- Second quarter net income, net income
excluding the impact of the Loss Portfolio Transfer (LPT) and
operating income of $24.8 million, $21.7 million and $19.7 million,
respectively.
- Annualized operating return on adjusted
equity of 8.1%.
- Second quarter combined ratio of 93.3%
and combined ratio excluding the impact of the LPT of 95.1%, each
an improvement year-over-year.
- Second quarter net written premiums of
$183.0 million, a decrease year-over-year related to a decline in
final audit premium.
- GAAP book value per share of $27.74,
book value per share of $32.95 and adjusted book value per share of
$30.17; increased 7.2%, 5.2% and 4.0%, respectively, in the first
half of 2017, each including dividends declared.
- In-force payroll exposure increased
1.7% overall, year-over-year.
- In-force policies increased 0.8%
overall, year-over-year.
- Net earned premiums decreased 2.9% in
the quarter, year-over-year.
- Board of Directors approved a quarterly
dividend of $0.15 per share.
Employers Holdings, Inc. (“EHI” or the “Company”)
(NYSE:EIG) today reported net income, net income excluding the
impact of the LPT and operating income of $24.8 million ($0.75 per
diluted share), $21.7 million ($0.66 per diluted share), and $19.7
million ($0.60 per diluted share), respectively, for the second
quarter of 2017.
The Company's net income for the second quarter of 2017
decreased $2.0 million year-over-year. This decrease reflects
non-routine adjustments made to LPT reserves and the LPT contingent
profit commission in the second quarter of 2016, which served to
reduce our losses and loss adjustment expense (LAE) and raise net
income by $4.9 million during that period.
The Company's net income before the impact of the LPT and
operating income increased by $2.5 million and $4.3 million,
respectively, year-over-year. These increases reflect a lower
combined ratio for the current period, driven primarily from a
reduction in the current accident year loss and LAE expense
ratio.
Chief Executive Officer Douglas Dirks commented on the
results:
“We produced another quarter of strong financial and operating
results. Excluding impacts of the LPT, our net income increased
13%, or eight cents per diluted share, and our combined ratio
improved 3.7 percentage points, demonstrating our disciplined
underwriting and sound investment strategies. Final audit premium
declined $6.2 million in the current quarter relative to the same
period last year, driving the 3% decline in top line
year-over-year. We achieved an annualized return on adjusted equity
of 8.1%, 1.2 percentage points higher than last year's second
quarter. Our balance sheet remained strong as we continued to grow
stockholders’ equity and book value per share. We again drove
strong new business growth and maintained high levels of retention
for our in-force policies, despite competitive market conditions,
while improving loss costs."
Summary of Second Quarter 2017
Results
(All comparisons vs. second quarter 2016, unless noted
otherwise).
Underwriting results
- The combined ratio before the impact of
the LPT decreased 3.7 percentage points to 95.1%, driven by a lower
current accident year loss and LAE ratio.
- The loss ratio before the LPT of 63.6%
decreased 3.8 percentage points reflecting a higher current
accident year loss ratio in last year's second quarter related to
four large losses and the continued impacts of key business
initiatives including: an emphasis on settling open claims;
diversifying our risk exposure across geographic markets; and
leveraging data-driven strategies to target, underwrite and price
profitable classes of business across all of our markets.
- The commission expense ratio of 12.5%
increased 0.1 percentage point due to an increase in partnership
and alliance business.
- The underwriting and other expense
ratio of 19.0% was flat.
Gross written premiums of $184.5 million decreased $6.1 million
due to a decline of $6.2 million in final audit premium compared
with the second quarter of 2016. Final audit pickup continued to be
positive with employers reporting higher payrolls at final audit
driven by increases in hours worked and the number of full-time
employees. We experienced strong new business growth but lower
renewal business overall, driven by one of our territories in
California.
In-force premium in states outside California grew 1.9% and
in-force premium in California increased by 0.5%. Policy count
outside of California grew 5.2% while policy count in California
declined 3.5%. Retention remained high and average renewal rates
decreased slightly by 1.8% year-to-date.
Net investment income of $18.2 million decreased $0.2 million
relative to the second quarter of last year. Net realized gains on
investments were $1.1 million versus $6.0 million in the second
quarter of last year when equity securities were sold as part of a
routine rebalancing of the equity portfolio.
In May of 2017, the Company redeemed $12.0 million of notes
payable for $9.9 million, resulting in a $2.1 million pre-tax
gain.
The Company's effective tax rate of 23.9% was slightly higher
than that of a year ago due mainly to the non-routine LPT
adjustments made in the second quarter of 2016, as previously
described.
Stockholders’ Equity including the
Deferred Gain, Second Quarter 2017 Dividend
Declaration
Stockholders’ equity including the deferred reinsurance gain was
$1,068.1 million, an increase of 4.1% year-over-year.
