EIG - Earnings call transcript Q4 2017 | Employers Holdings, Inc.

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Operator

Good day ladies and gentlemen and welcome to the Fourth Quarter 2017 Employers Holdings Incorporated 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, today’s conference call is being recorded. introduce for to conference like would your today’s host Mr. I General Counsel. Ormsby, Lenard Sir, please ahead. go

Lenard Ormsby

recorded Festa, Good our are in be the Chief statements. Operating Michelle. Dirks, Financial fourth for Act historical Executive our is Officer, where provision today XXXX. Investor Steve this earnings you, and that on our of Chief are reliance the quarter Statements call and from Chief call website, being facts our Mike Harbor call. Relations call Reform Safe not of me of during made section made Today’s replay Thank Paquette, the These Doug Employers. morning following statements XXXX call the forward-looking will are Officer. welcome Private a webcast Officer the the Litigation on available on and everyone are conference considered based to Securities With

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

will I over call turn Doug. to the Now,

Doug Dirks

The you, marked successful Thank particularly joining end for today. strong fourth quarter you our call Employers. very thank and a a Lenard all year for us on to

premiums During lowered and by X% the provision. prior grew we loss year current reserve quarter our written and

net our income $X.XX XX% quarter increased combined or points. XX% our income underwriting the XX% X.X increased the ratio impact share and improved adjusted percentage and per fourth Our LPT of by of before

Our to XX% the year percent $X.XX income full our XX% increased underwriting increased X by of ratio of points. improved the combined net increased and share XX.X% per income or impact percentage before adjusted our and LPT

actively our declining by continues loss new improving quarter During delivered impressive line our growth in renewal rates pursuing strong to of the our in fourth growth business top met new linked business book underwriting to trends. be we growth business, Despite by opportunities cost requirements. that the pressured

high, rates by retention average our renewal the but policy rate X.X%. Our premium for remain year decreased

per the year deferred including a the $XX.XX, year including from value book an increase Our share, X.X% at of ago dividends. gain ended

underwriting flexibility. acquire We will greater us company PartnerRe. multi-state from shell regulatory approval This with acquisition to are awaiting provide a even insurance

deep our line we rider, of can a possess conditions. markets model As that workers to we react compensation believe quickly and changing knowledge

Paquette significant the call over We of financial be turn and to our I’ll for for market results. to cycles. ability that, discussion economic competitive years With consider have many across further company. this the demonstrated this our a over We Mike advantage

Mike Paquette

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

improvements those continued and initiatives key year LAE settlement, year our each ratios full reflect loss claims business ago. ratios a significant impacts impact the diversification the of in and fourth before LPT These the geographic of represented respectively, XX.X% from involving and Our quarter XX.X% data improvement reported analytics. of

expense of commission Increases of produced the year than amount quarter respectively ratios ratios agency for in by in year those in a and fourth ago. and each and XX.X% business alliances XXXX. ratios incentives XX.X% higher commission full higher our reported were Our and the resulted partnerships

trading year were and Our full higher the activity year year quarter net offset year by unchanged gains XX.X% income securities. despite of as ago. full of light end sales resulting gains expense in other trading in a quarter lower consistent losses fourth increase operating This a year and reform. largely to activity for those XX.X% an and each Net reported tax the realized on also sales municipal increase from in ratios for underwriting investments fourth due of from ratios equity ago, are resulted investment from bond with respectively being was in

fourth the respectively. XX% for rates tax effective and and quarter were full year Our XX%

expense, During as quarter incremental result respectively. deferred new the representing this the tax and we for income fourth tax tax expense Jobs year effective the $X a XX% of using incurred full enactment impact an Cut XX% income fourth rate. and Absent tax statutory assets the Act, rate XX% of have Tax been incremental million, re-measurement and our our of on tax quarter of the income the and would liabilities

ago. year the was increase from of end investment of X% of billion, a market As portfolio value $X.X our an year

X.X, securities fixed year reinvested by duration taxable maturity equity our the and proceeds of total our securities approximately our average a quality investment minus. At we represented fully those year end securities. X% portfolio. XX%, exposure had And the of and AA of reduced credit During into municipal to

by plan. our per share the million year recently including than repurchase share $X.X quarterly stands a the $XX Our equity, more dividend stockholders billion. at our authorized new of two $X.XX and gain now to light board In strength, XX% deferred increased financial

has long-term will outlook Steve. and positive. call our announced morning And and A.M. now, from minus strength affirmed their that to ratings the was this I it that Best stable Lastly, credit and over have revised turn A financial issuer to

