EIG - Earnings call transcript Q4 2024 | Employers Holdings, Inc.

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Operator

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

Lori Brown

our Good Quarter Kevin. is welcome, to call. section everyone, recorded be replay Thank following available Earnings morning, Call Fourth the of Investors the XXXX webcast call where for the a and will you, from and website, Employers. being Today's

Reform the that Private Statements statements. made are These call based of safe provision historical the are Act on of harbor during Litigation made conference facts, on Securities statements in not this are forward-looking XXXX. reliance considered

Although the are expressed results our reasonable, the from risks in risks materially with and actual filings the our Securities be we cause set Exchange expectations believe our forward-looking forth expectations, including and statements uncertainties to in different could Commission.

during time disclosing call information at The not Investors under the FD. Such the complying and will disclosures company only current as SEC's with of Regulation of section website. disclosure material website updated its call be our a made in to subsequent included the be will of are means also nonpublic All reflect developments. for the the remarks and obligations uses

Accordingly, investors earnings in releases, to and website filings, of results should portion press our and calls responses earnings our webcast. remarks that included public to conference in our non-GAAP may these press supplement release. or financial our SEC In GAAP following an release addition our monitor use to to attachment in our are we non-GAAP our questions, measures. Reconciliations measures of as financial press

website. available presentation Investors and on the our investor other materials in Our any section

Chief Executive to I'll Now Kathy Officer, our over Antonello. call turn the

Katherine Antonello

for morning, today. everyone, us Thank you, joining Good thank and you Lori.

Officer, would Mike call Chief retiring to Mike incoming Officer. Chief and with me welcome Paquette, our On our Pedraja the I Financial like is Financial

hand with discussion. few our follow the and will additional I'll where close then we'll Mike over comments my deliver opening up we I a for and financials. call, provide details and agenda typical on comments will open it it our then to the During to thoughts questions,

nicely contributed endorsements. history. highest for quarter lower of our ending finished premium throughout by premium income investment in year new in achieved and fourth a growth the premiums net nonpremium, written solid with in-force the which and in We to and successful levels XXXX, very was policies final and We The renewal audit Employers. year offset

gross audit final fourth the to excluding growth. premiums with the the contributing Our accruals channels written both for full in all X% increased X% and change and distribution audit the year in premiums, quarter major

was from with loss development reserve our our of excluding income common a gains recognition performance prior to our stocks standpoint, of our business. of lower with study throughout favorable yielded action, unrealized also to led year-end the net other million investment full year the revenue underwriting reserve coupled for XXXX From the voluntary boost quarter. Our combined meaningfully ratio investment XX.X% investments. and strong and fourth an LPT from expenses, net That net underwriting $X a

the LPT, excluding represents year profit year, underwriting achieving a which of business. XX.X%, tail of long an combined full our ratio tenth the For our had line of we straight in

forward. of and fourth achieved remain year versus expense the to the primarily Cerity decreases year were XX.X% executed the laser-focused was that in ago. versus on XXXX, fourth pleased plan further savings the ratio of the quarter ratio. our throughout and full with particularly integration achieved a that achieving we and the we reductions cost The result and a general through ratio XX.X% year year XX.X% going was in we quarter for underwriting I'm reductions XX.X% the administrative for That ago

currently competitive our do The and compensation are we rate with voluntary increasing current anticipate of both XXXX ongoing is in our for reserving But increase the LAE loss ratio compensation, the business. specific workers' we and in guidance. you light industry. the prudent year consistent philosophy accident workers' provide not aware, environment As for trend

impact expense mitigate focus ratio. to on our this of the reducing the continued expect We

Finally, and XXXX. dedicated our achieved the to have employees and talented valued in want the our for I they in coming successfully thank better even most are years. all positioned for company asset They results

now provide XXXX our dive I'll my will to Mike closing into that, With remarks. return results provide and deeper financial Mike? a

Michael Paquette

million endorsements. we and highly $XXX wrote the being quarter $XXX Thank for premium period, Gross for and In levels with year for renewal quarter ago. million the X%, final the million offset lower $XXX year, that a with and were earned both by X% each higher Net premiums million new premiums you, of Kathy. increases and written full were representing $XXX and were year premiums consistent fourth the audit the premiums respectively. for

versus loss LAE $XX million, prior full versus development reserve development on million loss favorable XX.X% recognized quarter and slightly year year our ago. full XX.X% during The a year and the year favorable reserve ago. and respectively, quarter a the and lower accident the and $XX XX.X%, We year each of loss year higher estimate. were million loss and respectively period fourth increases XX.X% voluntary and the respectively, Our excluding of business, LPT, year in were in current $XX fourth and impact $X prior LAE respectively, result million a ratios, of

