Employers (EIG) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements, management's discussion, and market risk disclosures Item 1. Consolidated Financial Statements This section provides unaudited consolidated financial statements, including balance sheets, income, equity, and cash flow statements, with detailed accounting notes Consolidated Balance Sheets Presents the Company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates Consolidated Balance Sheet Highlights (in millions) | Item | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Assets | | | | Total investments | $2,460.2 | $2,463.9 | | Cash and cash equivalents | $69.1 | $68.3 | | Premiums receivable (net) | $382.0 | $361.3 | | Reinsurance recoverable for unpaid losses (net) | $400.2 | $411.5 | | Total assets | $3,543.3 | $3,541.3 | | Liabilities | | | | Unpaid losses and loss adjustment expenses | $1,786.8 | $1,808.2 | | Unearned premiums | $429.6 | $402.2 | | Total liabilities | $2,460.2 | $2,472.6 | | Stockholders' Equity | | | | Retained earnings | $1,500.2 | $1,472.9 | | Accumulated other comprehensive loss, net of tax | $(53.2) | $(82.5) | | Treasury stock, at cost | $(790.2) | $(746.5) | | Total stockholders' equity | $1,083.1 | $1,068.7 | | Total liabilities and stockholders' equity | $3,543.3 | $3,541.3 | Consolidated Statements of Comprehensive Income (Loss) Details the Company's revenues, expenses, net income, and other comprehensive income for specified periods Consolidated Statements of Comprehensive Income (Loss) Highlights (in millions, except per share data) | 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 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net premiums earned | $198.3 | $187.8 | $381.3 | $372.6 | | Net investment income | $27.1 | $26.9 | $59.2 | $53.8 | | Net realized and unrealized gains on investments | $20.9 | $2.2 | $8.1 | $13.6 | | Total revenues | $246.3 | $217.0 | $448.9 | $440.1 | | Losses and loss adjustment expenses | $140.1 | $108.8 | $260.8 | $225.3 | | Total expenses | $209.3 | $177.0 | $396.0 | $364.8 | | Net Income | $29.7 | $31.7 | $42.5 | $60.0 | | Total Comprehensive income | $37.2 | $29.6 | $71.8 | $47.0 | | Basic Earnings per common share | $1.24 | $1.25 | $1.76 | $2.37 | | Diluted Earnings per common share | $1.23 | $1.25 | $1.74 | $2.36 | | Cash dividends declared per common share | $0.32 | $0.30 | $0.62 | $0.58 | Consolidated Statements of Stockholders' Equity Outlines changes in stockholders' equity, including net income, dividends, and other comprehensive income adjustments Changes in Stockholders' Equity (in millions) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Balance, January 1 | $1,068.7 | $1,013.9 | | Stock-based obligations | $2.8 | $2.8 | | Vesting of RSUs and PSUs, net of tax withholdings | $(1.3) | $(1.7) | | Acquisitions of common stock | $(43.7) | $(24.2) | | Dividends declared | $(15.2) | $(14.9) | | Net income for the period | $42.5 | $60.0 | | Change in net unrealized losses on AFS investments, net of taxes | $29.3 | $(13.0) | | Balance, June 30 | $1,083.1 | $1,022.9 | Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities for specified periods Consolidated Statements of Cash Flows Highlights (in millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $14.6 | $12.3 | | Net cash provided by (used in) investing activities | $46.2 | $(101.6) | | Net cash used in financing activities | $(60.0) | $(41.6) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $0.8 | $(130.9) | | Cash, cash equivalents and restricted cash at the beginning of the period | $68.5 | $226.6 | | Cash, cash equivalents and restricted cash at the end of the period | $69.3 | $95.7 | Notes to Consolidated Financial Statements Provides detailed explanations and disclosures supporting the consolidated financial statements 1. Basis of Presentation and Summary of Operations EHI, a Nevada holding company, provides workers' compensation insurance, preparing U.S. GAAP financial statements with estimates for a single operating segment - EHI is a Nevada holding company engaged in the commercial property and casualty insurance industry, specializing in workers' compensation products and services through its wholly owned insurance subsidiaries[29] - The Company accounts for a retroactive 100% quota share reinsurance agreement (LPT Agreement) as retroactive reinsurance, with an initial deferred reinsurance gain recorded as a liability[30][31] - The Company operates as a single operating segment, Insurance Operations, with significant management judgments required for estimates such as unpaid losses, reinsurance recoverables, premium revenue, deferred income taxes, and investment valuation[33][34] 