8 | % | $ | 85.6 | 3.1 | % | 2.5 | % | 2.5 | % | ||||||||||
U.S. Agencies | 12.8 | 0.5 | 4.3 | 4.3 | 2.9 | 0.1 | 3.5 | 3.5 | ||||||||||||||||||
States and municipalities | 851.6 | 33.4 | 3.0 | 4.4 | 484.5 | 17.7 | 3.2 | 3.7 | ||||||||||||||||||
Corporate securities | 956.7 | 37.5 | 3.1 | 3.1 | 1,079.0 | 39.4 | 3.3 | 3.3 | ||||||||||||||||||
Residential mortgaged-backed securities | 258.0 | 10.1 | 3.0 | 3.0 | 480.4 | 17.5 | 3.0 | 3.0 | ||||||||||||||||||
Commercial mortgaged-backed securities | 95.5 | 3.7 | 2.7 | 2.7 | 110.6 | 4.0 | 3.2 | 3.2 | ||||||||||||||||||
Asset-backed securities | 42.4 | 1.7 | 2.4 | 2.4 | 61.2 | 2.2 | 3.4 | 3.4 | ||||||||||||||||||
Other securities | 181.7 | 6.6 | 4.7 | 4.7 | ||||||||||||||||||||||
Equity securities | 192.2 | 7.5 | 5.6 | 7.4 | 256.7 | 9.4 | 3.7 | 5.1 | ||||||||||||||||||
Short-term investments | 16.0 | 0.6 | 1.0 | 1.0 | ||||||||||||||||||||||
Total investments | $ | 2,552.6 | 100.0 | % | ||||||||||||||||||||||
Weighted average yield | 3.1 | % | 3.6 | % | ||||||||||||||||||||||
Total investments at fair value | $ | 2,742.6 | 100.0 | % | ||||||||||||||||||||||
Weighted average ending yield | 3.3 | % | 3.5 | % |
(1) | Computed using a statutory income tax rate of 21%. |
Rating | Percentage of Total Estimated Fair Value | ||
% | |||
Below Investment Grade | |||
Total | 100.0 | % |
As of December 31, | As of December 31, | |||||||||||||
2016 | 2015 | 2019 | 2018 | |||||||||||
(in millions) | (in millions) | |||||||||||||
Case reserves | $ | 1,046.9 | $ | 1,046.4 | $ | 951.5 | $ | 940.6 | ||||||
IBNR | 937.8 | 991.0 | 940.5 | 955.7 | ||||||||||
LAE reserves | 316.3 | 310.1 | 300.8 | 311.6 | ||||||||||
Gross unpaid losses and LAE reserves | 2,301.0 | 2,347.5 | 2,192.8 | 2,207.9 | ||||||||||
Less reinsurance recoverables on unpaid losses and LAE | 580.0 | 628.2 | ||||||||||||
Less reinsurance recoverable on unpaid losses and LAE | 532.5 | 504.4 | ||||||||||||
Net unpaid losses and LAE reserves | $ | 1,721.0 | $ | 1,719.3 | $ | 1,660.3 | $ | 1,703.5 |
As of December 31, | As of December 31, | |||||||||||||
2016 | 2015 | 2019 | 2018 | |||||||||||
(in millions) | (in millions) | |||||||||||||
Low end of actuarial range | $ | 1,525.2 | $ | 1,549.7 | $ | 1,489.4 | $ | 1,484.8 | ||||||
Carried reserves | 1,721.0 | 1,719.3 | 1,660.3 | 1,703.5 | ||||||||||
High end of actuarial range | 1,884.8 | 1,898.9 | 1,855.3 | 1,897.3 |
December 31, | December 31, | |||||||||||||
2016 | 2015 | 2019 | 2018 | |||||||||||
Increase (decrease) in reserves | (in millions) | (in millions) | ||||||||||||
At low end of range | $ | (195.8 | ) | $ | (169.6 | ) | $ | (170.9 | ) | $ | (218.7 | ) | ||
At high end of range | 163.8 | 179.6 | 195.0 | 193.8 | ||||||||||
Increase (decrease) in stockholders' equity and net income | ||||||||||||||
At low end of range | $ | 127.3 | $ | 110.2 | $ | 135.0 | $ | 172.8 | ||||||
At high end of range | (106.5 | ) | (116.7 | ) | (154.1 | ) | (153.1 | ) |
As of December 31, | |||
2016 | |||
(in millions) | |||
Low end of actuarial range | $ | 425.4 | |
LPT carried reserves | 465.5 | ||
High end of actuarial range | 529.3 |
Year Ended December 31, | |||
2016 | |||
Increase (decrease) in reserves | (in millions) | ||
At low end of range | $ | (40.1 | ) |
At high end of range | 63.8 | ||
Increase (decrease) in stockholders' equity and net income | |||
At low end of range | $ | 26.1 | |
At high end of range | (41.5 | ) |
As of December 31, | |||
2019 | |||
(in millions) | |||
Low end of actuarial range | $ | 328.9 | |
LPT carried reserves | 380.4 | ||
High end of actuarial range | 444.2 |
Hypothetical Changes in Interest Rates | Estimated Pre-tax Increase (Decrease) in Fair Value | Estimated Pre-tax Increase (Decrease) in Fair Value | ||||||||||||
(in millions, except percentages) | (in millions, except percentages) | |||||||||||||
300 basis point rise | $ | (294.0 | ) | (12.5 | )% | $ | (272.7 | ) | (11.0 | )% | ||||
200 basis point rise | (200.3 | ) | (8.5 | ) | (181.2 | ) | (7.3 | ) | ||||||
100 basis point rise | (101.9 | ) | (4.3 | ) | (89.1 | ) | (3.6 | ) | ||||||
50 basis point decline | 51.8 | 2.2 | 42.8 | 1.7 | ||||||||||
100 basis point decline | 103.6 | 4.4 | 85.1 | 3.4 |
(in millions) | Cost | Fair Value | 10% Fair Value Decrease | Pre-tax Impact on Total Equity Securities | 10% Fair Value Increase | Pre-tax Impact on Total Equity Securities | Cost | Fair Value | 10% Fair Value Decrease | Pre-tax Impact on Total Equity Securities | 10% Fair Value Increase | Pre-tax Impact on Total Equity Securities | ||||||||||||||||||||||||||||||||||
Equity securities | $ | 116.1 | $ | 192.2 | $ | 173.0 | $ | (19.2 | ) | $ | 211.4 | $ | 19.2 | $ | 155.6 | $ | 256.7 | $ | 231.0 | $ | (25.7 | ) | $ | 282.4 | $ | 25.7 |
Page | |
Management's Report on Internal Control Over Financial Reporting | |
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting | |
Report of Independent Registered Public Accounting Firm | |
Consolidated Balance Sheets as of December 31, | |
Consolidated Statements of Comprehensive Income for each of the | |
Consolidated Statements of Stockholders' Equity for each of the | |
Consolidated Statements of Cash Flows for each of the | |
Notes to Consolidated Financial Statements | |
The following Financial Statement Schedules are filed in Item 15 of Part IV of this report: | |
Financial Statement Schedules: | |
Schedule II. Condensed Financial Information of Registrant | |
Schedule VI. Supplemental Information Concerning Property-Casualty Insurance Operations | |
Pursuant to Rule 7-05 of Regulation S-X, Financial Statement Schedules I, III, IV, and V have been omitted as the information to be set forth therein is included in the Notes to Consolidated Financial Statements. |
Valuation of reserve for Unpaid Losses and Loss Adjustment Expenses | |
Description of the Matter | At December 31, 2019, the liability for incurred but not reported (IBNR) reserves represented a material portion of the $2,192.8 million of unpaid loss and loss adjustment expenses (LAE) reserves. As explained in Notes 2 and 8 to the consolidated financial statements, the liability for unpaid losses and LAE represents management's best estimate of the ultimate net cost of all reported and unreported losses incurred for the applicable periods, less payments made. The estimated reserves include the accumulation of estimates for all claims reported prior to the balance sheet date, estimates of claims incurred but not reported, and estimates of expenses for investigating and adjusting all incurred and unadjusted claims. IBNR reserves include an estimate for claims that are incurred but not yet reported, expected development on reported claims and for additional payments on closed claims. There is significant uncertainty inherent in determining management’s best estimate of the ultimate loss settlement cost which is used to determine the incurred but not reported claim reserves. In particular, the estimate is sensitive to the selection and weighting of actuarial methods and management’s selection of parameters and assumptions including, the pattern with which aggregate data will be paid or emerge over time, claim settlement activity, claims cost inflation rates, and claim frequencies. Auditing management’s best estimate of IBNR reserves was complex due to the highly judgmental nature of the assumptions used in the valuation process. The significant judgement was primarily due to the sensitivity of management’s estimate to the selection of assumptions including the pattern with which aggregate data will be paid or emerge over time and claims cost inflation rates, which had a significant effect on the valuation of IBNR reserves. |
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the process for estimating IBNR reserves. This included, among other procedures, testing management review controls in place over the review and approval of methods and assumptions used in estimating IBNR reserves. To test IBNR reserves, our audit procedures included, among others, testing the completeness and accuracy of the data used in the calculation by testing reconciliations of the underlying claims and policyholder data recorded in the source systems to the actuarial reserving calculations and comparing a sample of incurred and paid claims to source documentation. With the assistance of EY actuarial specialists, we evaluated the Company’s selection and weighting of actuarial methods by comparing the weightings used in the current estimate to those used in prior periods and those used in the industry for the specific types of insurance. To evaluate the significant assumptions used by management, we compared the assumptions to current and historical claims trends and to current industry benchmarks. We also compared management’s recorded reserves to a range of reasonable reserves estimates calculated independently by our EY actuarial specialists. Additionally, we performed a hindsight analysis of the prior period estimates using subsequent claims development. |
Employers Holdings, Inc. and Subsidiaries | ||||||||||||||||
Consolidated Balance Sheets | ||||||||||||||||
As of December 31, | As of December 31, | |||||||||||||||
2016 | 2015 | 2019 | 2018 | |||||||||||||
(in millions, except share data) | ||||||||||||||||
Assets | (in millions, except share data) | |||||||||||||||
Investments: | ||||||||||||||||
Fixed maturity securities at fair value (amortized cost $2,305.9 at December 31, 2016 and $2,221.1 at December 31, 2015) | $ | 2,344.4 | $ | 2,288.5 | ||||||||||||
Equity securities at fair value (cost $116.1 at December 31, 2016 and $137.5 at December 31, 2015) | 192.2 | 198.7 | ||||||||||||||
Short-term investments at fair value (amortized cost $16.0 at December 31, 2016) | 16.0 | — | ||||||||||||||
Fixed maturity securities at fair value (amortized cost $2,403.3 at December 31, 2019 and $2,513.7 at December 31, 2018) | $ | 2,485.9 | $ | 2,496.4 | ||||||||||||
Equity securities at fair value (cost $155.6 at December 31, 2019 and $131.9 at December 31, 2018) | 256.7 | 199.9 | ||||||||||||||
Equity securities at cost | 6.7 | 6.4 | ||||||||||||||
Other invested assets (cost $28.4 at December 31, 2019) | 29.1 | — | ||||||||||||||
Short-term investments at fair value (amortized cost $25.0 at December 31, 2018) | — | 25.0 | ||||||||||||||
Total investments | 2,552.6 | 2,487.2 | 2,778.4 | 2,727.7 | ||||||||||||
Cash and cash equivalents | 67.2 | 56.6 | 154.9 | 101.4 | ||||||||||||
Restricted cash and cash equivalents | 3.6 | 2.5 | 0.3 | 0.6 | ||||||||||||
Accrued investment income | 20.6 | 20.6 | 16.4 | 18.0 | ||||||||||||
Premiums receivable (less bad debt allowance of $9.8 at December 31, 2016 and $12.2 at December 31, 2015) | 304.7 | 301.1 | ||||||||||||||
Premiums receivable (less bad debt allowance of $4.6 at December 31, 2019 and $6.7 at December 31, 2018) | 285.7 | 333.1 | ||||||||||||||
Reinsurance recoverable for: | ||||||||||||||||
Paid losses | 8.7 | 7.7 | 7.2 | 6.7 | ||||||||||||
Unpaid losses | 580.0 | 628.2 | 532.5 | 504.4 | ||||||||||||
Deferred policy acquisition costs | 44.3 | 44.3 | 47.9 | 48.2 | ||||||||||||
Deferred income taxes, net | 59.4 | 67.9 | — | 26.9 | ||||||||||||
Property and equipment, net | 22.2 | 24.9 | 21.9 | 18.2 | ||||||||||||
Operating lease right-of-use assets | 15.9 | — | ||||||||||||||
Intangible assets, net | 8.2 | 8.5 | 13.6 | 7.7 | ||||||||||||
Goodwill | 36.2 | 36.2 | 36.2 | 36.2 | ||||||||||||
Contingent commission receivable–LPT Agreement | 31.1 | 29.2 | 13.2 | 32.0 | ||||||||||||
Cloud computing arrangements | 33.6 | 26.0 | ||||||||||||||
Other assets | 34.6 | 40.9 | 46.4 | 32.1 | ||||||||||||
Total assets | $ | 3,773.4 | $ | 3,755.8 | $ | 4,004.1 | $ | 3,919.2 | ||||||||
Liabilities and stockholders’ equity | ||||||||||||||||
Liabilities and stockholders' equity | ||||||||||||||||
Claims and policy liabilities: | ||||||||||||||||
Unpaid losses and loss adjustment expenses | $ | 2,301.0 | $ | 2,347.5 | $ | 2,192.8 | $ | 2,207.9 | ||||||||
Unearned premiums | 310.3 | 308.9 | 337.1 | 336.3 | ||||||||||||
Total claims and policy liabilities | 2,611.3 | 2,656.4 | ||||||||||||||
Commissions and premium taxes payable | 48.8 | 52.5 | 48.6 | 57.3 | ||||||||||||
Accounts payable and accrued expenses | 24.2 | 24.1 | 29.8 | 37.1 | ||||||||||||
Deferred reinsurance gain—LPT Agreement | 174.9 | 189.5 | 137.1 | 149.6 | ||||||||||||
Notes payable | 32.0 | 32.0 | — | 20.0 | ||||||||||||
Non-cancellable obligations | 23.0 | 18.8 | ||||||||||||||
Operating lease liability | 17.8 | — | ||||||||||||||
Other liabilities | 41.6 | 40.5 | 52.1 | 74.0 | ||||||||||||
Total liabilities | $ | 2,932.8 | $ | 2,995.0 | $ | 2,838.3 | $ | 2,901.0 | ||||||||
Commitments and contingencies (Note 12) | ||||||||||||||||
Stockholders’ equity: | ||||||||||||||||
Common stock, $0.01 par value; 150,000,000 shares authorized; 56,226,277 and 55,589,454 shares issued and 32,128,922 and 32,216,480 shares outstanding at December 31, 2016 and 2015, respectively | $ | 0.6 | $ | 0.6 | ||||||||||||
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued | — | — | ||||||||||||||
Additional paid-in capital | 372.0 | 357.2 | ||||||||||||||
Retained earnings | 777.2 | 682.0 | ||||||||||||||
Accumulated other comprehensive income, net of tax | 74.5 | 83.6 | ||||||||||||||
Treasury stock, at cost (24,097,355 shares at December 31, 2016 and 23,372,974 shares at December 31, 2015) | (383.7 | ) | (362.6 | ) | ||||||||||||
