EIG - Earnings call transcript Q3 2017 | Employers Holdings, Inc.

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Operator

Good day ladies and gentlemen and welcome to the Employers Holdings Inc. Q3 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. to President, call Chief like Ormsby, to now Vice Executive Legal would turn over the Lenard I Officer. Sir, you may begin.

Lenard Ormsby

soon accessed results of where file morning XXXX her on enjoying Litigation Vicki retirement. Operating Safe we is our Investor webcast statements call being at Employers. this our and Mike as are Financial Officer; me that and well-deserved host Thank today the and the Mills. Counsel the section on we at Legal Everyone of earnings Steve Good and employers.com and the our are our the taking Executive materials Chief call With will statements. and General historical company's ladies you. are over made I'm a gentlemen in considered based Dirks, recorded Officer Statements will third call call. Reform Investors on Form made Act reliance and that quarter Commission. Festa, of she conference not facts provision These is from through Securities at replay the during Securities our announced Lenard Relations earnings Harbor Chief Today's Yesterday, are the are Officer. Doug the be Chief Private Paquette, with earnings on Employers XX-Q These our accessible I'm for website link. of forward-looking the following available Officer; XXXX. website, hopes Employers. and call Exchange Ormsby, Chief welcome may the to call for be

expectations press during metrics including we financial with these materials earnings developments. will different section responses Securities forth remarks All in press to Portfolio in could of actual reasonable, the time to financial the Exchange be expectations, non-GAAP metrics, the that of the made supplement not to call subsequent In call release remarks from our of and the results and expressed those presentation to new our the LPT. Loss set our our in current the Although earnings are impact updated are and questions, and at uncertainties Reconciliations or attachment XXXX Commission. filings available materially reflect or exclude Transfer website. forward-looking cause may our our use risks risks our release, in other including be in and we statements on Investor the are non-GAAP as any our included our an Investors the believe

to I Doug. Now, over turn the will call

Doug Dirks

for call third Lenard thank this strong joining all our of year. Thank results produced us today. underwriting you, on you the and We and operating quarter in

improved income XX% increased share. Our or X.X LPT increased the as And $X.XX impact current by before of XX% our quarter the our points. per percentage operating underwriting ratio combined diluted income

pressured in by this meet underlying to ended rates our per solid business linked including top In value at continues be declining business, premium quarter our current growth underwriting quarter, delivered that a business the actively opportunities increase we the was pursuing book X line of Despite dividends. audit expectations growth Our and $XX.XX, constraints. month above by in to book share of our renewal growth new requirements. loss new X% final improving

one third market. slightly in the retention policy exposures California quarter Southern in declined Our increased. the payroll in high territory Overall, premiums rate by renewal quarter remained our and driven

transaction with operate, multi-state acquisition approximately licenses to as in and/or X.X%. in from $XX to which months with average that the providing states X states price announced underwriting greater year-end final for will the purchase the in currently we to an close partner us business. do flexibility provide renewal REIT conduct recently insurance about not expect We currently be several have entered million. on agreement by year we and buy into first of [ph]. company shell rate decreased hope This well Our we where the We us as this

As knowledge our quickly changing can writer, and deep we of workers' believe react to a possess markets that compensation monoline conditions. we

this a many over demonstrated of the And ability our to will analytic years critical turn that have over financial as advantage a Mike consider economic We this and call We market initiatives. to we pursue and across the I strategically that, with results. further and technology intend discussion and to strengthen maintain for competitive Mike? data continue cycles. we

Mike Paquette

Doug. the written address quarter for you, in which year-over-year premiums will his Net Thank X% remarks. Steve third increased by

ratio combined of before ratio LPT a reported as LAE our quarter in largely improving by loss ago, lower third than points. percentage of impact of was a XX% the the X.X Our year the XX.X% result

Our maturity other average and The fixed book a portfolio yield yield. end, of which underwriting were a third quarter year on X.X%. to a ago related for pretax At the a million subsequently replaced maturities. were third of net for aggregate. expense gains book the taxable of was in quarter year our investment commission and sales equivalent from bonds municipal had fixed Net to unchanged from ago yield with an tax of maturities investments X.X% pretax realized as a book higher quarter ratios result higher the increased income $XX.X and

not development million to of the During we that technology of placed off been capitalized the had previously capabilities $X.X in costs yet quarter relating information wrote service.

develop our technology to systems data that capabilities, within improve those continue experience. existing customer our and capabilities will We implement information analytics and enable integrate

quarters. interest, the effective current main rate amortization statutory U.S. why are rate Our our XX%. effective was gain the adjustments recent reserve differs from of bond which for rate deferred the and tax reasons is with tax consistent XX% income LPT largely prior of quarter that Municipal

call X% of investment had the total from over an a represented our average of the securities As and AA-minus XXXX, third an a I September the of duration value the now, X% Steve. billion, $X.X of the quarter, fixed And equity of ago. maturities quality and our investment XX, to of market X.X increase of year At portfolio. portfolio end will turn credit our was

