Employers Holdings, Inc. Reports Fourth Quarter 2020 and Year End Financial Results; Declares Quarterly Cash Dividend of $0.25 per Share
Company to Host Conference Call on
2020 Highlights
- Record number of ending policies in-force (103,506), up 5% year-over-year;
- Net income of
$119.8 million , or$3.97 per diluted share; - Adjusted net income of
$93.5 million , or$3.10 per diluted share; - Net investment income of
$76.3 million , down 13% year-over-year; - Net realized and unrealized gains on investments recorded through the income statement of
$19.0 million ; - Net premiums earned of
$615.3 million , down 12% year-over-year; - Favorable prior year loss reserve development of
$81.6 million , versus$77.5 million a year ago; - The Company repurchased 3,020,016 shares of its common stock at an average price of
$33.05 per share; - Book value per share including the Deferred Gain of
$46.85 , up 15.2% year-over-year including dividends declared.
Fourth Quarter 2020 Highlights
- Net income of
$64.0 million , or$2.19 per diluted share; - Adjusted net income of
$42.8 million , or$1.46 per diluted share; - Net investment income of
$18.0 million , down 20% year-over-year; - Net realized and unrealized gains on investments recorded through the income statement of
$21.3 million ; - Net premiums earned of
$151.5 million , down 11% year-over-year; - Favorable prior year loss reserve development of
$39.7 million , versus$11.4 million a year ago; - The Company repurchased 529,146 shares of its common stock at an average price of
$32.50 per share.
Management Commentary
Chief Executive Officer
“Our record number of ending policies in-force demonstrates that our policyholders are enduring the pandemic, albeit with lower payroll levels. We remain optimistic that, as more vaccines are delivered and state restrictions are lifted, we will be able to replace the premium we have lost in 2020. In support of this anticipated recovery, we have continued to pursue and advance the significant investments we have made in delivering a superior customer experience for our agents and insureds and have actively managed our underwriting expenses with a view towards achieving our targeted expense ratios, despite the meaningful reductions in earned premium we are currently experiencing.
“We expected to incur a lower current accident year loss and LAE ratio in 2020 than we experienced in 2019. Nonetheless, through the first three quarters of 2020, we maintained our loss ratio at our 2019 level (65.5%) in recognition of the uncertainty brought by the pandemic in terms of expected premium levels, the extent and duration of regulatory actions and overall claims frequency and severity. During the fourth quarter, in response to consistently favorable indemnity claims frequency trends experienced throughout the year, we reduced our 2020 accident year loss and LAE ratio to 64.3%.”
Summary of Consolidated Fourth Quarter 2020 Operating Results
(All comparisons vs. fourth quarter 2019, unless noted otherwise).
Gross premiums written were
Losses and loss adjustment expenses were
Commission expenses were
Underwriting and general and administrative expenses were
Net investment income of
Income tax expense was
The Company’s book value per share of
Summary of Fourth Quarter 2020 Results by Segment
(see page 16 of the Financial Supplement for a description of our reportable segments. All comparisons are vs. fourth quarter 2019, unless noted otherwise).
Employers Segment
The Employers segment reported net income before income taxes of
Highlights included the following:
– Underwriting income of
– Combined ratio of 70.2% versus 95.5%;
– Current accident year loss and LAE ratio of 60.8% versus 65.6%;
– Favorable prior year loss reserve development of 26.2 percentage points versus 6.7 percentage points;
– Commission expense ratio of 12.5% versus 12.0%;
– Underwriting expense ratio of 23.1% versus 24.6%;
– Net investment income of
– Net realized and unrealized gains on investments of
Cerity Segment
The Cerity segment reported a net loss before income tax of
Corporate and Other
Corporate and Other activities reported net income (loss) before income taxes of
– LPT amortization, which served to reduce losses and LAE, of
– Net investment income of
– General and administrative expenses of
Share Repurchases and First Quarter 2021 Dividend Declarations
During the fourth quarter of 2020, the Company repurchased 529,146 shares of its common stock at an average price of
On
Earnings Conference Call and Webcast / Availability of Financial Supplement and Investor Presentation
The Company will host a conference call on
To participate in the live conference call by telephone, dial +1 (888) 364-8443 or +1 (484) 747-6630 and use the conference call access code 1177535.
The webcast will be accessible on the Company’s website at www.employers.com through the “Investors” link. An archived version of the webcast will remain on the Company’s website for up to seven days following the live webcast. To listen to a recording of the call by telephone, dial +1 (855) 859-2056 or +1 (404) 537-3406 and use the conference call access code 1177535.
Reconciliation of Non-GAAP Financial Measures to GAAP
The information in this press release should be read in conjunction with the Financial Supplement that is attached to this press release and available on our website.
Within this earnings release we present various financial measures, some of which are “non-GAAP financial measures” as defined in Regulation G pursuant to Section 401 of the Sarbanes - Oxley Act of 2002. A description of these non-GAAP financial measures, as well as a reconciliation of such non-GAAP measures to our most directly comparable GAAP financial measures is included in the attached Financial Supplement. Management believes that these non-GAAP measures are important to the Company's investors, analysts and other interested parties who benefit from having an objective and consistent basis for comparison with other companies within our industry. Management further believes that these measures are more relevant than comparable GAAP measures in evaluating our financial performance.
Forward-Looking Statements
In this press release, the Company and its management discuss and make statements based on currently available information regarding their intentions, beliefs, current expectations, and projections of, among other things, the Company's future performance, including the effects of the Coronavirus (COVID-19) pandemic, business growth, retention rates, loss costs, claim trends and the impact of key business initiatives, future technologies and planned investments. Certain of these statements may constitute “forward-looking” statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and are often identified by words such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “target,” “project,” “intend,” “believe,” “estimate,” “predict,” “potential,” “pro forma,” “seek,” “likely,” or “continue,” or other comparable terminology and their negatives. The Company and its management caution investors that such forward-looking statements are not guarantees of future performance. Risks and uncertainties are inherent in the Company’s future performance. Factors that could cause the Company's actual results to differ materially from those indicated by such forward-looking statements include, among other things, those discussed or identified from time to time in the Company’s public filings with the
Filings with the
The Company’s filings with the
The Company also provides its quarterly Investor Presentations on its website at www.employers.com.
About
EMPLOYERS® and America’s small business insurance specialist® are registered trademarks of
Contact Information
Company contact:
Mike Paquette (775) 327-2562 or mpaquette@employers.com
Investor relations contact:
Adam Prior, The Equity Group, Inc. (212) 836-9606 or aprior@equityny.com
EMPLOYERS Contact
- Mike Paquette (775) 327-2562 or mpaquette@employers.com
