Employers (EIG) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Supplement Overview This overview details the company's Q2 2025 financial performance, position, and investment portfolio Consolidated Financial Highlights 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 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] - Stockholders' equity increased to $1,083.1 million as of June 30, 2025, from $1,068.7 million at December 31, 2024[7] Summary Consolidated Income Statements This section details the company's revenues, expenses, and net income for the three and six months ended June 30, 2025, and 2024, showing an increase in total revenues but a decrease in net income for both periods Summary Consolidated Income Statements ($ 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] Return on Equity 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] Combined Ratios 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] Roll-forward of Unpaid Losses and LAE 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] - 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] Consolidated Investment Portfolio 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 ($M) | % of Fixed Maturity | | :------------------------ | :---------- | :------------------ | | Corporate securities | 797.2 | 38% | | Mortgage-backed securities| 675.9 | 33% | | Asset-backed securities | 195.8 | 9% | | States and municipalities | 167.9 | 8% | | Bank loans and other | 146.8 | 7% | | U.S. Treasuries and agencies | 67.5 | 3% | | Collateralized loan obligations | 25.9 | 1% | - The weighted average book yield remained stable at 4.5% as of June 30, 2025, and December 31, 2024, with an average credit quality of A+ (S&P), while the duration slightly decreased to 4.3 from 4.5[19] Book Value Per Share This section presents book value per share, book value per share including Deferred Gain, and adjusted book value per share, along with their year-over-year changes, showing an overall increase across all book value metrics Book Value Per Share Metrics ($) | 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][22] Earnings Per Share 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] - 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] Non-GAAP Financial Measures 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] - 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] - 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] - 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][30]