Total stockholders’ equity | 840.6 | 760.8 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 3,773.4 | $ | 3,755.8 | ||||||||||||
Commitments and contingencies (Note 11) |
Employers Holdings, Inc. and Subsidiaries | ||||||||
Consolidated Balance Sheets | ||||||||
As of December 31, | ||||||||
2019 | 2018 | |||||||
(in millions, except share data) | ||||||||
Stockholders' equity: | ||||||||
Common stock, $0.01 par value; 150,000,000 shares authorized; 57,184,370 and 56,975,675 shares issued and 31,355,378 and 32,765,792 shares outstanding at December 31, 2019 and 2018, respectively | $ | 0.6 | $ | 0.6 | ||||
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued | — | — | ||||||
Additional paid-in capital | 396.4 | 388.8 | ||||||
Retained earnings | 1,158.8 | 1,030.7 | ||||||
Accumulated other comprehensive income (loss), net of tax | 65.3 | (13.7 | ) | |||||
Treasury stock, at cost (25,828,992 shares at December 31, 2019 and 24,209,883 shares at December 31, 2018) | (455.3 | ) | (388.2 | ) | ||||
Total stockholders' equity | 1,165.8 | 1,018.2 | ||||||
Total liabilities and stockholders' equity | $ | 4,004.1 | $ | 3,919.2 |
Employers Holdings, Inc. and Subsidiaries | ||||||||||||||||||||||||
Consolidated Statements of Comprehensive Income | ||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2019 | 2018 | 2017 | |||||||||||||||||||
Revenues | (in millions, except per share data) | (in millions, except per share data) | ||||||||||||||||||||||
Net premiums earned | $ | 694.8 | $ | 690.4 | $ | 684.5 | $ | 695.8 | $ | 731.1 | $ | 716.5 | ||||||||||||
Net investment income | 73.2 | 72.2 | 72.4 | 88.1 | 81.2 | 74.6 | ||||||||||||||||||
Net realized gains (losses) on investments | 11.2 | (10.7 | ) | 16.3 | ||||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 51.1 | (13.1 | ) | 7.4 | ||||||||||||||||||||
Gain on redemption of notes payable | — | — | 2.1 | |||||||||||||||||||||
Other income | 0.6 | 0.2 | 0.3 | 0.9 | 1.2 | 0.8 | ||||||||||||||||||
Total revenues | 779.8 | 752.1 | 773.5 | 835.9 | 800.4 | 801.4 | ||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Losses and loss adjustment expenses | 417.9 | 429.4 | 453.4 | 365.9 | 376.7 | 417.2 | ||||||||||||||||||
Commission expense | 83.5 | 85.4 | 81.4 | 88.1 | 94.2 | 91.4 | ||||||||||||||||||
Underwriting and other operating expenses | 136.1 | 135.2 | 129.1 | |||||||||||||||||||||
Interest expense | 1.6 | 2.7 | 3.0 | |||||||||||||||||||||
Underwriting and general and administrative expenses | 187.5 | 158.5 | 139.9 | |||||||||||||||||||||
Interest and financing expenses | 0.6 | 1.5 | 1.4 | |||||||||||||||||||||
Other expenses | — | — | 7.5 | |||||||||||||||||||||
Total expenses | 639.1 | 652.7 | 666.9 | 642.1 | 630.9 | 657.4 | ||||||||||||||||||
Net income before income taxes | 140.7 | 99.4 | 106.6 | 193.8 | 169.5 | 144.0 | ||||||||||||||||||
Income tax expense | 34.0 | 5.0 | 5.9 | 36.7 | 28.2 | 42.8 | ||||||||||||||||||
Net income | $ | 106.7 | $ | 94.4 | $ | 100.7 | $ | 157.1 | $ | 141.3 | $ | 101.2 | ||||||||||||
Comprehensive income | ||||||||||||||||||||||||
Unrealized (losses) gains during the period (net of taxes of $(1.0), $(16.3), and $14.6 for the years ended December 31, 2016, 2015, and 2014, respectively) | $ | (1.8 | ) | $ | (30.3 | ) | $ | 27.1 | ||||||||||||||||
Reclassification adjustment for realized (gains) losses in net income (net of taxes of $3.9, $(3.7), and $5.7 for the years ended December 31, 2016, 2015, and 2014, respectively) | (7.3 | ) | 7.0 | (10.6 | ) | |||||||||||||||||||
Other comprehensive (loss) income, net of tax | (9.1 | ) | (23.3 | ) | 16.5 | |||||||||||||||||||
Unrealized AFS investment gains (losses) during the period (net of tax (expense) benefit of $(21.8), $12.9, and $(8.9) for the years ended December 31, 2019, 2018, and 2017, respectively) | $ | 82.1 | $ | (48.5 | ) | $ | 19.9 | |||||||||||||||||
Reclassification adjustment for realized AFS investment (gains) losses in net income (net of tax expense (benefit) of $0.8, $(0.4), and $2.6 for the years ended December 31, 2019, 2018, and 2017, respectively) | (3.1 | ) | 1.4 | (4.8 | ) | |||||||||||||||||||
Other comprehensive income (loss), net of tax | 79.0 | (47.1 | ) | 15.1 | ||||||||||||||||||||
Total comprehensive income | $ | 97.6 | $ | 71.1 | $ | 117.2 | $ | 236.1 | $ | 94.2 | $ | 116.3 | ||||||||||||
Net realized gains (losses) on investments | ||||||||||||||||||||||||
Net realized gains on investments before impairments on fixed maturity and equity securities | $ | 17.0 | $ | 6.5 | $ | 16.8 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | ||||||||||||||||||||||||
Net realized and unrealized gains (losses) on investments before impairments | $ | 51.1 | $ | (9.8 | ) | $ | 8.8 | |||||||||||||||||
Other than temporary impairments recognized in earnings | (5.8 | ) | (17.2 | ) | (0.5 | ) | — | (3.3 | ) | (1.4 | ) | |||||||||||||
Net realized gains (losses) on investments | $ | 11.2 | $ | (10.7 | ) | $ | 16.3 | |||||||||||||||||
Net realized and unrealized gains (losses) on investments | $ | 51.1 | $ | (13.1 | ) | $ | 7.4 | |||||||||||||||||
Earnings per common share (Note 18): | ||||||||||||||||||||||||
Earnings per common share (Note 17): | ||||||||||||||||||||||||
Basic | $ | 3.29 | $ | 2.94 | $ | 3.19 | $ | 4.89 | $ | 4.30 | $ | 3.11 | ||||||||||||
Diluted | $ | 3.24 | $ | 2.90 | $ | 3.14 | $ | 4.83 | $ | 4.24 | $ | 3.06 | ||||||||||||
Cash dividends declared per common share | $ | 0.36 | $ | 0.24 | $ | 0.24 | ||||||||||||||||||
Cash dividends declared per common share and eligible RSUs and PSUs | $ | 0.88 | $ | 0.80 | $ | 0.60 |
Employers Holdings, Inc. and Subsidiaries | ||||||||||||||||||||||||||
�� | ||||||||||||||||||||||||||
Consolidated Statements of Stockholders' Equity | ||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income, Net | Treasury Stock at Cost | Total Stockholders' Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
(in millions, except share data) | ||||||||||||||||||||||||||
Balance, January 1, 2014 | 54,672,904 | $ | 0.6 | $ | 338.1 | $ | 502.2 | $ | 90.4 | $ | (362.6 | ) | $ | 568.7 | ||||||||||||
Stock-based compensation (Note 14) | — | — | 6.0 | — | — | — | 6.0 | |||||||||||||||||||
Stock options exercised | 120,494 | — | 2.2 | — | — | — | 2.2 | |||||||||||||||||||
Vesting of restricted stock units, net of shares withheld to satisfy minimum tax withholding (Note 14) | 73,404 | — | (0.6 | ) | — | — | — | (0.6 | ) | |||||||||||||||||
Dividends to common stockholders | — | — | — | (7.6 | ) | — | — | (7.6 | ) | |||||||||||||||||
Excess tax benefit from stock-based compensation | — | 0.9 | — | — | — | 0.9 | ||||||||||||||||||||
Net income for the year | — | — | 100.7 | — | — | 100.7 | ||||||||||||||||||||
Change in net unrealized gains on investments, net of taxes of $8.9 | — | — | — | 16.5 | — | 16.5 | ||||||||||||||||||||
Balance, December 31, 2014 | 54,866,802 | $ | 0.6 | $ | 346.6 | $ | 595.3 | $ | 106.9 | $ | (362.6 | ) | $ | 686.8 | ||||||||||||
Balance, January 1, 2015 | 54,866,802 | $ | 0.6 | $ | 346.6 | $ | 595.3 | $ | 106.9 | $ | (362.6 | ) | $ | 686.8 | ||||||||||||
Stock-based compensation (Note 14) | — | — | 4.6 | — | — | — | 4.6 | |||||||||||||||||||
Stock options exercised | 463,466 | — | 7.6 | — | — | — | 7.6 | |||||||||||||||||||
Vesting of restricted and performance stock units, net of shares withheld to satisfy minimum tax withholding (Note 14) | 259,186 | — | (2.7 | ) | — | — | — | (2.7 | ) | |||||||||||||||||
Dividends to common stockholders | — | — | — | (7.7 | ) | — | — | (7.7 | ) | |||||||||||||||||
Excess tax benefit from stock-based compensation | — | 1.1 | — | — | — | 1.1 | ||||||||||||||||||||
Net income for the year | — | — | 94.4 | — | — | 94.4 | ||||||||||||||||||||
Change in net unrealized gains on investments, net of taxes of $(12.6) | — | — | — | (23.3 | ) | — | (23.3 | ) | ||||||||||||||||||
Balance, December 31, 2015 | 55,589,454 | $ | 0.6 | $ | 357.2 | $ | 682.0 | $ | 83.6 | $ | (362.6 | ) | $ | 760.8 | ||||||||||||
Balance, January 1, 2016 | 55,589,454 | $ | 0.6 | $ | 357.2 | $ | 682.0 | $ | 83.6 | $ | (362.6 | ) | $ | 760.8 | ||||||||||||
Stock-based compensation (Note 14) | — | — | 5.8 | — | — | — | 5.8 | |||||||||||||||||||
Stock options exercised | 586,132 | — | 9.6 | — | — | — | 9.6 | |||||||||||||||||||
Vesting of restricted and performance stock units, net of shares withheld to satisfy minimum tax withholding (Note 14) | 50,691 | — | (0.6 | ) | — | — | — | (0.6 | ) | |||||||||||||||||
Acquisition of common stock (Note 13) | — | — | — | — | — | (21.1 | ) | (21.1 | ) | |||||||||||||||||
Dividends to common stockholders | — | — | — | (11.5 | ) | — | — | (11.5 | ) | |||||||||||||||||
Net income for the year | — | — | 106.7 | — | — | 106.7 | ||||||||||||||||||||
Change in net unrealized gains on investments, net of taxes of $(4.9) | — | — | — | (9.1 | ) | — | (9.1 | ) | ||||||||||||||||||
Balance, December 31, 2016 | 56,226,277 | $ | 0.6 | $ | 372.0 | $ | 777.2 | $ | 74.5 | $ | (383.7 | ) | $ | 840.6 |
Employers Holdings, Inc. and Subsidiaries | ||||||||||||||||||||||||||
Consolidated Statements of Stockholders' Equity | ||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss), Net of Tax | Treasury Stock, at Cost | Total Stockholders' Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
(in millions, except share data) | ||||||||||||||||||||||||||
Balance, January 1, 2017 | 56,226,277 | $ | 0.6 | $ | 372.0 | $ | 777.2 | $ | 74.5 | $ | (383.7 | ) | $ | 840.6 | ||||||||||||
Stock-based obligations (Note 13) | — | — | 6.9 | — | — | — | 6.9 | |||||||||||||||||||
Stock options exercised | 307,076 | — | 6.0 | — | — | — | 6.0 | |||||||||||||||||||
Vesting of restricted and performance stock units, net of shares withheld to satisfy minimum tax withholding (Note 13) | 161,821 | — | (2.2 | ) | — | — | — | (2.2 | ) | |||||||||||||||||
Grant date fair value adjustment | — | — | (1.5 | ) | 1.3 | — | — | (0.2 | ) | |||||||||||||||||
Dividends declared | — | — | — | (19.7 | ) | — | — | (19.7 | ) | |||||||||||||||||
Net income for the year | — | — | 101.2 | — | — | 101.2 | ||||||||||||||||||||
Net impact of tax Enactment on net unrealized gains on investments | — | — | — | (17.8 | ) | 17.8 | — | — | ||||||||||||||||||
Change in net unrealized gains on investments, net of taxes of $(6.3) | — | — | — | 15.1 | — | 15.1 | ||||||||||||||||||||
Balance, December 31, 2017 | 56,695,174 | $ | 0.6 | $ | 381.2 | $ | 842.2 | $ | 107.4 | $ | (383.7 | ) | $ | 947.7 | ||||||||||||
Balance, January 1, 2018 | 56,695,174 | $ | 0.6 | $ | 381.2 | $ | 842.2 | $ | 107.4 | $ | (383.7 | ) | $ | 947.7 | ||||||||||||
Stock-based obligations (Note 13) | — | — | 9.4 | — | — | — | 9.4 | |||||||||||||||||||
Stock options exercised | 57,091 | — | 1.1 | — | — | — | 1.1 | |||||||||||||||||||
Vesting of restricted and performance stock units, net of shares withheld to satisfy minimum tax withholding (Note 13) | 223,410 | — | (2.9 | ) | — | — | — | (2.9 | ) | |||||||||||||||||
Acquisition of common stock (Note 12) | — | — | — | — | — | (4.6 | ) | (4.6 | ) | |||||||||||||||||
Dividends declared | — | — | — | (26.7 | ) | — | — | (26.7 | ) | |||||||||||||||||
Net income for the year | — | — | 141.3 | — | — | 141.3 | ||||||||||||||||||||
Reclassification adjustment for adoption of ASU No. 2016-01 | — | — | — | 74.0 | (74.0 | ) | — | — | ||||||||||||||||||
Change in net unrealized losses on investments, net of taxes of $12.5 | — | — | — | (47.1 | ) | — | (47.1 | ) | ||||||||||||||||||
Balance, December 31, 2018 | 56,975,675 | $ | 0.6 | $ | 388.8 | $ | 1,030.7 | $ | (13.7 | ) | $ | (388.2 | ) | $ | 1,018.2 | |||||||||||
Balance, January 1, 2019 | 56,975,675 | $ | 0.6 | $ | 388.8 | $ | 1,030.7 | $ | (13.7 | ) | $ | (388.2 | ) | $ | 1,018.2 | |||||||||||
Stock-based obligations (Note 13) | — | — | 10.1 | — | — | — | 10.1 | |||||||||||||||||||
Stock options exercised | 31,630 | — | 0.7 | — | — | — | 0.7 | |||||||||||||||||||
Vesting of restricted and performance stock units, net of shares withheld to satisfy minimum tax withholding (Note 13) | 177,065 | — | (3.2 | ) | — | — | — | (3.2 | ) | |||||||||||||||||
Acquisition of common stock (Note 12) | — | — | — | — | — | (67.1 | ) | (67.1 | ) | |||||||||||||||||
Dividends declared | — | — | — | (28.9 | ) | — | — | (28.9 | ) | |||||||||||||||||
Net income for the year | — | — | 157.1 | — | — | 157.1 | ||||||||||||||||||||
Change in net unrealized gains on investments, net of taxes of $(21.0) | — | — | — | 79.0 | — | 79.0 | ||||||||||||||||||||
Balance, December 31, 2019 | 57,184,370 | $ | 0.6 | $ | 396.4 | $ | 1,158.8 | $ | 65.3 | $ | (455.3 | ) | $ | 1,165.8 |
Employers Holdings, Inc. and Subsidiaries | Consolidated Statements of Cash Flows | |||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2019 | 2018 | 2017 | |||||||||||||||||||
Operating activities | (in millions) | (in millions) | ||||||||||||||||||||||
Net income | $ | 106.7 | $ | 94.4 | $ | 100.7 | $ | 157.1 | $ | 141.3 | $ | 101.2 | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | 8.5 | 8.3 | 7.0 | 9.0 | 6.3 | 8.2 | ||||||||||||||||||
Stock-based compensation | 5.8 | 4.6 | 6.0 | 10.1 | 9.4 | 6.8 | ||||||||||||||||||
Amortization of cloud computing arrangements | 5.3 | — | — | |||||||||||||||||||||
Amortization of premium on investments, net | 14.6 | 12.8 | 10.6 | 8.7 | 8.4 | 14.3 | ||||||||||||||||||
Allowance for doubtful accounts | (2.4 | ) | 4.3 | 0.8 | (2.1 | ) | (3.3 | ) | 0.2 | |||||||||||||||
Deferred income tax expense (benefit) | 13.4 | (5.6 | ) | (0.5 | ) | |||||||||||||||||||
