Employers (EIG) 1 Aug 24 2024 Q2 Earnings call transcript

In the latest earnings call, Employers Holdings, Inc. (EHI) shared a strong second quarter performance, with a focus on growth, strategic expansion, and navigating competitive pressures. The call, led by CEO Kathy Antonello and CFO Mike Paquette, provided valuable insights into the company's financial health, strategic initiatives, and market dynamics.

Financial Highlights: A Strong Quarter and a Positive Outlook

EHI reported a robust second quarter, with adjusted net income per share of $1.10, marking the highest quarterly result in the last 10 years. The company's revenue growth was driven by higher new and renewal premiums, strong net investment income, and continued net investment gains. Gross written premiums increased by 10%, with all major distribution channels contributing to the growth. The underwriting performance was particularly notable, with a decrease in underwriting expenses and a combined ratio of 95.4%, the lowest since 2018.

Strategic Expansion and Competitive Landscape

EHI is actively expanding its business, with a focus on appetite expansion and strategic partnerships. The company recognized $41 million in premium from its appetite expansion efforts, performing at a good loss ratio. Kathy Antonello noted that the environment remains competitive, with an average rate decrease of 3% to 4% in the renewal book. However, the company remains optimistic about its growth prospects, with a focus on expanding into new classes and markets.

Underwriting Performance and Investment Strategy

Underwriting performance was a highlight of the call, with a decrease in underwriting expenses and a combined ratio of 95.4%. The midyear full reserve study led to the recognition of $9.3 million of net favorable prior year loss reserve development. The company's investment strategy, including its net investment income and unrealized gains from equity securities and other investment holdings, also contributed significantly to the quarter's financial performance.

Looking Ahead: Challenges and Opportunities

The call touched upon key challenges and opportunities, including the impact of economic conditions on audit pick-ups and the potential impact of fee schedule changes in Florida. EHI's ability to manage these challenges, particularly in administered pricing states like Florida, will be a key focus for investors. The company's strategic expansion and underwriting performance, coupled with its strong financial health, position it well for future growth.

In conclusion, Employers Holdings, Inc.'s strong second quarter performance, strategic expansion, and positive outlook for the future are noteworthy. The company's ability to navigate competitive pressures and manage challenges, particularly in the context of economic conditions and fee schedule changes, will be a key factor in its future success. Investors and stakeholders will be closely watching EHI's performance in the coming quarters, particularly in the context of its expansion strategies and market dynamics.