[Second Quarter 2025 Financial Supplement Overview](index=1&type=section&id=Financial%20Supplement%20Overview) This overview details the company's Q2 2025 financial performance, position, and investment portfolio [Consolidated Financial Highlights](index=3&type=section&id=1%20Consolidated%20Financial%20Highlights) This section provides a high-level overview of key financial metrics for the three and six months ended June 30, 2025, and 2024, including premiums, income, assets, equity, and combined ratios, highlighting significant year-over-year changes Selected Financial Highlights (Three Months Ended June 30) | Metric | 2025 ($M) | 2024 ($M) | % Change | | :-------------------------------- | :-------- | :-------- | :------- | | Gross premiums written | 203.3 | 207.9 | (2)% | | Net premiums earned | 198.3 | 187.8 | 6% | | Net investment income | 27.1 | 26.9 | 1% | | Net Income | 29.7 | 31.7 | (6)% | | Adjusted net income | 11.5 | 27.9 | (59)% | | Annualized adjusted return on stockholders' equity | 3.7% | 9.2% | (60)% | | Earnings per diluted share | 1.23 | 1.25 | (2)% | | Combined ratio excluding LPT | 106.4% | 95.4% | | Selected Financial Highlights (Six Months Ended June 30) | Metric | 2025 ($M) | 2024 ($M) | % Change | | :-------------------------------- | :-------- | :-------- | :------- | | Gross premiums written | 415.4 | 418.7 | (1)% | | Net premiums earned | 381.3 | 372.6 | 2% | | Net investment income | 59.2 | 53.8 | 10% | | Net Income | 42.5 | 60.0 | (29)% | | Adjusted net income | 32.8 | 45.1 | (27)% | | Annualized adjusted return on stockholders' equity | 5.3% | 7.5% | (29)% | | Earnings per diluted share | 1.74 | 2.36 | (26)% | | Combined ratio excluding LPT | 104.8% | 99.0% | | Balance Sheet Highlights (June 30, 2025 vs June 30, 2024) | Metric | 2025 ($M) | 2024 ($M) | % Change | | :------------------ | :-------- | :-------- | :------- | | Total assets | 3,543.3 | 3,550.0 | — | | Stockholders' equity| 1,083.1 | 1,022.9 | 6% | | Book value per share| 45.62 | 41.09 | 11% | [Summary Consolidated Balance Sheets](index=4&type=section&id=2%20Summary%20Consolidated%20Balance%20Sheets) This section presents the company's financial position as of June 30, 2025, compared to December 31, 2024, detailing assets, liabilities, and stockholders' equity, showing a slight increase in total assets and stockholders' equity Summary Consolidated Balance Sheets ($ in millions) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------------------------- | :------------ | :---------------- | | **ASSETS** | | | | Investments, cash and cash equivalents | 2,529.5 | 2,532.4 | | Premiums receivable, net | 382.0 | 361.3 | | Total assets | 3,543.3 | 3,541.3 | | **LIABILITIES** | | | | Unpaid losses and LAE | 1,786.8 | 1,808.2 | | Unearned premiums | 429.6 | 402.2 | | Total liabilities | 2,460.2 | 2,472.6 | | **STOCKHOLDERS' EQUITY** | | |\ | Total stockholders' equity | 1,083.1 | 1,068.7 | | Total liabilities and stockholders' equity | 3,543.3 | 3,541.3 | - Total assets increased slightly to **$3,543.3 million** as of June 30, 2025, from **$3,541.3 million** at December 31, 2024, while total liabilities decreased to **$2,460.2 million** from **$2,472.6 million** over the same period[7](index=7&type=chunk) - Stockholders' equity increased to **$1,083.1 million** as of June 30, 2025, from **$1,068.7 million** at December 31, 2024[7](index=7&type=chunk) [Summary Consolidated Income Statements](index=5&type=section&id=3%20Summary%20Consolidated%20Income%20Statements) This section details the company's revenues, expenses, and net income for the three and six months ended June 30, 2025, and 2024, showing an increase in total revenues but a decrease in net income for both periods Summary Consolidated Income Statements ($ in millions, Three Months Ended June 30) | Item | 2025 | 2024 | | :--------------------------------------- | :--- | :--- | | Net premiums earned | 198.3| 