Employers (US:EIG)2025-07-31 16:00Financial Data and Key Metrics Changes - Gross written premium decreased by 2.2% compared to 2024, primarily due to a decrease in new business written premium within the middle market [7][11] - Net premiums earned increased by 5.6%, driven by strong increases in net written premium in 2024 [7][11] - The current accident year loss and loss adjustment expense (LAE) ratio on voluntary business was 69%, up from 66% in 2024, reflecting a response to rising cumulative trauma claims in California [8][11] - Adjusted net income decreased by 58.8% to $11,500,000 compared to $27,900,000 in the prior year [15] - Stockholders' equity increased, with book value per share rising 12.8% to $49.44 and adjusted book value per share increasing by 8.2% to $51.68 over the last twelve months [19] Business Line Data and Key Metrics Changes - The company experienced a record number of policies in force, with a year-over-year growth rate of 4.6% [7] - Commission expense ratio improved to 13.2% from 13.9% a year ago, while underwriting expense ratio decreased to 21.7% from 22.4% [10][12] - Net investment income for the quarter was $27,100,000, slightly higher than the previous year [14] Market Data and Key Metrics Changes - The California Insurance Commissioner approved an 8.7% rate increase effective September 1, driven by medical loss development and increased frequency of cumulative trauma claims [22][23] - The company noted that California represents about 45% of its book, and while overall industry results are worsening, the company believes its results will remain favorable [22] Company Strategy and Development Direction - The company is focused on profitability over growth, leading to targeted underwriting actions and improved risk selection [7] - There is an ongoing emphasis on expense management and capital management, with a commitment to refining underwriting and pricing approaches for profitable growth [17][18] - The company is actively involved in advocating for legislative reforms to address the challenges posed by cumulative trauma claims in California [39][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's financial strength and prospects, highlighting the importance of deep customer relationships and geographic diversification [18] - The company is cautiously optimistic about managing potential headwinds related to prescription drug costs and medical services [18] - A full actuarial study is planned for the third quarter to assess the impact of cumulative trauma claims [9][35] Other Important Information - The Board of Directors declared a quarterly dividend of $0.32 per share, payable on August 27 [16] - The company repurchased $23,000,000 of its common stock at an average price of $48.08 per share during the quarter [15] Q&A Session Summary Question: Impact of cumulative trauma claims on current accident year loss - Management noted that California's results have been more favorable than the industry, but overall industry results are worsening, prompting actions on current accident year reserves [22][24] Question: Frequency of claims and attorney involvement - Management confirmed that California allows claims to be filed post-termination, leading to higher attorney involvement and a broader legislative framework compared to other states [29][30] Question: Confidence in reserves reflecting trends - Management expressed confidence in their multi-pronged approach to manage reserves and indicated that accident year 2025 is in a good position [35][36] Question: Comparison of claims to industry averages - Management stated that their book remains better than the industry average and that claims are typically late reported [38] Question: Capital management and excess capital - Management highlighted their high level of excess capital, which provides flexibility for growth investments and potential capital management strategies [44][45]