Employers (US:EIG)2026-02-20 17:02Financial 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]