EIG - Earnings call transcript Q2 2021 | Employers Holdings, Inc.

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Operator

Good day ladies and gentlemen, and welcome to the Second Quarter 2021 Employers Holdings, Inc. Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. Lori Brown, General Counsel.

Lori Brown

Katrina. you, Thank welcome Call and the Quarter Second Good Employers. everyone, Earnings for XXXX morning to Today's recorded will is our the call being website, section the call. where of Investors a replay be following and available webcast from today our Executive Antonello, Chief Officer. Officer; be our Chief Paquette, on the Mike Presenting will Financial Kathy call and facts forward-looking statements. made conference that call considered Statements are not are during this based on historical XXXX. Litigation safe are harbor on provision Reform made Act Private the statements of These the Securities in of reliance

time and company's the website. and an these our to following any metrics. presentation in filings, of that company's should our financial use the non-GAAP to included release, as we questions, the in nonpublic call be materially the complying actual portion included only the and expressed statements on calls in are call responses our section its and filings developments. company reasonable, Investors non-GAAP the believe material Exchange section current available Securities press to and with forward-looking materials we addition updated obligation cause conference Such Although as the our our results attachment Reconciliations SEC's public also with earnings at in in website. disclosing our information be including could risks investors the not expectations and website the release our of our Commission. results of metrics may financial The are other regulation remarks our supplement, our will risks Accordingly, earnings forth expectations, Investors uses in company's subsequent investor and press different FD. GAAP of in reflect All are uncertainties under press SEC the during set remarks disclosures be for the disclosure means website to to will monitor from releases, In a of to webcasts. made or

Now will turn I to over Kathy. the call

Kathy Antonello

Lori by will restrictions our now encouraged we and by our to the compensation for lifted, market. year-over-year thanks workers pandemic. increases we're well, XXXX challenges the are new the joining rebound and On With second quotes And observations everyone XXXX. our faced businesses I us results holders during reopened outline of you for continues today. policy perform Mike given and to throughout discuss current experienced quarter quarter of largely the in the Thank financial business submissions, and and of binds. the today's call experiencing Employers second

written the business new that we year-over-year, were gross Our ever, another force. we opportunities further More in line. than to bring remain will X% our second up and yet top so growth closed rising payrolls record confident premiums of quarter period number with policies and

is premium business slightly, pandemic for new driven of half year-over-year, Our and by February. shutdowns related XXXX down first the in January

at quarter premium retention relative renewal strong XX% improve. was business participation XX% year-to-date. XXXX, rate unemployment to force second our rate as both The However, new remains book labor to the continued policy our and on rate up very over

quarter. policy modest of half Although the to and this premium Overall and lower for rate XXXX offset by strength X% was for first down was average degree the some XX% decreases. year-over-year renewal our second sizes

XX.X% voluntary We XX.X% year-end. and down continue loss year to see current LAE from lost maintained and declines XX.X%, and a accident business in our ago at year frequency time on claims for have ratio at

late quarter and that $X occurred of reserve favorable million tempered experienced catastrophic we adverse our loss years accident million by claims with second were loss XXXX. results two reserve development prior While on of in $XX development associated XXXX non-COVID

employee our Mike of remarks. then that, further results will expenses and a decrease provide of by and I discussion and now in-line variable are result directly was our departures a XXXX down With expense closing XX% expectation. of provide decreased Our fluctuate financial XX% The Mike? my primarily premium. targeted that quarter from earned with will first with year-over-year, our of lower expenses the those second quarter return to savings, expenses in

Mike Paquette

Kathy. you, Thank

During the annualized and investment XX.X% the we as adjusted second earned two of year X.X% operating our loss of quarter, operating return delivered Employers. prior within on largely the ratio These result unusual modest well as income, combined lower a net large and equity adjustments. largest were segment premium results

premiums net of decrease our year-over-year. quarter, a the million, XX% $XXX earned For were