187.8| | Net investment income | 27.1 | 26.9 | | Net realized and unrealized gains on investments | 20.9 | 2.2 | | Total revenues | 246.3| 217.0| | Losses and LAE incurred | (140.1)| (108.8)| | Total expenses | (209.3)| (177.0)| | Net Income before income taxes | 37.0 | 40.0 | | Net Income | 29.7 | 31.7 | | Total comprehensive income | 37.2 | 29.6 | Summary Consolidated Income Statements ($ in millions, Six Months Ended June 30) | Item | 2025 | 2024 | | :--------------------------------------- | :--- | :--- | | Net premiums earned | 381.3| 372.6| | Net investment income | 59.2 | 53.8 | | Net realized and unrealized gains on investments | 8.1 | 13.6 | | Total revenues | 448.9| 440.1| | Losses and LAE incurred | (260.8)| (225.3)| | Total expenses | (396.0)| (364.8)| | Net Income before income taxes | 52.9 | 75.3 | | Net Income | 42.5 | 60.0 | | Total comprehensive income | 71.8 | 47.0 | - Net realized and unrealized gains on investments significantly increased for the three months ended June 30, 2025, to **$20.9 million** from **$2.2 million** in the prior year, but decreased for the six-month period[10](index=10&type=chunk) [Return on Equity](index=6&type=section&id=4%20Return%20on%20Equity) This section provides calculations for Return on Stockholders' Equity and Adjusted Return on Stockholders' Equity, showing a decline in both metrics for the three and six months ended June 30, 2025, compared to the prior year Return on Equity Metrics (Annualized) | Metric | Three Months Ended June 30, 2025 (%) | Three Months Ended June 30, 2024 (%) | Six Months Ended June 30, 2025 (%) | Six Months Ended June 30, 2024 (%) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Return on stockholders' equity | 11.0% | 12.4% | 7.9% | 11.8% | | Adjusted return on stockholders' equity | 3.7% | 9.2% | 5.3% | 7.5% | - Annualized adjusted return on stockholders' equity decreased by **60%** for the three months ended June 30, 2025 (**3.7%** vs **9.2%**), and by **29%** for the six months ended June 30, 2025 (**5.3%** vs **7.5%**)[13](index=13&type=chunk) [Combined Ratios](index=7&type=section&id=5%20Combined%20Ratios) This section presents various combined ratios, including GAAP combined ratio and combined ratio excluding LPT, for the three and six months ended June 30, 2025, and 2024, indicating an increase in these ratios, primarily driven by higher loss and LAE ratios Combined Ratios (Three Months Ended June 30) | Ratio | 2025 (%) | 2024 (%) | | :--------------------------------------- | :----- | :----- | | GAAP combined ratio | 105.6% | 94.2% | | Combined ratio excluding LPT | 106.4% | 95.4% | | Combined ratio excluding LPT: current accident year | 106.3% | 100.2% | Combined Ratios (Six Months Ended June 30) | Ratio | 2025 (%) | 2024 (%) | | :--------------------------------------- | :----- | :----- | | GAAP combined ratio | 103.9% | 97.9% | | Combined ratio excluding LPT | 104.8% | 99.0% | | Combined ratio excluding LPT: current accident year | 104.3% | 101.5% | - The Loss and LAE ratio excluding LPT for the current accident year increased to **71.4%** for the three months ended June 30, 2025, from **63.9%** in the prior year, and to **68.8%** for the six-month period from **64.1%**[15](index=15&type=chunk) [Roll-forward of Unpaid Losses and LAE](index=8&type=section&id=6%20Roll-forward%20of%20Unpaid%20Losses%20and%20LAE) This section details the changes in unpaid losses and loss adjustment expenses (LAE) for the three and six months ended June 30, 2025, and 2024, showing the movement from beginning to end balances, including incurred and paid losses Roll-forward of Unpaid Losses and LAE ($ in millions) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Unpaid losses and LAE at beginning of period | 1,792.6 | 1,874.5 | 1,808.2 | 1,884.5 | | Total losses incurred | 141.8 | 110.9 | 264.1 | 229.5 | | Total paid losses | 141.5 | 128.8 | 274.1 | 253.0 | | Unpaid losses and LAE at