Net realized (gains) losses on investments | (11.2 | ) | 10.7 | (16.3 | ) | |||||||||||||||||||
Excess tax benefits from stock-based compensation | — | (1.2 | ) | (1.2 | ) | |||||||||||||||||||
Other | — | 0.1 | (0.3 | ) | ||||||||||||||||||||
Deferred income tax expense | 6.0 | 14.4 | 24.2 | |||||||||||||||||||||
Net realized and unrealized (gains) losses on investments | (51.1 | ) | 13.1 | (7.4 | ) | |||||||||||||||||||
Gain on redemption of notes payable | — | — | (2.1 | ) | ||||||||||||||||||||
Write-off of previously capitalized costs | — | — | 7.5 | |||||||||||||||||||||
Change in operating assets and liabilities: | ||||||||||||||||||||||||
Premiums receivable | (1.2 | ) | (9.6 | ) | (17.6 | ) | 49.5 | (3.1 | ) | (22.2 | ) | |||||||||||||
Reinsurance recoverable on paid and unpaid losses | 47.2 | 44.3 | 71.3 | 20.4 | 33.1 | 44.5 | ||||||||||||||||||
Federal income taxes | 7.7 | (3.9 | ) | 6.5 | ||||||||||||||||||||
Cloud computing arrangements | (12.9 | ) | (26.0 | ) | — | |||||||||||||||||||
Operating lease right-of-use-assets | (15.9 | ) | — | — | ||||||||||||||||||||
Current federal income taxes | (7.4 | ) | 8.6 | (2.7 | ) | |||||||||||||||||||
Unpaid losses and loss adjustment expenses | (46.5 | ) | (22.2 | ) | 39.2 | (63.4 | ) | (58.2 | ) | (34.9 | ) | |||||||||||||
Unearned premiums | 1.4 | (1.9 | ) | 6.8 | 0.8 | 18.0 | 8.0 | |||||||||||||||||
Accounts payable, accrued expenses and other liabilities | (4.2 | ) | 8.6 | 12.8 | (7.5 | ) | 19.1 | (7.0 | ) | |||||||||||||||
Deferred reinsurance gain–LPT Agreement | (14.6 | ) | (17.5 | ) | (42.1 | ) | (12.5 | ) | (14.0 | ) | (11.3 | ) | ||||||||||||
Contingent commission receivable–LPT Agreement | (1.9 | ) | (2.8 | ) | (1.3 | ) | 18.8 | — | — | |||||||||||||||
Operating lease liabilities | 17.8 | — | — | |||||||||||||||||||||
Non-cancellable obligations | 4.2 | 16.1 | 2.7 | |||||||||||||||||||||
Other | (0.5 | ) | (7.0 | ) | (10.5 | ) | (11.8 | ) | (3.0 | ) | 12.3 | |||||||||||||
Net cash provided by operating activities | 122.8 | 116.4 | 171.9 | 123.1 | 180.2 | 142.3 | ||||||||||||||||||
Investing activities | ||||||||||||||||||||||||
Purchases of fixed maturity securities | (466.8 | ) | (476.9 | ) | (378.0 | ) | (359.0 | ) | (636.7 | ) | (592.3 | ) | ||||||||||||
Purchases of equity securities | (49.1 | ) | (85.1 | ) | (29.5 | ) | (240.8 | ) | (79.3 | ) | (36.8 | ) | ||||||||||||
Purchases of short-term investments | (10.0 | ) | — | — | — | (59.7 | ) | (8.2 | ) | |||||||||||||||
Purchases of other invested assets | (28.4 | ) | — | — | ||||||||||||||||||||
Proceeds from sale of fixed maturity securities | 132.4 | 105.4 | 47.9 | 163.0 | 204.8 | 249.8 | ||||||||||||||||||
Proceeds from sale of equity securities | 80.4 | 34.7 | 36.5 | 232.4 | 70.7 | 41.2 | ||||||||||||||||||
Proceeds from maturities and redemptions of investments | 230.6 | 323.9 | 251.1 | |||||||||||||||||||||
Proceeds from maturities and redemptions of fixed maturity securities | 309.9 | 329.4 | 215.7 | |||||||||||||||||||||
Proceeds from maturities of short-term investments | 25.0 | 39.0 | 20.2 | |||||||||||||||||||||
Net change in unsettled investment purchases and sales | (24.7 | ) | 22.4 | 5.8 | ||||||||||||||||||||
Capital expenditures and other | (5.0 | ) | (11.5 | ) | (10.5 | ) | (12.1 | ) | (10.2 | ) | (8.2 | ) | ||||||||||||
Change in restricted cash and cash equivalents | (1.1 | ) | 8.3 | (4.2 | ) | |||||||||||||||||||
Net cash used in investing activities | (88.6 | ) | (101.2 | ) | (86.7 | ) | ||||||||||||||||||
Purchase of Cerity Insurance Company, net of cash and cash equivalents acquired | (16.1 | ) | — | — | ||||||||||||||||||||
Net cash provided by (used in) investing activities | 49.2 | (119.6 | ) | (112.8 | ) | |||||||||||||||||||
Financing activities | ||||||||||||||||||||||||
Acquisition of common stock | (21.1 | ) | — | — | (67.5 | ) | (4.2 | ) | — | |||||||||||||||
Cash transactions related to stock-based compensation | 9.0 | 4.8 | 1.6 | (2.5 | ) | (1.8 | ) | 3.8 | ||||||||||||||||
Dividends paid to stockholders | (11.5 | ) | (7.7 | ) | (7.6 | ) | (28.9 | ) | (26.7 | ) | (19.7 | ) | ||||||||||||
Payments on notes payable and capital leases | — | (60.5 | ) | (11.3 | ) | |||||||||||||||||||
Excess tax benefits from stock-based compensation | — | 1.2 | 1.2 | |||||||||||||||||||||
Redemption of notes payable | (20.0 | ) | — | (9.9 | ) | |||||||||||||||||||
Payments on capital leases | (0.2 | ) | (0.2 | ) | (0.2 | ) | ||||||||||||||||||
Net cash used in financing activities | (23.6 | ) | (62.2 | ) | (16.1 | ) | (119.1 | ) | (32.9 | ) | (26.0 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | 10.6 | (47.0 | ) | 69.1 | ||||||||||||||||||||
Cash and cash equivalents at the beginning of the period | 56.6 | 103.6 | 34.5 | |||||||||||||||||||||
Cash and cash equivalents at the end of the period | $ | 67.2 | $ | 56.6 | $ | 103.6 | ||||||||||||||||||
Non-cash transactions | ||||||||||||||||||||||||
Financed property and equipment purchases | $ | 0.7 | $ | 0.3 | $ | 0.7 | ||||||||||||||||||
Non-cash exchange of fixed maturity investments for short-term investments | $ | 6.0 | $ | — | $ | — | ||||||||||||||||||
Net increase in cash, cash equivalents, and restricted cash | 53.2 | 27.7 | 3.5 | |||||||||||||||||||||
Cash, cash equivalents, and restricted cash at the beginning of the period | 102.0 | 74.3 | 70.8 | |||||||||||||||||||||
Cash, cash equivalents, and restricted cash at the end of the period | $ | 155.2 | $ | 102.0 | $ | 74.3 | ||||||||||||||||||
Non-cash transactions | ||||||||||||
Financed property and equipment purchases | $ | 0.7 | $ | 0.3 | $ | 0.4 |
As of | As of | |||||||
December 31, 2019 | December 31, 2018 | |||||||
(in millions) | ||||||||
Cash and cash equivalents | $ | 154.9 | $ | 101.4 | ||||
Restricted cash and cash equivalents supporting reinsurance obligations | 0.3 | 0.6 | ||||||
Total cash, cash equivalents and restricted cash | $ | 155.2 | $ | 102.0 |
December 31, |
2016 | 2015 | 2014 | ||||||||||
(in millions, except per share data) | ||||||||||||
LPT Reserve Adjustments | $ | (5.0 | ) | $ | (10.0 | ) | $ | (46.8 | ) | |||
Cumulative adjustment to the Deferred Gain(1) | (3.1 | ) | (6.4 | ) | (31.1 | ) | ||||||
Net income impact from this change in estimate | 3.1 | 6.4 | 31.1 | |||||||||
Earnings per common share impact from this change in estimate | ||||||||||||
Basic | 0.10 | 0.20 | 0.99 | |||||||||
Diluted | 0.09 | 0.20 | 0.97 |
2016 | 2015 | 2014 | ||||||||||
(in millions, except per share data) | ||||||||||||
Change in estimate of Contingent commission receivable - LPT Agreement | $ | 1.9 | $ | 2.8 | $ | 12.5 | ||||||
Cumulative adjustment to the Deferred Gain(1) | (1.8 | ) | (2.6 | ) | (10.8 | ) | ||||||
Net income impact from this change in estimate | 1.8 | 2.6 | 10.8 | |||||||||
Earnings per common share impact from this change in estimate | ||||||||||||
Basic | 0.06 | 0.08 | 0.34 | |||||||||
Diluted | 0.05 | 0.08 | 0.34 |
2015 | 2014 | |||||||
(in millions, except per share data) | ||||||||
Loss and LAE reserves reallocated to taxable years | $ | 56.3 | $ | 13.1 | ||||
Impact to effective tax rate | (15.4 | )% | (3.4 | )% | ||||
Net income impact from this change in estimate | $ | 15.3 | $ | 3.6 | ||||
Earnings per common share impact from this change in estimate | ||||||||
Basic | 0.48 | 0.11 | ||||||
Diluted | 0.47 | 0.11 |
2019 | 2018 | ||||||||||||||||||||||
Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
State licenses | $ | 13.5 | $ | — | $ | 13.5 | $ | 7.7 | $ | — | $ | 7.7 | |||||||||||
Insurance relationships | 9.4 | $ | (9.4 | ) | — | 9.4 | $ | (9.4 | ) | — | |||||||||||||
Other | 0.1 | — | 0.1 | — | — | — | |||||||||||||||||
Total | $ | 23.0 | $ | (9.4 | ) | $ | 13.6 | $ | 17.1 | $ | (9.4 | ) | $ | 7.7 |
2016 | 2015 | ||||||||||||||||||||||
Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
State licenses | $ | 7.7 | $ | — | $ | 7.7 | $ | 7.7 | $ | — | $ | 7.7 | |||||||||||
Insurance relationships | 9.4 | $ | (8.9 | ) | 0.5 | 9.4 | $ | (8.6 | ) | 0.8 | |||||||||||||
Total | $ | 17.1 | $ | (8.9 | ) | $ | 8.2 | $ | 17.1 | $ | (8.6 | ) | $ | 8.5 |
Year | Amount | |||
(in millions) | ||||
2017 | 0.3 | |||
2018 | 0.2 | |||
Total | $ | 0.5 |
2019 | 2018 | ||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
Financial assets | (in millions) | ||||||||||||||
Total investments at fair value (Note 5) | $ | 2,742.6 | $ | 2,742.6 | $ | 2,721.3 | $ | 2,721.3 | |||||||
Cash and cash equivalents | 154.9 | 154.9 | 101.4 | 101.4 | |||||||||||
Restricted cash and cash equivalents | 0.3 | 0.3 | 0.6 | 0.6 | |||||||||||
Financial liabilities | |||||||||||||||
Notes payable (Note 10) | $ | — | $ | — | $ | 20.0 | $ | 23.5 |
2016 | 2015 | ||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
Financial assets | (in millions) | ||||||||||||||
Investments (Note 6) | $ | 2,552.6 | $ | 2,552.6 | $ | 2,487.2 | $ | 2,487.2 | |||||||
Cash and cash equivalents | 67.2 | 67.2 | 56.6 | 56.6 | |||||||||||
Restricted cash and cash equivalents | 3.6 | 3.6 | 2.5 | 2.5 | |||||||||||
Financial liabilities | |||||||||||||||
Notes payable (Note 11) | $ | 32.0 | $ | 33.0 | $ | 32.0 | $ | 36.6 |
December 31, 2019 | December 31, 2018 | ||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Fixed maturity securities | |||||||||||||||||||||||
U.S. Treasuries | $ | — | $ | 85.6 | $ | — | $ | — | $ | 106.4 | $ | — | |||||||||||
U.S. Agencies | — | 2.9 | — | — | 11.4 | — | |||||||||||||||||
States and municipalities | — | 484.5 | — | — | 528.0 | — | |||||||||||||||||
Corporate securities | — | 1,079.0 | — | — | 1,090.4 | — | |||||||||||||||||
Residential mortgage-backed securities | — | 480.4 | — | — | 451.5 | — | |||||||||||||||||
Commercial mortgage-backed securities | — | 110.6 | — | — | 94.3 | — | |||||||||||||||||
Asset-backed securities | — | 61.2 | — | — | 64.5 | — | |||||||||||||||||
Other securities | — | 181.7 | — | — | 149.9 | — | |||||||||||||||||
Total fixed maturity securities | $ | — | $ | 2,485.9 | $ | — | $ | — | $ | 2,496.4 | $ | — | |||||||||||
Equity securities at fair value | |||||||||||||||||||||||
Industrial and miscellaneous | $ | 216.4 | $ | — | $ | — | $ | 174.8 | $ | — | $ | — | |||||||||||
Other | 40.3 | — | — | 25.1 | — | — | |||||||||||||||||
Total equity securities at fair value | $ | 256.7 | $ | — | $ | — | $ | 199.9 | $ | — | $ | — | |||||||||||
Short-term investments | $ | — | $ | — | $ | — | $ | — | $ | 25.0 | $ | — | |||||||||||
Total investments at fair value | $ | 256.7 | $ | 2,485.9 | $ | — | $ | 199.9 | $ | 2,521.4 | $ | — |
December 31, 2016 | December 31, 2015 | ||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Fixed maturity securities | |||||||||||||||||||||||
U.S. Treasuries | $ | — | $ | 127.4 | $ | — | $ | — | $ | 120.2 | $ | — | |||||||||||
U.S. Agencies | — | 12.8 | — | — | 24.4 | — | |||||||||||||||||
States and municipalities | — | 851.6 | — | — | 854.5 | — | |||||||||||||||||
Corporate securities | — | 956.7 | — | — | 925.3 | — | |||||||||||||||||
Residential mortgage-backed securities | — | 258.0 | — | — | 237.9 | — | |||||||||||||||||
Commercial mortgage-backed securities | — | 95.5 | — | — | 80.3 | — | |||||||||||||||||
Asset-backed securities | — | 35.4 | 7.0 | — | 45.9 | — | |||||||||||||||||
Total fixed maturity securities | $ | — | $ | 2,337.4 | $ | 7.0 | $ | — | $ | 2,288.5 | $ | — | |||||||||||
Equity securities | |||||||||||||||||||||||
Industrial and miscellaneous | $ | 167.2 | $ | — | $ | — | $ | 178.4 | $ | — | $ | — | |||||||||||
Non-redeemable preferred (FHLB stock) | — | — | 4.9 | — | — | — | |||||||||||||||||
Other | 20.1 | — | — | 20.3 | — | — | |||||||||||||||||
Total equity securities | $ | 187.3 | $ | — | $ | 4.9 | $ | 198.7 | $ | — | $ | — | |||||||||||
Short-term investments | $ | — | $ | 16.0 | $ | — | $ | — | $ | — | $ | — |
December 31, 2016 | December 31, 2015 | ||||||
Cash and cash equivalents at fair value | $ | 9.7 | $ | 56.6 | |||
Cash equivalents measured at NAV, which approximates fair value | 57.5 | — | |||||
Total cash and cash equivalents | $ | 67.2 | $ | 56.6 |
Level 3 Securities | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Beginning balance, January 1 | $ | — | $ | 4.7 | |||
Transfers out of Level 3(1) | — | (4.7 | ) | ||||
Purchases and sales, net | — | — | |||||
Ending balance, December 31 | $ | — | $ | — |
(1) | The transfer during the year ended December 31, 2018 was the result of adoption of ASU 2016-01, which specified that FHLB stock shall be carried at cost and is no longer measured at fair value. |
Level 3 Securities | ||||
(in millions) | ||||
Beginning balance, January 1, 2016 | $ | — | ||
Purchases | 11.9 | |||
Ending balance, December 31, 2016 | $ | 11.9 |
December 31, 2019 | December 31, 2018 | ||||
Cash equivalents measured at NAV | 14.4 | 57.5 | |||
Other invested assets carried at NAV | 9.1 | — |
Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||||
At December 31, 2016 | (in millions) | |||||||||||||||||||||||||||||||
At December 31, 2019 | (in millions) | |||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||
U.S. Treasuries | $ | 124.1 | $ | 3.5 | $ | (0.2 | ) | $ | 127.4 | $ | 83.7 | $ | 1.9 | $ | — | $ | 85.6 | |||||||||||||||
U.S. Agencies | 11.9 | 0.9 | — | 12.8 | 2.8 | 0.1 | — | 2.9 | ||||||||||||||||||||||||
States and municipalities | 833.0 | 24.7 | (6.1 | ) | 851.6 | 458.2 | 26.3 | — | 484.5 | |||||||||||||||||||||||
Corporate securities | 942.3 | 18.9 | (4.5 | ) | 956.7 | 1,038.6 | 40.4 | — | 1,079.0 | |||||||||||||||||||||||