The Board of Directors declared a third quarter 2017 dividend of
$0.15 per share. The dividend is payable on August 23, 2017 to
stockholders of record as of August 9, 2017.
Conference Call and Web Cast; Form
10-Q; Supplemental Materials
The information in this press release should be read in
conjunction with the financial supplement that is attached to this
press release and is available on our website.
Reconciliation of Non-GAAP Financial
Measures to GAAP
Within this earnings release we present various financial
measures, some of which are a "non-GAAP financial measure" 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
the Company's most directly comparable GAAP financial measures is
included in the attached Financial Supplement. Management believes
that these non-GAAP measures are meaningful 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. These non-GAAP measures are not a
substitute for GAAP measures and investors should be careful when
comparing the Company's non-GAAP financial measures to similarly
titled measures used by other companies. Other companies may
calculate these measures differently, and, therefore, these
measures may not be comparable.
The Company will host a conference call on Thursday,
July 27, 2017, at 8:30 a.m. Pacific Daylight Time. The
conference call will be available via a live web cast on the
Company's web site at www.employers.com. An archived version will be
available several hours after the call. The conference call replay
number is (404) 537-3406 or (855) 859-2056 with a pass code of
55002602.
The Company provides a list of portfolio securities in the
Calendar of Events, “Investors” section of its website at
www.employers.com. The Company also
provides its filings with the Securities and Exchange Commission
and its investor presentations on its website.
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, business growth, retention rates, loss costs, claim
trends and the impact of key business initiatives. 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. EHI and its management caution
investors that such forward-looking statements are not guarantees
of future performance. Risks and uncertainties are inherent in
EHI'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 EHI's public filings
with the SEC, including the risks detailed in the Company's
Quarterly Reports on Form 10-Q and the Company's Annual Reports on
Form 10-K. Except as required by applicable securities laws, the
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise.
The SEC filings for EHI can be accessed through the “Investors”
link on the Company's website, www.employers.com, or through the SEC's EDGAR
Database at www.sec.gov (EHI EDGAR CIK
No. 0001379041).
Copyright © 2017 EMPLOYERS. All rights reserved. EMPLOYERS® and
America's small business insurance specialist. ® are registered
trademarks of Employers Insurance Company of Nevada. Employers
Holdings, Inc. is a holding company with subsidiaries that are
specialty providers of workers' compensation insurance and services
focused on select, small businesses engaged in low to medium hazard
industries. Insurance subsidiaries include Employers Insurance
Company of Nevada, Employers Compensation Insurance Company,
Employers Preferred Insurance Company, and Employers Assurance
Company, all rated A- (Excellent) by A.M. Best Company.
Additional information can be found at: http://www.employers.com.
Employers Holdings, Inc.Second Quarter
2017Financial Supplement
EMPLOYERS HOLDINGS, INC.
Table of Contents
Page
1
Consolidated Financial Highlights
2
Summary Consolidated Balance Sheets
3
Summary Consolidated Income Statements
4
Return on Equity
5
Combined Ratios
6
Roll-forward of Unpaid Losses and LAE
7
Consolidated Investment Portfolio
8
Book Value Per Share
9
Earnings Per Share
10
Non-GAAP Financial Measures
EMPLOYERS HOLDINGS, INC.
Consolidated Financial Highlights
(unaudited)
$ in millions, except per share
amounts
Three Months Ended Six Months
Ended June 30, June 30, 2017
2016* % change 2017 2016* %
change Selected financial highlights: Gross insurance
premiums written $ 184.5 $ 190.6 (3 )% $ 382.1 $ 381.3 — % Net
insurance premiums written 183.0 188.7 (3 ) 379.1 377.4 — Net
insurance premiums earned 171.7 176.9 (3 ) 347.1 349.5 (1 ) Net
investment income 18.2 18.4 (1 ) 36.9 36.2 2 Underwriting income
11.5 9.7 19 20.5 18.4 11 Net income before impact of the LPT(1)
21.7 19.2 13 42.0 37.9 11 Operating income(1) 19.7 15.4 28 38.6
33.1 17 Net income 24.8 26.8 (7 ) 48.0 48.6 (1 ) Comprehensive
income 32.5 46.2 (29 ) 63.8 87.8 (27 ) Total assets 3,824.8 3,832.4
— Stockholders' equity 899.2 845.3 6 Stockholders' equity including
deferred reinsurance gain(2) 1,068.1 1,026.0 4 Adjusted
stockholders' equity(2) 977.8 903.2 8 Annualized operating return
on adjusted stockholders' equity(3) 8.1 % 6.9 % 17 % 8.0 % 7.5 % 7
%
Amounts per share: Cash dividends declared per share $
0.15 $ 0.09 67 % $ 0.30 $ 0.18 67 % Net income per diluted share(4)
0.75 0.81 (7 ) 1.46 1.47 (1 ) Net income before impact of the LPT
per diluted share(4) 0.66 0.58 14 1.27 1.15 10 Operating income per
diluted share(4) 0.60 0.46 30 1.17 1.00 17 GAAP book value per
share(2) 27.74 26.04 7 Book value per share(2) 32.95 31.60 4
Adjusted book value per share(2) 30.17 27.82 8
Combined ratio
before impact of the LPT:(5) Loss and loss adjustment
expense ratio: Current year 63.8 % 68.6 % 63.8 % 66.4 % Prior year
(0.2 ) (1.2 ) (0.1 ) (0.7 ) Loss and loss adjustment expense ratio
63.6 % 67.4 % 63.7 % 65.7 % Commission expense ratio 12.5 12.4 12.4
12.1 Underwriting and other operating expense ratio 19.0
19.0 19.8 19.9 Combined ratio before impact of
the LPT 95.1 % 98.8 % 95.8 % 97.8 % (1) See Page 3 for
calculations and Page 10 for information regarding our use of
Non-GAAP Financial Measures.
