Employers (US:EIG)2025-05-02 16:02Financial 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]