EIG - Earnings call transcript Q3 2018 | Employers Holdings, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Q3 2018 Employers Holdings, Inc. Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Ms. and Deputy SVP, Brown, General Counsel. Lori

begin. may You

Lori Brown

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

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

will turn over call I Doug. the to Now

Douglas Dirks

$XX.X the on and of joining $XX first today. Thank posted outstanding and a you the our for quarter million. third Good third million performance have of we quarter net XXXX. us the you, morning, income adjusted of Yesterday, everyone, income income strong for thank of and reported million, had net of before X LPT months call Lori. We net $XX.X impact

up underwriting third increased year income a XX% was to adjusted income net and our from $XX.X ago, XX% Our million. quarter

renewal falling top Our saw ratio impact of growth, rate income before XX.X% and our to renewal by a the LPT our ago, of XX.X%. versus the percentage on loss a but principally improved stemming that new with combined quarter by an solid premium points was of average decline the rates continues the costs. of from line continuing We business X.X% In quarter, up year average we investment third net declining business experienced an decrease X%. be challenged X.X of third during renewal

renewal declined For the same our ago, period average X.X%. by X rate year

the of Our XX, was call turn per an for deferred from XX.X% Mike further our or over was including $XX.XX, that, adjusted And book including third results. our XXXX, I'll quarter annualized. value the share, increase on X.X% a equity XXXX, the Mike? return gain financial for dividends. With June at to X.X% discussion September XX, of

Michael Paquette

in Doug. third from which the for increased a you, written his Thank year will each and premiums quarter Steve Net ago, address earned remarks.

data points the was quarter of The loss favorable years XXXX period result geographic percentage of lower development LPT ratio of through analytics. key relating including improvement initiatives, third Six to claim resulted was $XX million points XXXX. use a development, reserve of primarily settlements, business LAE of and the XX.X% largely our Our accident accelerated of and prior diversification the ago. loss favorable impact the that year before the from than percentage X

XXXX agency then commission than ratio higher Our produced higher channels XX.X% in the projected the of of by in period. our in ratio percentage a current commissions distribution ago. expense incentives resulted higher third slightly alternative and was the commission Increases quarter business year

Our a year third of third The development X% and quarter of the ago. of digital income was million, increase new for $XX.X Net XX% percentage year ago. primarily aggressive result than and underwriting higher other our ratio a was was points investment capabilities. and from X.X operating implementation quarter technologies the expense up

Our quarter the X.X% year pretax book during yield on ago. X.X% the a portfolio versus was

ago. the current tax the result the tax rate of higher quarter. third fully rate a income for effective was Jobs XX% the The effective Act, was year partially of XXXX experienced income in versus quarter XX% by Cuts offset Our proportion taxable and a largely the reduction Tax during

fixed unrealized of over unrealized in rates, our call turn investment credit capital have to year-to-date quality fixed that to fixed $XX average we hold investment impact in losses remain portfolio. little Steve. maturity. and total resulted that have do investment X.X and X% equity how And impact of after-tax on our we of interest the investment and the XX, an income, high, very increases which will in million. income our income of Note portfolio regulatory had our continue investment statutory investments have not XXXX, losses date Further, maturities I'll of duration the requirements. quality gain and investment represented we our have surplus to the September very to benefit our had As investments incurred since and manage Recent net typically of losses fluctuations securities A-, a these unrealized or now

Stephen Festa

of of Mike, as Net business bound in driver growth, business primary from alternative million and was morning. comparable The over both quarter new increase third of you, good growth our revenue result year-over-year premiums XX.X% new The achieved and XXXX. as XXXX. period core in business rate was the of quotes increases this distribution policies. Double-digit million well up was $X.X a of submissions, $XX.X increased channels. X.X% new of for written were which the the quarter Thank $XXX.X or million

versus we comparable the so the in. the This in middle loss our do effect in business costs. trends level XXXX, driven earlier. by comparable approved competition space growth exhibited continue the costs year in those see period the to third quarter, operate see of in The competition declining rate for heightened With as the to quarter. policy year to of exhibited the acceleration XX% difficult retention the rates declining improvement states retention rate in market. decrease on second continued of new driven for rates. up unit we a trend. in states result an to renewal in the It quarter policies the quarter we filings rate quarter by is strong overall XX.X% the we retention with third over this prior This quarter evident by we respect XXXX states This continue estimate Almost was period of offset over XXXX unit had XX.X% both in as again, a reflected the basis, high business loss have over the business in small that future double-digit virtually once as well renewals do all business decreases, in. year-to-date On third are is is

additional in as declining expect rate states. fact do our existing that to evidenced the process, to as or We many see economy increasing pickup and strong during this of continue of proposed policyholders strong hire number well a the and XXXX from We the filings continue of reflection audit by staff in to hours our existing rate final continue the worked staff. as payroll trend approved XXXX pay

of these slowing near any down have to trends seen We not the in don't expect and future.