While pandemic shopping holders for half X%, policy which were businesses down coverage. X% workers writings demonstrates endured second up our written that first small the the compensation and for have were our premiums our quarter actively premium are

We assessments targeted Our a for $XX Commission From X%. expense fixed ago. losses reductions and The decreases increase compensation of expense and segment in resulted decrease versus savings expenses, such due fees and expenses $XX year debt prior $XX and reporting loss in XX%. premium. a the we losses and of in year-over-year. income was variable XX% and and ago Underwriting million decreases expenses respectively. loss its professional of million, administrative a $X such mentioned. taxes, adjustment on our resulted million underwriting were in favorable had catastrophic premium were from loss a of voluntary decrease expenses due our $XX during period million and million the earned recognized increase XX% million, departures, perspective, and the was The earned that net were million, ratios as expenses, a versus non-COVID previously XX.X% segment Decreases current year an quarter primarily two year of to combined primarily lower Employer as bad our from business were claims reserve general $X premiums. to $XX and adjustment decrease development expenses employee

premium over several enthusiastic quarter, which had Our an from past We underwriting Cerity’s writings, underwriting the segment consistently loss of a for about $X over increased just million million ago. Cerity months. $X an year loss have of down were the

investments. to Turning

million fixed At to maturities impacting end, other duration rates credit the quarter that portfolio. and of and The quality net the bond represented with total of securities year-over-year. $XX an consistent average income quarter, interest for was Our first down of lower X.X but was primarily X% year-over-year decrease yields. investment and XX% A+ investment our a investments of our quarter equity have the due

the stockholders' reflected quarter Our unrealized $XX $XX of net and favorably were million Board and back impacted income from million million of gains our on net gains I'll our Kathy. turn repurchased statement by unrealized in sheet. this at authority book securities, of maturity other quarter was $XX equity, a common the share value repurchase share an income on to stock of share. now million. finally, price investments, during on impacted quarter, reflected and per we July per And the fixed our after-tax balance amount new our our by authorized securities after-tax $XX.XX are XX, call And this And equity our which average of favorably each which from $XX

Kathy Antonello

Mike. Thanks

capabilities support for Our businesses XXXX. targeted compensation segment, premium, to experience. of And intellectual and the solutions groups continue direct gather our an D. growth initiatives and access to insurance We're encouraged to future to which operating in-force $X compensation seeking online by within now all digital its our insurance workers’ offers momentum success during low first provide Cerity has will believe hazard technological Cerity of A that directly through and million consumers, continues half workers’

and of For managing maintain while the of our to focused economies by emerging be continuing improving labor actively year, remainder improvements the discipline, underwriting capitalizing will on our we on expenses. scale market

key Our balance strong initiatives. and these and very of sheet position highly capital supportive are are

workers' for monoline compensation and continued well will America's small we remain success. take operator, to we trends the can and that we confident businesses, seeing favorable And with appropriately positioned now questions. a specializing As react in rider are we're that, efficiently

Operator

Our [Operator Instructions] is question Truist. from Mark Hughes from first

line is open. Your

Mark Hughes

Kathy Hi, and you Thank Yes. very Mike. much.

Kathy Antonello

Hi, Mark.

Mark Hughes

you reserve them? what happened? in about The general the how the and could just instance you those first the What was misjudged nature quarter, of in claims development talk

Kathy Antonello

instance last the the Can you I just repeat what? part? – Yes. very first of

Mark Hughes

low? was set then reason Yes. you that? reserve being and the for too What And originally how not the

Kathy Antonello

Okay. question. Thanks sure. Yes, for that

way expect and don't diligent take end these as when to the impact that value very and two have in claims in value increasing that, to as what great size, of nature enough that that as the any do to this on with of and in of reserves that possible, happened as unrelated So and to analyze so the near lifetime were are XXXX say claim. a soon size we're – of And very be future nature very periods. soon time infrequent. any related not does lifetime I'll position for to this it any reflect were They this the the our of understand we us with of occur, claims different But claims accidents be. we they COVID. claim do we way as information try can any