Steve Festa

were a $XXX And a up Mike. $XX as occurred quarter dollars environment the of million those as competitive, was premium do the written ago. you, Net states X% market year extremely rate Net XXXX. million versus that virtually premiums is in business. despite in we million written all year well Thank from for growth written good those in $XX environment for This declining of written growth morning. the a which or

our currently prior alternative we existing for our our calls, XX% growth was over and the discussed business XX% in premiums, partnerships This quarter resources of up and our previous quarter. business channel fourth XX% up both In the have have the to New prior On the in-force we quarter partners. from the and fact X% channel the opportunities and for within year. dedicated over makes up channel within XX% fourth this grow business that distribution new new with XXXX. year-over-year revenue grew year XX% with XXXX, distribution

grow new channel. core to continue distribution also business our in We

have Our states has has growth we in rates but policy which continue only presence. occurred to see entered, year. a throughout new occurred we With in not the the to business recently XXXX, retention respect renewals in unit states long-term have new we had high that in

like line been have is positively in retaining important has We and market bottom on softening experiencing. focused a particularly the are results currently we cycle that impacted emphasis this business our

pricing a market year the competition renewals. progressed, did in from we As with particular standpoint, aggressive more observe middle

frequency on claim to trends XXXX. into strong the continue initiatives. Claim with to this closure expect positive be execution continue for declines year We continuing and

data recent having We the as in deployed fourth in as the these by business the our we to our is turn invest predictive Doug. We state claim the the which initiative decreased analytics target already District reflective our in price our continue during area in on management XXXX. quarter underwrite of loss XX.X% to entered been these ratio business as with plan call well X.X exposure investments percentage Consistent risk The across Columbia. in to believe only of Louisiana. strong now claimed continue geographic fourth profitable classes of our markets. a will results. and of back enhance write before points, to also all of most geographic And for We the continuing diversify We we impact as will strategy markets, the diversification well quarter of the initiatives, states, across states diversification all but the strategies efforts leveraging additional LPT, to not our with this strategy, entering XX quarter. driven

Doug Dirks

Steve. Thanks,

implementation enhance the and recently plan aggressive technologies have a initiated transform believe customers. experience our of and new and of of capabilities development We digital fundamentally that will we

and development promote chosen and new initiatives, have and into deployment reinvest that creation. to flexibility to the greater future these expected years value by reform these tax our support of our We the technological three from of first We financial pricing provide assets long-term celebrating new with greatly intellectual will growth our believe and us capabilities. digital business precision two back benefits

in expense and compared increase these development underwriting capabilities periods. our XXXX, in ratio the as XXXX implementation other and that We expect that and prior technologies operating new experienced will of to

However, we more expect future expenses gains periods. increased will in than offset by these operational that be efficiency

Federation we the conditions. for NFIB is record small business for XXXX report recent began of is situated to ideally year business the are the expectation business reported turn economic labor these up. be will optimism strategic core in in A And operator, to questions. who the over market great shaping that Business owners to expand. now from ahead Lastly, small JPMorgan We Independent in a good small that call likely businesses. cited a the higher with believe focus, most heats small A recent survey for markedly time believe a reflects the of XXXX. are up to survey of which as wages benefit our level from number workers, The now highest competitive improved National history of

Operator

[Operator of with Instructions] Mark you. from comes Hughes line Our question SunTrust. first the Thank

go Please Your line is open. ahead.

Mark Hughes

Yes, thank morning. Good you.

Doug Dirks

Good morning.

