EIG - Earnings call transcript Q4 2018 | Employers Holdings, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Q4 2018 Employers Holdings, Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following management’s prepared remarks, we will have a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's conference will be recorded for replay purposes. It is now my pleasure to turn the conference over to your host, Doug Dirks, Chief Executive Officer. ahead. go Please

Doug Dirks

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

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

the writings we grew premiums by year maintained written new industry-wide business XX% X% by XXXX, accident year, and despite grew ratio. current During over loss pricing headwinds, our

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

Despite full growth XX% Our opportunities adjusted as net or Throughout ratio that generated income $X.XX and by pursuing before met percentage points. underwriting year we the increased improved income by combined share actively the of XX% our the increased impact of year new our business our XX.X%, four on solid LPT per continues underwriting XX.X% We experienced the business new quarter during of average fourth business, and by pricing decline requirements. an our renewal XX.X%. strong renewal declining challenged be decrease rates falling from loss line principally an the renewal growth with premium stemming rate in of cost. average to top

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

on for equity and return per year including XXXX dividends rate value XX, for $XX.XX, deferred December XX.X%. at the year an gain book Our including -- of adjusted increase X.X% of our the share the was was adjusted

believe conditions. changing workers' to react quickly deep knowledge markets compensation that us we to our a mono-line As of writer rapidly we allowing possess

cycles. demonstrated and have over across this economic years ability We many the market

call provide our company. a of discussion for turn believe industry technological we With advantage a the that, with significant forward, I'll existing results. over Mike? planned our coupled innovations Mike Looking to that and our competitive in-depth knowledge, financial for further

Mike Paquette

Thank you, Doug.

of of impact and ratio before fourth LAE was LPT a year consistent the Our with highly of XX.X% quarter that the ago. loss

years relating XXXX period prior primarily accident current million During $XX.X recognized loss to we the development quarter XXXX. favorable through of reserve

lower than year, of LPT X.X the our impact of percentage year and XX.X% the was before the loss points For ago. ratio LAE a

XX.X% of in X.X current ratio Decreases period. quarter than was commission the the in the drove points fourth reduction in year commission lower agency ratio percentage expense ago. incentives a Our

ratio commission highly that our was year, the of consistent XX.X% For with of XXXX.

percentage Our The expense primarily underwriting points result than increase higher X.X fourth capabilities. technologies of and development and ratio of implementation was a quarter new XX% year ago. was the other and our operating aggressive digital of

For a to of quarter Net year, our the will of the higher fourth income XX% further ratio Doug was underwriting X.X remarks. was points million, which expense up percentage investment year XX.X% his that ago. for XXXX, from speak than $XX.X in

$XX.X a on X.X% year from was portfolio X.X% yield investment quarter the the ago. the a million, was during book pretax year versus X% ago. Our up for year Net income

being to these recognized X% we unrealized how a tax hold in income and for total the represented was XX% fixed quarter portfolio. portfolios, the Cuts Jobs Recent interest and fourth rate were effective of a securities an XXXX on million fourth do of throughout after-tax impact average investment maturities XXXX. resulted our At income the and our manage rates, rates Act, eliminating credit the we Note of losses net When unrealized maturities XX% and in XXXX fixed increases our income maturity. of year-end, typically losses tax and for duration respectively. benefited had year not have quarter transitional $XX X.X of equity and which since the have AA- our investment investments investment fixed that income effective XXXX the Tax XX% Our gains ago. of our XX% versus effects quality investment fluctuations in

million a average at $X.X we of stock common XXXX further of our $XX.XX. quarter, price repurchased and in an common $XX.XX price the of average $X.X at have thus far share per an our of During million stock we repurchased

the at currently to And call stands over $XX Our repurchase now Steve. authority share I'll million. remaining turn