Mark Hughes

Were this higher in than you freak might just have hindsight or these was expected, hazard accounts accident? and a

Kathy Antonello

words infrequent. These for see not related, from They were your Not at to of often, have non-COVID to to And very use They these difficult yes, going very claims. freak said, already, we've types worked like I to as but expected. – accidents. would so accidents underwrite they're every these were I all. not were, home mentioned we you're they're expect

Mark Hughes

and up about or And you do how on body see continuing trajectory new then better year-over-year. two-year there? Is definitely from just little you progressing can the just a here? a talk get to basis about language it business How that

Kathy Antonello

better. it's continuing get No, to definitely

by on basis. the countrywide about that's Our in-force claims, during a or quarter policy count X,XXX second and grew X.X%

average to it policies increase. also you that most across saw the saw also seeing increase can that the lot And states, starting I of Florida, size growth in we're across size a We're policy see bands. growth Georgia, Jersey, we California. Illinois, We in New And California. was policy tell

in we much anymore, like so seeing pockets not it's pandemic. So the during were

continued policies seeing are sizes. policy increase we we're and very average some the in encouraged in increases So by

Mark Hughes

some And looking then now versus how earlier frequency, give that frequency was the of just versus roughly year on speaking? you you could us sense last down. still And year in frequencies mentioned

Kathy Antonello

Yes.

the frequency even looked significant premium an and And some both XXXX year decreases. drop anomaly right frequency to to with sort frequency XXXX. and we've it's down see on relative we we it tell basis. payroll look that a at shutdowns occurred. can and last to We're relative – very saw are, I So was And you of continuing

So to it frequency perspective, definitely looking from is at continuing that drop.

Mark Hughes

going just that in followed for on, I want but get to did rate. then I the run expense this And

what you the pricing outside quarter. has of in seeing – savings And Does secondly, anticipate? California you obviously reflect fully California, You then expense the good there? this improvement are just this some

Kathy Antonello

Mike, do back with the question and jump you want I'll then expense to take California. the

Mike Paquette

constant be the expenses, forward the quarter. the going of should the year, with fixed So $XX holder which fluctuate the premium Mark balance of for million component, aspect but level assessments will policy earned bad at variable premium. is we're dividends, for the with again The taxes, that debt of

look $XX variable virtue in of appropriate that earned the the the second a the take and about which you of earned of at decrease had what we virtue at an $X.X six million is rate $X.X variable a run when second, in bit decrease the a expenses, of it that but the the by happened to of change So about quarter, it in was level will premium of of fluctuate was year that was fixed premium? first that from million in decrease expense. by this million quarter So

Kathy Antonello

at Yes. And regard XX% of in remains California California, our to about book.

earnings mention further Xst. Xst. in that And the California rates then call, territories February did effective certain in effective again, made last reduced reductions June we we On I

second XXXX rates that And Right of California. in quarter, second combination the are business about significant by was in the up XX%. the seen submissions happening So increases now of California to and business and the relative binds. the our new restrictions on lower quotes we've in less quarter

So we're there increases seeing significant California. some in

Mark Hughes

Thank you again.

Kathy Antonello

you. Thank

Operator

Bob next Boenning [Operator is from Scattergood. with Instructions] and Our question Farnam

line Your is open.

Bob Farnam

Yes. Hi there morning. and good

where to you full of of you what what So hiring about percentage hear staffing, were of at run us small an people. have, can give idea lot and small kind trouble a with that business they they're the you the rate? businesses Obviously having anecdotes customers relative –

wise So I'm they've curious percentage just kind of before? the to year gotten year relative to of last what back payroll or kind

Kathy Antonello

Yes.