end of period | 1,786.8 | 1,850.9 | 1,786.8 | 1,850.9 | - Net unpaid losses and LAE at the end of the period decreased to **$1,385.8 million** as of June 30, 2025, from **$1,432.6 million** as of June 30, 2024[17](index=17&type=chunk) - Total losses incurred for the six months ended June 30, 2025, were **$264.1 million**, an increase from **$229.5 million** in the prior year[17](index=17&type=chunk) [Consolidated Investment Portfolio](index=9&type=section&id=7%20Consolidated%20Investment%20Portfolio) This section provides a detailed breakdown of the company's investment portfolio as of June 30, 2025, and December 31, 2024, highlighting the composition by asset class, fair values, and key investment characteristics such as yield and credit quality Consolidated Investment Portfolio (Fair Value, $ in millions) | Investment Position | June 30, 2025 | % of Total | December 31, 2024 | % of Total | | :------------------ | :------------ | :--------- | :---------------- | :--------- | | Fixed maturity securities | 2,077.0 | 82% | 2,097.4 | 83% | | Equity securities | 275.6 | 11% | 259.8 | 10% | | Short-term investments | 9.0 | — | 0.1 | — | | Other invested assets | 98.6 | 4% | 106.6 | 4% | | Cash and cash equivalents | 69.1 | 3% | 68.3 | 3% | | Total investments and cash | 2,529.5 | 100% | 2,532.4 | 100% | Breakout of Fixed Maturity Securities (Fair Value, June 30, 2025) | Type | Amount ($M) | % of Fixed Maturity | | :------------------------ | :---------- | :------------------ | | Corporate securities | 797.2 | 38% | | Mortgage-backed securities| 675.9 | 33% | | Asset-backed securities | 195.8 | 9% | | States and municipalities | 167.9 | 8% | | Bank loans and other | 146.8 | 7% | | U.S. Treasuries and agencies | 67.5 | 3% | | Collateralized loan obligations | 25.9 | 1% | - The weighted average book yield remained stable at **4.5%** as of June 30, 2025, and December 31, 2024, with an average credit quality of **A+ (S&P)**, while the duration slightly decreased to **4.3** from **4.5**[19](index=19&type=chunk) [Book Value Per Share](index=10&type=section&id=8%20Book%20Value%20Per%20Share) This section presents book value per share, book value per share including Deferred Gain, and adjusted book value per share, along with their year-over-year changes, showing an overall increase across all book value metrics Book Value Per Share Metrics ($) | Metric | June 30, 2025 ($) | March 31, 2025 ($) | December 31, 2024 ($) | June 30, 2024 ($) | | :--------------------------------------- | :------------ | :------------- | :---------------- | :------------ | | Book value per share | 45.62 | 44.43 | 43.52 | 41.09 | | Book value per share including the Deferred Gain | 49.44 | 48.25 | 47.35 | 44.91 | | Adjusted book value per share | 51.68 | 50.75 | 50.71 | 48.89 | Year-over-year Change in Book Value Per Share Metrics (Twelve Months Ended) | Metric | June 30, 2025 (%) | March 31, 2025 (%) | December 31, 2024 (%) | June 30, 2024 (%) | | :--------------------------------------- | :------------ | :------------- | :---------------- | :------------ | | Book value per share | 14.0% | 13.5% | 11.9% | 15.7% | | Book value per share including the Deferred Gain | 12.8% | 12.3% | 10.6% | 14.0% | | Adjusted book value per share | 8.2% | 8.5% | 9.8% | 10.2% | - Book value per share increased by **14.0%** year-over-year for the twelve months ended June 30, 2025, while adjusted book value per share increased by **8.2%** over the same period[21](index=21&type=chunk)[22](index=22&type=chunk) [Earnings Per Share](index=11&type=section&id=9%20Earnings%20Per%20Share) This section details basic and diluted earnings per share, earnings per share excluding LPT, and adjusted earnings per share for the three and six months ended June 30, 2025, and 2024, showing a general decline across all EPS metrics Earnings Per Share Metrics (Diluted, $) | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Diluted