Steve Festa

of premiums million and business Thank as million Mike final increases The morning. in increases with both up in well written. or XXXX. new audit you quarter $XXX.X were quarter include third X% good Net as $XX.X premiums, the the increase premium of drivers this from for written

not we declining environment continue we a This We business pickup From to majority in audit in hiring also of new which is the only had growth our see as revenue business the growth strong business payroll in well the second states additional saw the as we of where existing quarter-over-quarter have production that the presence worked which at by both, improvement by recently sates by additional several driven entered this the rate increase a first in despite This in. states new an employees, hours final employees. have the of we the over of a occurred has standpoint, This quarter, occurred quarter is year. operate. well in X.X%. we grew new as new long-term but as has occurred also

to our our both for currently quarter, As channel continue a distribution indicated we substantial the premiums. in contributor of the well alternative growth, our agent us makes prior year been in calls, as to for independent from growth has XX.X% although partners. enforce channel, our distribution as This see

calls. quarter. of LPT noted XXXX of Our are the results current during the improved years third to discussed on undertaken over and from previous calendar quarter in XX.X% past year the continue recent the derivative quarters loss the before the the in XX.X% and of in impact These LAE ratio few trends initiatives

indemnity continue decrease frequency the loss estimate. claim back medical trends to and continue indemnity Our are downward to slight and These will year-over-year call Doug. to per And I our reflected accident in cost see claim. movement now, current in we return year

Doug Dirks

Steve. Thanks,

While investment underwriting our record by yields, impacted at income is our is profitability levels. low continuing

business most through Our in while continue positive have flow capital shareholders, strong invest dividend. earnings increases and allowed to us to returning our recently in to cash our

are we share. the value will in by the shareholders, of evidenced and We operating per for call increased income turn over book balance as strong for value strength continued questions. And our and with our now our our growth that, operator, maintaining sheet creating

Operator

[Operator Instructions] comes Mark SunTrust. first question Hughes of Our from

open. Your line is

Mark Hughes

dislocation at might nice line, that morning. good The competitors any particular any you, contributed growth? that Thank strength to at have the top

Steve Festa

business Mark, some side as only channel independent independent is as the but had Steve. side, side, we've we've alternative picking partnerships from not on added well pre-existing the as of distribution this We're partners, both well. up agent new some the

well; So we're clearly, more national are competitors. buying's of and of new regional through as business companies really and taking we're more opportunities picking some just getting multi-line that are them from quotes up are other those some submissions, more competitors and

Mark Hughes

do why competitive as together? the in quarters success? assume was the but that of all more think just Anything that last I marketplace as it you're having couple ties it's you

Steve Festa

to continue. partnerships the sales some talent year I you in which as and I our and to earlier that new on the us relationships developed some think alluded particular numbers to to just actually are organization, are new over that end the and show leadership past starting bringing added I our we've expect to

Mark Hughes

premium, what the able was The number you absolute or are audit to increased for share it year-over-year? much how audit premium

Steve Festa

it quarter increased the million. $X.X for Yes,

Mark Hughes

an on was And basis? what absolute then it

Doug Dirks

Mark, I'm sure I'm question. not following your

Mark Hughes

itself, million it that $X.X I'm an $X.X was sorry. increase premium of The was audit million? year-over-year or

Steve Festa

an $X.X million. it's no, quarter-over-quarter increase No, of

Mark Hughes

Okay.

is continues that? improving same to pace pricing? side, On is it I your slower the the is is or pricing faster improving the as said or renewal down, pace that X% rate frequency at frequency If X%, think down frequency you improve; at is than

Doug Dirks

this terms that severity, side of would way, we are I break that at think in don't I trend frequency I least the know pricing. Mark. favorable in the on out that point would and of terms of say at we that quite

Mark Hughes

that write-off something this some again this quarter, going in The is spending extra have the understood. plans? try doesn't spending Right, with or impact to your is future -- to technology you're

Doug Dirks

would describe continuation. as a I

or the mind few designed to be a respond policyholders agents. changing customers, of quite have needs We our better they initiatives to that in are

So I just expect it continuation. will be

Mark Hughes

Okay, you. Thank very good.

Operator

with from Thank Instructions] next Buckingham you. [ph] question [Operator Research. comes Our Elis

now is open. line Your

Unidentified Analyst

for compares we're rate accounts just [ph]. and of in larger question compares a and I how on had just between trying Hi, accounts. guys Amit I'm you California it core and out how it on understand smaller the to for declines,

Steve Festa

California very in that than retention decline of a other market and more with not in California seeing you're are our greater states, in seeing little that we're were referencing it's one rate of our in our accounts in are renewal market accounts. we really and actually that competition smaller rates decline So high territory it's heightened particular phenomenon, type in smaller

Unidentified Analyst

you. Thank

Operator

Thank you.