both our additional continued XXXX, risk on accelerated generate tail to mitigate and settle to overall salvage. Throughout we claims reserve basis an

immaterial total revision, of reducing points earnings full premium. our we income. XXXX administrative our ratios refined expense which XXXX This fourth and our and increasing As by our same expenses underwriting in presented, was commission mentioned on our periods expenses effect had underwriting general or our by quarter amount. respective X.X certain and expense effect both year within the the net of involuntary approximately percentage ratios presentation with has release, no the This associated revision

ago. was percentage involuntary expense our as in ratio adjustment XX.X% points X.X commission ratios were to respectively, and commission and our ratio year The a premium previously XX.X%, well a refinements. by decrease mentioned primarily XX% full due to expense approximately quarter versus served and expenses, for which quarter fourth respectively, as Our to year the this nonrecurring commission reduce XX.X%, the

Our for a highly consistent ago with when the was premium year commission full considering that expense ratio involuntary year refinement. the

quarter involuntary were expenses premium professional year higher by Our from year fourth plan general and each integration year, last quarter information our the expense related full administrative debt fees respectively, XX.X%, expense refinement. were The in and underwriting the offset and that and lower XX.X%, and versus decreases respectively, ago. technology in executed Cerity and period fourth of XX.X% to XX.X% partially resulting primarily ratios we bad a

a income measured cost. for bond year $XX The due balance investment by million to higher $XX ago. lower versus was quarter partially Net million increase amortized yields, investment offset as by was the fourth average a

year benefited net was unwound strategy, income the Federal full was million, of for quarter our from Note Home consistent a income last the $XXX of net fourth Loan highly in Our with investment that in we which year. investment Bank ago. investment former the XXXX which that year leverage

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

of million Net and net year was yield ago. through statement X.X%, $XX the Our ending income gains on million investments year ago. losses average than for unrealized X.X% book which quarter were the up realized versus weighted a $X a from is less

realized year, our year and For versus ago. the gains were million full $XX unrealized experienced million net $XX a

both Our of and down fourth a interest the expenses ago. those were year versus and year in quarter financing sharply the full

tax tax adjustments quarter year in period were each million rates in versus reserve and loss advantaged in million benefits exclusions applicable ago. the mentioned. or fourth tax ] and [ repayment our due Bank and gain effective Income reflect decreases associated The Loan Federal a XX% previously tax $XX of rate a investment and to LPT an effective income, the tax was deferred LAE XXXX amortization. for of as Home period advances inclusions XX% quarter each pre-privatization income during the adjustments effective rate tax The with $X

was ago. a $XX effective million, rate for Our or a tax income tax effective XX% rate tax full an of XX% $XX versus year expense the million year

by book other per of net dividends X.X% declared. and $XX from share XXXX million $XX.XX These share, including gains Our each gain impacted measures were during of XXXX, per after-tax deferred increased by during value arising adjusted value including book of and increased by $XX.XX securities our the unrealized equity investments. XX.X% favorably our

$XX.XX our stock the of quarter, $XX year-end, at repurchased $XX per average at a share common $XX.XX of During of per an price since and we stock average further of we price share. million million bought an our fourth

$X.XX of Directors on to authorization currently stands per our first is repurchase record $XX.X dividend March XXXX quarter week, This share of of X. quarterly this remaining March million. as regular dividend Our Earlier declared a of share. XX shareholders payable Board at

back to And now I'll Kathy. the turn call

Katherine Antonello

We objectives Mike. to our met you, management million quarterly by returning our through dividends. regular repurchases share Thank and stockholders $XX in capital XXXX

in Our metrics to way, success thereby any the future XXXX best and our without objectives current opportunistically in the our throughout declare these several repurchasing need allowed meet possible dividends. shares improving us special of to key

ratings that to of the announced to companies provide financial our small strength our reinforces trusted, across high-quality the today. upgraded This recently businesses upgrade we coverage AMS each results, financial reliable, of our Beyond ability nation. insurance

claims growth appetite channels XXXX, of expanding solutions customers. alternative focusing directly vigorously opportunities distribution to to relationships profitable disciplined we on our thoughtfully and risk developing segments insurance maintaining agencies, both the remainder to further management, insurance cultivating to and specialty and offering ahead traditional Looking continue long-term strong will and new with important underwriting by pursue

strong growth will both initiatives, We and are the we support forward and year our confident ahead. look to innovation that capital our position

now take that, And questions. we Kevin, with will

Operator

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

Mark Hughes

marketplace inflation, at Kathy, loss have holding seemingly can at cetera. you et of costs, see been XX accident you've lower magnitude a increase for change you you the current pick to medical now? dynamics the the while, and a sense same motivates loss the the pick? year? in for And do the play, of loss What Why the in steady lot a the been that then give us of

