Employers' Q1 2025 Earnings Call: Unpacking Contradictions in Loss Ratios, Investment Strategies, and Competitive Challenges
Friday, May 2, 2025 7:28 pm ET
2min read Current accident year loss and LAE ratio trends, appetite expansion and rate environment, investment strategy and yield changes, medical inflation and cost containment, rate environment and competition are the key contradictions discussed in Employers' latest 2025Q1 earnings call.
Premiums and Policies:
- Employers Holdings reported net premium earned that was relatively flat compared to 2024, with a 4% year-over-year increase in the number of policies in-force.
- The flat premiums were due to lower new business and audit premium offset by higher renewal premium, while the policy increase was driven by a focus on profitability over growth.
Investment Income and Returns:
- The company earned $32 million in net investment income during the quarter, a 20% increase from the previous year.
- This increase was primarily due to returns from investments in private equity limited partnerships and higher yields on fixed maturity securities.
Loss Ratio and Reserve Adjustment:
- The current accident year loss and LAE ratio on voluntary business increased to 66% from the previous year's 64%.
- This increase was consistent with a conservative reserving philosophy and reflects the competitive rate environment and pressure on accident years 2023 and 2024.
Dividend and Share Repurchase:
- The Board of Directors declared a 7% increase in the quarterly dividend to $0.32 per share and authorized a new stock repurchase program for up to $125 million.
- These actions reflect the company's confidence in its financial strength and prospects, and were supported by strong financial performance and capital management.
Premiums and Policies:
- Employers Holdings reported net premium earned that was relatively flat compared to 2024, with a 4% year-over-year increase in the number of policies in-force.
- The flat premiums were due to lower new business and audit premium offset by higher renewal premium, while the policy increase was driven by a focus on profitability over growth.
Investment Income and Returns:
- The company earned $32 million in net investment income during the quarter, a 20% increase from the previous year.
- This increase was primarily due to returns from investments in private equity limited partnerships and higher yields on fixed maturity securities.
Loss Ratio and Reserve Adjustment:
- The current accident year loss and LAE ratio on voluntary business increased to 66% from the previous year's 64%.
- This increase was consistent with a conservative reserving philosophy and reflects the competitive rate environment and pressure on accident years 2023 and 2024.
Dividend and Share Repurchase:
- The Board of Directors declared a 7% increase in the quarterly dividend to $0.32 per share and authorized a new stock repurchase program for up to $125 million.
- These actions reflect the company's confidence in its financial strength and prospects, and were supported by strong financial performance and capital management.
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