Earnings per share | 1.23 | 1.25 | 1.74 | 2.36 | | Earnings per share excluding LPT | 1.16 | 1.17 | 1.61 | 2.19 | | Adjusted earnings per share | 0.48 | 1.10 | 1.35 | 1.77 | - Adjusted diluted earnings per share decreased significantly by **56%** for the three months ended June 30, 2025 (**$0.48** vs **$1.10**), and by **24%** for the six months ended June 30, 2025 (**$1.35** vs **$1.77**)[24](index=24&type=chunk) - Average common shares outstanding (diluted) decreased to **24,136,221** for the three months ended June 30, 2025, from **25,363,941** in the prior year[24](index=24&type=chunk) [Non-GAAP Financial Measures](index=12&type=section&id=10%20Non-GAAP%20Financial%20Measures) This section explains the company's use of various non-GAAP financial measures, providing the rationale for their inclusion and how they offer a more meaningful understanding of ongoing operational performance, underwriting capital, and profitability by excluding non-recurring or non-operating items - Management believes non-GAAP measures are important for investors and analysts, offering an objective and consistent basis for comparison within the industry and being more relevant for evaluating financial performance[25](index=25&type=chunk) - The LPT Agreement effects are excluded from non-GAAP measures because it is a non-recurring transaction without ongoing cash benefits, allowing for a clearer understanding of the Company's ongoing underwriting performance[26](index=26&type=chunk) - Adjusted net income excludes the LPT Agreement effects, net realized and unrealized gains/losses on investments (net of tax), and other non-recurring transactions (net of tax) to help identify trends in operating performance[28](index=28&type=chunk) - Adjusted stockholders' equity includes the Deferred Gain and excludes accumulated other comprehensive income (net of tax), serving as a key denominator for the adjusted return on stockholders' equity metric and providing a meaningful measure of total underwriting capital[29](index=29&type=chunk)[30](index=30&type=chunk)

Core Viewpoint - Employers Holdings, Inc. reported a mixed financial performance for the second quarter of 2025, with a slight decrease in gross premiums written but an increase in net premiums earned, reflecting a focus on profitability and improved risk selection [3][7]. Financial Highlights - Gross premiums written decreased by 2% from $207.9 million to $203.3 million [7][8]. - Net premiums earned increased by 6% from $187.8 million to $198.3 million [7][8]. - Net income per diluted share decreased by 2% from $1.25 to $1.23, while adjusted net income per diluted share saw a significant drop of 56% from $1.10 to $0.48 [7][8]. - Loss and loss adjustment expenses ratio increased from 57.9% to 70.7% [7][9]. - The company declared a regular quarterly dividend of $0.32 per share, reflecting confidence in future operations [6][15]. Management Commentary - The CEO noted that the decrease in gross premiums was due to a decline in the middle market, while smaller policy sizes showed growth [3]. - The company has increased the loss and LAE ratio for 2025 due to rising cumulative trauma claims in California, indicating a proactive approach to risk management [4]. Expense Ratios - The commission expense ratio improved from 13.9% to 13.2%, attributed to lower new business premiums [5][10]. - The underwriting expense ratio decreased from 22.4% to 21.7%, despite a slight increase in underwriting expenses [5][11]. Investment Performance - Net investment income increased by 1% from $26.9 million to $27.1 million, while net realized and unrealized gains on investments surged from $2.2 million to $20.9 million [12][7]. Shareholder Returns - The company returned $31.4 million to shareholders through share repurchases and dividends during the quarter [7][16]. - A total of 482,000 shares were repurchased at an average price of $48.08 per share [16].