2. New Accounting Standards The Company is evaluating ASU 2024-03 for expense disaggregation and adopted ASU 2023-07 for improved segment reporting disclosures - The FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures, effective for fiscal years beginning after December 15, 2026, requiring further disaggregation of certain costs and expenses[36] - The Company adopted ASU 2023-07, Segment Reporting, as of December 31, 2024, which improves disclosures about reportable segments by requiring more detailed information on significant segment expenses and CODM performance measures[37] 3. Valuation of Financial Instruments Financial instruments are categorized by fair value levels, with total investments at fair value of $2,354.1 million as of June 30, 2025 Financial Instruments Carried at Fair Value (in millions) | Item | June 30, 2025 Carrying Value | June 30, 2025 Estimated Fair Value | December 31, 2024 Carrying Value | December 31, 2024 Estimated Fair Value | | :-------------------------- | :----------------------------- | :--------------------------------- | :------------------------------- | :------------------------------- | | Total investments at fair value | $2,354.1 | $2,354.1 | $2,351.6 | $2,351.6 | | Cash and cash equivalents | $69.1 | $69.1 | $68.3 | $68.3 | | Restricted cash and cash equivalents | $0.2 | $0.2 | $0.2 | $0.2 | - As of June 30, 2025, the Company held $68.6 million of fixed maturity securities designated as Level 3 due to limited observable market information[44] Investments at Fair Value by Level (in millions) | Category | June 30, 2025 Level 1 | June 30, 2025 Level 2 | June 30, 2025 Level 3 | December 31, 2024 Level 1 | December 31, 2024 Level 2 | December 31, 2024 Level 3 | | :-------------------------- | :-------------------- | :-------------------- | :-------------------- | :------------------------ | :------------------------ | :------------------------ | | Total fixed maturity securities | $— | $2,008.4 | $68.6 | $— | $2,031.8 | $65.6 | | Total equity securities at fair value | $268.1 | $— | $— | $254.1 | $— | $— | | Short-term investments | $— | $9.0 | $— | $0.1 | $— | $— | | Total investments at fair value | $268.1 | $2,017.4 | $68.6 | $254.2 | $2,031.8 | $65.6 | - The Company's investments in private equity limited partnership interests are carried at Net Asset Value (NAV) and totaled $98.6 million at June 30, 2025, with unfunded commitments of $13.1 million[49] 4. Investments Total AFS investments were $2,086.0 million at June 30, 2025, with increased net investment income and significant realized/unrealized gains Total AFS Investments (in millions) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Amortized Cost | $2,154.5 | $2,203.2 | | Allowance for CECL | $(1.1) | $(1.1) | | Gross Unrealized Gains | $18.6 | $9.9 | | Gross Unrealized Losses | $(86.0) | $(114.5) | | Estimated Fair Value | $2,086.0 | $2,097.5 | Net Realized and Unrealized Gains on Investments (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 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total investments | $20.9 | $2.2 | $8.1 | $13.6 | Net Investment Income (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 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net investment income | $27.1 | $26.9 | $59.2 | $53.8 | - Securities on deposit with states for regulatory requirements totaled $655.3 million at June 30, 2025, up from $630.9 million at December 31, 2024[62] 5. Current Expected Credit Losses CECL allowances are maintained for premiums receivable, reinsurance recoverables, and AFS investments, with the premiums receivable allowance increasing to $22.4 million Changes in CECL on Premiums Receivable (in millions) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Beginning balance | $19.2 | $17.9 | | Current period provision | $11.0 | $10.1 | | Write-offs charged against allowance | $(3.2) | $(5.0) | | Recoveries collected | $(4.6) | $(4.2) | | Ending balance | $22.4 | $18.8 | Changes in CECL on Reinsurance Recoverables (in millions) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Beginning balance | $0.9 | $0.9 | | Current period provision | $(0.1) | $— | | Ending balance | $0.8 | $0.9 | - As of June 30, 2025, the Company established an aggregate allowance for CECL on AFS investments of $1.1 million, with no intent to sell any AFS investments below their amortized cost[72][73] 6. Property and Equipment Net property and equipment remained stable at $7.7 million, while capitalized cloud computing costs decreased to $13.7 million Property and Equipment, Net (in millions) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Property and equipment, gross | $43.3 | $48.9 | | Accumulated