small are can about the trouble hiring. and that it So you're information see you same having out all we're hearing when you businesses are anecdotal

a to policies is in the short are businesses did. going the so down comes are we definitely impact that our that would audits And that their coming lot to to say a that that are We're that from the hopeful period, relative not fall endorse policy would that but that that the run. will But audit in expect everything would were indicate businesses would them you with businesses just still payrolls originally. that in going getting of to an and seeing returned start improvements we're expect month-over-month it's small that seeing those it to, seeing up are not on of be our small position would open down are average I average When – their stick, premiums on the and audit perspective, as better. small what change to staff we during that for to up. at what which so payrolls this wrote would a hockey better we we're And businesses premiums

Bob Farnam

so you your getting your impact come as have current as economy XX%. around employees going rates ratio – you less loss opens some And you loss see trends you then the have? What do that may experienced that related ratio? on expense on employees loss and forward What impact that exiting Okay. do back to hired, the

Kathy Antonello

into concern been prior that definitely XXXX that in saw of recessions. And mean, our We Yes. we are a and XXXX. coming back it has estimates. I out incorporating

concern new eye And us gives we're it's forth; keeping but hires result that increasing right pause that as seeing of and us not as or so but any gives it's, anything far something as we're frequency now so on. an a

Bob Farnam

couple a Cerity. questions have on I enough. Fair Okay. of

for the long wanted the did at about break expenses to excited $X you're that over XX million about had million of the original talk I With premium. you about $XX Cerity, plan expenses you this top foresee months Cerity, even? line, so last given or for of taking how Now, your to

Mike Paquette

very even can not take we steady the So, you Insurtech we've they've outside has break in difficult it's accurately seeing that We're is months, is of Bob, that. today. we're reaching seek. so hazard through amount of see progress. produce The of new this Cerity We're Because multiple few the that I'm written beginning a staying that of in which not even, years the in lane. in first broken big this concept Insurtech any that the year. premium the I'll to a of and we wrote our six premium aware classes the inception-to-date but operated, in

keep $XXX bit, $XX mind, a not have us that our been business time. would little Insurtech expenses, and engine, out loss showing predict we're So focused staying in to and It's fix that to growth a will stable but again, a time. $XX itself profitable have buy not the ratio more tweak lane the go not on also starving difficult we when for ratio million, have would consistent perfect that did keeps our million and in wouldn't some million, that even, managing for in required very that'll reasonable and the expense break been

we So as as to current to to but we're the a I efficient stay trying see make as we're don't very going have it enthused course. by We're breakeven. possible, estimate what

Bob Farnam

for an expenses the be to So costs of million type now, give terms of the what about that looking premium last how idea expenses settle out we how of how because this lot to kind I'm have months, versus expense maybe expense in? the costs continuing thing relative you how still kind business? that – of So costs in don't but of as – that $XX fixed much startup what right understand over going of is expenses? is just is the much of a should probably going forward I the trying starts for XX base, much of of the variable to whole in small there us figure

Mike Paquette

Sure. that's And a difficult question.

may for not because variable costs, the those less us it's $XX and advertising lot, at a I A We lot a the not that we're we're expenses. at is semi to right can just could are right way, for – years. down for couple more an run much But one about of for our than of diligent call the XXXX, the not that. you into on it's now, year is about probably running solution plug that we're last platform opportunity going variable million for of do and now we have very and by million $XX probably –and entity just kind years. being Cerity million get will a that's to provide couple But expense that. the fixed, from in to for we're this All give. we run of that. in You're that have some But run of not workers' And comp $XX right forward. mean ones will have out true There expense you another expense. say And a is at you what rate easy marketing off on running variable, year. difficult may

Bob Farnam

Okay. Yes.

$XX out to a the because this just drag trying year, is I'm long on obviously it's – So but figure cover trying the in to going still a way how for $X premium – to million, be it’s coming up of to next long million you've up to cost earnings, gotten go. like this the

start get have this to – of plug So idea can making to start at you're the money, pull to I'm of be just an got to tell either it. you point, some shareholders trying going has what terms in – on

on had had have at – pulling you all? it on plug if know thoughts don't either I thoughts the on So you've

Mike Paquette

not thing. consistent was growth stay to we're this see, as what we going we we're overnight now by lane, our and as long enthused. an knew solid, in And Right very encouraged have we we be

Bob Farnam

Mike. Thanks right. All for Okay. that,

Operator

Mark follow-up have from a Instructions] from [Operator Truist. Hughes We

Your line is open.