(2) See Page 8 for calculations and Page
10 for information regarding our use of Non-GAAP Financial
Measures.
(3) See Page 4 for calculations and Page 10 for information
regarding our use of Non-GAAP Financial Measures. (4) See Page 9
for calculations and Page 10 for information regarding our use of
Non-GAAP Financial Measures. (5) See Page 5 for calculations and
Page 10 for information regarding our use of Non-GAAP Financial
Measures.
*The Company adopted ASU Number 2016-9,
Stock Compensation in the third quarter of 2016 with an effective
date of January 1, 2016. Adoption of this standard resulted in a
reduction to our income taxexpense of $0.5 million and $1.3 million
for the three and six months ended June 30, 2016, respectively.
EMPLOYERS HOLDINGS, INC.
Summary Consolidated Balance Sheets
(unaudited)
$ in millions, except per share
amounts
June 30, 2017 December 31,
2016 ASSETS Investments, cash and cash equivalents $
2,666.9 $ 2,623.4 Accrued investment income 20.5 20.6 Premiums
receivable, net 333.1 304.7 Reinsurance recoverable on paid and
unpaid losses 568.2 588.7 Deferred policy acquisition costs 49.6
44.3 Deferred income taxes, net 44.9 59.4 Contingent commission
receivable—LPT Agreement 31.1 31.1 Other assets 110.5 101.2
Total assets $ 3,824.8 $ 3,773.4
LIABILITIES Unpaid losses and LAE $ 2,284.9 $ 2,301.0
Unearned premiums 341.1 310.3 Commissions and premium taxes payable
52.0 48.8 Deferred reinsurance gain—LPT Agreement 168.9 174.9 Notes
payable 20.0 32.0 Other liabilities 58.7 65.8 Total
liabilities $ 2,925.6 $ 2,932.8
STOCKHOLDERS' EQUITY
Common stock and additional paid-in capital $ 377.2 $ 372.6
Retained earnings 815.4 777.2 Accumulated other comprehensive
income, net 90.3 74.5 Treasury stock, at cost (383.7 ) (383.7 )
Total stockholders’ equity 899.2 840.6 Total
liabilities and stockholders’ equity $ 3,824.8 $ 3,773.4
Stockholders' equity
including deferred reinsurance gain (1) $ 1,068.1 $ 1,015.5
Adjusted stockholders' equity (1) 977.8 941.0
GAAP Book Value per Share (1) $ 27.74 $ 26.16 Book value per
share (1) 32.95 31.61 Adjusted Book Value per Share (1)
30.17 29.29 (1) See Page 8 for
calculations and Page 10 for information regarding our use of
Non-GAAP Financial Measures.
EMPLOYERS HOLDINGS, INC.
