Employers 8K Regulation FD Disclosure | EIG 5 Sep 07

KBW

Annual Insurance Conference

September 5, 2007

Safe Harbor Disclosure

This slide presentation is for informational purposes only. It should be read in conjunction with our Form 10-K for the year 2006, our Form
10-Q for the second quarter 2007 and our Form 8-Ks filed with the Securities and Exchange Commission (SEC) and available in the
“Investor Relations” section of our website at www.employers.com.

Non-GAAP Financial Measures

In presenting Employers Holdings, Inc.’s (EMPLOYERS^SM) results, management has included and discussed certain non-GAAP financial
measures, as defined in Regulation G.  Management believes these non-GAAP measures better explain EMPLOYERS results allowing for a
more complete understanding of underlying trends in our business.  These measures should not be viewed as a substitute for those
determined in accordance with GAAP.  The reconciliation of these measures to their most comparable GAAP financial measures is included
in this presentation or in our Form 10-K for the year 2006, our Form 10-Q for the second quarter 2007 and our Form 8-Ks filed with the
Securities and Exchange Commission (SEC) and available in the “Investor Relations” section of our website at www.employers.com.

Forward-looking Statements

This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements regarding anticipated future results and can be identified by the fact that they do not relate
strictly to historical or current facts. They often include words like "believe”, "expect”, "anticipate”, "estimate" and "intend" or future or
conditional verbs such as "will”, "would”, "should”, "could" or "may”. Certain factors that could cause actual results to differ materially from
expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions, and
legislative and regulatory changes that could adversely affect the business of EMPLOYERS and its subsidiaries. All subsequent written and
oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by these
cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

EMPLOYERS is a service mark and trade name for a group of companies which provides workers’ compensation insurance and services. Insurance is
offered through Employers Compensation Insurance Company, except in Nevada, where insurance is offered through Employers Insurance Company of
Nevada. Employers Compensation Insurance Company does not do business in all jurisdictions. For more information please visit www.employers.com.

Contents Page

California Rates and Rate Setting

Customer Selection

Insurance Operations Summary

Workers’ Compensation Industry

Policy Count

Strategic Distribution Partners

Focused Marketing and Distribution

Focus on Low to Medium Hazard Groups

Disciplined Underwriting – Five Basic Elements

Insurance Operations

Seasoned Executives with Extensive Experience

Expanding Geographic Footprint

Strategies

Financial Snapshot

Key Strengths

Overview

Corporate Overview

31-32

Summary

Mortgage-backed Securities

Capital Management

Selected Operating Results

SUMMARY

Investment Portfolio

Reinsurance Program

Underwriting Profitability

Earnings and EPS

Loss Portfolio Transfer

Four Key Elements of our Financial Strength

Financial Results

Corporate Overview

Overview

Business

Specialty provider of workers’ compensation insurance

18^th largest private writer in the U.S. ⁽¹⁾

8^th largest private writer in California ⁽¹⁾

2^nd largest writer in Nevada ⁽¹⁾

Geographic

Focused in Western U.S. – direct premiums written as of the second quarter of 2007

70% in California

21% in Nevada

9% in nine other states

Customers

Small businesses in low to medium hazard industries

Distribution through independent agents and strategic partners

31,902 policies in force at 6/30/2007

Average annual policy premium of approximately $11,000

(1) Based on “One-Year Premium and Loss Study,” U.S., California and Nevada, A.M. Best Company, 2006

Key Strengths

Established enterprise with 94 year operating history

Focused operations and disciplined underwriting – target an attractive
and underserved market segment with growth opportunities

Unique and long-standing strategic distribution relationships

Financial strength and flexibility - strong balance sheet and conservative
reserving

Experienced management team with deep knowledge of workers’
compensation

’02 – ’06 CAGR = 20%

Capital management plans include dividends and share
repurchases

Loss trends and investments are driving net income

Strong growth provides a solid basis for underwriting

Premium growth has reversed due to California rate
decreases

($ million)

