Employers Holdings, Inc. Q4 FY2024 earnings call

• The fourth quarter contributed nicely to a very successful year with highest levels of written and earned premium, etc. - Gross written premium excluding certain items increased 3% in Q4 and 6% for the full year. - Investment performance boosted revenue with strong net investment income. - Year-end full reserves study led to $9 million net favorable prior year loss reserve development on voluntary business. - Underwriting and general administrative ratio decreased due to Cerity integration plan. - Repurchased $10 million of common stock in Q4 and declared first quarter 2025 dividend. - AM Best upgraded financial strength ratings of insurance companies to A.

Gross premiums written were $176 million for the fourth quarter and $776 million for the full year. Net premiums earned were $190 million for the quarter and $750 million for the year. The fourth quarter and full year loss and LAE ratios, excluding the impact of the LPT, were 59.5% and 61.6% respectively. The fourth quarter and full year commission expense ratios were 12.8% and 13.5% respectively. The fourth quarter and full year underwriting and general administrative expense ratios were 23.2% and 23.5% respectively. Net investment income for the fourth quarter was $27 million versus $26 million a year ago, and net investment income for the full year was $107 million.

• Currently anticipate increasing 2025 accident year loss and LAE ratio for voluntary business. - Increase is consistent with prudent reserving philosophy and competitive rate environment in workers' compensation industry. - Expect expense ratio reduction to be mitigated by the change in loss and LAE ratio.

• Risks related to workers' compensation industry competitive rate environment. - Uncertainties in reserving philosophy and its impact on results. - Potential fluctuations in investment income due to market conditions.

Q: Can you give a sense of the magnitude of the change in the loss pick for the current accident year?

A: Our actuaries consider pricing environment, growth prospects, trends in frequency and severity. Prudent reserving philosophy and competitive rate environment led to expecting increase in 2025 accident year loss and LAE ratio with drivers like higher actuarial trend selections and competitive rate environment.

Q: Is one to think the 70 basis points uptick in 2024?

A: Can't give specific indication on how high it will be in 2025, but expect expense ratio reduction to be a meaningful offset.

Q: Talk about the increase in the higher hazard groups' percentage of in force.

A: Shift into higher hazard groups is due to appetite expansion effort and NCCI remapping hazard groups a few years ago. Being cautious when expanding and cherry-picking best risks. Currently hovering between 91% to 92% in categories A through E.

Q: About the $9 million favorable development.

A: Predominantly in accident years 2020 and prior, will be addressed in 10-K with details on large losses in those years