Residential mortgage-backed securities | 255.9 | 4.7 | (2.6 | ) | 258.0 | 471.7 | 9.4 | (0.7 | ) | 480.4 | ||||||||||||||||||||||
Commercial mortgage-backed securities | 96.1 | 0.4 | (1.0 | ) | 95.5 | 107.4 | 3.2 | — | 110.6 | |||||||||||||||||||||||
Asset-backed securities | 42.6 | — | (0.2 | ) | 42.4 | 60.4 | 0.9 | (0.1 | ) | 61.2 | ||||||||||||||||||||||
Other securities(1) | 180.5 | 1.6 | (0.4 | ) | 181.7 | |||||||||||||||||||||||||||
Total fixed maturity securities | 2,305.9 | 53.1 | (14.6 | ) | 2,344.4 | 2,403.3 | 83.8 | (1.2 | ) | 2,485.9 | ||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||||||||
Industrial and miscellaneous | 100.5 | 67.4 | (0.7 | ) | 167.2 | |||||||||||||||||||||||||||
Non-redeemable preferred (FHLB stock) | 4.9 | — | — | 4.9 | ||||||||||||||||||||||||||||
Other | 10.7 | 9.4 | — | 20.1 | ||||||||||||||||||||||||||||
Total equity securities | 116.1 | 76.8 | (0.7 | ) | 192.2 | |||||||||||||||||||||||||||
Short-term investments | 16.0 | — | — | 16.0 | ||||||||||||||||||||||||||||
Total investments | $ | 2,438.0 | $ | 129.9 | $ | (15.3 | ) | $ | 2,552.6 | |||||||||||||||||||||||
Total AFS investments | $ | 2,403.3 | $ | 83.8 | $ | (1.2 | ) | $ | 2,485.9 | |||||||||||||||||||||||
At December 31, 2015 | ||||||||||||||||||||||||||||||||
At December 31, 2018 | ||||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||
U.S. Treasuries | $ | 116.4 | $ | 3.9 | $ | (0.1 | ) | $ | 120.2 | $ | 106.7 | $ | 0.9 | $ | (1.2 | ) | $ | 106.4 | ||||||||||||||
U.S. Agencies | 23.0 | 1.4 | — | 24.4 | 11.3 | 0.1 | — | 11.4 | ||||||||||||||||||||||||
States and municipalities | 809.4 | 45.1 | — | 854.5 | 513.4 | 15.3 | (0.7 | ) | 528.0 | |||||||||||||||||||||||
Corporate securities | 913.4 | 19.9 | (8.0 | ) | 925.3 | 1,106.2 | 5.8 | (21.6 | ) | 1,090.4 | ||||||||||||||||||||||
Residential mortgage-backed securities | 231.8 | 7.1 | (1.0 | ) | 237.9 | 459.1 | 2.2 | (9.8 | ) | 451.5 | ||||||||||||||||||||||
Commercial mortgage-backed securities | 81.1 | 0.2 | (1.0 | ) | 80.3 | 96.7 | 0.1 | (2.5 | ) | 94.3 | ||||||||||||||||||||||
Asset-backed securities | 46.0 | — | (0.1 | ) | 45.9 | 64.7 | 0.2 | (0.4 | ) | 64.5 | ||||||||||||||||||||||
Other securities(1) | 155.6 | — | (5.7 | ) | 149.9 | |||||||||||||||||||||||||||
Total fixed maturity securities | 2,221.1 | 77.6 | (10.2 | ) | 2,288.5 | 2,513.7 | 24.6 | (41.9 | ) | 2,496.4 | ||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||||||||
Industrial and miscellaneous | 126.0 | 56.8 | (4.4 | ) | 178.4 | |||||||||||||||||||||||||||
Other | 11.5 | 9.0 | (0.2 | ) | 20.3 | |||||||||||||||||||||||||||
Total equity securities | 137.5 | 65.8 | (4.6 | ) | 198.7 | |||||||||||||||||||||||||||
Total investments | $ | 2,358.6 | $ | 143.4 | $ | (14.8 | ) | $ | 2,487.2 | |||||||||||||||||||||||
Short-term investments | 25.0 | — | — | 25.0 | ||||||||||||||||||||||||||||
Total AFS investments | $ | 2,538.7 | $ | 24.6 | $ | (41.9 | ) | $ | 2,521.4 |
(1) | Other securities within fixed maturity securities consist of bank loans, which are classified as AFS and reported at fair value. |
Cost | Estimated Fair Value | |||||||
(in millions) | ||||||||
At December 31, 2019 | ||||||||
Equity securities at fair value | ||||||||
Industrial and miscellaneous | $ | 129.1 | $ | 216.4 | ||||
Other | 26.5 | 40.3 | ||||||
Total equity securities at fair value | $ | 155.6 | $ | 256.7 | ||||
At December 31, 2018 | ||||||||
Equity securities at fair value | ||||||||
Industrial and miscellaneous | $ | 114.6 | $ | 174.8 | ||||
Other | 17.3 | 25.1 | ||||||
Total equity securities at fair value | $ | 131.9 | $ | 199.9 |
Amortized Cost | Estimated Fair Value | |||||||
(in millions) | ||||||||
Due in one year or less | $ | 170.2 | $ | 171.5 | ||||
Due after one year through five years | 758.2 | 781.5 | ||||||
Due after five years through ten years | 778.6 | 819.3 | ||||||
Due after ten years | 56.8 | 61.4 | ||||||
Mortgage and asset-backed securities | 639.5 | 652.2 | ||||||
Total | $ | 2,403.3 | $ | 2,485.9 |
Amortized Cost | Estimated Fair Value | |||||||
(in millions) | ||||||||
Due in one year or less | $ | 136.1 | $ | 137.4 | ||||
Due after one year through five years | 896.8 | 918.6 | ||||||
Due after five years through ten years | 613.4 | 625.7 | ||||||
Due after ten years | 265.0 | 266.8 | ||||||
Mortgage and asset-backed securities | 394.6 | 395.9 | ||||||
Total | $ | 2,305.9 | $ | 2,344.4 |
December 31, 2019 | December 31, 2018 | |||||||||||||||||||||
Estimated Fair Value | Gross Unrealized Losses | Number of Issues | Estimated Fair Value | Gross Unrealized Losses | Number of Issues | |||||||||||||||||
Less than 12 months: | (dollars in millions) | |||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||
U.S. Treasuries | $ | — | $ | — | — | $ | 12.2 | $ | (0.1 | ) | 7 | |||||||||||
States and municipalities | — | — | — | 70.1 | (0.7 | ) | 21 | |||||||||||||||
Corporate securities | — | — | — | 624.4 | (13.4 | ) | 205 | |||||||||||||||
Residential mortgage-backed securities | 56.9 | (0.2 | ) | 29 | 156.9 | (2.5 | ) | 59 | ||||||||||||||
Commercial mortgage-backed securities | — | — | — | 30.9 | (0.5 | ) | 13 | |||||||||||||||
Asset-backed securities | 10.1 | (0.1 | ) | 6 | 25.1 | (0.2 | ) | 18 | ||||||||||||||
Other securities | 15.2 | (0.3 | ) | 64 | 137.1 | (5.7 | ) | 215 | ||||||||||||||
Total fixed maturity securities | 82.2 | (0.6 | ) | 99 | 1,056.7 | (23.1 | ) | 538 | ||||||||||||||
Total less than 12 months | $ | 82.2 | $ | (0.6 | ) | 99 | $ | 1,056.7 | $ | (23.1 | ) | 538 | ||||||||||
12 months or greater: | ||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||
U.S. Treasuries | $ | — | $ | — | — | $ | 72.7 | $ | (1.1 | ) | 25 | |||||||||||
Corporate securities | — | — | — | 193.7 | (8.2 | ) | 69 | |||||||||||||||
Residential mortgage-backed securities | 40.0 | (0.5 | ) | 19 | 199.8 | (7.3 | ) | 72 | ||||||||||||||
Commercial mortgage-backed securities | — | — | — | 55.0 | (2.0 | ) | 22 | |||||||||||||||
Asset-backed securities | — | — | — | 16.5 | (0.2 | ) | 17 | |||||||||||||||
Other securities | 5.9 | (0.1 | ) | 19 | — | — | — | |||||||||||||||
Total fixed maturity securities | 45.9 | (0.6 | ) | 38 | 537.7 | (18.8 | ) | 205 | ||||||||||||||
Total 12 months or greater | $ | 45.9 | $ | (0.6 | ) | 38 | $ | 537.7 | $ | (18.8 | ) | 205 |
December 31, 2016 | December 31, 2015 | |||||||||||||||||||||
Estimated Fair Value | Gross Unrealized Losses | Number of Issues | Estimated Fair Value | Gross Unrealized Losses | Number of Issues | |||||||||||||||||
Less than 12 months: | (dollars in millions) | |||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||
U.S. Treasuries | $ | 33.3 | $ | (0.2 | ) | 14 | $ | 27.4 | $ | (0.1 | ) | 20 | ||||||||||
States and municipalities | 200.9 | (6.1 | ) | 50 | — | — | — | |||||||||||||||
Corporate securities | 289.5 | (4.1 | ) | 101 | 328.4 | (4.7 | ) | 122 | ||||||||||||||
Residential mortgage-backed securities | 137.5 | (2.6 | ) | 51 | 50.5 | (0.8 | ) | 24 | ||||||||||||||
Commercial mortgage-backed securities | 48.0 | (1.0 | ) | 21 | 51.5 | (1.0 | ) | 22 | ||||||||||||||
Asset-backed securities | 30.1 | (0.2 | ) | 20 | 34.1 | — | 27 | |||||||||||||||
Total fixed maturity securities | 739.3 | (14.2 | ) | 257 | 491.9 | (6.6 | ) | 215 | ||||||||||||||
Equity securities | 13.6 | (0.6 | ) | 28 | 35.8 | (4.6 | ) | 45 | ||||||||||||||
Total less than 12 months | $ | 752.9 | $ | (14.8 | ) | 285 | $ | 527.7 | $ | (11.2 | ) | 260 | ||||||||||
12 months or greater: | ||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||
Corporate securities | $ | 15.2 | $ | (0.4 | ) | 5 | $ | 34.6 | $ | (3.3 | ) | 15 | ||||||||||
Residential mortgage-backed securities | — | — | — | 7.1 | (0.2 | ) | 25 | |||||||||||||||
Asset-backed securities | — | — | — | 11.1 | (0.1 | ) | 4 | |||||||||||||||
Total fixed maturity securities | 15.2 | (0.4 | ) | 5 | 52.8 | (3.6 | ) | 44 | ||||||||||||||
Equity securities | 1.7 | (0.1 | ) | 5 | — | — | — | |||||||||||||||
12 months or greater | $ | 16.9 | $ | (0.5 | ) | 10 | $ | 52.8 | $ | (3.6 | ) | 44 | ||||||||||
Total available-for-sale: | ||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||
U.S. Treasuries | $ | 33.3 | $ | (0.2 | ) | 14 | $ | 27.4 | $ | (0.1 | ) | 20 | ||||||||||
States and municipalities | 200.9 | (6.1 | ) | 50 | — | — | — | |||||||||||||||
Corporate securities | 304.7 | (4.5 | ) | 106 | 363.0 | (8.0 | ) | 137 | ||||||||||||||
Residential mortgage-backed securities | 137.5 | (2.6 | ) | 51 | 57.6 | (1.0 | ) | 49 | ||||||||||||||
Commercial mortgage-backed securities | 48.0 | (1.0 | ) | 21 | 51.5 | (1.0 | ) | 22 | ||||||||||||||
Asset-backed securities | 30.1 | (0.2 | ) | 20 | 45.2 | (0.1 | ) | 31 | ||||||||||||||
Total fixed maturity securities | 754.5 | (14.6 | ) | 262 | 544.7 | (10.2 | ) | 259 | ||||||||||||||
Equity securities | 15.3 | (0.7 | ) | 33 | 35.8 | (4.6 | ) | 45 | ||||||||||||||
Total available-for-sale | $ | 769.8 | $ | (15.3 | ) | 295 | $ | 580.5 | $ | (14.8 | ) | 304 |
Gross Realized Gains | Gross Realized Losses | Change in Net Unrealized Gains (Losses) | Changes in Fair Value Reflected in Earnings | Changes in Fair Value Reflected in AOCI, before tax | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Year Ended December 31, 2019 | ||||||||||||||||||||
Fixed maturity securities | $ | 5.2 | $ | (1.3 | ) | $ | 99.9 | $ | 3.9 | $ | 99.9 | |||||||||
Equity securities | 17.8 | (4.4 | ) | 33.1 | 46.5 | — | ||||||||||||||
Other invested assets | — | — | 0.7 | 0.7 | — | |||||||||||||||
Total investments | $ | 23.0 | $ | (5.7 | ) | $ | 133.7 | $ | 51.1 | $ | 99.9 | |||||||||
Year Ended December 31, 2018 | ||||||||||||||||||||
Fixed maturity securities | $ | 2.2 | $ | (4.0 | ) | $ | (59.7 | ) | $ | (1.8 | ) | $ | (59.7 | ) | ||||||
Equity securities | 15.9 | (1.6 | ) | (25.6 | ) | (11.3 | ) | — | ||||||||||||
Total investments | $ | 18.1 | $ | (5.6 | ) | $ | (85.3 | ) | $ | (13.1 | ) | $ | (59.7 | ) | ||||||
Year Ended December 31, 2017 | ||||||||||||||||||||
Fixed maturity securities | $ | 4.7 | $ | (2.2 | ) | $ | 3.9 | $ | 2.5 | $ | 3.9 | |||||||||
Equity securities | 9.3 | (4.4 | ) | 17.5 | 4.9 | 17.5 | ||||||||||||||
Total investments | $ | 14.0 | $ | (6.6 | ) | $ | 21.4 | $ | 7.4 | $ | 21.4 |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Net realized gains (losses) on investments | (in millions) | |||||||||||
Fixed maturity securities | ||||||||||||
Gross gains | $ | 1.9 | $ | 0.5 | $ | 1.1 | ||||||
Gross losses | (0.7 | ) | (0.4 | ) | — | |||||||
Net realized gains on fixed maturity securities | $ | 1.2 | $ | 0.1 | $ | 1.1 | ||||||
Equity securities | ||||||||||||
Gross gains | $ | 16.6 | $ | 8.1 | $ | 15.7 | ||||||
Gross losses | (6.6 | ) | (18.9 | ) | (0.5 | ) | ||||||
Net realized gains (losses) on equity securities | $ | 10.0 | $ | (10.8 | ) | $ | 15.2 | |||||
Total | $ | 11.2 | $ | (10.7 | ) | $ | 16.3 | |||||
Change in unrealized gains (losses) | ||||||||||||
Fixed maturity securities | $ | (28.9 | ) | $ | (22.2 | ) | $ | 23.1 | ||||
Equity securities | 14.9 | (13.7 | ) | 2.2 | ||||||||
Total | $ | (14.0 | ) | $ | (35.9 | ) | $ | 25.3 |
Years Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
Fixed maturity securities | $ | 81.9 | $ | 76.0 | $ | 70.4 | ||||||
Equity securities | 7.9 | 6.5 | 6.9 | |||||||||
Other invested assets | 1.2 | — | — | |||||||||
Short-term investments | — | 0.3 | 0.1 | |||||||||
Cash equivalents and restricted cash | 1.7 | 2.0 | 0.6 | |||||||||
Gross investment income | 92.7 | 84.8 | 78.0 | |||||||||
Investment expenses | (4.6 | ) | (3.6 | ) | (3.4 | ) | ||||||
Net investment income | $ | 88.1 | $ | 81.2 | $ | 74.6 |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
(in millions) | ||||||||||||
Fixed maturity securities | $ | 68.5 | $ | 68.8 | $ | 70.7 | ||||||
Equity securities | 7.4 | 5.9 | 4.2 | |||||||||
Cash equivalents and restricted cash | 0.4 | 0.1 | 0.1 | |||||||||
Gross investment income | 76.3 | 74.8 | 75.0 | |||||||||
Investment expenses | (3.1 | ) | (2.6 | ) | (2.6 | ) | ||||||
Net investment income | $ | 73.2 | $ | 72.2 | $ | 72.4 |
As of December 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Furniture and equipment | $ | 2.5 | $ | 3.3 | |||
Leasehold improvements | 6.0 | 3.2 | |||||
Computers and software | 60.3 | 61.9 | |||||
Automobiles | 1.1 | 1.1 | |||||
Property and equipment, gross | 69.9 | 69.5 | |||||
Accumulated depreciation | (48.0 | ) | (51.3 | ) | |||
Property and equipment, net | $ | 21.9 | $ | 18.2 |
As of December 31, | |||||||
2016 | 2015 | ||||||
(in millions) | |||||||
Furniture and equipment | $ | 2.3 | $ | 2.3 | |||
Leasehold improvements | 4.3 | 4.3 | |||||
Computers and software | 59.0 | 56.7 | |||||
Automobiles | 1.2 | 1.2 | |||||
Property and equipment, gross | 66.8 | 64.5 | |||||
Accumulated amortization and depreciation | (44.6 | ) | (39.6 | ) | |||
Property and equipment, net | $ | 22.2 | $ | 24.9 |
Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
Current tax expense: | (in millions) | ||||||||||
Federal | $ | 26.3 | $ | 13.2 | $ | 17.9 | |||||
State | 1.8 | 0.6 | 0.7 | ||||||||
Total current tax expense | 28.1 | 13.8 | 18.6 | ||||||||
Deferred federal tax expense: | |||||||||||
Impact of tax Enactment | — | (0.4 | ) | 7.0 | |||||||
Other | 8.6 | 14.8 | 17.2 | ||||||||
Total deferred federal tax expense | 8.6 | 14.4 | 24.2 | ||||||||
Income tax expense | $ | 36.7 | $ | 28.2 | $ | 42.8 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Current tax expense: | (in millions) | ||||||||||
Federal | $ | 20.3 | $ | 9.5 | $ | 6.3 | |||||