Statutory Surplus

Equity Incl. Deferred Gain - LPT

Net Premium Written

Financial Snapshot

387

440

418

298

187

100

200

300

400

500

2002

2003

2004

2005

2006

1st & 2nd

Qtr 2007

655

682

339

431

531

640

224

200

400

600

800

2002

2003

2004

2005

2006

3/31/07

6/30/07

’02 – ’06 CAGR = 30%

152

120

160

2002

2003

2004

2005

2006

1st & 2nd

Qtr 2007

’02 – ’06 CAGR = 93%

Net Income Before Loss Portfolio Transfer (LPT)

351

747

607

516

424

790

795

200

400

600

800

2002

2003

2004

2005

2006

3/31/07

6/30/07

’02 – ’06 CAGR = 21%

Strategies

Focus on
Profitability

Target attractive, underserved small business market

Maintain disciplined risk selection, underwriting and
pricing

Pursue
Organic
Growth
Opportunities

Expand in current markets and in our new states

Leverage infrastructure, technology and systems

Utilize existing and new strategic distribution partners

Optimize
Capital
Structure

Invest in operations and manage capital prudently

Return capital to shareholders

Consider opportunistic strategic transactions

Expanding GeographicFootprint

2000

2002

2006

2007

NEW STATES

Florida, Oregon,
Texas, Arizona
and Illinois = 1.1%

Direct Premiums Written (%) for six months ended 6/30/07

Seasoned Executives with Extensive Experience

EVP, Chief Financial Officer

William E. Yocke

SVP, Chief Underwriting Officer

Jeff J. Gans

SVP, Chief Claims Officer

Stephen V. Festa

SVP, President of Western Region

George Tway

SVP, President of Strategic Markets Region

David M. Quezada

SVP, President of Pacific Region

T. Hale Johnston

President and Chief Operating Officer

Martin J. Welch

Chief Executive Officer

Douglas D. Dirks

Experience
(Years)

Title

Name

Average experience of senior operating leadership = 24 years

Insurance Operations

Disciplined Underwriting

37.9% statutory loss and LAE ratio in 2006

Risk Selection
Expertise

Strong
Underwriting
Culture

Focused
Guidelines and
Consistent
Automated
Approach

Disciplined
Underwriting

Local Knowledge

Pricing of
Individual Risks

Five Basic Elements

Focus on Low to Medium Hazard Groups

EMPLOYERS

Focus on low to medium hazard risks allows us to optimize risk selection and pricing adequacy

Hazard Group A

Industry ⁽¹⁾

% of Premiums Written, 12/31/06

Hazard Group B

Hazard Group C

Hazard Group D

Hazard Group E

Hazard Group F

Hazard Group G

Hazard Groups A through D

Lower
Risk

Higher
Risk

(1) NCCI 2006 Premium Distribution by Hazard Group (as presented at 2007 Annual Issues Symposium).

Industry = 56%

EMPLOYERS = 82%

Customer Selection

35.1%

$136,883

Top 10

1.7

6,458

Automobile

2.0

7,939

Dentists & Dental Surgeons & Clerical

2.3

9,040

Clothing Manufacturers

2.4

9,455

Machine Shops

2.5

9,846

Clerical Office Employees

2.9

11,189

Store: Retail

3.0

11,590

College: Professional Employees & Clerical

4.8

18,854

Store: Wholesale

6.4

24,858

Physicians & Clerical

7.1%

$ 27,654

Restaurants

Percent of
Total

Direct Premiums

Written (000s)

Class

Hazard
Group

EMPLOYERS further differentiates risks within industry-defined customer classes

Top Ten Classes in 2006

Focused Marketing and Distribution

Independent Agents and Brokers

PACIFIC REGION

California

In 2006, 44% of direct
premiums written

STRATEGIC REGION

Largely ADP & Wellpoint;
added E-CHX in Qtr 4, 2006

Primarily California today

In 2006, 30% of direct premiums
written

Three business units target customer segments with a focused underwriting approach

WESTERN REGION

Nevada, Colorado, Utah,
Montana, Idaho, Texas,
Arizona, Illinois, Oregon,
Florida