depreciation | $(35.6) | $(41.1) | | Property and equipment, net | $7.7 | $7.8 | - Capitalized costs associated with cloud computing arrangements decreased to $13.7 million at June 30, 2025, from $17.3 million at December 31, 2024[76] Maturities of Lease Liabilities (in millions) | Year | Operating Leases | | :--- | :--------------- | | 2025 | $0.7 | | 2026 | $1.2 | | 2027 | $1.2 | | 2028 | $0.4 | | Total lease payments | $3.5 | 7. Income Taxes The effective tax rate for Q2 and H1 2025 was 19.7%, with a $0.4 million excise tax obligation from stock repurchases - The effective tax rate for the three and six months ended June 30, 2025, was 19.7%, compared to 20.8% and 20.3% for the corresponding periods in 2024[81] - The Company's excise tax obligation from net stock repurchases was $0.4 million for the six months ended June 30, 2025, due to the Inflation Reduction Act of 2022[82] - The Company is evaluating the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) on its financial condition and results of operations[83] 8. Liability for Unpaid Losses and Loss Adjustment Expenses Unpaid losses and LAE decreased to $1,786.8 million, with unfavorable prior accident year development of $1.6 million Reconciliation of Changes in Liability for Unpaid Losses and LAE (in millions) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Unpaid losses and LAE at beginning of period | $1,808.2 | $1,884.5 | | Net unpaid losses and LAE at beginning of period | $1,395.8 | $1,456.1 | | Total net losses and LAE incurred during the period | $264.1 | $229.5 | | Total net paid losses and LAE during the period | $274.1 | $253.0 | | Unpaid losses and LAE at end of period | $1,786.8 | $1,850.9 | - The increase in current accident year losses and LAE for the three and six months ended June 30, 2025, was primarily due to unfavorable loss trends, predominantly in California, driven by a rapid increase in cumulative trauma (CT) claims[86][87] - Prior accident year development for the six months ended June 30, 2025, included $0.7 million net unfavorable development on voluntary risk business and $0.9 million net unfavorable development on assigned risk business, contrasting with $9.2 million net favorable development in the prior year[88][89] 9. LPT Agreement The LPT Agreement covers losses up to $2.0 billion, with a remaining Deferred Gain of $90.7 million as of June 30, 2025 - The LPT Agreement provides coverage for losses up to $2.0 billion for claims with original dates of injury prior to July 1, 1995[91] - The Company amortized $3.3 million of the Deferred Gain for the six months ended June 30, 2025, compared to $3.8 million for the same period in 2024[92] - The remaining Deferred Gain was $90.7 million as of June 30, 2025, down from $94.0 million at December 31, 2024[93] 10. Financing Arrangements EHI has a $25.0 million credit facility with no borrowings, and subsidiaries have access to $170.0 million in FHLB standby letters of credit - EHI entered into a $25.0 million unsecured, three-year revolving credit facility on May 28, 2024, with an option to increase to $35.0 million[94] - EHI had no borrowings under the Credit Agreement during the six months ended June 30, 2025, and remained in compliance with all covenants, including maintaining a minimum consolidated net worth of $800.0 million and a debt to total capitalization ratio of no more than 35%[96][98] - The Company's insurance subsidiaries have access to standby letters of credit from the FHLB, totaling $170.0 million, which are fully secured with eligible collateral[100] 11. Accumulated Other Comprehensive Loss AOCI improved to $(53.2) million at June 30, 2025, driven by reduced net unrealized losses on AFS investments Components of Accumulated Other Comprehensive Loss (in millions) | Item | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Net unrealized losses on AFS investments, before taxes | $(67.3) | $(104.5) | | Deferred tax benefit on net unrealized losses | $14.1 | $22.0 | | Total accumulated other comprehensive loss | $(53.2) | $(82.5) | 12. Stock-Based Compensation The Company granted RSUs and PSUs in 2025, with 208,279 RSUs and 221,496 PSUs outstanding as of June 30, 2025 Stock-Based Awards Granted (February & May 2025) | Award Type | Number Awarded | Weighted Average Fair Value on Date of Grant | | :--------- | :------------- | :----------------------------------------- | | RSUs (February 2025) | 53,040 | $49.33 | | PSUs (February 2025) | 94,820 | $49.33 | | RSUs (May 2025) | 4,400 | $48.09 | | PSUs (May 2025) | 420 | $48.09 | | RSUs (May 2025, non-employee directors) | 14,187 | $47.12 | - As of June 30, 2025, the Company had 208,279 RSUs and 221,496 PSUs (based on target achievement) outstanding[105] 13. Earnings Per Common Share Basic EPS for H1 2025 was $1.76, and diluted EPS was $1.74, reflecting a decrease from the prior year Earnings Per Common Share Calculation (in millions, except share data) | 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 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $29.7 | $31.7 | $42.5 | $60.0 | | Weighted average number of shares outstanding—basic | 24,005,881 | 25,278,473 | 24,201,160 | 25,312,208 | | Weighted average number of shares outstanding—diluted | 24,136,221 | 25,363,941 | 24,370,311 | 25,449,957 | - No potential dilutive shares were excluded from diluted EPS computations for the three and six months ended June 30, 2025, as they were not anti-dilutive[110] 14. Segment Reporting The Company operates as a single Insurance Operations segment, with a combined ratio of 103.9% and in-force premiums of $768.3 million for H1 2025 - The Company operates as a single reportable segment, Insurance Operations, providing workers' compensation insurance[111] - Performance is determined based on net income, combined ratio, and adjusted stockholders' equity, with the latter being a non-GAAP measure of financial strength[112] Insurance Operations Financial Highlights (in millions, except percentages) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Gross premiums written | $415.4 | $418.7 | | Net premiums earned | $381.3 | $372.6 | | Total revenues | $448.9 | $440.1 | | Losses and loss adjustment expenses | $260.8 | $225.3 | | Total expenses | $396.0 | $364.8 | | Net income | $42.5 | $60.0 | | Combined ratio | 103.9 % | 97.9 % | | Adjusted stockholders' equity | $1,227.0 | $1,217.2 | In-force Premiums by State (in millions) | State | June 30, 2025 In-force Premiums | December 31, 2024 In-force Premiums | June 30, 2024 In-force Premiums | | :-------------------------- | :-------------------------------- | :---------------------------------- | :-------------------------------- | | California | $351.6 | $336.1 | $328.0 | | Florida | $63.3 | $60.1 | $58.0 | | New York | $36.0 | $36.1 | $34.9 | | Other (43 states and D.C.) | $300.2 | $309.8 | $308.4 | | Total in-force, including estimated audit premium | $768.3 | $751.7 | $737.6 | Item 2. Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations Management discusses financial condition and results, noting decreased net income due to higher losses, strong investment income, and robust liquidity General Describes the Company's business model, strategic focus, and ongoing initiatives for profitable growth and risk diversification - The Company provides workers' compensation insurance coverage to small and mid-sized businesses in low-to-medium hazard industries across most of the United States, with 47% of in-force premiums generated in California[125] - The Company focuses on disciplined underwriting, claims management, medical provider networks, and diversified distribution channels to achieve profitable growth[127][128] - Ongoing business initiatives include achieving business process excellence, delivering self-service options, diversifying risk exposure, and broadening appetite expansion[130] Overview Summarizes key financial performance indicators, including net income, premiums earned, and investment results for the reporting periods - Net income decreased to $29.7 million for the three months ended June 30, 2025 (from $31.7 million in 2024) and to $42.5 million for the six months ended June 30, 2025 (from $60.0 million in 2024)[131] - Key factors affecting financial performance for the three and six months ended June 30, 2025, included moderate increases in net premiums earned, higher losses and LAE, and strong net investment income with favorable net realized and unrealized gains[131] Summary Financial Results (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 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross premiums written | $203.3 | $207.9 | $415.4 | $418.7 | | Net premiums earned | $198.3 | $187.8 | $381.3 | $372.6 | | Net investment income | $27.1 | $26.9 | $59.2 | $53.8 | | Net realized and unrealized gains on investments | $20.9 | $2.2 | $8.1 | $13.6 | | Losses and LAE | $140.1 | $108.8 | $260.8 | $225.3 | | Underwriting (loss) income | $(11.0) | $10.8 | $(14.6) | $7.8 | I. Review of Underwriting Results Analyzes underwriting performance, including gross premiums written, net premiums earned, loss ratios, and combined ratio trends Underwriting Results (in millions, except percentages) | 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 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross premiums written | $203.3 | $207.9 | $415.4 | $418.7 | | Net premiums earned | $198.3 | $187.8 | $381.3 | $372.6 | | Underwriting (loss) income | $(11.0) | $10.8 | $(14.6) | $7.8 | | Loss and LAE ratio | 70.7 % | 57.9 % | 68.4 % | 60.5 % | | Commission expense ratio | 13.2 % | 13.9 % | 12.9 % | 13.7 % | | Underwriting expense ratio | 21.7 % | 22.4 % | 22.6 % | 23.7 % | | Combined ratio | 105.6 % | 94.2 % | 103.9 % | 97.9 % | - Gross premiums written declined by 2.2% for the three months and 0.8% for the six months ended June 30, 2025, primarily due to reductions in new business, despite achieving a record number of in-force policies (134,421 at June 30, 2025)[136] - The calendar year loss and LAE ratio increased to 70.7% for the three months and 68.4% for the six months ended June 30, 2025, primarily due to a higher current accident year loss and LAE estimate driven by unfavorable loss trends, particularly from cumulative trauma (CT) claims in California[148][149] - Prior accident year development for the six months ended June 30, 2025, was $1.6 million unfavorable, a significant shift from $9.2 million favorable in the prior year[151] - The commission expense ratio decreased due to an increase in renewal premiums (lower commission rate) and lower agency incentive accruals[158] - The underwriting expense ratio decreased due to a disciplined focus on expense reduction[160] II. Review of Non-Underwriting Results Examines financial performance from investment income, realized/unrealized gains, interest expenses, and income tax expenses - Net investment income increased by 10.0% for the six months ended June 30, 2025, primarily due to returns from private equity limited partnerships and higher book yields on fixed maturity securities[164] - Net realized and unrealized gains on investments were $20.9 million for the three months ended June 30, 2025, a substantial increase from $2.2 million in the prior year, driven by gains on equity securities and other investments[166] - Interest and financing expenses were minimal, less than $0.1 million for the three months and $0.1 million for the six months ended June 30, 2025[170] - Income tax expense decreased to $7.3 million for the three months and $10.4 million for the six months ended June 30, 2025, with effective tax rates of 19.7% for both periods[171] Liquidity and Capital Resources Assesses the Company's ability to meet financial obligations, manage capital, and fund operations through cash, investments, and credit facilities - The Company believes its total capital position and liquidity are strong and sufficient for financing needs in the next 12 months and longer-term[172] - EHI's liquidity is contingent on existing capital and dividends from subsidiaries, which are restricted by state insurance laws[173] - Several subsidiaries declared dividends in Q1 and Q2 2025, limiting further payments without regulatory approval for the remainder of 2025[174][175][176] - Total cash and investments at the holding company were $37.8 million at June 30, 2025[177] - Operating subsidiaries' liquidity is primarily from premium collections, investment income, and reinsurance recoveries, with total cash and investments of $2,491.7 million at June 30, 2025[183][184] - Net cash provided by operating activities increased to $14.6 million for the six months ended June 30, 2025, from $12.3 million in the prior year[191] - Net cash provided by investing activities was $46.2 million for the six months ended June 30, 2025, a significant improvement from net cash used of $(101.6) million in the prior year[191] - The Company paid $15.4 million in dividends and repurchased 888,101 shares of common stock for $43.4 million during the six months ended June 30, 2025[197][198] - As of June 30, 2025, the investment portfolio consisted of 85% fixed maturity securities with a duration of 4.3 and a weighted average quality of 'A+'[206] - Contractual obligations include $3.5 million in lease payments, $9.9 million in other purchase obligations, and $13.1 million in unfunded investment commitments to private equity limited partnerships[200][201][202] - Unpaid losses and LAE reserves totaled $1,786.8 million, with $321.8 million payable within 12 months[203] Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company manages credit, interest rate, and equity price risks through diversification, duration management, and sensitivity analysis, also addressing inflation impacts - The Company is exposed to credit risk from fixed maturity securities, equity securities, other invested assets, cash equivalents, reinsurers, and premiums receivable, mitigated through diversification and monitoring[217][218] - Interest rate risk on fixed maturity securities is managed