EIG - Earnings call transcript Q2 2024 | Employers Holdings, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the 2024 Second Quarter Employers Holdings, Inc. Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Lori Brown, General Counsel. ahead. go Please

Lori Brown

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

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

Katherine Antonello

I'll everyone, XXXX Good our you Call. to Today, to I'll our typical with Second to by you, financials. highlights our to Mike Thank some more and of Q&A, where results. to will our follow XXXX Lori. quarter welcome back I'll morning Earnings second providing Quarter details then come And we agenda, additional some on financial commentary. it hand for over begin prior

quarter second Our results were very strong.

net adjusted the years gains strong of net XXXX. share quarterly in drove the both increases highest income new XX and of investment continued first X Our per Higher last net result and $X.XX renewal operations. was for year-over-year the in revenue and our quarter investment premiums, of income -- months

growth premium resulted X% steady lower premium by in written renewal increase partially new audit final offset in business increase and Our XX% in recognition. a business, from a

channels distribution gross major adjustments, quarter, to growth. premium contributing written premiums for XX% with our the audit increased Excluding the all

loss with quarter which year of of is XX%, study medical Our investment XX%, an is From reserving from and for further this quarter reserve other a down fourth positions investment that particularly loss sharply been combined standpoint, potential expenses, from LPT current expense with accident We Mike? lowest both The deeper into to Cerity of the the ratio, meaningful a a accident coupled our unrealized lowest it's million underwriting then of been action, decrease of midyear pleased quarter XX% with performance I'll the LPT and net our provide year and will ratio existing year provide underwriting plan, along $X.X which a net underwriting from quarter prior ratio is since favorable closing year the we XXXX. the ratio us since the in a the business. That of ago in standpoint. I'm provision to well primarily revenue voluntary our in from integration with net led inflation and With our investments. our of prior common was and increase recognition that, development, general decrease development XXXX administrative boost the Mike believe fourth return full excluding combined excluding a and and XX.X% it's was to the financials, our third our strong now result also dive XXX.X%, stocks my to our income gains reserve XXXX. the of was remarks. and which XXXX. led executed a year of

Michael Paquette

Thank you, Kathy.

Our written increase premiums an million, $XXX gross X%. were of

million, increase due partially earned As premiums, an X%. premiums. of and lower renewal offset audit Kathy higher mentioned, new the $XXX Net premiums was primarily increase to final were by

resulted settle $XXX less favorable favorable million expenses of commission tail risk of to with net ago. primarily accelerated Our our of an we've a ago. additional expense generate throughout result expense plan, versus success as salvage, both were XX% an versus expenses in in the are typically to our previously writings, development decrease and uncollected business XXXX initial which and year a year million, $XX related further during new million XX.X% loss the increase commission $XX higher that $XX was year subject ago. in development. We of reserve were on XX% net Underwriting million quarter our to expense year a a adjustment Commission The our ago commission and and from rate. The year ratio Cerity million to losses primarily premiums and increase was year and favorable expense result of $XX quarter mitigate increase years. development mentioned. ratio to versus versus claims ago, integration increase a million a XXXX expenses commission earned second administrative the Kathy and and the administrative The $XX million reversal consistent were of The was second net net million our the relating of versus general reserve primarily prior was premium. ratio prior underwriting a higher was basis, loss general continued $X recognized XX.X% made overall $XX versus of

investment strategy quarter income due investments, the fixed net net former of offset quarter, from late Our $X slight unwinding than our from year-over-year. the a primarily largely investment X% was nearly XXXX. When actually Loan XXXX, increase on was the the Bank up our of that year million that ago. higher maturity interest by in was income in $XX second The yields our former for of a investment million to expense considering Home Federal leveraged we strategy more incurred increase

fixed of currently have duration Our of maturities and A+. a credit X.X average quality an

from yield X.X% ago. up which end, a nicely X.X% book was average quarter is at weighted Our year

are quarter from investment Our sheet. impacted investment net reflected statement reflected fixed which generated both our net favorably $X maturity gains income holdings, and of of and our from balance on after-tax million unfavorably securities by which by impacted $X this are after-tax was generated -- other stockholders million equity losses holdings, net of was unrealized on our income

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

This on per repurchase stands quarterly share. XXXX Kathy. quarter And Our dividend $XX with share on of turn XX And $X.XX to call regular Board XX. million. authority remaining August declared of our record payable that, to August Directors dividend now the of currently at I'll yesterday, a stockholders back third is

Katherine Antonello

Thank you, Mike.