Mark Hughes

The was quarter, premium on it you. Thank what say can what was it was, Yes. I then a have sounds a like first net that audit question you this quarter? the and return, it in

Kathy Antonello

Yes.

a little bit background. just So of

So was for down million we to negative that backup of in X, premiums the and at audit the $X.X XXXX, to added $X.X it our it second reduced that in earned we accrual brought of during million. first X accruals, we brought so quarter the $X.X and XXXX, then written million, quarter quarter. And

pickup audit weighted that As are quarter was about as that's trend indications I and point still We pickups see to going and pickup negative premium when But they're and strengthens the that towards between economy want to wages is increases do pretty mix in of this earned, earlier, we're I the feel a the mentioned months payrolls audit out XXXX, our to since represents that strongly $X reverse continuing positive see both returns. to a is coming the second too, of be in increased. that employment audit there accrual negative more audit and in then we that accrual. lag audit million. the the going and

Mark Hughes

I and differentiation in the change the I'm accrual, that follow the $X.X you plus sorry, $X million explain didn't between could negative quite And million again?

Kathy Antonello

Yes.

So negative during X. the our quarter to million from we accrual up audit brought $X.X

and was was that a million. positive, negative $X pickup then a So audit our

Mark Hughes

million the was – So that million. what said, net $X.X $X.X negative

Kathy Antonello

right. That's Yes.

Mark Hughes

it accrual, was the underlying QX, and in $X.X million well, then I net we number? look a And what the was Perfect. then that what number those on negative as guess had you if basis at

Kathy Antonello

with can I front you on back that. get of don't but we have me, that in

Mark Hughes

referring another were there? Yes, fine. in to mentioned as with might just plug what that Cerity And about in that's then you you Mike, talking Okay. empathy, you

Mike Paquette

that the can offering I'm All comp carrier Cerity, suite, optionality Employers. another and as business both as solution that a Employers well full exists within Cerity with is saying be and workers'

Mark Hughes

builds the it valuable just it it idea you're take and I about talking platform the of shutting down. there, as

you’d You value to or that came Is – wouldn't if your provide it another that down sell shut that would in that platform and be to that platform way. offer you might point? able it or it

Mike Paquette

within have carrier’s we I'm that not all. for has comp time-to-time offering more to that And opportunities do saying offering. full it another business offering. solution absolutely to Cerity nothing with we another workers' well. has provide at that comp is I'm optionality saying to to as it that That to the the providing Employers down, do What carrier’s with have it's nothing workers’ from for shutting sale, fulsome

Mark Hughes

from And terms your got Yes, not quarter a when may then okay. XQ, number, for written comparable premium looking in how of this little but to of think you X, this you the All share is up premium, mentioned like you'd right. shaping about of premium. you've think fair Thanks slower, growth faster, written kind down headwind about for at you that question, terms Any similar be written you're year-over-year you've clarification. the growth XXXX little see net audit that will premium a XQ? be direction in Do it up? do

Mike Paquette

we've open can't like see but January is that projections the very of now February expecting expectations our Mark. we business, and can't on for hoping right for predict good of We now. what balance since continued encouraging, and trajectory we were been California opportunities we're very below We right see right – type now year. trajectory those the this is We business new much make year now, the a that and

Mark Hughes

Thank you.

Operator

now to Ms. back to like further questions this the I would showing time. Kathy conference am turn at I no CEO. Antonello,

Kathy Antonello

morning. for you, quarter. I weekend, again all you look forward with Thank And the next us joining Enjoy and thank to meeting you Katrina. this

Operator

day. participation and gentlemen, today's concludes for this Ladies you wonderful have your and conference. a Thank

disconnect. all may You

Employers (EIG) 23 Jul 212021 Q2 Earnings call transcript