Financial Data and Key Metrics Changes - Gross premiums written decreased to $156.8 million from $176.3 million, an 11% decline primarily due to lower new business writings and lower final audit premiums [8] - Losses and LAE increased to $134.4 million from $113.2 million, an 18.7% increase attributed to a higher accident year 2025 selected loss and LAE ratio [8] - Net investment income rose to $31.4 million from $26.7 million, a 17.6% increase driven by private equity investment returns and a higher book yield on the fixed income portfolio [9] - Adjusted net income was $14.5 million compared to $28.7 million in the previous year [11] - Book value per share increased by 11% to $51.31 [7] Business Line Data and Key Metrics Changes - The small commercial franchise maintained strong retention rates throughout 2025, indicating successful investments in automation and ease of use [4] - The company is experiencing lower new business writings and has exited certain classes of business, particularly in California [35] Market Data and Key Metrics Changes - The California market is characterized as hardening, with rate increases being implemented [24] - The overall competitive environment remains, with some carriers exiting certain states or classes of business [24] Company Strategy and Development Direction - The company is expanding its capabilities with a new excess workers' compensation product, leveraging core expertise and AI tools for development [6] - A focus on disciplined underwriting, prudent risk management, and strategic investments is expected to strengthen the company's position in the workers' compensation insurance market [7] - The company aims to return capital to shareholders through share repurchases and dividends, reflecting confidence in its financial position [7] Management's Comments on Operating Environment and Future Outlook - Management noted that the frequency of cumulative trauma claims in California is still elevated but has shown signs of flattening [20] - The company expects reduced written premium in 2026 due to the hard market conditions [4] - Management is optimistic about the impact of AI initiatives on operational efficiency and expense ratios [27] Other Important Information - The board declared a quarterly dividend of $0.32 per share, payable on March 18 [14] - The company repurchased $215 million in shares and dividends in 2025, with a focus on capital management [7] Q&A Session Summary Question: Trajectory of CT claims - Management observed that the acceleration of CT claims frequency has slowed down, although it remains elevated compared to historical levels [20] Question: Dynamics of the hardening market - Management indicated that while the California market is hardening, the overall environment remains competitive, with some carriers exiting certain areas [24] Question: Buybacks for 2026 - Management expects to return to a normal level of share repurchase authority in 2026, being opportunistic in timing [26] Question: Improvement in expense ratio - Management is hopeful for continued improvement in the expense ratio due to ongoing AI initiatives [27] Question: Gross written premium in California - Management confirmed that lower new business writings and non-renewals are contributing to the decline in gross written premium in California [35] Question: Scaling the new excess workers' comp product - Management plans to scale the new product cautiously, with expectations for it to become a significant revenue driver over time [36] Question: Competitive advantages in the excess workers' comp market - Management believes that efficiency through AI and unique loss control offerings will help differentiate their product in a competitive market [44] Question: Performance expectations for the new product - Management anticipates a combined ratio in the mid-80s for the excess workers' compensation product, with a strong expense ratio [48] Question: Future proportion of premiums from excess workers' comp - Management hopes that excess workers' comp could represent about 10% of overall written premium in the next 4-7 years [50]

Financial Data and Key Metrics Changes - Gross premiums written decreased to $156.8 million from $176.3 million year-over-year, a decline of 11% primarily due to lower new business writings and lower final audit premiums [7] - Losses and LAE increased by 18.7% to $134.4 million compared to $113.2 million in the prior year, driven by an increase in the accident year 2025 selected loss and LAE ratio [7] - Net investment income rose by 17.6% to $31.4 million from $26.7 million in the previous year, attributed to private equity investment returns and a higher book yield on the fixed income portfolio [8] - Adjusted net income was $14.5 million for the quarter, down from $28.7 million last year [10] - Book value per share increased by 11% to $51.31 [6] Business Line Data and Key Metrics Changes - The small commercial franchise maintained strong retention rates throughout 2025, indicating successful investments in automation and ease of use [4] - The company is experiencing lower new business writings and has exited certain classes of business, particularly in California [34] Market Data and Key Metrics Changes - The California market is characterized as hardening, with rate increases being implemented, while the overall environment remains competitive across the country [20][22] - The average rate on renewal increased by over 5% for the entire book, with California driving much of this increase [22][23] Company Strategy and Development Direction - The company is expanding its capabilities with a new excess workers' compensation product, leveraging core expertise to diversify its risk profile [5] - AI tools are being aggressively adopted to enhance product development and operational efficiency, with a focus on creating a sustainable competitive advantage [13][26] - The company aims to return capital to shareholders through share repurchases and dividends, reflecting confidence in its financial position [6][12] Management's Comments on Operating Environment and Future Outlook - Management noted that the frequency of cumulative trauma claims in California has flattened, although it remains elevated compared to historical levels [18] - The company expects reduced written premium in 2026 due to the hard market conditions, but is optimistic about maintaining profitability through disciplined underwriting and strategic actions [4][19] - Management expressed confidence in the company's financial strength and operational performance, with a focus on improving expense ratios through AI initiatives [12][25] Other Important Information - The company repurchased $215 million in shares and declared a quarterly dividend of $0.32 per share for Q1 2026 [6][12] - The investment rebalancing strategy aimed to reduce equity investments to target levels while increasing overall portfolio yield [9] Q&A Session Summary Question: Trajectory of CT claims - Management observed that the acceleration of CT claims frequency has slowed down, although it remains elevated compared to past levels [18] Question: Dynamics of the hardening market - The hardening market is primarily observed in California, with some competitors still taking market share, but the company is cautious about pricing margins [19][20] Question: Gross written premium in California - The decline in gross written premium is attributed to lower new business and non-renewals, particularly in California [34] Question: Scaling the new excess workers' comp product - The company plans to write its first business effective July 1 and will proceed cautiously to learn and adapt as it scales [35] Question: Performance expectations for the excess workers' comp product - Management anticipates a combined ratio in the mid-80s for the excess comp space, with a strong expense ratio due to AI-driven underwriting [44]