our Mike want will years. see X I that the And the confident our dividends share, book quarterly combination and more the average through share growth to will the And our value our XX personally the and month, gain to XXXX. accretive adjusted XX% questions. increased be to $XX.XX. to $XX.XX these price in repurchases in past last to we retiring in than by ratio at book our increased end his deferred metrics the of continue last over March has share declared months, value the success. XX% preferred metrics that, adjusted announcement acknowledge book was contributions will over book closing, to operator, This per now regular our the and $XX bitter including take in we're quarter, dividends combined be we the share sweet made has we of improvement value returned to that per In per After tremendous at our we further million Both per And organization future. with share. adjusted highly for value stockholders a measuring an considering

Operator

[Operator from Mark Instructions] of Truist. Our first question line of the comes Hughes

Mark Hughes

fee comp in schedules does in whole Medicare California, reimbursement In workers' the or part? follow

Katherine Antonello

fee Medicare, per but are is my not It tied some I yes, -- the dollar Yes. understanding California medical schedules are I it's they to there to dollar, Medicare. adjustments, believe are tied think that

Mark Hughes

the should is as as fee in of just is suppress are we done and inflation to in I is they but to I'm to risk are of there fee risk. under future tied numbers, less government we medical those schedules, that going if the had not think assume circumstances, the if sure medical motivated future And be that so the those limited Yes. past costs of to exactly those but a the inflation as states, many think the schedule other

Katherine Antonello

I putting has and mentioned think that generally those schedules last and in place, schedules Many successful in wildly somewhat speaking back decade to physicians, of anyone they the successful have inpatient more forth. outpatient done been put in that and back you measures I was a I predicted. passed XXXX hospitals, over think so medical tied XXX fee than Bill not think they would and particular, include I schedules in would in of very was are Medicare it more job nice than all -- but industry cost been I containment medical a think move fee the mean have so when into but fee the highly Senate successful. for tandem, those place Well, would California, really

I would under costs just are so to schedules And and these are they speaking, medical working, in helping keep workers' control. say, generally compensation

Mark Hughes

been. it of But of top think the in keeping different commentary top we talked expect positive, When when are about competition. expansion the what we've throw mind about as still you general line drivers? and kind you can positive they've in outlook, and to Any your all not line about comes appetite audit as the kind premiums growth,

Katherine Antonello

down. pressure Yes. and new the offset I'm renewal I seeing. see slowing growth in of top an we're of some line growth, this of quarter business did We mean was offsetting terms level audit with that pleased the terms in pickup there

our of during give None is... and decreased at our say, few change is though, just economic me, surprising in numbers, accrual also the you audit I We to of a and focus underlying conditions wages BLS is the for lot employment hourly quarter. as leisure a when to would look which where annual it, hospitality, of the you June,

Mark Hughes

me? Kathy, can you hear

Katherine Antonello

Can. My apologies for that.

Mark Hughes

I question Yes. probably me. asked just No, you the And outlook. comment. it's had sure did about a something started to growth wrong. I I'm

kind appetite, So about what that, I'll all be say thinking we -- top it would the should again -- line? competition, of

Katherine Antonello

Yes.

the not I we're saw we especially pick-ups given seeing. that the am economic terribly decrease conditions underlying this in surprised So with quarter, audit

hospitality. you employment as a can and and employment pressure is and That and And reduction June XX.X% for that give in putting in change hear wages on the to just audit hello, you wages ago. was X% -- so the change BLS our what's in year few pickup to compares me? numbers, hourly annual leisure of And a

Mark Hughes

you. hear Yes, can I

loud coming and through You're clear.

Katherine Antonello

right. Okay,

We're decreases is is line this to and audit putting too new to to causing a what ended pick-ups in of that's our XXXX. accrual couple bit. a an it's our quarter. continue down accrual second pressure the and bringing seeing decrease and our and premiums growth our the terms That that So decrease business also premium it's quarter strong on through the numbers, audit in renewal just audit of to $XX.X with us coming top not an quarter so million a million, compares $X.X of we of be of give you increase that's

look that when But million was meaningful quarter decrease this to million accrual they XXXX. quarter. in versus you $X.X both pickup, $X.X in second quarter audit earned the this and contributor a So then were premium at written of

in premium. audit very the Endorsement final noncompliant in of gross change the exclude you coming second XXXX. also if written our in earlier, said $XX I was quarter the Like -- $X strong. million and accrual, about premium is 'XX in second about of relative premium million up XX% pickup about We quarter the to endorsements in in recognize

So the you of I channels, is contributor our a that from said, endorsement all appetite the that distribution meaningful is coming major we're growth. expansion growth premium, like mentioned seeing strong to

I loss ratio came from million all our $XX we're premium this good other expansion a to for think efforts. our very of about what our that's performing seeing And of very quarter, appetite classes. at similar

Mark Hughes

number detail. that [ base expense good progression of expenses, this Mike, ] down this anything of this little growth is quarter, a is on the sort then and the step seasonality, from historically starting unusual of final But that pretty that bit. appreciate sort sequentially rate? one the the First, the is XQ XQ What's to I kind starting quarter, up to or thing? as a that is or steady base? one-timers, there then whatever a was apply base And X And right $XX.X run striking the so speak thing.

