Employers (US:EIG)2023-02-18 06:08Financial Data and Key Metrics Changes - The company reported a 22% increase in written premiums for Q4 2022 and a 21% increase for the full year [7][8] - Net investment income rose by 53% for the quarter and 24% for the year, totaling $90 million, the highest since 2009 [9][22] - The effective tax rate decreased to 16% from 20% year-over-year [20] Business Line Data and Key Metrics Changes - The Employers segment had underwriting income of $24 million, down from $28 million a year ago, with a combined ratio of 87% compared to 82% [14] - Cerity's premium writings increased by 350% from $1.5 million to $6.7 million [11] Market Data and Key Metrics Changes - The company experienced strong growth in new renewal and final audit premiums, driven by a robust labor market and rising wages [8][25] - The average pricing in Q4 2022 showed the smallest year-over-year rate decrease, approaching flat [40] Company Strategy and Development Direction - The company aims to identify new profitable segments in the workers' compensation market while maintaining fixed expenses [26] - The focus for 2023 includes investing in workforce and customer experience improvements [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong capital position and growth potential [30] - The competitive environment remains challenging, but there are opportunities due to insurtechs tightening pricing [40] Other Important Information - The company returned over $120 million to shareholders in 2022 through share repurchases and dividends [18] - The Federal Home Loan Bank strategy is expected to taper by the end of 2023, impacting future net investment income [46] Q&A Session Summary Question: Capital situation and potential for capital return - Management confirmed a strong capital position and the potential for further capital returns in the future [29][30] Question: Cerity's fourth quarter performance - Cerity's premium increased by about 275% year-over-year, with expectations for continued growth [33] Question: Current accident year outlook - Management does not expect a material change in the current accident year [35] Question: Competitive environment - The competitive landscape remains challenging, with some insurtechs tightening pricing, creating opportunities for the company [40] Question: Frequency and severity trends - Frequency is decreasing significantly, while severity is showing a slight uptick, but nothing concerning is anticipated [41][44] Question: Federal Home Loan Bank strategy impact - The strategy is expected to end in late 2023, with diminishing benefits as the year progresses [46]