Employers (US:EIG)2025-05-02 16:02Financial Data and Key Metrics Changes - The first quarter net premium earned was relatively flat compared to 2024, driven by higher renewal premium offset by lower new business and audit premium [7] - Gross premiums written were $212 million, an increase of 1%, while net premiums earned were $183 million, a decrease of 1% [11][12] - Net investment income increased by 20% to $32 million, the highest in the company's history as a publicly traded entity [9][14] - The current accident year loss and LAE ratio on voluntary business increased to 66% from 64% in 2024 [9][12] - The underwriting expense ratio improved to 23.4% from 25% a year ago [10][13] - Adjusted net income increased by 24% to $21.3 million from $17.2 million a year ago [15] Business Line Data and Key Metrics Changes - The increase in gross premiums was primarily due to higher renewal business, partially offset by lower new business and final audit premiums [11][12] - Commission expense 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 ended the period with a record number of policies in force, achieving 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% in recent years [25] Company Strategy and Development Direction - The company continues to prioritize profitability over growth and has identified refinements in underwriting and pricing to maintain discipline [17] - There is an ongoing appetite expansion effort to identify areas for profitable growth, with confidence to accelerate this effort [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 despite potential recessionary headwinds [18] - The company is focused on expense management and prudent capital management, with key operating metrics showing improvement [19] - The book value per share increased by 14% to $48.25, and adjusted book value per share increased by 9% to $50.75 over the last twelve months [19] Other Important Information - The Board of Directors authorized a new stock repurchase program for up to $125 million from May 6, 2025, through December 31, 2026 [15][16] - A 7% increase in the quarterly dividend to $0.32 per share was declared, payable on May 28 [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, with a rise in cumulative trauma claims in California [23][24] Question: How about underlying medical inflation and other drivers of medical expenses? - Management indicated that lost time claim frequencies have generally trended downward, although California saw an uptick due to cumulative trauma claims, with overall severity values holding steady [27][28] Question: Is there a macroeconomic contribution to cumulative trauma claims? - Management stated that there is no identifiable macroeconomic cause for the cumulative trauma claims arising from accident year 2024, noting it is a California-specific phenomenon [30][31] Question: What do you think will show up in the NCCI state of the line report regarding industry fundamentals? - Management anticipates that while there are still significant redundancies in the industry, carriers are reducing redundancies less, and internal rates have shown a slight increase [38][39]