State | 0.3 | 1.1 | 0.1 | ||||||||
Total current tax expense | 20.6 | 10.6 | 6.4 | ||||||||
Deferred federal tax expense (benefit) | 13.4 | (5.6 | ) | (0.5 | ) | ||||||
Income tax expense | $ | 34.0 | $ | 5.0 | $ | 5.9 |
Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Expense computed at statutory rate | $ | 40.7 | $ | 35.6 | $ | 50.4 | |||||
Tax-advantaged investment income | (2.4 | ) | (2.9 | ) | (7.6 | ) | |||||
LPT deferred gain amortization | (2.3 | ) | (2.6 | ) | (4.0 | ) | |||||
Stock based compensation | (0.9 | ) | (1.4 | ) | (3.4 | ) | |||||
LPT Reserve Adjustment | (0.4 | ) | (0.5 | ) | — | ||||||
Impact of tax Enactment | — | (0.4 | ) | 7.0 | |||||||
Other | 2.0 | 0.4 | 0.4 | ||||||||
Income tax expense | $ | 36.7 | $ | 28.2 | $ | 42.8 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(in millions) | |||||||||||
Expense computed at statutory rate | $ | 49.3 | $ | 34.8 | $ | 37.3 | |||||
Tax-advantaged investment income | (8.5 | ) | (8.6 | ) | (8.8 | ) | |||||
Pre-Privatization reserve adjustments, excluding LPT | — | (15.3 | ) | (3.6 | ) | ||||||
LPT deferred gain amortization | (4.7 | ) | (4.9 | ) | (8.4 | ) | |||||
LPT Reserve Adjustment | (1.1 | ) | (2.2 | ) | (10.9 | ) | |||||
Other | (1.0 | ) | 1.2 | 0.3 | |||||||
Income tax expense | $ | 34.0 | $ | 5.0 | $ | 5.9 |
2019 | 2018 | ||||||||||||||
Deferred Tax | Deferred Tax | ||||||||||||||
Assets | Liabilities | Assets | Liabilities | ||||||||||||
(in millions) | |||||||||||||||
Unrealized capital gains, net | $ | — | $ | 38.7 | $ | — | $ | 10.6 | |||||||
Deferred policy acquisition costs | — | 10.2 | — | 10.3 | |||||||||||
Intangible assets | — | 1.6 | — | 1.6 | |||||||||||
Loss reserve discounting for tax reporting | 30.9 | — | 31.1 | — | |||||||||||
Unearned premiums | 13.2 | — | 13.3 | — | |||||||||||
Allowance for bad debt | 1.0 | — | 1.4 | — | |||||||||||
Stock-based compensation | 3.4 | — | 2.9 | — | |||||||||||
Accrued liabilities | 4.4 | — | 4.9 | — | |||||||||||
Other | 2.1 | 7.1 | 2.6 | 6.8 | |||||||||||
Total | $ | 55.0 | $ | 57.6 | $ | 56.2 | $ | 29.3 | |||||||
Deferred income tax asset (liability), net | $ | (2.6 | ) | $ | 26.9 |
2016 | 2015 | ||||||||||||||
Deferred Tax | Deferred Tax | ||||||||||||||
Assets | Liabilities | Assets | Liabilities | ||||||||||||
(in millions) | |||||||||||||||
Unrealized capital gains, net | $ | — | $ | 40.1 | $ | — | $ | 45.0 | |||||||
Deferred policy acquisition costs | — | 15.7 | — | 15.7 | |||||||||||
Intangible assets | — | 2.9 | — | 3.0 | |||||||||||
Loss reserve discounting for tax reporting | 51.7 | — | 56.3 | — | |||||||||||
Unearned premiums | 20.9 | — | 20.9 | — | |||||||||||
Allowance for bad debt | 3.4 | — | 4.3 | — | |||||||||||
Stock-based compensation | 4.4 | — | 4.1 | — | |||||||||||
Accrued liabilities | 8.1 | — | 8.4 | — | |||||||||||
Minimum tax credit | 27.8 | — | 28.0 | — | |||||||||||
Net operating loss carryforward | — | — | 8.7 | — | |||||||||||
Other | 9.7 | 7.9 | 8.4 | 7.5 | |||||||||||
Total | $ | 126.0 | $ | 66.6 | $ | 139.1 | $ | 71.2 | |||||||
Deferred income taxes, net | $ | 59.4 | $ | 67.9 |
Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Unpaid losses and LAE at beginning of period | $ | 2,207.9 | $ | 2,266.1 | $ | 2,301.0 | |||||
Less reinsurance recoverable on unpaid losses and LAE | 504.4 | 537.0 | 580.0 | ||||||||
Net unpaid losses and LAE at beginning of period | 1,703.5 | 1,729.1 | 1,721.0 | ||||||||
Losses and LAE, net of reinsurance, incurred during the period related to: | |||||||||||
Current year | 456.1 | 457.5 | 447.3 | ||||||||
Prior years | (77.5 | ) | (66.2 | ) | (18.5 | ) | |||||
Total net losses and LAE incurred during the period | 378.6 | 391.3 | 428.8 | ||||||||
Paid losses and LAE, net of reinsurance, related to: | |||||||||||
Current year | 106.6 | 93.0 | 76.9 | ||||||||
Prior years | 315.2 | 323.9 | 343.8 | ||||||||
Total net paid losses and LAE during the period | 421.8 | 416.9 | 420.7 | ||||||||
Ending unpaid losses and LAE, net of reinsurance | 1,660.3 | 1,703.5 | 1,729.1 | ||||||||
Reinsurance recoverable on unpaid losses and LAE | 532.5 | 504.4 | 537.0 | ||||||||
Unpaid losses and LAE at end of period | $ | 2,192.8 | $ | 2,207.9 | $ | 2,266.1 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(in millions) | |||||||||||
Unpaid losses and LAE at beginning of period | $ | 2,347.5 | $ | 2,369.7 | $ | 2,330.5 | |||||
Less reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE | 628.2 | 669.5 | 743.1 | ||||||||
Net unpaid losses and LAE at beginning of period | 1,719.3 | 1,700.2 | 1,587.4 | ||||||||
Losses and LAE, net of reinsurance, incurred in: | |||||||||||
Current year | 452.9 | 456.9 | 503.8 | ||||||||
Prior years | (18.4 | ) | (7.2 | ) | 4.6 | ||||||
Total net losses and LAE incurred during the period | 434.5 | 449.7 | 508.4 | ||||||||
Paid losses and LAE, net of reinsurance, related to: | |||||||||||
Current year | 78.7 | 75.4 | 75.9 | ||||||||
Prior years | 354.1 | 355.2 | 319.7 | ||||||||
Total net paid losses and LAE during the period | 432.8 | 430.6 | 395.6 | ||||||||
Ending unpaid losses and LAE, net of reinsurance | 1,721.0 | 1,719.3 | 1,700.2 | ||||||||
Reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE | 580.0 | 628.2 | 669.5 | ||||||||
Unpaid losses and LAE at end of period | $ | 2,301.0 | $ | 2,347.5 | $ | 2,369.7 |
Incurred Losses and LAE, Net of Reinsurance | Incurred Losses and LAE, Net of Reinsurance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | As of December 31, 2016 | Years Ended December 31, | As of December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accident Year | 2007(1) | 2008(1) | 2009(1) | 2010(1) | 2011(1) | 2012(1) | 2013(1) | 2014(1) | 2015(1) | 2016 | IBNR | Cumulative number of reported claims | 2010(1) | 2011(1) | 2012(1) | 2013(1) | 2014(1) | 2015(1) | 2016(1) | 2017(1) | 2018(1) | 2019 | IBNR | Cumulative number of reported claims | ||||||||||||||||||||||||||||||||||||||||||||||||
(in millions, except claims counts) | (in millions, except claims counts) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | $ | 349.4 | $ | 341.8 | $ | 340.1 | $ | 340.3 | $ | 332.9 | $ | 332.7 | $ | 334.7 | $ | 334.6 | $ | 339.2 | $ | 346.6 | $ | 15.1 | 31,326 | |||||||||||||||||||||||||||||||||||||||||||||||||
2008 | 315.9 | 315.3 | 317.8 | 329.2 | 329.5 | 335.1 | 336.9 | 343.8 | 341.4 | 16.2 | 28,082 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2009 | 255.4 | 266.9 | 279.0 | 280.1 | 283.6 | 283.7 | 291.2 | 290.5 | 16.3 | 22,666 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2010 | 204.9 | 224.4 | 228.1 | 246.1 | 250.2 | 262.0 | 259.9 | 23.8 | 18,533 | $ | 204.9 | $ | 224.4 | $ | 228.1 | $ | 246.1 | $ | 250.2 | $ | 262.0 | $ | 259.9 | $ | 258.8 | $ | 255.2 | $ | 255.3 | $ | 15.8 | 18,541 | ||||||||||||||||||||||||||||||||||||||||
2011 | 253.7 | 267.3 | 272.0 | 277.4 | 296.3 | 292.6 | 34.0 | 19,553 | 253.7 | 267.3 | 272.0 | 277.4 | 296.3 | 292.6 | 288.8 | 287.8 | 285.6 | 20.0 | 19,582 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2012 | 348.8 | 359.9 | 360.9 | 386.4 | 388.2 | 60.5 | 25,930 | 348.8 | 359.9 | 360.9 | 386.4 | 388.2 | 382.8 | 379.8 | 378.5 | 35.2 | 26,011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 452.6 | 460.6 | 478.6 | 472.6 | 90.1 | 28,740 | 452.6 | 460.6 | 478.6 | 472.6 | 468.9 | 464.6 | 459.3 | 50.2 | 28,884 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2014 | 463.4 | 445.8 | 432.9 | 107.4 | 28,231 | 463.4 | 445.8 | 432.9 | 434.6 | 430.5 | 424.7 | 59.3 | 28,552 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 422.2 | 425.8 | 135.6 | 26,560 | 422.2 | 425.8 | 423.9 | 419.6 | 408.7 | 62.7 | 27,199 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 419.0 | 226.1 | 21,239 | 419.0 | 414.6 | 395.4 | 375.0 | 66.8 | 25,722 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 412.4 | 391.3 | 358.3 | 89.6 | 24,953 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 422.5 | 424.6 | 127.4 | 27,614 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 422.4 | 206.2 | 28,025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | Total | $ | 3,669.6 | Total | $ | 3,792.3 |
Cumulative Paid Losses and LAE, Net of Reinsurance | Cumulative Paid Losses and LAE, Net of Reinsurance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accident Year | 2007(1) | 2008(1) | 2009(1) | 2010(1) | 2011(1) | 2012(1) | 2013(1) | 2014(1) | 2015(1) | 2016 | 2010(1) | 2011(1) | 2012(1) | 2013(1) | 2014(1) | 2015(1) | 2016(1) | 2017(1) | 2018(1) | 2019 | ||||||||||||||||||||||||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | $ | 74.2 | $ | 165.3 | $ | 208.9 | $ | 236.7 | $ | 256.2 | $ | 270.0 | $ | 280.2 | $ | 288.3 | $ | 297.2 | $ | 302.3 | ||||||||||||||||||||||||||||||||||||||||
2008 | 71.1 | 155.4 | 201.8 | 234.7 | 255.3 | 271.1 | 284.2 | 293.6 | 300.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2009 | 59.0 | 130.6 | 174.1 | 202.0 | 219.3 | 232.1 | 242.3 | 249.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2010 | 47.1 | 105.6 | 143.8 | 171.7 | 190.7 | 206.2 | 215.4 | $ | 47.1 | $ | 105.6 | $ | 143.8 | $ | 171.7 | $ | 190.7 | $ | 206.2 | $ | 215.4 | $ | 221.3 | $ | 226.5 | $ | 228.9 | |||||||||||||||||||||||||||||||||
2011 | 47.4 | 115.1 | 162.6 | 193.8 | 217.5 | 230.1 | 47.4 | 115.1 | 162.6 | 193.8 | 217.5 | 230.1 | 238.2 | 243.8 | 248.1 | |||||||||||||||||||||||||||||||||||||||||||||
2012 | 58.6 | 148.3 | 214.2 | 261.4 | 289.9 | 58.6 | 148.3 | 214.2 | 261.4 | 289.9 | 305.0 | 316.9 | 324.3 | |||||||||||||||||||||||||||||||||||||||||||||||
2013 | 68.5 | 184.4 | 263.8 | 317.4 | 68.5 | 184.4 | 263.8 | 317.4 | 346.1 | 365.9 | 379.3 | |||||||||||||||||||||||||||||||||||||||||||||||||
2014 | 65.3 | 172.7 | 248.9 | 65.3 | 172.7 | 248.9 | 297.2 | 323.4 | 342.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 65.5 | 174.5 | 65.5 | 174.5 | 246.9 | 290.5 | 311.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 65.6 | 65.6 | 166.8 | 227.7 | 261.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 63.5 | 160.2 | 215.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 77.9 | 189.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 88.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | Total | $ | 2,394.2 | Total | $ | 2,589.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
All outstanding liabilities for unpaid losses and LAE prior to 2007, net of reinsurance | 346.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All outstanding liabilities for unpaid losses and LAE prior to 2010, net of reinsurance | All outstanding liabilities for unpaid losses and LAE prior to 2010, net of reinsurance | 378.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total outstanding liabilities for unpaid losses and LAE, net of reinsurance | Total outstanding liabilities for unpaid losses and LAE, net of reinsurance | $ | 1,621.6 | Total outstanding liabilities for unpaid losses and LAE, net of reinsurance | $ | 1,581.7 |
(1) | Data presented for these calendar years is required supplementary information, which is |
December 31, 2019 | ||||
(in millions) | ||||
Liabilities for unpaid losses and LAE, net of reinsurance | $ | 1,581.7 | ||
Reinsurance recoverable on unpaid losses | 532.5 | |||
Unallocated LAE (adjusting and other) | 78.6 | |||
Total liability for unpaid losses and LAE | $ | 2,192.8 |
December 31, 2016 | ||||
(in millions) | ||||
Liabilities for unpaid losses and LAE, net of reinsurance | $ | 1,621.6 | ||
Reinsurance recoverable on unpaid losses | 580.0 | |||
Unallocated LAE | 99.4 | |||
Total liability for unpaid losses and LAE | $ | 2,301.0 |
Average Annual Percentage Payout of Claims by Age, Net of Reinsurance | |||||||||||||||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | ||||||||||
17.7 | % | 26.3 | % | 17.4 | % | 11.7 | % | 7.5 | % | 5.1 | % | 3.6 | % | 2.4 | % | 1.8 | % | 1.0 | % |
Average Annual Percentage Payout of Claims by Age, Net of Reinsurance | |||||||||||||||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | ||||||||||
17.3 | % | 24.4 | % | 15.4 | % | 10.3 | % | 6.7 | % | 4.7 | % | 3.5 | % | 2.5 | % | 2.3 | % | 1.5 | % |
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | 2014 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||||||||||||||||
Written | Earned | Written | Earned | Written | Earned | Written | Earned | Written | Earned | Written | Earned | |||||||||||||||||||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||||||||||||||||||||||||
Direct premiums | $ | 691.0 | $ | 691.0 | $ | 684.9 | $ | 686.0 | $ | 686.8 | $ | 684.3 | $ | 687.4 | $ | 691.6 | $ | 739.0 | $ | 727.2 | $ | 719.5 | $ | 712.5 | ||||||||||||||||||||||
Assumed premiums | 10.4 | 10.6 | 12.8 | 12.8 | 10.9 | 10.3 | 9.5 | 9.6 | 9.9 | 10.0 | 10.2 | 10.0 | ||||||||||||||||||||||||||||||||||
Gross premiums | 701.4 | 701.6 | 697.7 | 698.8 | 697.7 | 694.6 | 696.9 | 701.2 | 748.9 | 737.2 | 729.7 | 722.5 | ||||||||||||||||||||||||||||||||||
Ceded premiums | (6.8 | ) | (6.8 | ) | (8.4 | ) | (8.4 | ) | (10.1 | ) | (10.1 | ) | (5.4 | ) | (5.4 | ) | (6.1 | ) | (6.1 | ) | (6.0 | ) | (6.0 | ) | ||||||||||||||||||||||
Net premiums | $ | 694.6 | $ | 694.8 | $ | 689.3 | $ | 690.4 | $ | 687.6 | $ | 684.5 | $ | 691.5 | $ | 695.8 | $ | 742.8 | $ | 731.1 | $ | 723.7 | $ | 716.5 | ||||||||||||||||||||||
Ceded losses and LAE incurred | $ | 0.1 | $ | 10.1 | $ | 17.2 | $ | 19.2 | $ | 9.5 | $ | (0.5 | ) |
December 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Dekania Surplus Note, due April 29, 2034 | $ | — | $ | 10.0 | |||
Alesco Surplus Note, due December 15, 2034 | — | 10.0 | |||||