Steve Festa

market written year-over-year, for XX% Despite we our is a Net and virtually a revenue up those million business. of market growth as all new were well environment environment grew you, we this This as environment, rate year occurred of which increase. Thank million in XXXX. competitive a that business good states do premiums declining Mike million in in written morning. $XXX the the extremely from $XX $XX despite

from of continue over bound states basis in-force growth policies comparable we X%. well in have as the entered, channels have For had submissions, XXXX. partnerships. partnerships XXXX but presence. during by was A came growth a policies also states retention both new core profitable. been see as and our classes had in grew distribution we business business we year-over-year in came the our every business in respect have month from as the our amount historically most new increased a targeted not our We XXXX, our recent growth quotes new month channels. we policy distribution from of On in This increases This long-term throughout strong which long-term significant unit both in more equally to high business we well as year. With rate alternative to our renewals that only

retention XXXX results. improved rate fact In over our

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

mentioned we middle in the any As particular we from retraction aggressive throughout renewals. market have year, with in the have market observed the pricing not

economics we to optimistic report, by within XXXX. within every with our diversification to capitalize on we increasing Wage see Doug. growth the strategy, expect the to quarter during strong briefing write. has counter state in four monopolistic XXXX projected past growth We wage evidenced to I in of do NCCI geographic XXXX multi-state us turn entered states. to fourth for Delaware any be opportunities to operate fourth not back average book allows as of business payrolls. will of call in new our this We quarter XXXX the now able growth were continue state And up the In their not and forecast. continues seventh This this we Consistent X.X% weekly with be evidence the and X.X% exception footprint in now U.S. that entered the to XXXX. the the we state continental into

Doug Dirks

Thank you, Steve.

further process During ongoing we enhance technologies a and efficiency include development these now direct-to-customer extended digital Cerity compensation our launched technology, and capabilities plan in agent aggressive believe investments to a and which improvement Last digital data will workers' Cerity month focused we that and our year enhancing to businesses we defined XXXX capabilities from transform initiated of offers on fundamentally other of in initiatives implementation experience and introducing its new and analytics and We insurance customers. the solutions. agent improving Arizona this experience insurance the of separate subsidiary of continued Illinois and reach January in new Utah.

served platform both needs plans regulatory necessary to we Cerity other appetite Cerity ratio including implementation two Cerity of and underwriting of expand and small will percentage associated businesses launch out XXXX the the throughout nationwide. XXXX. to to underwriting these approximately build its are meet its increase The geographical with operating costs the Our of initiatives key and our for expense Subject approvals, insurance by points. development direct-to-customer to reach

assuming earned and these XXXX higher points result level we that a ratio in our that initiatives. operating For of XXXX as consistent underwriting XXXX, four other percentage to that be premium a will than expect approximately of expense experienced of

level and with operational in questions. gradually expense a we'll However, premium ratio call And periods, to generate operating to writings normalized return the the future over will efficiency underwriting as operator, our we that and expect turn we that other in gains.

Operator

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

Your line open. is

Mark Hughes

morning. good you, Thank

Doug Dirks

morning. Good

Mark Hughes

of the points just to -- a be extra the from of points that last be it'd The years top four came points couple XXXX two we cumulatively? higher initiatives on clear these that's in go back that year six

Mike Paquette

our today. from points That's where right. XXXX six points but be It'd for estimate That's Mark best four were we XXXX. from

Mark Hughes

you multiple might six previously been spread then had think have formulation I over a points And used a years. it

at -- that structure that. a Or some increase? do to expect represent something of it's clearly than would return you that this the I think Would cost permanent level? point higher prior this

Mike Paquette

achieve difficult believe upon to this because project XXXX premium writings we very to don't it's initiatives. dependent two for largely at but it's time We us be from going the these that it's beyond permanent,

Doug Dirks

add evolving we I'll on past are reference heard launching well can moving now. Mark critical we the you've agent us initiatives we the to deploy speed both very and rapidly is the business This as that quickly is right But of so as think to Cerity. in our as as that that side market

speed these where that you about to so the expect with are part we actually big which a are we of is initiatives. we versus think deploying it where And when be

Now, we launch expense of we We they XXXX. expense but back to is absolutely where is deployed objective returning the efficiencies. actually what hits it were ratio that here to competitive. statement consider reduce success. difficult drive is much greater to lower will fully the a a objective ratio Ultimately historical us more great we're expect wouldn't just the The project, fully to below drive these in making as Exactly income ratio was longer our the when expense it term initiatives. prior thereby it to be to

Mark Hughes

Is Illinois? you about And early business strategy? with experience how sort can go-to-market, the What's in it do you your -- reach a those talk owners? of small the

Doug Dirks

variety Well, marketing It of is entirely a that there's we're digital. techniques utilizing.