In 2006, 26% of direct
premiums written

Strategic Distribution Partners

Strategic Distribution Partners

Largest payroll services company in the
U.S. with over 450,000 clients

Partner since entering California market
in 2002

Business originated by ADP’s field sales
staff and insurance agency

“Pay-by-Pay” premium collection

Strategic partners expand market reach and produce business with high persistency

Largest group health carrier in California

Partner since entering California market
in 2002

Business originated by Wellpoint’s health
insurance agents

Single bill to customers

Solid in force policy count growth
continued in the second quarter,
2007

31,902 at 6/30/07

28,294 at 6/30/06

Total increase of 3,608 or
12.8%

In Force Policy Count

Total in force policy count has grown consistently with a 2002 – 2006 CAGR of 6%

23,657

24,967

26,005

27,686

29,742

30,922

31,902

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2002

2003

2004

2005

2006

3/31/07

6/30/07

’02 – ’06 CAGR = 6%

Workers’ Compensation Industry

Historical Pure Loss Ratio

California

Total U.S.

Source: WCIRB as of 09/30/06 (California); Insurance Information Institute as of 12/31/05 (Total U.S.)

2002: EMPLOYERS
entry into California

California Rates and Rate Setting

- 14.2%

July 1, 2007

- 9.5%

January 1, 2007

-65.1%

Cumulative Change

-16.4%

July 1, 2006

-15.3%

January 1, 2006

-18.0%

July 1, 2005

- 2.2%

January 1, 2005

- 7.0%

July 1, 2004

-14.9%

January 1, 2004

Workers’ Compensation Insurance Rating Bureau
(WCIRB) recommended decrease of 11.3%

Insurance Commissioner ordered decrease of 14.2% in
advisory rates

Company’s choice to implement rate changes

Internal analyses are compared to Bureau’s view of the
industry to confirm actual experience

Filed loss cost multipliers (LCMs) account for loss
adjustment, underwriting and commission expenses and
targeted unlevered return of 12% to 13%

Rate deviation plans modify full premium rates based on
individual or group risk characteristics to yield “effective
rates”

EMPLOYERS filed a 4.5% decrease premium for
California policies incepting on or after September 15,
2007

Rate filing accepted August, 2007

Recent Commissioner Ordered
Advisory Pure Premium Changes

High performing insurance operation, built upon four key
elements

A highly focused customer base

A disciplined underwriting culture

An efficient -- and scalable – infrastructure

Strong producer and strategic partner relationships, providing us
with:

broader access to markets

enhanced value delivery to our customers

more cost effective production

Insurance Operations Summary

Financial Results

Four Key Elements of Our Financial Strength

Surplus of
$640MM

at 12/31/2006

Conservative
Reserving

High Quality
Investment
Portfolio

Catastrophe
Reinsurance
Program

0.6:1 NPW / Surplus
at 12/31/2006

Over 90% fixed maturity
with average rating AA

Coverage up to
$200MM loss

Track record of
reserve strength

Loss Portfolio Transfer (LPT)

$ millions

$602.5

Gain at 6/30/2007

(147.5)

Subsequent Reserve Adjustments

750

Gain at 1/1/2000

$ 775

Consideration

$1,525

Original Reserves Transferred

$2,000

Total Coverage

Contract

$ millions

$433.9

GAAP: Deferred Reinsurance
Gain – LPT Agreement

(168.6)

Cumulative Amortization To Date

$602.5

Statutory Surplus Created

Accounting at 6/30/07

Non-recurring transaction with no ongoing cash benefits or charges to current operations

Retroactive 100% quota share reinsurance coverage for all losses occurring prior to 7/1/95

Gain on transaction booked as statutory surplus; deferred and amortized under GAAP