Total | $ | — | $ | 20.0 |
December 31, | |||||||
2016 | 2015 | ||||||
(in millions) | |||||||
Dekania Surplus Note, due April 30, 2034 | $ | 10.0 | $ | 10.0 | |||
ICONS Surplus Note, due May 26, 2034 | 12.0 | 12.0 | |||||
Alesco Surplus Note, due December 15, 2034 | 10.0 | 10.0 | |||||
Balance | $ | 32.0 | $ | 32.0 |
Year | Principal Due | |||
(in millions) | ||||
2017 - 2021 | $ | — | ||
Thereafter | 32.0 | |||
Total | $ | 32.0 |
Year Ended December 31, | ||||
2019 | ||||
(in millions) | ||||
Operating lease expense | $ | 5.1 | ||
Finance lease expense | 0.2 | |||
Total lease expense | $ | 5.3 |
Year | Operating Leases | Capital Leases | ||||||
(in millions) | ||||||||
2017 | $ | 5.1 | $ | 0.3 | ||||
2018 | 3.7 | 0.2 | ||||||
2019 | 3.1 | 0.1 | ||||||
2020 | 2.5 | 0.1 | ||||||
2021 | 1.1 | 0.1 | ||||||
Thereafter | 0.1 | — | ||||||
Total | $ | 15.6 | $ | 0.8 |
Year | Operating Leases | Finance Leases | ||||||
(in millions) | ||||||||
2020 | $ | 4.8 | $ | 0.2 | ||||
2021 | 3.5 | 0.2 | ||||||
2022 | 2.3 | 0.1 | ||||||
2023 | 2.3 | 0.1 | ||||||
2024 | 2.1 | — | ||||||
Thereafter | 4.6 | — | ||||||
Total lease payments | 19.6 | 0.6 | ||||||
Less: imputed interest | (1.8 | ) | — | |||||
Total | $ | 17.8 | $ | 0.6 |
Asset Class | 2016 | 2015 | ||||||
(in millions) | ||||||||
Computers and software | $ | — | $ | 0.4 | ||||
Automobiles | 1.2 | 1.2 | ||||||
1.2 | 1.6 | |||||||
Accumulated amortization | (0.6 | ) | (1.0 | ) | ||||
Total | $ | 0.6 | $ | 0.6 |
As of December 31, | ||||
2019 | ||||
(in millions) | ||||
Operating leases: | ||||
Operating lease right-of-use asset | $ | 15.9 | ||
Operating lease liability | 17.8 | |||
Finance leases: | ||||
Property and equipment, gross | 1.1 | |||
Accumulated depreciation | (0.5 | ) | ||
Property and equipment, net | 0.6 | |||
Other liabilities | $ | 0.6 |
Year Ended December 31, | ||||
2019 | ||||
(in millions) | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows used for operating leases | $ | 5.1 | ||
Financing cash flows used for finance leases | 0.2 |
Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
Stock-based compensation expense related to: | (in millions) | ||||||||||
Stock options | $ | 0.1 | $ | 0.3 | $ | 0.5 | |||||
RSUs | 2.7 | 2.5 | 2.0 | ||||||||
PSUs | 7.2 | 6.5 | 4.3 | ||||||||
Total | 10.0 | 9.3 | 6.8 | ||||||||
Less: related tax benefit | 2.1 | 2.0 | 2.4 | ||||||||
Net stock-based compensation expense | $ | 7.9 | $ | 7.3 | $ | 4.4 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Stock-based compensation expense related to: | (in millions) | ||||||||||
Stock options | $ | 0.7 | $ | 1.0 | $ | 1.2 | |||||
RSUs | 1.9 | 2.0 | 1.9 | ||||||||
PSUs | 3.2 | 1.6 | 2.9 | ||||||||
Total | 5.8 | 4.6 | 6.0 | ||||||||
Less: related tax benefit | 2.0 | 1.6 | 2.1 | ||||||||
Net stock-based compensation expense | $ | 3.8 | $ | 3.0 | $ | 3.9 |
2016 | 2015 | 2014 | ||||||
Expected volatility | 38.0 | % | 38.0 | % | 39.0 | % | ||
Expected life (in years) | 4.8 | 4.8 | 4.8 | |||||
Dividend yield | 1.3 | % | 1.0 | % | 1.2 | % | ||
Risk-free interest rate | 1.4 | % | 1.6 | % | 1.6 | % | ||
Weighted average grant date fair values of stock options granted | $8.46 | $7.63 | $6.66 |
Number of Stock Options | Weighted-Average Price | Weighted Average Remaining Contractual Life | ||||||
Stock options outstanding at December 31, 2016 | 564,096 | $ | 21.04 | 3.3 years | ||||
Exercised | (307,076 | ) | 19.44 | |||||
Forfeited | (9,673 | ) | 24.45 | |||||
Stock options outstanding at December 31, 2017 | 247,347 | 22.90 | 3.4 years | |||||
Exercised | (57,091 | ) | 20.17 | |||||
Stock options outstanding at December 31, 2018 | 190,256 | 23.71 | 2.7 years | |||||
Exercised | (31,630 | ) | 26.98 | |||||
Forfeited | (4,610 | ) | 25.37 | |||||
Stock options outstanding at December 31, 2019 | 154,016 | 23.65 | 1.7 years | |||||
Exercisable at December 31, 2019 | 144,161 | 23.37 | 1.6 years |
Number of Stock Options | Weighted-Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||
Stock options outstanding at December 31, 2013 | 1,546,898 | $ | 17.24 | 3.4 years | ||||
Granted | 141,744 | 20.87 | 6.2 years | |||||
Exercised | (120,494 | ) | 17.89 | |||||
Expired | (2,400 | ) | 17.00 | |||||
Forfeited | (44,458 | ) | 19.99 | |||||
Stock options outstanding at December 31, 2014 | 1,521,290 | 17.45 | 2.9 years | |||||
Granted | 80,800 | 24.20 | 6.2 years | |||||
Exercised | (463,466 | ) | 16.43 | |||||
Forfeited | (17,079 | ) | 20.21 | |||||
Stock options outstanding at December 31, 2015 | 1,121,545 | 18.31 | 2.8 years | |||||
Granted | 67,431 | 27.72 | 6.2 years | |||||
Exercised | (586,132 | ) | 16.39 | |||||
Expired | (6,075 | ) | 22.48 | |||||
Forfeited | (32,673 | ) | 24.35 | |||||
Stock options outstanding at December 31, 2016 | 564,096 | 21.04 | 3.3 years | |||||
Exercisable at December 31, 2016 | 380,703 | 19.57 | 2.4 years |
2016 | 2015 | 2014 | 2019 | 2018 | 2017 | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||
Fair value of stock options vested | $ | 0.8 | $ | 1.3 | $ | 1.6 | $ | 0.2 | $ | 0.4 | $ | 0.6 | ||||||||||
Intrinsic value of outstanding stock options | 10.6 | 10.1 | 9.2 | 2.8 | 3.4 | 5.3 | ||||||||||||||||
Intrinsic value of exercisable stock options | 7.6 | 8.5 | 7.8 | 2.7 | 2.8 | 3.6 |
Number of RSUs | Weighted Average Grant Date Fair Value | Number of RSUs | Weighted Average Grant Date Fair Value | |||||||||||
RSUs outstanding at December 31, 2013 | 358,346 | $ | 18.44 | |||||||||||
RSUs outstanding at December 31, 2016 | 324,384 | $ | 22.55 | |||||||||||
Granted | 87,396 | 21.02 | 87,276 | 37.94 | ||||||||||
Forfeited | (16,690 | ) | 20.18 | (13,711 | ) | 29.28 | ||||||||
Vested | (122,185 | ) | 18.26 | (102,785 | ) | 22.89 | ||||||||
RSUs outstanding at December 31, 2014 | 306,867 | 19.15 | ||||||||||||
RSUs outstanding at December 31, 2017 | 295,164 | 26.67 | ||||||||||||
Granted | 112,048 | 24.19 | 87,857 | 40.26 | ||||||||||
Forfeited | (7,749 | ) | 20.99 | (3,370 | ) | 33.51 | ||||||||
Vested | (92,133 | ) | 19.74 | (129,351 | ) | 24.53 | ||||||||
RSUs outstanding at December 31, 2015 | 319,033 | 20.71 | ||||||||||||
RSUs outstanding at December 31, 2018 | 250,300 | 32.45 | ||||||||||||
Granted | 100,218 | 28.20 | 90,576 | 40.60 | ||||||||||
Forfeited | (21,872 | ) | 24.87 | (22,232 | ) | 36.39 | ||||||||
Vested | (72,995 | ) | 21.56 | (76,739 | ) | 33.99 | ||||||||
RSUs outstanding at December 31, 2016 | 324,384 | 22.55 | ||||||||||||
Vested but unsettled RSUs at December 31, 2016 | 140,587 | 18.54 | ||||||||||||
RSUs outstanding at December 31, 2019 | 241,905 | 34.70 | ||||||||||||
Vested but unsettled RSUs at December 31, 2019 | 73,535 | 24.75 |
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Grant date fair value of RSUs vested | $ | 2.6 | $ | 3.2 | $ | 2.4 | |||||
Intrinsic value of RSUs vested | 3.2 | 5.5 | 4.3 |
2016 | 2015 | 2014 | |||||||||
(in millions) | |||||||||||
Grant date fair value of RSUs vested | $ | 1.6 | $ | 1.7 | $ | 2.2 | |||||
Intrinsic value of RSUs vested | 2.1 | 2.2 | 2.7 |
Date of Grant | Target Number Awarded | Fair Value on Date of Grant | Aggregate Fair Value on Date of Grant | ||||||||
(in millions) | |||||||||||
March 2017(1) | 97,440 | $ | 37.60 | $ | 3.7 | ||||||
March 2018(1) | 96,940 | 40.30 | 3.9 | ||||||||
March 2019(1) | 95,940 | 40.54 | 3.9 | ||||||||
August 2019(1) | 9,587 | 41.72 | 0.4 |
Date of Grant | Target Number Awarded | Fair Value on Date of Grant | Aggregate Fair Value on Date of Grant | ||||||||
(in millions) | |||||||||||
March 2014(1) | 125,340 | $ | 20.87 | $ | 2.6 | ||||||
March 2015(2) | 110,000 | 24.20 | 2.7 | ||||||||
March 2016(2) | 97,236 | 27.72 | 2.7 |
(1) |
The PSUs awarded in March |
December 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Capital stock and unassigned surplus | $ | 658.2 | $ | 558.5 | |||
Paid in capital | 362.8 | 349.4 | |||||
Surplus notes | — | 20.0 | |||||
Total statutory surplus | $ | 1,021.0 | $ | 927.9 |
December 31, | |||||||
2016 | 2015 | ||||||
(in millions) | |||||||
Capital stock and unassigned surplus | $ | 622.0 | $ | 498.8 | |||
Paid in capital | 174.9 | 174.9 | |||||
Surplus notes | 32.0 | 32.0 | |||||
Total statutory surplus | $ | 828.9 | $ | 705.7 |
Years Ended December 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Net unrealized gains (losses) on investments, before taxes | $ | 82.6 | $ | (17.3 | ) | ||
Deferred tax (expense) benefit on net unrealized gains (losses) | (17.3 | ) | 3.6 | ||||
Total accumulated other comprehensive income (loss) | $ | 65.3 | $ | (13.7 | ) |
Years Ended December 31, | |||||||
2016 | 2015 | ||||||
(in millions) | |||||||
Net unrealized gain on investments, before taxes | $ | 114.6 | $ | 128.6 | |||
Deferred tax expense on net unrealized gains | (40.1 | ) | (45.0 | ) | |||
Total accumulated other comprehensive income | $ | 74.5 | $ | 83.6 |
Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions, except share data) | |||||||||||
Net income | $ | 157.1 | $ | 141.3 | $ | 101.2 | |||||
Weighted average number of shares outstanding–basic | 32,120,578 | 32,884,828 | 32,501,576 | ||||||||
Effect of dilutive securities: | |||||||||||
Stock options | 77,482 | 97,810 | 208,602 | ||||||||
PSUs | 285,550 | 268,030 | 271,738 | ||||||||
RSUs | 56,108 | 60,669 | 78,844 | ||||||||
Dilutive potential shares | 419,140 | 426,509 | 559,184 | ||||||||
Weighted average number of shares outstanding–diluted | 32,539,718 | 33,311,337 | 33,060,760 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(in millions, except share data) | |||||||||||
Net income | $ | 106.7 | $ | 94.4 | $ | 100.7 | |||||
Weighted average number of shares outstanding–basic | 32,434,580 | 32,070,911 | 31,529,621 | ||||||||
Effect of dilutive securities: | |||||||||||
Stock options | 246,562 | 286,764 | 223,811 | ||||||||
PSUs | 222,594 | 155,768 | 264,511 | ||||||||
RSUs | 73,099 | 48,010 | 51,126 | ||||||||
Dilutive potential shares | 542,255 | 490,542 | 539,448 | ||||||||
Weighted average number of shares outstanding–diluted | 32,976,835 | 32,561,453 | 32,069,069 |
Years Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Stock options excluded as the exercise price was greater than the average market price | — | 20,200 | 173,247 | |||||
Stock options, PSUs and RSUs excluded under the treasury method, as the potential proceeds on settlement or exercise was greater than the value of shares acquired | 89,221 | 257,405 | 260,171 |
Employers | Cerity | Corporate and Other | Total | |||||||||||||
(in millions) | ||||||||||||||||
Year Ended December 31, 2019 | ||||||||||||||||
Gross premiums written | $ | 696.8 | $ | 0.1 | $ | — | $ | 696.9 | ||||||||
Net premiums written | 691.4 | 0.1 | — | 691.5 | ||||||||||||
Net premiums earned | 695.8 | — | — | 695.8 | ||||||||||||
Net investment income | 84.1 | 0.3 | 3.7 | 88.1 | ||||||||||||
Net realized and unrealized gains on investments | 47.7 | 0.1 | 3.3 | 51.1 | ||||||||||||
Other income | 0.9 | — | — | 0.9 | ||||||||||||
Total revenues | 828.5 | 0.4 | 7.0 | 835.9 | ||||||||||||
Losses and loss adjustment expenses | 378.6 | — | (12.7 | ) | 365.9 | |||||||||||
Commission expense | 88.1 | — | — | 88.1 | ||||||||||||
Underwriting and general and administrative expenses | 153.2 | 16.0 | 18.3 | 187.5 | ||||||||||||
Interest and financing expenses | 0.6 | — | — | 0.6 | ||||||||||||
Total expenses | 620.5 | 16.0 | 5.6 | 642.1 | ||||||||||||
Net income (loss) before income taxes | $ | 208.0 | $ | (15.6 | ) | $ | 1.4 | $ | 193.8 |
Employers | Cerity | Corporate and Other | Total | |||||||||||||
(in millions) | ||||||||||||||||
Year Ended December 31, 2018 | ||||||||||||||||
Gross premiums written | $ | 748.9 | $ | — | $ | — | $ | 748.9 | ||||||||
Net premiums written | 742.8 | — | — | 742.8 | ||||||||||||
Net premiums earned | 731.1 | — | — | 731.1 | ||||||||||||
Net investment income | 78.6 | — | 2.6 | 81.2 | ||||||||||||
Net realized and unrealized (losses) gains on investments | (13.9 | ) | — | 0.8 | (13.1 | ) | ||||||||||
Other income | 1.0 | 0.2 | — | 1.2 | ||||||||||||
Total revenues | 796.8 | 0.2 | 3.4 | 800.4 | ||||||||||||
Losses and loss adjustment expenses | 391.3 | — | (14.6 | ) | 376.7 | |||||||||||
Commission expense | 94.2 | — | — | 94.2 | ||||||||||||
Underwriting and general and administrative expenses | 135.0 | 5.9 | 17.6 | 158.5 | ||||||||||||
Interest and financing expenses | 1.5 | — | — | 1.5 | ||||||||||||
Total expenses | 622.0 | 5.9 | 3.0 | 630.9 | ||||||||||||
Net income (loss) before income taxes | $ | 174.8 | $ | (5.7 | ) | $ | 0.4 | $ | 169.5 |
Employers | Cerity | Corporate and Other | Total | |||||||||||||
(in millions) | ||||||||||||||||
Year Ended December 31, 2017 | ||||||||||||||||
Gross premiums written | $ | 729.7 | $ | — | $ | — | $ | 729.7 | ||||||||
Net premiums written | 723.7 | — | — | 723.7 | ||||||||||||
Net premiums earned | 716.5 | — | — | 716.5 | ||||||||||||
Net investment income | 73.3 | — | 1.3 | 74.6 | ||||||||||||
Net realized and unrealized gains on investments | 7.4 | — | — | 7.4 | ||||||||||||
Gain on redemption of notes payable | 2.1 | — | — | 2.1 | ||||||||||||
Other income | 0.8 | — | — | 0.8 | ||||||||||||
Total revenues | 800.1 | — | 1.3 | 801.4 | ||||||||||||
Losses and loss adjustment expenses | 428.8 | — | (11.6 | ) | 417.2 | |||||||||||
Commission expense | 91.4 | — | — | 91.4 | ||||||||||||
Underwriting and general and administrative expenses | 123.7 | 1.1 | 15.1 | 139.9 | ||||||||||||
Interest and financing expenses | 1.4 | — | — | 1.4 | ||||||||||||