to a objective We in national develop continue to progress platform. our make

During plan our remaining Island. write will months, not states entered the on of well entering the of the which initiative. we We three next the that the XX of are We state as quarter, states few Rhode footprint states business Columbia. District the national monopolistic complete as over now course in

with previously to as continue investments analytics data technology and discussed forward in as well We capabilities. our move

customer scalability. through see I And to the include several well loss to We mitigation back turn investments now as as analytics in improved will of areas to expect on return experience, and efficiency Doug. the improved these predictive call costs

Douglas Dirks

Thanks, Steve.

overall with in progress we of accident the results quarter to As XXXX, line our be year into expectation. fourth continue

strong, continues compounded by declining of on pressures. of business renewal premium competitive Offsetting the stronger-than-expected rates higher-than-expected growth. some be growth and to renewal New impact remains business average new headwind premium steady the payrolls declining although rates are

With and We sustainable many continue implementation lead operating good multiyear progress develop results of Though implement capabilities, underwriting in make analytic variety a to our and as to that, as agent plans they over prepared and out efficiencies. and strategic sooner. allow for initiatives and we claims That nature, capabilities financial operational and we'll improving customer are us these us of to aggressively which technology are centered to the on concludes our turn new comments. questions. experience developed, call consequently benefits operator, allowing roll realize

Operator

Instructions]. [Operator

Hughes here Mark comes Our from with first question SunTrust.

Mark Hughes

what was distinction XX.X%, between those X.X%? and, that making I The the What there numbers? are two think, you're

Stephen Festa

the The third versus the The the renewed the year. we rate quarter is this impact XX.X% quarter policies revenue in that. that rate last policies on the is of the Mark, reduction, -- rate renewal revenue at reduction those of reference

Michael Paquette

revenue minus the renewal X.X%... on impact was -- the was So

Mark Hughes

Okay. The exposure the difference. being

Michael Paquette

That's right.

Mark Hughes

the Okay. premiums XX% Mike, of quarter, other the expenses in underwriting, earned.

less seasonality? this of XX%, kind just kind historically quarter, lower Or seasonal You've a know been of of a running there investments the has is With spending a quarter? had load. was I that little XQ XX%. expense this was

Michael Paquette

the latter. It's

has type that rules, and $XX slightly that of time. on is where announced than now, extended That with we right with a emerging kind very we X are, low where expense is accounting the be had points, period would spend about manner all based which we the we the million, over So we're anticipated in but an is we're pleased and of would that. comfortable expense different do of and we -- been deploying

we'll you X owe that the in But just of that So X little now is almost which comfortable emerging developing the get you a so want right was a year that of I do ago. we available. expense soon to It's had can it's just differently your our XXXX we're you envisioned, the assure bit and we're out models than very as recast that And you as process points. to plan, tweak that and with we spend. a

Mark Hughes

about what's got? uptick submissions driving the and do et much How can you momentum -- how kind lap talk these the Understood. When premium, in Steve, much -- coming maybe much the the see how is quarters? might cetera? in you've in much in are of How this pipeline? follow-through business And -- driving you we it? quotes, new growth that more initiatives

Stephen Festa

that -- will in much to them. some difficult reflected that. would And this it's my I increase the because new behind quarters initiatives of growth that at over be say, you're But still in project least couple business response, Mark, beyond I to momentum quarter to market, next competition quarter, in continues have are probably the seeing So too the stronger. further quarter in of competition continue nice in very of -- business starting them. term, the in see new states, this from The would being one prior strong California see growth. And to even short accelerated from the the to to to we're expect get this we're certain even some

business that's going will full driving quarters. which been headwinds from quarters the this initiatives we momentum or have leveraged haven't we've to point. new X think So of some are over one stronger of of that the X at be we're the those the the than seen prior next still But they growth I couple see,

Mark Hughes

question. development from? that? come did you What Did years? the you -- give final What could Then favorable years accident