Katherine Antonello

Yes.

and would there's at severity there and philosophy or accident loss states. and a it. year we So consider year within we ratio and have and based our the determined that compelling . in beginning changed. like look not like and our Mark, the generally actuaries. on prospects those of our and states that our by environment And that initiatives impact our they environment, current at to feel that has it leave approach year, change the We until to to choose results. that's could we we the I ratio reason frequency our say growth implementing the LAE might the be also is annually each trends the any pricing They of of current the

philosophy us As you a reserving to rate a slightly competitive LAE higher ratio XXXX select XX%. was what XX.X%, that consistent accident which said, our chose environment [indiscernible] been and led the and we than for was for That XXXX, of loss continued while. and has year

environment. in that competitive the the LAE the say to extent rate We is expect I and year have primary the mentioned be that XXXX. XXXX. ratio increase mitigated change but I selection. there that ratio, ongoing in expense also do ratio as in expecting. do pick higher our we in we to in trend What The accident loss improvement actuarial mentioned, see drivers are When some will same loss our some And we're LAE I would loss by

that has in change been we've I'd industry, years, current be are coming the just below pick year also accident consistent add directionally loss the and been work expecting several that increasing which comp that. the we with for will

Mark Hughes

basis XXXX? point in Is uptick XX a think good to about Understood. that starting Is think one XXXX. point to the

Katherine Antonello

Because do this we we fact the it can't impact. don't the decrease to expect indication to give any give how will you offset a be in guidance, our and point as expense except ratio I for high mitigating at an be that

Mark Hughes

point? no offset To be at will this -- or it just partially or you specifics fully think, do offset,

Katherine Antonello

at meaningful. we expect specifics but be offset No to point, to this it

Mark Hughes

trend selection, are driving trends lot actuarial Can Yes. say trade what of you mix? medical [indiscernible] a said frequency, maybe you severity, And that then higher that the weight.

Katherine Antonello

Yes. Yes.

look So that always frequency, and our at we based we see premium. on on-level

below have we for our to continued over frequency Our wages, several last in We When have the values in trend the they and change claim loss steady severity that's lower do not held medical speaking, remain that And downward the claim barely severity. years. recent trend levels, years. expect adjust change. overall by driven generally to the most really pre-pandemic been time

other medical inflation wage housing or especially to or as in at say it up to this like would remained same the energy food. economic the I mild you trending has and relation about severity, relatively inflation. Indemnity it's point, sectors And look when data

So that's good news.

is will seeing more year So bit saw the the coming and just last the I'm and in state add for little what we a really we're out not broadly for have of that accident well below picks coming LAE ratio pressure just conservatism I'm suggesting years. what with we from loss XXXX industry, year's I But XX. many, many that of been way, selecting the we in the line form. are shape that industry or any saying that that's

Mark Hughes

might severity? a have you seeing benign. have more on inflation I sense? kind It the an essentially years, inflation, was put seen but a being think [indiscernible] that current of the on -- might it any Or of wage pressure ended I The maybe earlier up was that is hidden, medical does the wage amount make much of Is in -- beneficial offset inflation does any trend you're inflation extra as guess fact a little of year? that accident kind not that that then was in that premium BACE? since

Katherine Antonello

change year No. a tell leisure was is X.X% the at sense. hospitality, big annual for I compared X.X% look you I for in make and to sectors a BLS concentration. numbers, all December, where X.X% of wages that when and numbers have does hourly as we X.X% employment Those I'll which ago. and and mean the

of the business, that's a that impacting accrual of it's and that's our we pressure putting in by reduction the it written and audit decreasing and wages audit that impacting premium. pickups of it's book our and employment So on the have, acceleration bit net

of of some COVID. the very written -- the to that still on that the net that's the we pressure not saw of putting that seeing employment but and reduction the in really There's spot strong out you're we're it's premium. So extent increases, on wages acceleration coming

Mark Hughes

question. final Yes. maybe then just And X

You've been into should talking How that's about helped going that we line. expansion in the top your think about drive appetite XXXX?