Core Insights - Employers Holdings, Inc. reported financial results for the full year and fourth quarter of 2025, highlighting challenges and strategic responses to increased claim frequency in California [1][2]. Full-Year 2025 Financial Highlights - Net income decreased to $10.8 million ($0.46 per diluted share) from $118.6 million ($4.71 per diluted share) in 2024 [3]. - Adjusted net income was $21.8 million ($0.93 per diluted share), down from $94.0 million ($3.73 per diluted share) [3]. - Gross premiums written totaled $756.1 million, a decline from $776.3 million [3]. - Net premiums earned increased to $761.9 million from $749.5 million [3]. - The loss and LAE ratio rose to 76.4% from 60.9% [3]. - The GAAP combined ratio was 110.9%, compared to 97.9% in the previous year [3]. Fourth Quarter 2025 Financial Highlights - Net loss was $(23.4) million ($(1.06) per diluted share), compared to a profit of $28.3 million ($1.14 per diluted share) in Q4 2024 [3]. - Adjusted net income for the quarter was $14.5 million ($0.66 per diluted share), down from $28.7 million ($1.15 per diluted share) [3]. - Gross premiums written were $156.8 million, an 11% decrease from $176.3 million [7]. - Net investment income increased by 18% to $31.4 million from $26.7 million [11]. - The GAAP combined ratio for the quarter was 106.1%, compared to 95.5% in Q4 2024 [3]. CEO Commentary - CEO Katherine Antonello emphasized the company's resilience and strategic actions taken to address increased claim frequency, which are expected to lead to a return to historical profitability levels [2][4]. Strategic Developments - The company launched a new excess workers' compensation product, leveraging AI for innovation and customer expansion [5]. - Employers Holdings returned $215.4 million to shareholders through share repurchases and dividends, reflecting confidence in financial strength [6]. Investment Performance - Net investment income for the year increased by 9% to $116.7 million from $107.0 million [3]. - The company experienced net realized and unrealized losses on investments of $(20.4) million, compared to gains of $24.1 million in 2024 [3]. Shareholder Returns - The company repurchased 2,368,845 shares at an average price of $40.94 per share during Q4 2025 [15]. - A first-quarter dividend of $0.32 per share was declared, payable on March 18, 2026 [16].

Financial Data and Key Metrics Changes - Gross premiums written increased by 1.4% to $183.9 million compared to $181.2 million in the prior year, primarily due to renewal business premium growth [16] - Net premiums earned rose by 3% to $192.1 million from $186.6 million in the previous year, driven by larger levels of 2024 written premium earning in 2025 [16] - Losses and loss adjustment expenses (LAE) were $186.6 million, significantly higher than $117.7 million a year ago, reflecting increased reserves due to cumulative trauma claims [17] - The adjusted net loss was $25.5 million compared to adjusted net income of $20.2 million a year ago [20] - The book value per share increased by 6.1% to $49.70, while adjusted book value per share rose by 5.5% to $51.31 over the last 12 months [22][23] Business Line Data and Key Metrics Changes - The company increased its accident year 2025 loss and LAE ratio from 69% to 72% due to rising cumulative trauma claims in California [6] - The underwriting expense ratio decreased to 20.6% from 23.5% year-over-year, attributed to lower compensation-related expenses and higher net premiums earned [18] - The commission expense ratio improved to 12% from 13.8%, primarily due to a higher proportion of renewal business [18] Market Data and Key Metrics Changes - The company reported a 4% growth in policies in force, indicating strong retention in the small commercial business despite competitive pressures [13] - The frequency of cumulative trauma claims in California has increased, impacting reserves, while frequency in other states continues to decline [6][10] Company Strategy and Development Direction - The company is focusing on underwriting margin over growth in a soft workers' compensation market, implementing targeted pricing actions and enhanced risk selection [12] - A new excess workers' compensation offering is being developed, with plans to start accepting submissions in early 2026 [14] - The company is pursuing legislative reforms in California to align cumulative trauma claims with other states [11][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the adjustments made to reserves adequately address recent trends and emphasized that these are not indicative of broad deterioration in the business [7][12] - The company is committed to providing best-in-class care to injured workers while managing the impact of cumulative trauma claims [11] - Future growth is expected to be steady, with a focus on maintaining underwriting margins rather than aggressive expansion [33] Other Important Information - The company announced a $125 million debt-funded recapitalization plan and increased its share repurchase authorization to $250 million [15][21] - Net investment income for the quarter was $26.1 million, slightly lower than the previous year, with realized and unrealized gains on investments increasing to $21.2 million [14][19] Q&A Session Summary Question: Can you elaborate on the targeted litigation strategies? - The company is using analytics to manage cumulative trauma claims and has established aggressive targets to reduce litigation costs [25] Question: How predictable are the loss trends going into 2026? - Management believes the trend is stabilizing but acknowledges the difficulty in predicting future outcomes [29] Question: Will there be a traditional fourth-quarter reserve review? - Yes, a full fourth-quarter review will be conducted, including an external actuarial review [36] Question: What commentary have you received from rating agencies regarding cumulative trauma claims? - Rating agencies have been supportive of the company's operational and capital actions [38] Question: How are medical cost trends evolving? - Overall claim severity values have held steady, with no significant concerns regarding medical costs [39] Question: Can you discuss the new excess workers' compensation product? - The new product is part of the company's diversification strategy, leveraging existing expertise and systems [41]