Employers Holdings (EIG) Misses Q4 EPS by 14c

Employers Holdings (NYSE: EIG) reported Q4 EPS of $0.48, $0.14 worse than the analyst estimate of $0.62.

• Net income of $31.8 million ($0.99 per diluted share), adjusted net income of $15.5 million ($0.48 per diluted share).
• Net investment income of $22.6 million, up 6% year-over-year.
• Net premiums earned of $169.7 million, down 8% year-over-year.
• Favorable prior year loss reserve development of $11.4 million, compared to $25.4 million a year ago.
• The Company repurchased 465,350 shares of its common stock at an average price of $42.32 per share ($19.7 million).

Management Commentary

Chief Executive Officer Douglas Dirks commented on the results: “We delivered an 8.6% return on adjusted equity for the year while continuing to successfully execute our plan of aggressive development and implementation of new technologies and capabilities that we believe will fundamentally transform and enhance the digital experience of our customers. In addition, we remain focused on our other key business initiatives, including: achieving internal and customer-facing business process excellence to provide greater support and ease of use to our independent agents, brokers and policyholders; further diversifying our risk exposure across geographic markets; and utilizing a multi-company pricing platform and employing territory-specific pricing.”

Mr. Dirks continued, “These initiatives are already providing us with significant new business opportunities, as measured by the record levels of submissions we received and quotes we provided during 2019. Despite the sharp increase in new business opportunities, we are continuing to maintain pricing discipline, which has limited policy binds. Our renewal premiums continue to be very strong both in terms of price and unit retention.

During the current market cycle, we intend to remain committed to exercising pricing discipline while attempting to remain competitive. In the short-run, this will mean increasing pressure on the expense ratio to protect the loss ratio. We believe this disciplined approach will ultimately produce superior performance over time. Throughout the past several quarters, we have experienced favorable prior year loss reserve development for nearly every accident year through the utilization of advanced claims analytics as well as a continuation of our accelerated claims settlement initiatives.

We are also pleased with the development of our new digital insurance platform, Cerity, which we launched just a year ago. Cerity is now able to offer direct-to-customer worker’s compensation insurance in 34 states and the District of Columbia and is expanding rapidly to cover more states and businesses every month. For the first time this quarter, we are breaking out our financial results to separate Cerity’s operations from Employers’ operations, and believe that a balanced approach toward digitized product offerings coupled with agent support properly positions the Company to adapt to a rapidly changing marketplace.”

For earnings history and earnings-related data on Employers Holdings (EIG) click here.

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