Employers (US:EIG)2023-10-26 20:37Financial Data and Key Metrics Changes - Gross premiums written increased to $196 million, up 4% from $189 million a year ago, primarily due to higher new and renewal business writings [8] - Net premiums earned rose to $185 million, a 3% increase from $179 million in the previous year [8] - Net investment income increased by 9% to $26 million, driven by higher market interest rates impacting bond yields [30] - Net income was negatively impacted by $6 million of net after-tax unrealized losses from equity securities and $26 million from fixed maturity securities [10] Business Line Data and Key Metrics Changes - The Employers segment reported pretax income of $21 million, down from $26 million a year ago, with a combined ratio of 98% [9] - The Cerity segment experienced a pretax loss of $2 million, consistent with the previous year [9] - The average policy size increased from approximately $5,200 to $5,500 over the past year, attributed to economic growth and higher employment levels [20] Market Data and Key Metrics Changes - The company reported strong audit pickups totaling $7.4 million in Q3, compared to $12.5 million in the same quarter of 2022 [16] - New business written premiums reached $115 million, with about $40 million coming from appetite expansion classes [36] Company Strategy and Development Direction - The company is focused on integrating Cerity's operations to enhance efficiency and reduce redundant systems [12] - There is an ongoing effort to expand underwriting appetite, with a committee formed to explore new class codes for 2024 [36] - The company aims to reduce total underwriting expenses as a percentage of earned premiums in 2024 [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position to benefit from favorable trends in the small business workers' compensation sector [13] - The internal drug cost index for in-network pharmacy costs has been decreasing since 2019, with a slight uptick in 2023, but remains lower than pre-pandemic levels [46] Other Important Information - The company repurchased 367,209 shares at an average price of $38.95 per share, with a remaining share repurchase authorization of $36 million [31] - A quarterly dividend of $0.28 per share was declared, payable on November 22 [31] Q&A Session Summary Question: What is the outlook for premium growth excluding audit adjustments? - Management indicated that gross written premium increased about 12% in Q3 2023 relative to Q3 2022, maintaining double-digit growth when excluding audit adjustments [35] Question: What is the average policy size for the new business? - The average policy size has increased due to both economic growth and appetite expansion efforts [20] Question: When is the consolidation of Cerity expected to be completed? - The consolidation is expected to be largely completed in 2024, with benefits anticipated from an expense standpoint [40]