Michael Paquette

from XXXX. Mark, it's XXXX predominantly to

Operator

over further queue. for time, back Douglas in At questions there's this like call no remarks. Dirks I'd to another turn one. showing to Pardon I'm me, the

have Philadelphia from Cliff We Financial. a question Gallant with here

Cliff Gallant

-- partner see any -- of Just update benefit that? any a it that? is Is from questions. couple is small acquisition, The on that there

Michael Paquette

yet, receive as of approval, regulatory but hope still Not that and to soon. we're awaiting we

Cliff Gallant

about terms quarters. you a -- benefits I well, the X -- technology of Are And or too was the but know it initiatives, seeing maybe Or to say? ask to is any year Okay. the early X or probably too ago then I yet? maybe of now early think, as sort in benefit started this is

Stephen Festa

And Cliff, out We this are, things information some to of we're opportunity specific a on the more little call that working still relatively early. take on. but I'll maybe maybe it's

the launched of life greater a is our of help digital initiative started as That's to in of add better customers automate heavily and eliminating we're points the We've decisions for year full recent one it'll on several some of initiative risk customer we impact then in allow most So many investing for terms points aggressive to internal the few the early and where the result is that. our have It'll that technology the before already of. us the claims in to make investments policy organization. for also aspects and benefit, months this using eliminate a stages into unnecessary that. for an and we also customers improving touch we be pricing area. value analytics start new launched more was a of more focused or stakeholders. we're efficiency website management but the and touch take customers focused one our example, next that seeing within on predictive in seeing We're The that and that Much during that cycle of an example of today. don't experience scalability

So to as a very future. on both we're the we impact those that working specifics line are as results our have some in line top on that are clear going bottom think well

Douglas Dirks

And in I'm jump just going there a of be. to magnitude little of some will of what example initiatives give these the and quick

XXX% process being going efficiency in some X% We've were improved experience the through be And touched. that that we're where being We really is the this and transactions of to power the in to initiatives. have initiative. touched the reduced of achieving of these that terms one

large magnitude very a it's So gain.

Cliff Gallant

slowdown. perhaps just have curious you there market your any any signs worries worries, of what sort I'm line, Is While that starting we're of of sort here? economic the among sign you're to I from seeing general economic been it's that of customers. on see

Stephen Festa

We're all. audit at not pickup. strong Cliff, still very seeing

not so The that didn't we're evidence and at third any of see any quarter, of we trend, relaxation seeing all. that

Operator

And Scattergood. question Boenning with from our next comes Bob and Farnam

Robert Farnam

renewal on actual loss to going declines year how just trying cost of loss engage trends rate I'm have the that tracking just So have filed ratio the one the I question are accident by states? the they XX%, been forward. whether with

Stephen Festa

improving state, with So we're WCIRB our comfortable about it's states obviously, loss way we to environments we're with justified that the do mean, reduction, feel respect to We've in. largest the that I on the The business is past. continues We same talked Bob. in XX.X% that in the see based it that seeing California. California.

achieve focused business, and away we would this not said we're where on profitable can hesitate we've retaining established. we'll business the I what that our is, previously, walk very from profit However, say but goals to we

So we will we walk have to the and expectations. continue profit our like doesn't feel away where match from price business

Robert Farnam

mean, What do you tell you expectations -- us what your profitability? I for can are

Stephen Festa

I can't. cannot. I

Operator

we Mark Hughes from follow-up SunTrust. here with a And have

Mark Hughes

-- ask the Yes, guess repurchases would stock maybe I very -- share repurchases. is on strong obviously view again your I ask just The I'll on profitability. I you just point. this or thought at share

Michael Paquette

regard, initiatives but competing stated, line. we has We've be over uses option as available be Mark. growing very us. ongoing cash basis, Examples have one, a the we've and that and -- our we've some we our in daily recent competing We've of time. acquisitions. attractive of simply again, we optimistic take the as had But that cash got than for a periods. years. last also for repurchases a that are consider attractive, I'll would in our will We for top it uses funding recent. view had as we're dividend more We just But it pending we holding very few had doubled all share digital our on view

Operator

call am I further to queue. Douglas I'd Dirks back currently to for showing in the over questions like remarks. And no turn

Douglas Dirks

We again to call and you, look your the February for Thank you, operator. year-end joining results day. interest report we appreciate for We great you Very support. everyone, with a Thank today. you, Thank forward and speaking your participation have and us good. on as XXXX. next

Operator

your gentlemen, concludes today's and for you Ladies This in thank program. participation conference. the

day. great have may disconnect. Everyone, You a now

Employers (EIG) 25 Oct 182018 Q3 Earnings call transcript