Other expenses | 7.5 | — | — | 7.5 | ||||||||||||
Total expenses | 652.8 | 1.1 | 3.5 | 657.4 | ||||||||||||
Net income (loss) before income taxes | $ | 147.3 | $ | (1.1 | ) | $ | (2.2 | ) | $ | 144.0 |
2019 | 2018 | 2017 | |||||||||||||||||||
State | In-force Premiums | Policies In-force | In-force Premiums | Policies In-force | In-force Premiums | Policies In-force | |||||||||||||||
(dollars in millions) | |||||||||||||||||||||
California | $ | 329.8 | 43,079 | $ | 357.1 | 41,988 | $ | 349.4 | 40,573 | ||||||||||||
Florida | 36.3 | 5,822 | 41.0 | 5,833 | 41.8 | 5,625 | |||||||||||||||
New York | 31.7 | 5,679 | 23.9 | 3,663 | 12.3 | 2,038 | |||||||||||||||
Other (43 states and D.C.) | 266.8 | 44,104 | 244.2 | 40,014 | 223.4 | 37,258 | |||||||||||||||
Total | $ | 664.6 | 98,684 | $ | 666.2 | 91,498 | $ | 626.9 | 85,494 |
2016 Quarters Ended | 2019 Quarters Ended | |||||||||||||||||||||||||||||||
March 31 | June 30 | September 30 | December 31 | March 31 | June 30 | September 30 | December 31 | |||||||||||||||||||||||||
(in millions, except per share data) | (in millions, except per share data) | |||||||||||||||||||||||||||||||
Net premiums earned | $ | 172.6 | $ | 176.9 | $ | 173.3 | $ | 172.0 | $ | 174.8 | $ | 175.5 | $ | 175.8 | $ | 169.7 | ||||||||||||||||
Net realized gains on investments | 1.5 | 6.0 | 1.6 | 2.1 | ||||||||||||||||||||||||||||
Net realized and unrealized gains on investments | 23.3 | 7.4 | 2.6 | 17.8 | ||||||||||||||||||||||||||||
Losses and loss adjustment expenses | 107.3 | 111.7 | 109.0 | 89.9 | 88.6 | 86.8 | 92.9 | 97.6 | ||||||||||||||||||||||||
Commission expense | 20.3 | 21.9 | 21.3 | 20.0 | 22.0 | 23.8 | 21.9 | 20.4 | ||||||||||||||||||||||||
Underwriting and other operating expenses | 36.3 | 33.6 | 31.7 | 34.5 | ||||||||||||||||||||||||||||
Underwriting and general and administrative expenses | 47.5 | 43.8 | 45.3 | 50.9 | ||||||||||||||||||||||||||||
Income tax expense | 5.9 | 7.4 | 7.8 | 12.9 | 10.0 | 9.0 | 8.1 | 9.6 | ||||||||||||||||||||||||
Net income | 21.8 | 26.8 | 22.6 | 35.5 | 51.8 | 40.7 | 32.8 | 31.8 | ||||||||||||||||||||||||
Earnings per common share: | ||||||||||||||||||||||||||||||||
Basic | 0.67 | 0.82 | 0.70 | 1.10 | 1.60 | 1.27 | 1.03 | 1.00 | ||||||||||||||||||||||||
Diluted | 0.66 | 0.81 | 0.69 | 1.08 | 1.57 | 1.25 | 1.01 | 0.99 |
2018 Quarters Ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
(in millions, except per share data) | ||||||||||||||||
Net premiums earned | $ | 176.6 | $ | 178.0 | $ | 192.9 | $ | 183.6 | ||||||||
Net realized and unrealized (losses) gains on investments | (8.0 | ) | 5.7 | 15.6 | (26.4 | ) | ||||||||||
Losses and loss adjustment expenses | 95.4 | 87.8 | 106.6 | 86.9 | ||||||||||||
Commission expense | 23.7 | 24.5 | 24.8 | 21.2 | ||||||||||||
Underwriting and general and administrative expenses | 39.2 | 40.1 | 38.8 | 40.4 | ||||||||||||
Income tax expense | 3.8 | 8.8 | 10.7 | 4.9 | ||||||||||||
Net income | 25.6 | 42.5 | 47.6 | 25.6 | ||||||||||||
Earnings per common share: | ||||||||||||||||
Basic | 0.78 | 1.29 | 1.45 | 0.78 | ||||||||||||
Diluted | 0.77 | 1.28 | 1.43 | 0.77 |
2015 Quarters Ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
(in millions, except per share data) | ||||||||||||||||
Net premiums earned | $ | 159.0 | $ | 170.6 | $ | 179.0 | $ | 181.8 | ||||||||
Net realized gains (losses) on investments | 1.2 | 1.9 | 2.0 | (15.8 | ) | |||||||||||
Losses and loss adjustment expenses | 106.2 | 101.5 | 115.8 | 105.9 | ||||||||||||
Commission expense | 18.7 | 22.9 | 21.0 | 22.8 | ||||||||||||
Underwriting and other operating expenses | 33.5 | 32.5 | 31.6 | 37.6 | ||||||||||||
Income tax expense (benefit) | 4.1 | 4.1 | 5.9 | (9.1 | ) | |||||||||||
Net income | 14.0 | 29.2 | 24.5 | 26.7 | ||||||||||||
Earnings per common share: | ||||||||||||||||
Basic | 0.44 | 0.91 | 0.76 | 0.83 | ||||||||||||
Diluted | 0.43 | 0.90 | 0.75 | 0.82 |
Plan Category | (a) Number of securities to be issued upon exercise of outstanding options, warrants, and rights | (b) Weighted-average exercised price of outstanding options, warrants, and rights(4) | (c) Number of securities remaining available for further issuance under compensation plans (excluding securities reflected in column (a)) | (a) Number of securities to be issued upon exercise of outstanding options, warrants, and rights | (b) Weighted-average exercised price of outstanding options, warrants, and rights(4) | (c) Number of securities remaining available for further issuance under compensation plans (excluding securities reflected in column (a)) | ||||||||||||||
Equity compensation plans approved by stockholders(1): | ||||||||||||||||||||
Stock options | 564,096 | $ | 21.04 | 3,809,785 | 154,016 | $ | 23.65 | 3,492,616 | ||||||||||||
RSUs(2) | 324,384 | 3,485,401 | 241,905 | 3,250,711 | ||||||||||||||||
PSUs(3) | 332,576 | 3,152,825 | 599,814 | 2,650,897 | ||||||||||||||||
Equity compensation plans not approved by stockholders | — | — | — | — | — | — | ||||||||||||||
Total | 1,221,056 | $ | 21.04 | 3,152,825 | 995,735 | $ | 23.65 | 2,650,897 |
(1) | The Plan is administered by the Compensation Committee of the Board of Directors, which is authorized to grant, at its discretion, awards to officers, employees, non-employee directors, consultants, and independent contractors. The maximum number of common shares currently reserved for grants of awards under the Plan was |
(2) | RSUs are phantom (as opposed to actual) shares of common stock which, depending on the individual award, vest in equal tranches over one- to four-year periods, subject to the recipient maintaining a continuous relationship with the Company through the applicable vesting date. |
(3) | PSUs are phantom (as opposed to actual) shares of common stock, which are subject to a performance period of two |
(4) | Holders of RSUs and PSUs are not entitled to voting |
Page | ||
Report of Independent Registered Public Accounting Firm | ||
Consolidated Balance Sheets as of December 31, | ||
Consolidated Statements of Comprehensive Income for each of the three years ended December 31, | ||
Consolidated Statements of Stockholders' Equity for each of the three years ended December 31, | ||
Consolidated Statements of Cash Flows for each of the three years ended December 31, | ||
Notes to Consolidated Financial Statements | ||
Financial Statement Schedules: | ||
Schedule II. Condensed Financial Information of Registrant | ||
Schedule VI. Supplemental Information Concerning Property-Casualty Insurance Operations | ||
Pursuant to Rule 7-05 of Regulation S-X, Financial Statement Schedules I, III, IV, and V have been omitted as the information to be set forth therein is included in the notes to the audited consolidated financial statements. |
Employers Holdings, Inc. | ||||||||
Condensed Balance Sheets | ||||||||
December 31, | ||||||||
2019 | 2018 | |||||||
Assets | (in millions, except share data) | |||||||
Investments: | ||||||||
Investment in subsidiaries | $ | 1,096.1 | $ | 873.8 | ||||
Fixed maturity securities at fair value (amortized cost $25.3 at December 31, 2019 and $24.2 at December 31, 2018) | 26.6 | 24.6 | ||||||
Equity securities at fair value (cost $27.8 at December 31, 2019 and $40.0 at December 31, 2018) | 28.1 | 38.7 | ||||||
Short-term investments at fair value (amortized cost $25.0 at December 31, 2018) | — | 25.0 | ||||||
Total investments | 1,150.8 | 962.1 | ||||||
Cash and cash equivalents | 9.9 | 41.3 | ||||||
Accrued investment income | 0.2 | 0.3 | ||||||
Intercompany receivable | 3.5 | 0.3 | ||||||
Federal income taxes receivable | 3.5 | 22.7 | ||||||
Deferred income taxes, net | 2.2 | — | ||||||
Other assets | 1.6 | 0.9 | ||||||
Total assets | $ | 1,171.7 | $ | 1,027.6 | ||||
Liabilities and stockholders' equity | ||||||||
Accounts payable and accrued expenses | $ | 5.0 | $ | 5.0 | ||||
Deferred income taxes, net | — | 0.4 | ||||||
Other liabilities | 0.9 | 4.0 | ||||||
Total liabilities | 5.9 | 9.4 | ||||||
Stockholders' equity: | ||||||||
Common stock, $0.01 par value; 150,000,000 shares authorized; 57,184,370 and 56,975,675 shares issued and 31,355,378 and 32,765,792 shares outstanding at December 31, 2019 and 2018, respectively | 0.6 | 0.6 | ||||||
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued | — | — | ||||||
Additional paid-in capital | 396.4 | 388.8 | ||||||
Retained earnings | 1,158.8 | 1,030.7 | ||||||
Accumulated other comprehensive income (loss), net of tax | 65.3 | (13.7 | ) | |||||
Treasury stock, at cost (25,828,992 shares at December 31, 2019 and 24,209,883 shares at December 31, 2018) | (455.3 | ) | (388.2 | ) | ||||
Total stockholders' equity | 1,165.8 | 1,018.2 | ||||||
Total liabilities and stockholders' equity | $ | 1,171.7 | $ | 1,027.6 |
Employers Holdings, Inc. | ||||||||
Condensed Balance Sheets | ||||||||
December 31, | ||||||||
(in millions, except share data) | 2016 | 2015 | ||||||
Assets | ||||||||
Investments: | ||||||||
Investment in subsidiaries | $ | 757.5 | $ | 647.1 | ||||
Investment in fixed maturity securities at fair value (amortized cost $14.7 in 2016 and $40.2 in 2015) | 16.0 | 42.2 | ||||||
Equity securities at fair value (amortized cost $46.0 in 2015) | — | 51.6 | ||||||
Total investments | 773.5 | 740.9 | ||||||
Cash and cash equivalents | 41.4 | 1.4 | ||||||
Accrued investment income | 0.3 | — | ||||||
Intercompany receivable | — | 0.2 | ||||||
Federal income taxes receivable | 9.6 | 1.7 | ||||||
Deferred income taxes, net | 20.0 | 20.6 | ||||||
Other assets | 0.7 | 1.5 | ||||||
Total assets | $ | 845.5 | $ | 766.3 | ||||
Liabilities and stockholders' equity | ||||||||
Accounts payable and accrued expenses | $ | 4.8 | $ | 5.2 | ||||
Intercompany payable | 0.1 | — | ||||||
Other liabilities | — | 0.3 | ||||||
Total liabilities | 4.9 | 5.5 | ||||||
Stockholders' equity: | ||||||||
Common stock, $0.01 par value; 150,000,000 shares authorized 56,226,277 and 55,589,454 shares issued and 32,128,922 and 32,216,480 shares outstanding at December 31, 2016 and 2015, respectively | 0.6 | 0.6 | ||||||
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued | — | — | ||||||
Additional paid-in capital | 372.0 | 357.2 | ||||||
Retained earnings | 777.2 | 682.0 | ||||||
Accumulated other comprehensive income, net of tax | 74.5 | 83.6 | ||||||
Treasury stock, at cost (24,097,355 shares at December 31, 2016 and 23,372,974 shares at December 31, 2015) | (383.7 | ) | (362.6 | ) | ||||
Total stockholders' equity | 840.6 | 760.8 | ||||||
Total liabilities and stockholders' equity | $ | 845.5 | $ | 766.3 |
Employers Holdings, Inc. | ||||||||||||
Condensed Statements of Income | ||||||||||||
Years Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions, except per share data) | ||||||||||||
Revenues | ||||||||||||
Net investment income | $ | 3.7 | $ | 2.5 | $ | 1.3 | ||||||
Net realized and unrealized gains on investments | 3.3 | 0.8 | — | |||||||||
Total revenues | 7.0 | 3.3 | 1.3 | |||||||||
Expenses | ||||||||||||
Underwriting and general and administrative expenses | 19.0 | 17.5 | 15.2 | |||||||||
Total expenses | 19.0 | 17.5 | 15.2 | |||||||||
Loss before income taxes and equity in earnings of subsidiaries | (12.0 | ) | (14.2 | ) | (13.9 | ) | ||||||
Income tax benefit | (2.5 | ) | (4.3 | ) | (5.8 | ) | ||||||
Net loss before equity in earnings of subsidiaries | (9.5 | ) | (9.9 | ) | (8.1 | ) | ||||||
Equity in earnings of subsidiaries | 166.6 | 151.2 | 109.3 | |||||||||
Net income | $ | 157.1 | $ | 141.3 | $ | 101.2 | ||||||
Earnings per common share: | ||||||||||||
Basic | $ | 4.89 | $ | 4.30 | $ | 3.11 | ||||||
Diluted | $ | 4.83 | $ | 4.24 | $ | 3.06 | ||||||
Cash dividends declared per common share and eligible RSUs and PSUs | $ | 0.88 | $ | 0.80 | $ | 0.60 |
Employers Holdings, Inc. | ||||||||||||
Condensed Statements of Income | ||||||||||||
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
(in millions, except per share data) | ||||||||||||
Revenues | ||||||||||||
Net investment income | $ | 1.9 | $ | 4.0 | $ | 5.2 | ||||||
Net realized gains on investments | 8.0 | 2.4 | 5.8 | |||||||||
Total revenues | 9.9 | 6.4 | 11.0 | |||||||||
Expenses | ||||||||||||
Other operating expenses | 13.8 | 13.8 | 13.5 | |||||||||
Interest expense | — | 1.1 | 1.4 | |||||||||
Total expenses | 13.8 | 14.9 | 14.9 | |||||||||
Loss before income taxes and equity in earnings of subsidiary | (3.9 | ) | (8.5 | ) | (3.9 | ) | ||||||
Income tax benefit | (3.5 | ) | (3.3 | ) | (2.6 | ) | ||||||
Net loss before equity in earnings of subsidiary | (0.4 | ) | (5.2 | ) | (1.3 | ) | ||||||
Equity in net income of subsidiary | 107.1 | 99.6 | 102.0 | |||||||||
Net income | $ | 106.7 | $ | 94.4 | $ | 100.7 | ||||||
Earnings per common share (Note 18): | ||||||||||||
Basic | $ | 3.29 | $ | 2.94 | $ | 3.19 | ||||||
Diluted | $ | 3.24 | $ | 2.90 | $ | 3.14 | ||||||
Cash dividends declared per common share | $ | 0.36 | $ | 0.24 | $ | 0.24 |
Employers Holdings, Inc. | |||||||||||
Condensed Statement of Cash Flows | |||||||||||
Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Operating activities | |||||||||||
Net income | $ | 157.1 | $ | 141.3 | $ | 101.2 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Equity in undistributed earnings of subsidiaries | (70.4 | ) | (66.7 | ) | (71.5 | ) | |||||
Net realized and unrealized gains on investments | (3.3 | ) | (0.8 | ) | — | ||||||
Stock-based compensation | 10.1 | 9.4 | 6.8 | ||||||||
Amortization of premium on investments, net | — | 0.2 | 0.1 | ||||||||
Deferred income tax expense | (2.8 | ) | 14.7 | 5.3 | |||||||