Company Overview - Employers Holdings (EIG) is anticipated to report a year-over-year decline in earnings, with expected earnings of $0.94 per share, reflecting a decrease of 14.6% compared to the previous year [3] - Revenues for the quarter are projected to be $214.65 million, which is a decline of 1.1% from the same quarter last year [3] Earnings Expectations - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have not significantly altered their outlook for the company [4] - The Most Accurate Estimate for Employers Holdings is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -3.19%, suggesting a bearish sentiment among analysts regarding the company's earnings prospects [12] Historical Performance - In the last reported quarter, Employers Holdings exceeded the expected earnings of $0.69 per share by delivering $0.87, resulting in a surprise of +26.09% [13] - Over the past four quarters, the company has successfully beaten consensus EPS estimates on all occasions [14] Industry Context - In the broader context of the Zacks Insurance - Accident and Health industry, Unum (UNM) is expected to report earnings of $2.23 per share for the same quarter, indicating a year-over-year increase of 3.2% [18] - Unum's revenue is projected to be $3.32 billion, reflecting a growth of 2.4% from the previous year [18]

Core Insights - Employers are increasingly prioritizing comprehensive wellbeing strategies to address macro uncertainty and rising costs, focusing on physical, emotional, career, and financial health [1][2][10] Benefits Trends - 31% of employers enhanced medical benefits to support recruitment and retention, while only 12% focused on improving pharmacy benefits [4] - Adjustments to medical (31%) and prescription drug (26%) plan designs are being made to manage expenses effectively, with 29% switching plan carriers and 32% carving out pharmacy benefits to a pharmacy benefit manager [5] - Employers are customizing benefit packages with specialized coverages, including hearing aids (59%) and autism treatments (44%) [6] Reproductive Health Benefits - 48% of employers cover infertility services, with increases in coverage for fertility medications (84%), in vitro fertilization (71%), and other related services [7] Voluntary Benefits - 67% of employers view voluntary offerings as essential for a comprehensive financial wellbeing strategy, providing support in areas where traditional benefits may fall short [8] - Financial-focused programs like identity theft protection (39%) and legal plans (38%) help employees manage financial risks, contributing to reduced stress and increased productivity [9] Report Overview - The 2025 U.S. Benefits Benchmarks Report is based on responses from over 4,000 organizations and aims to guide employers in optimizing employee wellbeing through holistic initiatives [3][12]

Company Overview - Employers Holdings, Inc. (NYSE: EIG) is a holding company specializing in workers' compensation insurance and services, primarily targeting small and mid-sized businesses in low-to-medium hazard industries [4] - The company has over a century of experience in providing comprehensive coverage solutions, focusing on protecting employees through exceptional claims management, loss control, and risk management services [4] Upcoming Financial Results - The company will release its second quarter 2025 financial results after market close on July 30, 2025, with materials available on its website [1] - A conference call and webcast to review these financial results will take place on July 31, 2025, at 11:00 a.m. EDT / 8:00 a.m. PDT [2] Digital Solutions - Employers also offers Cerity®, a digital-first platform providing direct-to-consumer workers' compensation insurance solutions with fast and affordable coverage options [5] Operational Scope - Employers operates throughout the United States, except for four states served exclusively by state funds, with insurance offered through various subsidiaries rated A (Excellent) by AM Best [6]

Core Insights - The global Net Employment Outlook (NEO) for Q3 2025 stands at +24%, indicating stable hiring intentions despite trade uncertainties [2][4][8] - Companies investing in technology, AI, and automation show the most optimistic hiring plans, highlighting a connection between innovation and workforce confidence [1][4][8] Global Hiring Trends - 40% of employers plan to increase hiring, 42% will maintain current staff levels, 16% anticipate cuts, and 2% are uncertain about their hiring plans [1][8] - Asia Pacific leads with a hiring outlook of 29%, followed by the Americas at 27%, and Europe and the Middle East at 19% [6][8][10] Impact of Trade Uncertainty - 89% of companies report that trade uncertainty has influenced their hiring decisions, with many still planning for steady hiring in Q3 [3][8] - The trade situation has caused some companies to pause or slow their hiring plans, but overall hiring outlooks have stabilized [4][8] Sector-Specific Insights - The Information Technology sector has the strongest hiring outlook at 36%, followed by Financials & Real Estate at 28%, and Industrials & Materials at 26% [8] - Companies heavily investing in technology report more optimistic hiring plans compared to those not planning such investments [8] Regional Highlights - The United Arab Emirates tops global hiring intentions at 48%, followed by India at 42% and Costa Rica at 41% [9][17] - Argentina has the weakest global outlook at 3%, while countries like Israel and Sweden show significant year-over-year improvements [9][17]