through duration, which was 4.3 at June 30, 2025[220] Sensitivity of Fixed Maturity Securities and Short-Term Investments to Interest Rate Changes (in millions, except percentages) | Hypothetical Changes in Interest Rates | Estimated Pre-tax Increase (Decrease) in Fair Value | | :----------------------------------- | :------------------------------------------------ | | 300 basis point rise | $(250.4) (12.0)% | | 200 basis point rise | $(170.3) (8.2)% | | 100 basis point rise | $(86.3) (4.1)% | | 50 basis point decline | $43.2 (2.1)% | | 100 basis point decline | $86.1 (4.1)% | | 200 basis point decline | $170.3 (8.2)% | | 300 basis point decline | $252.3 (12.1)% | - Equity price risk is minimized by investing primarily in mid-to-large capitalization issuers and diversifying holdings across industry sectors[224] Sensitivity of Equity Securities at Fair Value to Price Changes (in millions) | Item | Cost | Fair Value | 10% Fair Value Decrease | Pre-tax Decrease in Total Equity Securities | 10% Fair Value Increase | Pre-tax Increase in Total Equity Securities | | :---------------- | :--- | :--------- | :---------------------- | :---------------------------------------- | :---------------------- | :---------------------------------------- | | Equity securities | $148.0 | $268.1 | $241.3 | $(26.8) | $294.9 | $26.8 | - Higher inflation could significantly impact financial statements by increasing loss and LAE reserves, operating expenses, and wage inflation, while also increasing net investment income due to rising interest rates[227][228][229] Item 4. Controls and Procedures Management confirmed effective disclosure controls and procedures, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[230] - There have been no material changes in the Company's internal control over financial reporting during the period covered by this report[231] PART II – OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and other disclosures Item 1. Legal Proceedings The Company is involved in routine legal proceedings, with no material impact expected on operations or financial position - The Company is involved in pending and threatened litigation in the normal course of business[233] - Management believes that the ultimate liability from such litigation is not expected to have a material effect on the Company's results of operations, liquidity, or financial position[233] Item 1A. Risk Factors The Company reviews risk factors quarterly, reporting no material changes from its Annual Report on Form 10-K - The Company reviews and updates its risk factors quarterly[234] - As of the date of this report, there have been no material changes to the risk factors contained in the Annual Report[234] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company repurchased 482,000 shares for $23.2 million and authorized a new $125.0 million stock repurchase program Common Stock Repurchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions) | | :----------------- | :------------------------------- | :--------------------------- | :---------------------------------------------------------------------------------------- | | April 1 - April 30 | 170,000 | $48.35 | $125.0 | | May 1 - May 31 | 144,000 | $49.02 | $117.9 | | June 1 - June 30 | 168,000 | $47.01 | $110.0 | | Total | 482,000 | $48.08 | | - On April 30, 2025, the Board authorized the 2025 Program for repurchases of up to $125.0 million of common stock through December 31, 2026, replacing a similar exhausted program[235] Item 3. Defaults Upon Senior Securities No defaults upon senior securities occurred during the reporting period - There were no defaults upon senior securities[236] Item 4. Mine Safety Disclosures Mine Safety Disclosures are not applicable to the Company's operations - Mine Safety Disclosures are not applicable to the Company[237] Item 5. Other Information No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers - No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[238] Item 6. Exhibits This section lists all Form 10-Q exhibits, including certifications and XBRL-formatted financial statements - The exhibits include certifications of Katherine H. Antonello and Michael A. Pedraja pursuant to Sections 302 and 906[239] - Financial statements for the quarter ended June 30, 2025, are included in Inline XBRL format, along with XBRL Taxonomy Extension Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[239] Signatures The report was signed by Michael A. Pedraja, EVP and CFO of Employers Holdings, Inc., on August 1, 2025 - The report was signed by Michael A. Pedraja, Executive Vice President and Chief Financial Officer of Employers Holdings, Inc., on August 1, 2025[242]