Employers Holdings, Inc. Q3 FY2024 earnings call

• Strong net income per share increased by 124% and adjusted net income per share increased by 19% driven by higher earned premiums, strong net investment income, and net investment gains.
• Book value per share metrics reached all-time highs due to strong operating results and sharp interest rate decrease during the quarter.
• Continued growth in new and renewal premiums with reductions in premium audit pickup and accrual.
• Current accident year loss and LAE ratio on voluntary business was 64%, consistent with prior years.
• Ongoing initiatives to reduce underwriting and general and administrative expense ratio effective, with ratio at 23.2% (second-lowest since 2018) due to Cerity integration.
• Appetite expansion led to 7% year-to-date growth in premiums, with loss ratios in new segments in line or better than traditional segments.
• Returned $15.1 million to stockholders via share repurchases and regular quarterly dividends.

Gross premiums written were $181 million, a decrease of 8%. Net premiums earned were $187 million, an increase of 1%. Losses and loss adjustment expenses were $118 million versus $115 million a year ago, with the loss and loss adjustment expense ratio, excluding the LPT, at 63.9% versus 63.2%. Commissions and expenses were $26 million versus $27 million, and the commission expense ratio was 14.1% versus 14.5%. Underwriting and general and administrative expenses were $43 million versus $44 million, with the underwriting and general expense ratio at 23.2% versus 23.6%. Net investment income was $27 million for the quarter, an increase of 3% due to higher yields on fixed maturity securities.

• Appetite expansion strategy continues with appetite working group seeking new class codes, no indication of the strategy running its course.
• Remaining share repurchase authority stands at $39 million.
• Board declared a fourth quarter 2024 regular quarterly dividend of $0.30 per share payable on November 27.

• Statements made during the call include forward-looking statements which could be affected by risks and uncertainties as outlined in SEC filings. The company uses its website for disclosing material nonpublic information and complying with Regulation FD.

Q: About the pace of appetite expansion, whether it has run its course and growth prospects?

A: Kathy Antonello states the appetite working group is still active, looking for new class codes, and the strategy continues with no intention of stopping, expecting to benefit from it into the future.

Q: Why was there a lull in audit premium in the period?

A: Katherine Antonello mentions economic factors like the labor market slowing meaningfully over summer then picking up in September, with some volatility in employment growth.

Q: Prognostication for NCCI aggregate loss costs in 2025?

A: Bureaus show downward pressure on loss costs driven by decreases in frequency and moderate changes in severity, and in most states, prices can be adjusted appropriately.