Core Insights - The 2025 Healthcare Literacy Report by Optavise emphasizes the importance of personalized education in enhancing employees' understanding of their workplace benefits [1][2][8] Employee Satisfaction and Understanding - 74% of employees express high satisfaction with their health plans, an increase from 69% the previous year, while 75% report understanding their plans, up from 68% [2] - Employees increasingly seek assistance from HR teams (40%) and third-party experts (18%), rising from 27% and 15% respectively [3] Access and Confidence - 87% of satisfied employees find it easy to access their benefits, while 58% of those who struggle with access lack confidence in understanding their health plans [4] - Among self-educating employees, only 65% feel confident in understanding their health plan, compared to 82% who receive guidance from HR or experts [3] Cost Awareness - 55% of employees have avoided doctor visits due to cost concerns, with 44% frequently comparing treatment costs and 45% comparing prescription drug prices [5][6] Engagement in Wellness Programs - 86% of employees participate in wellness programs when offered, with high interest in healthy eating (64%), fitness tracking (61%), financial wellness (52%), and mental health counseling (51%) [6] - Personalization in wellness programs is crucial, with 96% of employees valuing tailored benefit options [7] Gaps in Understanding - One in four employees still lacks confidence in understanding their health plans, with key terms like "coinsurance" causing confusion for 17% of respondents [8] - Only half of employees utilize personalized guidance sessions, but those who do find them the most helpful resource [9][10] Onboarding and Education - Benefits education significantly influences job change decisions, with 74% of employees considering benefits programs as a key factor [11] - New employees prefer one-on-one conversations with benefits experts (42%) and enrollment support (36%), with 92% finding presentations helpful during onboarding [12] Conclusion - Proper training, personalization, incentives, and support are essential for employee satisfaction with workplace benefits, highlighting the need for employers to enhance their benefit offerings [13]

Core Viewpoint - Employers Holdings, Inc. (EIG) reported better-than-expected first-quarter 2025 results, with a 4.2% increase in shares following the earnings announcement, driven by strong retention in renewal business and improved investment returns, although offset by a slight decline in net premiums and increased losses [1][2]. Financial Performance - Adjusted earnings per share (EPS) for Q1 2025 were 87 cents, exceeding the Zacks Consensus Estimate by 26.1% and reflecting a year-over-year increase of 29.9% [2]. - Operating revenues totaled $202.6 million, down 9.2% year over year, missing the consensus estimate by 6.6% [2]. - Gross premiums written rose 1% year over year to $212.1 million, while net premiums written also increased by 1% to $210.3 million [3]. - Net premiums earned decreased by 1% year over year to $183 million, falling short of the Zacks Consensus Estimate of $192.4 million [3]. - Net investment income grew 20% year over year to $32.1 million, surpassing the consensus mark of $27.3 million [4]. - Total expenses decreased by 0.6% year over year to $186.7 million, but losses and loss adjustment expenses increased by 4% due to higher current accident year losses [4]. Operational Metrics - Pre-tax income was reported at $15.9 million, a decrease of 55% year over year [5]. - The number of policies in force reached a record level of 133,121, marking a 4% increase year over year [5]. - The GAAP combined ratio was 102%, which deteriorated by 40 basis points year over year but was better than the Zacks Consensus Estimate of 102.7% [6]. Capital Deployment - Employers Holdings repurchased shares worth $20.2 million in Q1 2025 and an additional $8.2 million in April, with a new $125 million share repurchase program authorized on April 30, 2025 [8]. - Dividends paid in Q1 2025 amounted to $7.5 million, with a quarterly dividend of 32 cents per share announced for Q2 2025, representing a 7% increase [9]. Balance Sheet Highlights - As of March 31, 2025, the company had investments, cash, and cash equivalents of $2.5 billion, a 0.2% increase from the end of 2024 [6]. - Total assets rose to $3.6 billion from $3.5 billion at the end of 2024 [7]. - Total stockholders' equity increased by 0.7% to $1.1 billion, with adjusted book value per share rising to $50.75 from $50.71 at the end of 2024 [7].