Mark Hughes

a I'm sorry I pricing given renewal? had missed it, You the on for number pricing,

Mike Paquette

X.X%. down was Year-on-year

Mark Hughes

as correctly, And number did quarterly that that year, the I get well? the is full for

Mike Paquette

number quarterly have don't do a the at us. of X.X. front have We year I number in

Mark Hughes

then pricing? about California And how

Doug Dirks

Mark. have don't front We us number that in

Mark Hughes

more Is Okay. just up in your a Commission alternative that trend. seems recent or of quarter the expenses distribution like the function variability? a above point, roughly some it

Mike Paquette

on goals, we contributing from which Mark. business earlier an is we profitability that's strong profitability, in agency some partly growth the growth accelerated to at their in Obviously, factor our incentive So compared which of articulated payment. had and pace our an that this distribution business. very – our were the both answer increase the in alternative the performances in But was growth hitting call, in and to other our led core the many and payments that agents channel linked to are agents to linked as

Mark Hughes

it that business be should what quarter. something is But mentioned through quarters, I the new that necessarily kind more think - was initiative least in that something the in this sustained quarters? end new that subsequent of, kind carry that few alternative distribution Is the not at anomaly. a quarter of front is fourth will that a or you of fourth XX% would if You increase sustain into the for

Mike Paquette

starting gain that some expect I quarter. we're that we some same new to expect in momentum I continuing momentum momentum I necessarily the think some to fourth developed into area. in degree, of not that that to XXXX but as partnerships started the to see see We well.

Mark Hughes

digital this enhancing I Doug, claims. going Are could elaborate talking is service, to the How if experience, the you change you you that. business? on distribution talked customer hope about

Doug Dirks

in we that There now to transformation what's get the the The of above. advantage that in some Mark question all we coming. broadest to right need of because it's perfectly occurring answer front situated way of take believe we're industry a to think we insurance of is is,

really to imagination, predictive analytics data, really heavily it it's rely more AI. is and ability an limited ultimately on our So by only creating

front the advantage. this in it out in building aggressively, differentiator And out market create so in very of we're strong think will in because a very true we getting a competitive

Mark Hughes

direct when could And direct the to of small really be years, there you take few policyholder, a your here going this – I out is a business? direct direct? business to in is are element you assume proportion consumer What

Doug Dirks

prepared who occurring. Evaluating We've opportunities is industry ultimate route. the there today. any that of occurring change several strategy announcement that in competitors make already on channel that be. But are opportunity that part not gone that will long-term have got of a mindful is development our We a very I'm what to rapid our and

Mark Hughes

full development, prior The accident year, favorable it pick where XXXX? on trend, of the number, you . and Is all XX.X right about roughly on a pricing, obviously the the should in XX.X new out for puts we number, the fourth Where to last takes running it year had your quarter the good what's starting is year has analytics pick fourth full the for the very think that. think direction? addition we quarter last been at current When your XXXX, you’re for

Mike Paquette

Paquette. Mike is This

think to the and that, on for into better focus XXXX. that we points I know, came be XXXX and out you where you the than slightly with would starting start probably should year we but year hope it for

Mark Hughes

finally four the you And that the assume to to rate, your points then can ought point tax point of us savings. XXXX? would be equivalent Is relationship and what I tax right your that investment, to be in you out tax rate roughly the

Mike Paquette

Sure, so years the on spending of savings is be the tax two that, initiatives. three new mentioned Doug we would our to next

a rate because quarter that this bit. had a fourth In significantly terms the of little we which higher a and year income, XX% forward, rate quarter of going the underwriting an spiked as effective more fourth was adjusted, little attracted

aggregate, Going tax expect XX% forward enactment, XX% will rate. And about at in were number a forward. XXXX we the that and going rates we probably the running to in with XX% looking effective be that at

Mark Hughes

just then be And to clear.

I Is X% think year year's out X% specifically year. year? you I envision savings year you or a you've more that, and half and following are X% and this I'll it But next case cut that's savings equivalent year be of tax getting net the from you in investment the math. of margin, if next earned actually would tax premium is guess do that then are X% dedicated benefit you laid this the digital spending to than this I the savings. to numbers the –

Mike Paquette

the For than XXXX the savings, in but tax we year catch up year to to spend then a and more expect we'll subsequent half.

Mark Hughes

or in the And up this expense underwriting underwriting is line going show to another?

Mike Paquette

X% and expense other X% the line. mentioned The absolutely underwriting in and operating

Mark Hughes

very much. Thank you

Operator

comes Carletti line And of GMP. Thank our Matt next from you. question the with

open. ahead. line Please go Your is

Matt Carletti

covered good good of morning. Thanks, job, questions. a pretty most Mark did my

that one average year? Just how across end is and impact, year. should the points? back X will on QX the see be to that in follow to expense underway consistent out ratio investment ramp and already come will initiatives front we these points the that something Are digital fairly it up and and four the across Or impact on about

Mike Paquette

as we're average But I think I the up us it time as ramping year. Certainly it some think that latter, will will up I it's out. average think take will ramp the quickly and to an for possible. that be

Matt Carletti

on Okay, great. nice a congrats Thanks very and much. quarter year. And

Doug Dirks

Thanks, Matt.