Katherine Antonello

Yes.

our if to overall and million we're or the for slightly very to our loss quarter, of expand segment our operating a generated not We actually give continue has you business than to there very appetite, are that's successful our classes. some effort is a numbers, In target it program our LAE going us and because similar, at that been and ratio accelerating It's really new expansion contributing renewal fourth appetite better of just growth. traditional $XX classes to premium. the XX%

is focused we're past agents is in coming that's marketplaces. what digital through that area other on digital towards The I've mentioned API continued shift submissions, binds and this for utilization and the quotes

focusing So partnerships. on increasing we've -- digital we're efforts those our

in quite on So a that we'll XXXX see too. going bit of

Operator

Next question with Janney from comes Montgomery Bob Scott. Farnam

Robert Farnam

just into thought like for question bunch you. quarter. -- you there? the it wanted Mike, during a maybe was looks what I your a of investments The transitioned your kind process know securities mortgage-backed to of

Michael Paquette

letter California, Federal letter Home what is XX-K basis fee. Bank, a we our yielding to file of we about with Loan when by is just pretty Loan mortgage-backed realized XX to deposit X%, those Federal of but near deposits getting to that that liberate to big that we had small loss that what requirements that we securities pay of with we a in allowed go increase see through a have do we only quarter with $XXX to us recognized in issued million residential sold those with over credit $X us And use on over satisfy you'll these were the the Home What some we which Bank, million along the of credit lower yielding deposit Sure. were point and the California. permitted and increased assets our on

So uplift that income Those in our will accomplished have investment December. in were year. an a next net little bit trades of for

So seeing the net you're year. income in and investment we for that not that the the printed quarter

Robert Farnam

of right kind should money your between is a year? the differential that? about or talk like So way next it to expanded Is expand in book sounds yield and your yield your new that

Michael Paquette

is -- . from a ending of as period X.X ending some that prior show December of XX, result the is the but trade. increase we that the of Well, the that

Robert Farnam

second I'm have data available, but of of the All the that right. sure going about increase to question, wanted my to if And in hazard percentage groups not the Okay. you're kind of talk I in-force. higher kind

in talk now. may know the the just the want Now I digits, been there know in -- come for but higher went is taking digits Is types XXXX have impact you years, to longer it how was if -- the don't about think, that tail? in business? I will probably the higher describe of And XX-K, that in hazard an claims that see you my just it XXXX, kind kind on that of single idea wanted and maybe that of the low are of in mid-teens. to are XXXX, to of And risks might I where have books kind I you're what profitability? -- what for trends the maybe right feeling it Is single

Katherine Antonello

Yes.

very those into our -- groups. and groups that some expansion -- tied hazard has been the we been some time of efforts have of intentionally well, but of into hazard not to appetite is the thoughtful some all that moved shift higher expansion, that's higher has been all, and a So

lower those risks in are While that selecting the that in groups. codes the writing, hazard class higher the of hazard groups, hazard we maybe we're are range

change that NCCI from about years hazard that X now or a of was ago cause made shift X Another that groups. remapped

in hazard into been years have the higher of shifted that some groups. we for So classes upwards

shift to that land what carrier not pick where risks tell except our on the expand cautious change those, where X or groups . in all of and we're when things time. looking terms a we over the who of we being into we're you very a in the that numbers I So it's best headed risk we'll can't percentage caused are that as are ultimately those combination hazard appetite. and cherry we of exactly

Robert Farnam

kind Yes. kind always you've because And hazard that noticed comp of workers know low the of question the writer. been I was

it it's groups, as company profile. to too Is doesn't your higher in -- portion actual that target hazard of sound might kind your there. like might change. it's the of you So huge write more But continue it overall change still a identity

Katherine Antonello

huge a not portion. No,

Michael Paquette

can what couple XX% I to between the hovering add E. we've in is been Bob, last So A quarters, kind last . that's in of couple through quarters. of And categories of for been the consistent pretty XX%

Robert Farnam

good That's for right. color. last All you. Okay. One question

$X the related favorable Just new years? development, stuff so to accident million particular or or stuff it that of or is any what? old was Or

Michael Paquette

in our XXXX XX-K accident predominantly see when was comes and prior. file out statutory. and It years you'll And we the that

you experienced some a happy see that strengthening conversation address little in But it So and with to those in . [indiscernible]. published. we'll And very we a in will of years. large but XXXX, that XXXX have losses all you'll the soon, that bit and see once there's that you

Operator

questions over Kathy the I'd closing [Operator turn like call time. to back Instructions] Antonella for I'm further not any this showing at any to remarks.

Katherine Antonello

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

Operator

presentation. does and Thank today's you. gentlemen, Ladies conclude this

now day. have a disconnect, wonderful may You and

Employers (EIG) 21 Feb 252024 Q4 Earnings call transcript