Financial Performance - Total revenues for Q1 2025 were $202.6 million, a decrease of 9.5% from $223.1 million in Q1 2024[14] - Net income for Q1 2025 was $12.8 million, a significant drop of 54.7% compared to $28.3 million in Q1 2024[14] - Net premiums earned decreased to $183.0 million in Q1 2025, down from $184.9 million in Q1 2024, reflecting a decline of 1.0%[14] - Total expenses for the three months ended March 31, 2025, were $186.7 million, compared to $187.8 million for the same period in 2024, showing a slight decrease of 0.6%[103][104] - Net income for the three months ended March 31, 2025, was $12.8 million, a decrease of 54.8% compared to $28.3 million for the same period in 2024[21] - The combined ratio for the Insurance Operations segment was 102.0% for Q1 2025, compared to 101.6% for Q1 2024, indicating a slight deterioration in underwriting performance[103][104] Assets and Liabilities - Total assets increased to $3,556.9 million as of March 31, 2025, compared to $3,541.3 million as of December 31, 2024, representing a growth of 0.4%[12] - Total liabilities rose to $2,481.2 million as of March 31, 2025, up from $2,472.6 million at the end of 2024, indicating a 0.3% increase[12] - The total stockholders' equity increased to $1,075.7 million as of March 31, 2025, from $1,068.7 million at the end of 2024, a rise of 0.8%[12] Cash and Investments - Cash and cash equivalents increased to $100.4 million as of March 31, 2025, compared to $68.3 million as of December 31, 2024, reflecting a growth of 47.0%[12] - The company reported a net cash provided by investing activities of $46.1 million, a turnaround from a net cash used of $97.7 million in the previous year[21] - Total cash, cash equivalents, and restricted cash at the end of the period was $100.6 million, up from $68.5 million at the beginning of the period[22] - The investment portfolio as of March 31, 2025, had a total fair value of $2,335.9 million, with a weighted average book yield of 4.5%[186] - The fixed maturity securities portfolio had a weighted average quality rating of "A+" as of March 31, 2025[182] Losses and Expenses - Losses and loss adjustment expenses for Q1 2025 were $120.7 million, up from $116.5 million in Q1 2024, marking an increase of 2.9%[14] - Total net losses and LAE incurred during the three months ended March 31, 2025, were $122.3 million, compared to $118.6 million for the same period in 2024[78] - Current accident year losses and LAE increased to $121.0 million for the three months ended March 31, 2025, compared to $118.7 million for the same period in 2024, reflecting a rise in loss trends[133] Dividends and Stockholder Equity - The company declared cash dividends of $0.30 per common share in Q1 2025, compared to $0.28 in Q1 2024, representing a 7.1% increase[14] - The adjusted stockholders' equity as of March 31, 2025, was $1,228.8 million, compared to $1,213.0 million as of March 31, 2024, indicating a growth of 1.3%[103][104] Investment Gains and Losses - The company reported unrealized AFS investment gains of $21.1 million for Q1 2025, compared to losses of $11.6 million in Q1 2024[14] - The company recorded net realized and unrealized gains on investments of $12.8 million, contrasting with losses of $11.4 million in the prior year[21] - The company reported unrealized gains of $16.7 million and unrealized losses of $93.6 million on its available-for-sale investments as of March 31, 2025[48] Operational Metrics - Gross premiums written for the Insurance Operations segment increased to $212.1 million in Q1 2025, up from $210.9 million in Q1 2024, representing a growth of 0.6%[103][104] - The number of in-force policies increased to 133,121 as of March 31, 2025, compared to 130,767 at December 31, 2024[122] - The company continues to invest in technology to enhance data analytic capabilities and reduce operating costs over the long term[115] Tax and Regulatory - The effective tax rate for the three months ending March 31, 2025, was 19.5%, compared to 19.8% for the same period in 2024[75] - Income tax expense decreased to $3.1 million in Q1 2025 from $7.0 million in Q1 2024, with effective tax rates of 19.5% and 19.8%, respectively[149] Share Repurchase and Commitments - The company repurchased 406,101 shares for $20.2 million during Q1 2025[173] - As of March 31, 2025, the company had unfunded investment commitments totaling $14.0 million[177]