Operator

And Amit you. line question comes our Thank next the from of Kumar with Research. Buckingham

Please open. ahead. is line go Your

Amit Kumar

and follow good questions. Thanks morning. quick up Two

back on goes be questions discussion the is this to first change. of you on The hiring in-house externally. or all sort this going digital to Maybe something the - this- Is happen? some product, are more on cetera give bit et it people or is exactly maybe just a talk off about just hiring you the shelf some more more color will what

Doug Dirks

Amit. So above again there the of all it’s probably

adding internally. are We people

deployment, we analysis, advantage. technology data to management, foundational as in We the and development that of are the believe as of company competitive creating well are things capabilities beefing all both up in some the terms analytical

We believe partnering developing that a instances would things are where capabilities. the with firing off we parties advantage. we custom and us give There competitive are shelf unique third those are other

Otherwise So it's and at really to retain build where advantage intend internally party internally, for all that. we ourselves. mix of We we'll to the of will all third a identify but it want don't we build solutions. partner

Amit Kumar

it. Got

about should I alter was bit opening is that it remarks that topline or states expansion. on going a you had can I to was, maybe the that? materially question talk And the other how about for think just and The discussion think additional a there in more

Steve Festa

question. is this answer Steve Amit, I'll that

aggressive XXXX that than the plan in for the We some states aggressive can. carrier. a want of very going we're into I'm not being a entry other currently of national terms benefit as and to have the compensation we to we articulate not We of specifics as workers truly see be

get prior that on can't said that there until opportunities we on. are capitalize calls, we've As we point

topline those states. implications go are to our us to there for into So

represent However, the of more workers in states market. that we're compensation today the XX% than

impact, there be or substantial So significant but will we impact. shouldn't expect

Amit Kumar

And comments, expansion it. that to on being buyback just it put reload buyback notional actually your the reloaded. a Got was based I guess strategy guess think more is use question seems is I had was the than But I final I the being correct? based that on

Steve Festa

Yes Amit, correct. that's

you So repurchase manage to there are know, into money going in generate put we understand And we also to forward, shares superior the that capital. our we the to business prefer shed. but that to the have would tool to like opportunities just ROEs

Our believe today. existing program I expires

much to we'll of renew depend But were it a on that. happy use variety how things. So we will

more company to that the liquidity. importance holding of key our would One be

Amit Kumar

it. Got for Thanks the answers. That's have. all I

Operator

Instructions] with the a Thank you. up of line Mark from Hughes question We [Operator SunTrust. do have follow

go Your ahead. line is open. Please

Mark Hughes

lower losses your claims closing, investment You had declining predictive the talked about frequency, of the and attributable and to analytics. your good execution

I referenced here had think effect thoughts bit have is here the a lower carryover of positive to recently And pick talk next in a if Could maybe you for fourth your that out part that's about of - year? in sort recently - going come little effect about that? quarter. early a last that XXXX, you

Steve Festa

is that Yeah. I'll take Mark this question. Steve.

did but But of go into launch in that we for promise reasons. we to in recognized in that benefit the some XXXX, seeing in I'm real believe initiative we XXXX for a haven't that analytics We really has it is beyond. going terms us the new not claim correct. what of You're area. start and specifics expect predictive to obvious

beyond. and for will that's impact in that the that terms in optimism of So ‘XX have cause initiative particular

Mark Hughes

you. Thank

Operator

like the any over Dirks remarks. And to Doug for closing showing And no turn to conference I'd back I'm Mr. you. Thank question. further

Doug Dirks

your question. certainly close day. today. much the your discussing for I and and at have everyone a Thank Okay. very in forward great we're to start Thank you end believe you appreciate you much. A very year. We results first to all quarter very Thank a We participation good to the us joining of you look April. XXXX. strong off with

Operator

gentlemen, thank may does Everyone for great you today's you Ladies and program has participating This and in all disconnect. day. a conference. the conclude

Employers (EIG) 22 Feb 182017 Q4 Earnings call transcript