Our Cliff Philadelphia line Gallant Financial. comes the of with next from question

Your line is now open.

Cliff Gallant

great Thank guys. you, quarter and

company? the monies that with outlook and you're to First I'm does question; curious just the the going tax still outlook on remarks mentioned for far in to [ph] fixed, from that the the you opening move in reflect how

Mike Paquette

Cliff, really than safety wait range corporates. within to our It's was really is to it's and and go really to monies a [ph]. comfortable on by getting but going after-tax we aren't something potential of bit it always other mode those investment a the our from [ph] to of not the a going into future, with an it haven't in source it's close further because investment that, of we're guidelines monies But of volatility. a as reduce and did of things of a closer what suffered MBS basis permissible and the Mike. top something the out what assets, monies variety in minimum we unknown, see within to happens guidelines the is any balance those the we and But [ph] largely

Cliff Gallant

lot expense Okay. few you're the XX for like factors the you've the topline seems some to months? And of we ratio, should a expense mean also over I ratio think cost I next mean forward; capitalized there as but is XX the improving a it go leverage, we how showing on about

Doug Dirks

it's topline. of more expense ratio premium so about think you variable. the when variable, by tends be tax is component, increasing to obviously The supported debt A somewhat bad portion

as topline. those the underwriting run try inflationary So on I we certainly just pressure is wouldn't of fixed that grow in impacts to I obviously increase with -- manage objective normal other where cost. aren't relieved our of suggest is the component fixed but and the to the top line expense a declining rates, lot by rate an don't improve and

very got So management. wouldn't well rate but it think run I again, under we've it characterize I as

Cliff Gallant

claims it you terms number And just this see of talk can positioned might period your and a a up are growth on you is in as to of you there for like and backend ramp growth, a leading where growth now bit which factors the little on the into how management? you organic seems like it guys in seems loss you're rate; go

Steve Festa

as actually claims inventory, that's in give -- that initiative in positioned and through particularly we talked numbers we've the prior we've but reduced the exact accelerated Yes, the on the of through be for than any claims where claim ability little I significantly see calls, area about uptick our is to growth our focus our won't business small claim Cliff, we prepared allowed on you in lot may we're generally us is very the continue pending accounts. well. less you to market claims grow. we A frequency obviously will though see in on

Cliff Gallant

you. thank Okay,

Operator

We of Mark Hughes line a follow-up from SunTrust. have the of

now is line Your open.

Mark Hughes

thoughts obviously the single-digits updated lean, growth what you're with with capital you're growing getting curious, the on here, your ROE sheet very now base; is front, Just related some capital? thoughts debt, capital do management minimal and on your any but high to your balance

Mike Paquette

is this Mark, Mike.

need regulated one, liquidity, you impaired remind out some this that we prior different have efficiencies of at access the at for capital forward. because we'll us I'll is the to entities you taking our put at and directly so the will we've is our which how side aligned On bring consider end regime. new some other capacity which things; together thing this up insurance year ratios more corporate you going stage some been last did see the but that be new two somewhat our investors strength but into to the But we under come interested each extent the obviously to versus from restructuring capital need maximum corporate dividends dividend we that companies year of to years look

kind [ph] largely at and and is be closing current exhausting company and the have million. the capacity announced for time. at parent, earlier surplus shell year the did on of of So the some the $XX can the are what an had that year available partnerre we'll we've company has will dramatically at holding visit done year next And we've this increased dividend, been available dividend more notes with it of that that that's the repurchase some liquidity liquidity restored this the we we and we embarking in

Mark Hughes

related reserve you something of refreshment that's in evaluating any reserves, an your it place forecast I look potential fourth but is to there going was to know The timing be happen extra such on process the -- on your fourth is is on the the -- that would that for more likely quarter? there it process is happen, to that? [ph] the releases; quarter not in in the Just refresh me

Doug Dirks

analysis comment we full expected. of particular analysis, it mid-year year. comparison in isn't and the off-quarters happening quarter do the the actual the And at end in any won't the a do to on likelihood really we it analysis but an but I it's of of full

deeper are precludes that but of say any the and year. being are in studies wouldn't reserves unfavorable I period so or given ever mid-year favorable end adjustment an And to done

Mark Hughes

you. Thank

Operator

Thank like Douglas remarks. back further at and I in this the conference Dirks, to for over queue turn I CEO you. would to time. am President closing questions no showing And

Doug Dirks

a Thank full joining in you results. great us today. and our with and we appreciate We Thanks, forward good. to February your for everyone We have talking questions. your Very participation, year again report support to look your you speaking XXXX when all day.

Operator

for the gentlemen, Ladies program, disconnect. conference. in you great thank day. concludes have and today's you now participation a may Everyone, This

Employers (EIG) 29 Oct 172017 Q3 Earnings call transcript