Financial Data and Key Metrics Changes - The company's net premium earned was relatively flat compared to 2024, driven by higher renewal premiums offset by lower new business and audit premiums [7][8] - Gross premiums written increased by 1% to $212 million, while net premiums earned decreased by 1% to $183 million [11][12] - Net investment income rose by 20% to $32 million, marking the highest quarterly figure in the company's history [9][14] - The current accident year loss and LAE ratio on voluntary business increased from 64% to 66% [9][12] - The underwriting expense ratio improved to 23.4%, down from 25% a year ago [10][13] - Adjusted net income increased by 24% to $21.3 million compared to $17.2 million last year [15] Business Line Data and Key Metrics Changes - The increase in gross premiums was primarily due to higher renewal business, while lower new business and final audit premiums offset this growth [11][12] - Commission expenses decreased to $23 million from $25 million, and the commission expense ratio improved to 12.6% from 13.6% [13] - Underwriting expenses decreased to $43 million from $46 million, contributing to the improved underwriting expense ratio [13] Market Data and Key Metrics Changes - The company reported a record number of policies in force, with a year-over-year growth rate of 4% [8] - The overall selection of the current accident year loss ratio of 66% is below the industry average, which has been in the range of 69% to 70% [26] Company Strategy and Development Direction - The company continues to prioritize profitability over growth and is refining its underwriting and pricing approach to maintain discipline while returning to moderate new business growth levels [18] - The appetite expansion effort is identifying areas for profitable growth, with confidence to accelerate this effort going forward [18] - The company is monitoring potential impacts from tariff discussions and the cost of prescription drugs and medical services [18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the ability to maintain a strong customer base amid potential recessionary headwinds due to deep relationships with customers and agents [18] - The company has not experienced negative impacts from tariff discussions but is closely monitoring the situation [18] - The management highlighted a focus on expense management and prudent capital management, indicating a strong financial position [19] Other Important Information - The Board of Directors authorized a new stock repurchase program for up to $125 million over a 20-month period [15] - A 7% increase in the quarterly dividend to $0.32 per share was declared, reflecting confidence in the company's financial strength [15][16] Q&A Session Summary Question: Can you talk about specifics regarding loss trends and how broad they are geographically? - Management noted that the increase in the accident year GLOF and LAE ratio reflects ongoing competitive rate environments and pressure on accident years 2023 and 2024, particularly in California [24][26] Question: How about underlying medical inflation and its drivers? - Management indicated that lost time claim frequencies have generally trended downward, although California saw an uptick due to cumulative trauma claims [29][30] Question: Is there a macroeconomic contribution to cumulative trauma claims? - Management stated that there is no identifiable macroeconomic cause for the increase in cumulative trauma claims in California, which is unique to the state [31][32] Question: What do you think will show up in the NCCI's state of the line report? - Management anticipates that reserve redundancies are still significant but carriers are reducing them less, indicating caution in the rate environment [39]