Selected Operating Results

795.5

361.6

2,294.3

3,221.2

149.3

1,695.2

26.2

30.8

19.3

84.1

81.5

$84.6

746.8

303.8

2,307.8

3,195.7

80.0

1,715.7

152.2

171.6

68.2

393.0

387.2

$ 401.8

790.4

352.0

2,307.2

3,221.2

66.5

1,768.6

23.3

27.9

20.8

89.8

93.2

$ 96.5

144.6

Shareholders’ equity

Balance Sheet Data

1,595.8

Total investments

61.1

Cash and cash equivalents

3,094.2

Total assets

2,350.0

Reserves for loss & LAE

607.0

Equity including LPT deferred gain

58.7

137.6

Net Income

49.5

93.8

Net Income Before LPT

40.1

54.4

Net Investment Income

173.9

438.3

Net Earned Premium

174.7

439.7

Net Written Premium

$181.0

$ 458.7

Gross Written Premium

Income Statement Data

$ million

December 31

2005 2006

Q1
2007

Q2
2007

YTD
2007

Premiums are

declining due to

California rate

decreases

Loss trends and

Investments are

driving net income

While premiums have

declined in California, losses

have also declined

Portfolio re-allocation (equity

sales) in Q4 of 2006 reduced

volatility

Earnings and EPS

53,500,722

$ .49

.09

.58

26.2

(4.6)

$30.8

52,832,048

52,155,944

50,000,002

Weighted Average Shares Outstanding, pro forma ⁽²⁾

$ .94

$ .45

EPS Before Impacts of the LPT, pro forma ⁽²⁾

.17

$ 1.11

.97

49.5

(9.2)

$58.7

.40

EPS for Feb. 5 through the period

$3.43

$2.75

GAAP Pro forma EPS – assuming conversion

3.04

1.88

EPS (Net Income Before LPT) – assuming
conversion

.08

EPS attributable to LPT ⁽²⁾

.53

EPS for the period

$27.9

$171.6

$137.6

Net Income

(4.6)

(19.4)

(43.8)

Less: LPT Deferred Gain Amortization

23.3

152.2

93.8

Net Income Before LPT

$ million, except per share data

(1)

Based on 50,000,002 shares assumed outstanding before the conversion.

(2)

Pro forma EPS computed using the actual weighted average shares outstanding as of the end of the period. This includes shares outstanding for the period after the
Company’s IPO and prior to the IPO. Options have been excluded in computing the diluted earnings per share for the period 2/5/07 through 6/30/07 because their
inclusion would be anti-dilutive.

(3)

Pro forma EPS computed using the actual weighted average shares outstanding as of 6/30/2007.

December 31

2005 2006

Q1
2007

Q2
2007

YTD
2007

(2)

(3)

(1)

Underwriting Profitability

$36.0

85.7%

26.5%

13.4%

45.8%

5.3%

40.5%

$15.6

90.5%

25.9%

13.1%

51.5%

5.1%

46.4%

$20.4

$107.1

$78.1

Favorable Reserve Development ($ million)

106.4%

26.5%

13.4%

66.5%

5.3%

61.2%

Excluding
reserve
development for
6 mos., 2007 ⁽¹⁾

80.6%

27.0%

13.9%

39.6%

5.4%

34.2%

72.6%

84.9%

Combined Ratio (excl. LPT)

22.3%

16.0%

Underwriting & Other Expense Ratio ⁽³⁾

12.3%

10.7%

Commission Expense Ratio ⁽³⁾

37.9%

58.3%

Loss & LAE Ratio (excl. LPT)

4.9%

10.0%

Less: Impact of LPT ⁽²⁾

33.0%

48.3%

Loss & LAE Ratio

COMBINED RATIO

(GAAP and excluding the LPT)

(1)

Excluding $36 million of favorable development in the first six months of 2007, our loss ratio before the LPT would have been 66.5% and our combined ratio would
have been 106.4%. We target a combined ratio of 100. The total combined ratio includes three items causing upward pressure: (1) one shock loss requiring
additional reserves that may run in excess of $3.5 million; (2) one-time conversion costs; and (3) decreasing earned premium.

(2)

Total deferred gain amortization and LPT reserve adjustment of $43.8 million in 2005, $19.4 million in 2006, $4.6 million in the first and $4.6 million in the second
quarters of 2007.

(3)

Our higher expense ratio is largely a function of falling California rates.

Q1
2007

December 31
2005 2006

Q2
2007

YTD
2007