EIG Shareholder/Stockholder Letter Transcript:
2023
ANNUAL
REPORT
Employers Holdings, Inc.
employers.com
Company Summary
Employers Holdings, Inc. is the only nationwide insurance company exclusively
focused on providing workers compensation. Having been in the workers
compensation business for 110 years, we believe our deep expertise and
commitment to this line of insurance is a significant competitive advantage.
Market and economic conditions can change quickly, and we are uniquely
positioned to understand and react to the impact on our business and the
low-to-medium hazard industries we insure.
Our overall strategy is to pursue profitable growth opportunities across workers
compensation insurance market cycles, provide a seamless end-to-end customer
experience, maximize our investment returns within the constraints of prudent
portfolio management, maintain a strong equity capital position, and deliver
value to our shareholders, all while being conscious of environmental, social
and governance concerns.
Our critical stakeholders include agents, policyholders and injured workers,
and we strive to provide a best-in-class experience tailored to their individual
needs. We recently expanded our online portal which provides easy access to
policy and claims information to agents and policyholders. In addition, our
policyholders can purchase our product at their convenience via an array of
distribution channels, including traditional independent agents and brokers,
payroll providers, aggregators, digital agents, partner insurance companies,
and affinity groups.
2023 EMPLOYERS ANNUAL REPORT
i
2023 Overview
2023 was an excellent year for EMPLOYERS. We
experienced strong revenue growth driven by increases
in premium writings, net investment income and net
investment gains.
Our key accomplishments in 2023, included the
following:
Our ending policies in-force were 126,409,
the highest in our history;
We achieved a combined ratio of 95%, or 96%
excluding the effects of the LPT;
We wrote $761 million of net written premium,
the highest in our history;
Our investment portfolio generated net investment
income of $107 million, the highest in our history;
Our net income and net income per diluted share
increased by 144% and 154%, respectively, versus
that of a year ago;
Our adjusted net income and adjusted net income per
diluted share increased by 26% and 31%, respectively,
versus that of a year ago; and
We returned $107 million to stockholders through
a combination of share repurchases and regular
quarterly dividends.
2023 EMPLOYERS ANNUAL REPORT
ii
Financial Highlights1
($ in millions, except share and per share amounts)
Year Ended December 31,
2023
2022
CHANGE
Net insurance premiums written
$760.6
$707.2
8%
Net insurance premiums earned
$721.9
$675.2
7%
Combined ratio
95.0%
96.9%
-1.9 pts
Combined ratio excluding the effects of the LPT
96.0%
98.1%
-2.1 pts
Net investment income
$106.5
$89.8
19%
$22.7
$(51.8)
n/m
$118.1
$48.4
144%
$4.45
$1.75
154%
$101.7
$81.0
26%
$3.83
$2.93
31%
8.5%
6.6%
1.9 pts
$1,199.1
$1,189.2
1%
25,369,753 sh
27,160,748 sh
(1,790,995) sh
Net realized and urealized gains (losses) on investments
Net income
Net income per diluted share
Adjusted net income
Adjusted net income per diluted share
Adjusted return on equity
Ending Adjusted Stockholders Equity
Ending common shares outstanding
n/m = not meaningful
1
A Glossary of Financial Measures and reconciliation tables of GAAP to non-GAAP measures follow this letter.
2023 EMPLOYERS ANNUAL REPORT
iii
Underwriting Activities
Our net premiums written were up 8% in 2023
versus those of a year ago. This growth resulted
from a 20% increase in new business, a 9% increase
in renewal business and strong audit premium
recognition. The increase in new business resulted in
part from our continued appetite expansion efforts.
We also increased our final audit premium accruals
by $4.1 million and recognized $29.2 million of
audit premium pick-up, as our payroll exposure
increased with U.S. labor market strengthening
and rising wages for the businesses that we insure.
We continued our underwriting discipline and
maintained our current accident year loss and loss
adjustment expense ratio on voluntary business at
63.3%, which was lower than the 64.0% we recorded
throughout 2022. In addition, we reduced our loss
and loss adjustment expense reserves for prior
accident years by $45 million, which primarily
related to accident years 2020 and prior.
Our combined ratio excluding the impact of the
LPT was 96.0% in 2023, versus 98.1% a year ago.
The improvement in our combined ratio was
primarily the result of a lower loss and loss
adjustment expense ratio excluding the LPT
of 57.2%, versus 59.1% a year ago. Our commission
and underwriting and general and administrative
expense ratios of 13.9% and 24.9%, respectively,
were each highly consistent with those of a
year ago.
2023 EMPLOYERS ANNUAL REPORT
iv
4/11/2024 Letter Continued (Full PDF)