Michael Paquette

reason But vary to they Mark. and can timing I'm can of And IT on It's projects and based all our second not that's anything of dramatically types in of is terms of XXXX hard of flow. ebb say, things. expenses accruals, incentive expenses. the our unusual particularly those of quarter aware why

If least release had when ratio year-end, the call X.X provide was or Cerity recall, Cerity that versus points at would be. runoffs kind our we this of you at mentioned it the on what going integration we expense to otherwise of

year. into But that's same mind, in the the of thing So to will flow. bring keep it probably balance and ebb the

Mark Hughes

And to was about think way the of to it Is think we off I so look XX%. point think year, way of that if X.X last a that it, at? good is

Michael Paquette

would then of X.X say, I what least and commissions, that at, look at give percentage if some look or and year-to-dates points look I noise. guess because But the at of expenses now. out the right you so, best will With the always year-to-dates you the about could savings at that's take

Mark Hughes

Yes.

about in squeeze that I'll same. competition, competitors level enthused of Okay. anything X about if Kathy, about comp say . would workers might. the I more, competition see more you more people

Katherine Antonello

it's policies continue showed look rate the that that Yes, book would look typical between the and you write, a changes X%, about When the I'd is at competitive. say at We sectors we the same. to renewal fairly say environment decrease over our XXXX in quarters. we and exposure, been and for average and adjust rate last we've several seeing pretty what of year-over-year of X% our that's

driven are So being loss yes, -- in by but decreases costs things securities that a the still competitive. the of that it's filing, lot is are

Operator

next Carletti comes [Operator Citizens from of Matt Our line Instructions] JMP. the of question

Matthew Carletti

pricing guess, each coming. state, flexibility on Florida, of to there's actually administered question significant Mark's an you to being Florida price particularly first of of Medicare. one your questions context on less, schedule risk. -- kind so can specific kind that, comment my how my of Kathy, on on you follows could ability of understanding is in But was more there's hoping the from manage somewhat changes fee I I

Katherine Antonello

legislative we a That's Matt. NCCI's filing Yes. My in in fee question, recent response understanding analyzed legislation there I'll to changes do internally, is is remaining costs those being you Yes but pricing a of the the Florida. are said, great haven't the a terms projecting as medical say pricing the disagree of none. in or services, I have those with effective with Florida from is disability cost underwriting our January we the isn't that result last believe is truth be increase standards. outpatient. services than the can Florida, administered driver lot to in NCCI matter pricing. Other hospital physician of a of and we the of primary state, the for But increasing the X.X% coming in as tighten bit a expected those XXXX. And if of whole we But changes changes. little

business to standards our that have it's standpoint. just we underwriting writing at definition if the from a tighten and necessary, look we'll So feel we're

Matthew Carletti

Can Okay. us that kind reserve back the scenes give color behind little on of by peel And the the or movements favorable kind on accident of led some the you to year quarter. good a on bit of development helpful. any reserves X the in anything that Mike, That's just just for onion result. and trends

Michael Paquette

Sure.

that late calendar large saw that that's recognized where unfavorably quarter in favorable that the the relating this some development to occurred year have with came and We and experience losses was that offset bit we this prior. And other little developed states little out. we So a of year. have years we a amount in predominantly unfavorable bit the XXXX partially XXXX did in

Operator

question Montgomery line of the Scott. next Janney from comes of Bob Our Farnam

Robert Farnam

primary I as on My the of expansion of ADP performance difference the there getting another book is your I business. that focus line that was, much sounds book question non question guess ADP the versus performing between was the it business or But of you're book? performance in a is from expected like of on with had Kathy, your business. I'll other

Katherine Antonello

this book to for And very We of business continues has the always be. separately. do favorable ADP results and it analyze us been

it's relationship We have strong them book. I to. strong continue a And very a think very and with

book We any business. of in haven't changes seen that

Robert Farnam

it me. Okay. Yes, for that's

kind interested I book again, more the business, again, of so. entered think want Just of that in you expansion to already but

Katherine Antonello

Yes. that see into very to is we And very, pleased classes intention results expansion there. Yes. That as continue been to book, with expand seeing environment we're the our we've the is new favorable.

that. So do continuing to

Operator

like this questions time. for remarks. would now to closing I turn to back showing Antonello Kathy and it I'm further no at

Katherine Antonello

morning. this October. I all Okay. in thank meeting Thank you forward for with you, look again us and to joining Marvin, you

Operator

does program. your for in This conference. conclude the you participation Thank today's

disconnect. may You now

Employers (EIG) 1 Aug 242024 Q2 Earnings call transcript