Change in operating assets and liabilities: | |||||||||||
Accounts payable, accrued expenses, and other liabilities | 2.3 | 0.2 | (0.3 | ) | |||||||
Federal income taxes | 19.2 | (18.5 | ) | 5.4 | |||||||
Other assets | (0.7 | ) | (0.1 | ) | (0.1 | ) | |||||
Intercompany payables and receivables | (3.2 | ) | (2.2 | ) | 1.8 | ||||||
Net cash provided by operating activities | 108.3 | 77.5 | 48.7 | ||||||||
Investing activities | |||||||||||
Purchases of fixed maturity securities | (9.3 | ) | (14.4 | ) | (30.6 | ) | |||||
Purchases of equity securities | (42.0 | ) | (40.0 | ) | — | ||||||
Proceeds from sale of equity securities | 56.0 | — | — | ||||||||
Purchases of short-term securities | — | (59.6 | ) | (7.9 | ) | ||||||
Proceeds from sale of fixed maturity securities | 4.3 | 12.0 | 5.0 | ||||||||
Proceeds from maturities and redemptions of fixed maturity securities | 3.8 | 59.2 | 4.5 | ||||||||
Proceeds from maturities of short-term investments | 25.0 | — | — | ||||||||
Net change in unsettled investment purchases and sales | (5.0 | ) | 3.9 | — | |||||||
Capital contributions to subsidiaries | (73.6 | ) | (4.2 | ) | (5.6 | ) | |||||
Net cash used in investing activities | (40.8 | ) | (43.1 | ) | (34.6 | ) | |||||
Financing activities | |||||||||||
Acquisition of common stock | (67.5 | ) | (4.2 | ) | — | ||||||
Cash transactions related to stock-based compensation | (2.5 | ) | (1.8 | ) | 3.8 | ||||||
Dividends paid to stockholders | (28.9 | ) | (26.7 | ) | (19.7 | ) | |||||
Net cash used in financing activities | (98.9 | ) | (32.7 | ) | (15.9 | ) | |||||
Net (decrease) increase in cash and cash equivalents | (31.4 | ) | 1.7 | (1.8 | ) | ||||||
Cash and cash equivalents at the beginning of the period | 41.3 | 39.6 | 41.4 | ||||||||
Cash and cash equivalents at the end of the period | $ | 9.9 | $ | 41.3 | $ | 39.6 |
Employers Holdings, Inc. | |||||||||||
Condensed Statement of Cash Flows | |||||||||||
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(in millions) | |||||||||||
Operating activities | |||||||||||
Net income | $ | 106.7 | $ | 94.4 | $ | 100.7 | |||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
Equity in undistributed net income of subsidiary | (107.1 | ) | (99.6 | ) | (102.0 | ) | |||||
Realized gains on investments | (8.0 | ) | (2.4 | ) | (5.8 | ) | |||||
Stock-based compensation | 5.8 | 4.6 | 6.0 | ||||||||
Excess tax benefits from stock-based compensation | — | (1.2 | ) | (1.2 | ) | ||||||
Amortization of premium on investments, net | 0.4 | 0.9 | 1.0 | ||||||||
Deferred income tax expense (benefit) | 2.9 | (4.6 | ) | (2.3 | ) | ||||||
Change in operating assets and liabilities: | |||||||||||
Accounts payable, accrued expenses, and other liabilities | (0.7 | ) | 1.7 | 1.2 | |||||||
Federal income taxes | (7.9 | ) | 4.9 | 0.8 | |||||||
Other assets | 0.8 | 0.4 | 0.9 | ||||||||
Intercompany payable/receivable | 0.3 | 0.1 | (1.4 | ) | |||||||
Other | (0.4 | ) | 1.2 | 0.9 | |||||||
Net cash (used in) provided by operating activities | (7.2 | ) | 0.4 | (1.2 | ) | ||||||
Investing activities | |||||||||||
Purchase of fixed maturity securities | (31.0 | ) | (21.6 | ) | (12.0 | ) | |||||
Purchase of equity securities | (3.6 | ) | (19.0 | ) | (20.7 | ) | |||||
Proceeds from sale of fixed maturity securities | — | 18.3 | 4.1 | ||||||||
Proceeds from maturities and redemptions of investments | 24.9 | 45.5 | 32.6 | ||||||||
Proceeds from sale of equity securities | 88.5 | 24.0 | 20.6 | ||||||||
Capital contributions to subsidiary | (8.0 | ) | — | — | |||||||
Change in restricted cash equivalents | — | 4.6 | (4.1 | ) | |||||||
Net cash provided by investing activities | 70.8 | 51.8 | 20.5 | ||||||||
Financing activities | |||||||||||
Acquisition of common stock | (21.1 | ) | — | — | |||||||
Cash transactions related to stock-based compensation | 9.0 | 4.8 | 1.6 | ||||||||
Dividends paid to stockholders | (11.5 | ) | (7.7 | ) | (7.6 | ) | |||||
Payments on notes payable | — | (60.0 | ) | (10.0 | ) | ||||||
Excess tax benefits from stock-based compensation | — | 1.2 | 1.2 | ||||||||
Net cash used in financing activities | (23.6 | ) | (61.7 | ) | (14.8 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 40.0 | (9.5 | ) | 4.5 | |||||||
Cash and cash equivalents at the beginning of the period | 1.4 | 10.9 | 6.4 | ||||||||
Cash and cash equivalents at the end of the period | $ | 41.4 | $ | 1.4 | $ | 10.9 |
Schedule VI. Supplemental Information Concerning Property - Casualty Insurance Operations | ||||||||||||||||||||||||||||||||||||||||
Employers Holdings, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||||||||||
Consolidated Supplemental Information Concerning Property and Casualty Insurance Operations | ||||||||||||||||||||||||||||||||||||||||
Year Ended | Deferred Policy Acquisition Costs | Reserves For Unpaid Losses And LAE | Unearned Premiums | Net Premiums Earned | Net Investment Income | Losses and LAE Related to Current Years | Losses and LAE Related to Prior Years (including LPT Amortization and Adj) | Amortization of Deferred Policy Acquisition Costs | Paid Losses And LAE (including LPT Amortization and Adj) | Net Premiums Written | ||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||||
Employers Segment | ||||||||||||||||||||||||||||||||||||||||
2019 | $ | 47.9 | $ | 2,145.2 | $ | 337.0 | $ | 695.8 | $ | 84.1 | $ | 456.1 | $ | (77.5 | ) | $ | 107.7 | $ | 421.8 | $ | 691.4 | |||||||||||||||||||
2018 | 48.2 | 2,207.9 | 336.3 | 731.1 | 78.6 | 457.5 | (66.2 | ) | 112.0 | 416.9 | 742.8 | |||||||||||||||||||||||||||||
2017 | 45.8 | 2,266.1 | 318.3 | 716.5 | 73.3 | 447.3 | (18.5 | ) | 108.2 | 420.7 | 723.7 | |||||||||||||||||||||||||||||
Cerity Segment | ||||||||||||||||||||||||||||||||||||||||
2019 | $ | — | $ | — | $ | 0.1 | $ | — | $ | 0.3 | $ | — | $ | — | $ | — | $ | — | $ | 0.1 | ||||||||||||||||||||
2018 | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
2017 | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Corporate & Other | ||||||||||||||||||||||||||||||||||||||||
2019 | $ | — | $ | 47.6 | $ | — | $ | — | $ | 3.7 | $ | — | $ | (12.7 | ) | $ | — | $ | (12.7 | ) | $ | — | ||||||||||||||||||
2018 | — | — | — | — | 2.6 | — | (14.6 | ) | — | (14.6 | ) | — | ||||||||||||||||||||||||||||
2017 | — | — | — | — | 1.3 | — | (11.6 | ) | — | (11.6 | ) | — |
Schedule VI. Supplemental Information Concerning Property - Casualty Insurance Operations | ||||||||||||||||||||||||||||||||||||||||
Employers Holdings, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||||||||||
Consolidated Supplemental Information Concerning Property and Casualty Insurance Operations | ||||||||||||||||||||||||||||||||||||||||
Year Ended | Deferred Policy Acquisition Costs | Reserves For Unpaid Losses And LAE | Unearned Premiums | Net Premiums Earned | Net Investment Income | Losses and LAE Related to Current Years | Losses and LAE Related to Prior Years (including LPT Amortization and Adj) | Amortization of Deferred Policy Acquisition Costs | Paid Losses And LAE (including LPT Amortization and Adj) | Net Premiums Written | ||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||||
2016 | $ | 44.3 | $ | 2,301.0 | $ | 310.3 | $ | 694.8 | $ | 73.2 | $ | 452.9 | $ | (35.0 | ) | $ | 104.5 | $ | 416.2 | $ | 694.6 | |||||||||||||||||||
2015 | 44.3 | 2,347.5 | 308.9 | 690.4 | 72.2 | 456.9 | (27.6 | ) | 103.9 | 410.2 | 689.3 | |||||||||||||||||||||||||||||
2014 | 44.6 | 2,369.7 | 310.8 | 684.5 | 72.4 | 503.8 | (50.4 | ) | 102.7 | 340.6 | 687.6 |
Exhibit No. | Exhibit No. | Description of Exhibit | Included Herewith | Incorporated by Reference Herein | Exhibit No. | Description of Exhibit | Included Herewith | Incorporated by Reference Herein | ||||||||||||||||||
Form | File No. | Exhibit | Filing Date | Form | File No. | Exhibit | Filing Date | |||||||||||||||||||
3.1 | Amended and Restated Articles of Incorporation of Employers Holdings, Inc. | 10-K | 001-33245 | 3.1 | March 30, 2007 | 10-K | 001-33245 | 3.1 | February 28, 2019 | |||||||||||||||||
3.2 | Amended and Restated Bylaws of Employers Holdings, Inc. | 10-Q | 001-33245 | 3.1 | November 5, 2009 | 8-K | 001-33245 | 3.1 | June 13, 2018 | |||||||||||||||||
4.1 | Form of Common Stock Certificate | S-1/A | 333-139092 | 4.1 | January 18, 2007 | S-1/A | 333-139092 | 4.1 | January 18, 2007 | |||||||||||||||||
4.2 | X | |||||||||||||||||||||||||
10.1 | Quota Share Reinsurance Agreement, dated as of June 30, 1999, between State Industrial Insurance System of Nevada, D.B.A.: Employers Insurance Company of Nevada and the various Reinsurers as identified by the Interests and Liabilities Agreements attached thereto(1) | S-1/A | 333-139092 | 10.1 | January 18, 2007 | S-1/A | 333-139092 | 10.1 | January 18, 2007 | |||||||||||||||||
10.2 | Producer Agreement, dated as of May 1, 2005, between Employers Compensation Insurance Company and Automatic Data Processing Insurance Agency, Inc.(1) | S-1/A | 333-139092 | 10.2 | January 18, 2007 | S-1/A | 333-139092 | 10.2 | January 18, 2007 | |||||||||||||||||
10.3 | Joint Marketing and Network Access Agreement, dated as of January 1, 2006, between Employers Insurance Company of Nevada and Blue Cross of California, BC Life & Health Insurance Company, and Comprehensive Integrated Marketing Services(1) | S-1/A | 333-139092 | 10.3 | January 18, 2007 | 10-Q | 001-33245 | 10.1 | April 25, 2019 | |||||||||||||||||
10.4 | Joint Marketing and Network Access Agreement, dated as of July 1, 2006, between Employers Insurance Company of Nevada and Blue Cross of California, BC Life & Health Insurance Company, and Comprehensive Integrated Marketing Services(1) | S-1/A | 333-139092 | 10.4 | January 18, 2007 | 10-Q | 001-33245 | 10.2 | April 25, 2019 | |||||||||||||||||
*10.5 | Employers Holdings, Inc. Equity and Incentive Plan Form of Restricted Stock Unit Agreement for Non-Employee Directors | 10-Q | 001-33245 | 10.1 | August 7, 2009 | |||||||||||||||||||||
*10.6 | Employment Agreement by and between Employers Holdings, Inc. and Ann W. Nelson, dated December 5, 2011 and the renewal term effective as of January 1, 2016 | 8-K | 001-33245 | 10.1 | December 8, 2011 | |||||||||||||||||||||
*10.7 | Employment Agreement by and between Employers Holdings, Inc. and John P. Nelson, dated December 5, 2011, and the renewal term effective as of January 1, 2016 | 8-K | 001-33245 | 10.2 | December 8, 2011 | |||||||||||||||||||||
*10.8 | Employment Agreement by and between Employers Holdings, Inc. and Lenard T. Ormsby, dated December 5, 2011 and the renewal term effective as of January 1, 2016 | 8-K | 001-33245 | 10.3 | December 8, 2011 | |||||||||||||||||||||
10.5 | 10-Q | 001-33245 | 10.3 | April 25, 2019 | ||||||||||||||||||||||
10.6 | 8-K | 001-33245 | 10.4 | March 15, 2018 |
10.7 | 8-K/A | 001-33245 | 10.1 | May 24, 2018 | |||||||||
10.8 | 10-Q | 001-33245 | 10.11 | October 25, 2018 | |||||||||
*10.9 | 10-Q | 001-33245 | 10.1 | August 7, 2009 | |||||||||
*10.10 | 8-K | 001-33245 | 10.2 | June 30, 2017 | |||||||||
*10.11 | 8-K | 001-33245 | 10.1 | November 8, 2018 | |||||||||
*10.12 | 8-K | 001-33245 | 10.1 | November 8, 2018 | |||||||||
*10.13 | 10-K | 001-33245 | 10.20 | February 28, 2019 | |||||||||
*10.14 | 8-K | 001-33245 | 10.1 | April 26, 2019 | |||||||||
*10.15 | 10-Q | 001-33245 | 10.1 | July 29, 2019 | |||||||||
*10.16 | 10-Q | 001-33245 | 10.1 | October 25, 2019 | |||||||||
*10.17 | 10-Q | 001-33245 | 10.2 | April 27, 2017 | |||||||||
*10.18 | 10-Q | 001-33245 | 10.3 | April 27, 2017 | |||||||||
*10.19 | 10-Q | 001-33245 | 10.3 | April 30, 2015 | |||||||||
*10.20 | 8-K | 001-3324 | 10.1 | May 22, 2015 | |||||||||
21.1 | X | ||||||||||||
23.1 | X | ||||||||||||
31.1 | X | ||||||||||||
31.2 | X | ||||||||||||
32.1 | X | ||||||||||||
32.2 | X |
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded with the Inline XBRL document | X | |||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | X | |||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | |||||||||||
101.DEF | XBRL Taxonomy Definition Linkbase Document | X | |||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | |||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X | |||||||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
(1) | Confidential treatment has been requested for certain confidential portions of this exhibit; these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission. |
Date: | February | EMPLOYERS HOLDINGS, INC. | |
By: | /s/ Michael S. Paquette | ||
Name: Michael S. Paquette | |||
Title: Executive Vice President and Chief Financial Officer |
Signature | Title | Date |
/s/ Michael D. Rumbolz | Chairman of the Board | February |
Michael D. Rumbolz | ||
/s/ Douglas D. Dirks | President and Chief Executive Officer, Director (Principal Executive Officer) | February |
Douglas D. Dirks | ||
/s/ Michael S. Paquette | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | February |
Michael S. Paquette | ||
/s/ Richard W. Blakey | Director | February |
Richard W. Blakey | ||
/s/ Prasanna G. Dhoré | Director | February |
Prasanna G. Dhoré | ||
/s/ João (John) M. de Figueiredo | Director | February 20, 2020 |
João (John) M. de Figueiredo | ||
/s/ Valerie R. Glenn | Director | February |
Valerie R. Glenn | ||
/s/ | Director | February |
/s/ James R. Kroner | Director | February |
James R. Kroner | ||
/s/ Michael J. McColgan | Director | February 20, 2020 |
Michael J. McColgan | ||
/s/ Michael J. McSally | Director | February |
Michael J. McSally | ||
/s/ | Director | February |