those it likely of you strategy, buyer think workers' interest marketing a compensation. or is be a an being digital about directed if expressed So, direct are to who typical either at in people

of Now, number and small we've initially in rolled Illinois. was initially it again, it out a in classes

build now again Arizona campaign. offer. my in And can that a number expectation the in we'll But comments, as out I we Utah marketing classes increase nationwide it'll this digital of that business are be and of will We indicated well. as and be the

We are building knowledge.

a are We database. building

refining constantly that that the in can to buy be indirect. most of believe amenable marketing be really will likely we a that is So, that direct we part market spend to it we way

Mark Hughes

get -- rate. loss and about think more when you've had then I'll one lot XXXX, you ask obviously pick the movement back on line. a in But I'll of for the

trends? You've through loss this should price the when loss up pick? maintained will How the your in think consider that that. about How show you XXXX loss picks year we trends,

Mike Paquette

have the couple I that of result margin Let deployed. that of The maturing that frequency this impact are rates anywhere me that principally so impacts but would the declining likely ratio, and an lot also think of a are that the coming address expense now, impact cost will rate in loss side virtually pressure negative in declining loss to from there's One we a have on there's the positive say that a perspectives. claim the we a initiatives After the of so a a couple and ratio. fact on loss a we've ratio environment. Offsetting on that that's algorithm would in declining is experience the on number pricing, environment underwriting initiatives defining the country. when of of competitive

to the we to hope initiatives give we're not a that so be. I on to on guidance to what a offset you experiencing competitive marketplace. parts deploy we have are but moving There loss terms I'm here, give of of ratio, And impact ratio the to continue you plenty XXXX loss net-net, that can't what expect extent number, able in a a to we're our favorable going

Mark Hughes

Thank you.

Operator

[Operator Boenning Scattergood. comes & Instructions] Bob Our question Farnam next of from

line Your is open. now

Bob Farnam

Hi there and morning. good

new agents much going from with you platform, independent gotten Cerity have the So direct? pushback your

Steve Festa

Bob, this out independent your agents for that to is in the own have buyers not. we've I'll understanding about channel. of the is, Because be today since this workers' reasons time the we lot answer question is personal question. speaking answer them to an in are a Steve, there to bypass agent that bottom spent future going announcement compensation and There's our their the and front line that of of there

of And so them if we we've them. to to launch independent generate the business very resonated the and to us get to to we've the channel fact bit two the in agents that a with transparent that were do the specifically money soon And and agent three opportunity, fact that to agents, talk said quite as some very of investing of Cerity opportunity as been going years that. with the about course not we're the an there's well next over as they're as for that has the able a result

Doug Dirks

purposes. don't data They for businesses. marketing share separate are These

be ever to competing expect buyers. will won't each them channels to against that from they're -- moves the different but because they say will other we one be customers to that be not a these represent customer going there after that don't actively we different other, expect We think channel

Bob Farnam

Cerity, on average what really it The the mostly looking to like be of on how small you're going you I type kind that accounts business. in book? of size many are of the focusing mean like sounds employees in

Doug Dirks

It's agents the likely clearly small to would agents we're to to normal small It's we they accounts. accounts. are see business not but seek define, say that think enable difficult we a these the are write to businesses writer, obviously are these These small micro that accounts in can, their but channel. not all

not micro so in offices not drawn much to the and by you small professional class. be If at the there's accounts. look because initial But services companies. are They're variation premium large launch, these of We've terms country professional across line again of terms going accounts. are they're a in what rates

Bob Farnam

Right.

have initial relative of And Okay. details XXXX just if of recent you're know loss have of you a gears you. what developed front reserve But one bit, XXXX? ratios of and year XXXX, like for on the XXXX to booking kind don't kind in the in to accident kind where your I switching development, estimate

Mike Paquette

have information don't We Bob. of that front in us

Bob Farnam

Okay.

Mike Paquette

to each XXXX year. the quarters What four we from movements those years can in took And see of development is last of to the favorable strong we're XXXX. you in see, particularly continuing as

So target, a a like but of it's moving see been certainly we thus we far. what bit

Bob Farnam

Right.

Okay, thanks.

Operator

questions. time call Thank Doug no showing you. any closing And to this for turn I would back over the at I'm to comments. like further

Doug Dirks

for your Perfect. thank XXXX release your again participation Thank in of We'll quarter months results. everybody. a first questions. you you together for back we the joining as We us couple and be

Operator

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

Employers (EIG) 21 Feb 192018 Q4 Earnings call transcript