Summary Consolidated Income Statements
(unaudited)
$ in millions, except per share
amounts
Three Months Ended Six Months Ended
June 30, June 30, 2017 2016*
2017 2016* Underwriting revenues: Gross
premiums written $ 184.5 $ 190.6 $ 382.1 $ 381.3 Premiums ceded
(1.5 ) (1.9 ) (3.0 ) (3.9 ) Net premiums written 183.0 188.7 379.1
377.4 Net premiums earned 171.7 176.9 347.1 349.5
Underwriting
expenses: Losses and LAE incurred (106.1 ) (111.7 ) (215.0 )
(219.0 ) Commission expense (21.5 ) (21.9 ) (43.0 ) (42.2 )
Underwriting and other operating expenses (32.6 ) (33.6 ) (68.6 )
(69.9 )
Underwriting income 11.5 9.7 20.5 18.4 Net
investment income 18.2 18.4 36.9 36.2 Gain on redemption of notes
payable 2.1 — 2.1 — Other income 0.1 0.5 0.1 0.6 Interest expense
(0.4 ) (0.4 ) (0.8 ) (0.8 ) Net realized gains on investments 1.1
6.0 3.3 7.5 Income tax expense (7.8 ) (7.4 ) (14.1 ) (13.3 )
Net
income 24.8 26.8 48.0 48.6 Net unrealized gains on investments
arising during the period, net of tax 8.4 23.3 17.9 44.1
Reclassification adj. for realized gains in net income, net of tax
(0.7 ) (3.9 ) (2.1 ) (4.9 )
Comprehensive income $
32.5 $ 46.2 $ 63.8 $ 87.8
Add (subtract) Amortization of deferred reinsurance gain -
losses $ (2.5 ) $ (2.2 ) $ (4.9 ) $ (4.8 ) Amortization of deferred
reinsurance gain - contingent commission (0.6 ) (0.5 ) (1.1 ) (1.0
) LPT reserve adjustment — (3.1 ) — (3.1 ) LPT contingent
commission adjustments — (1.8 ) — (1.8 )
Net
income before impact of the LPT Agreement (1) $
21.7 $ 19.2 $ 42.0 $ 37.9
Add (subtract) Impact of the LPT Agreement $ (3.1 ) $ (7.6 )
$ (6.0 ) $ (10.7 ) Net realized gains on investments, net of tax
(0.7 ) (3.9 ) (2.1 ) (4.9 ) Gain on redemption of notes payable,
net of tax (1.4 ) — (1.4 ) — Amortization of intangibles, net of
tax 0.1 0.1 0.1 0.1
Operating
income 1 $ 19.7 $ 15.4
$ 38.6 $ 33.1 (1) See Page 10
regarding our use of Non-GAAP Financial Measures.
*The Company adopted ASU Number 2016-9,
Stock Compensation in the third quarter of 2016 with an effective
date of January 1, 2016. Adoption of this standard resulted in a
reduction to our income taxexpense of $0.5 million and $1.3 million
for the three and six months ended June 30, 2016, respectively.
EMPLOYERS HOLDINGS, INC.
Return on Equity (unaudited)
$ in millions, except per share
amounts
Three Months Ended Six Months Ended June
30, June 30, 2017 2016* 2017
2016* Net income A $ 24.8 $ 26.8
$ 48.0 $ 48.6 Add (subtract): Impact of LPT Agreement (3.1 ) (7.6 )
(6.0 ) (10.7 ) Net realized gains on investments, net of tax (0.7 )
(3.9 ) (2.1 ) (4.9 ) Gain on redemption of notes payable, net of
tax (1.4 ) — (1.4 ) — Amortization of intangibles, net of tax 0.1
0.1 0.1 0.1
Operating income
(1) B $ 19.7 $ 15.4 $
38.6 $ 33.1 Stockholders' equity - end
of period $ 899.2 $ 845.3 $ 899.2 $ 845.3 Stockholders'
equity - beginning of period 867.5 803.7 840.6 760.8
Average stockholders' equity C $ 883.4
$ 824.5 $ 869.9 $ 803.1
Stockholders' equity - end of period $ 899.2 $ 845.3 $ 899.2 $
845.3 Add (subtract): Deferred reinsurance gain 168.9 180.7 168.9
180.7 Accumulated other comprehensive income, net of tax (90.3 )
(122.8 ) (90.3 ) (122.8 ) Adjusted stockholders' equity - end of
period 977.8 903.2 977.8 903.2 Adjusted stockholders' equity -
beginning of period 956.9 886.7 941.0 866.7
Average adjusted stockholders' equity (1)
D $ 967.4 $ 895.0 $ 959.4
$ 885.0 Return on stockholders' equity
A /
C 2.8 % 3.3 % 5.5 % 6.1 %
Annualized return on stockholders'
equity 11.2 13.0 11.0 12.1 Operating return on adjusted
stockholders' equity (1)
B / D 2.0 % 1.7 % 4.0 % 3.7 %
Annualized operating return on adjusted stockholders' equity
(1) 8.1 6.9 8.0
7.5
(1) See Page 10 for information regarding
our use of Non-GAAP Financial Measures.
*The Company adopted ASU Number 2016-9,
Stock Compensation in the third quarter of 2016 with an effective
date of January 1, 2016. Adoption of this standardresulted in a
reduction to our income tax expense of $0.5 million and $1.3
million for the three and six months ended June 30, 2016,
respectively.
EMPLOYERS HOLDINGS, INC.
Combined Ratios (unaudited)
$ in millions, except per share
amounts
Three Months Ended Six Months Ended June
30, June 30, 2017 2016 2017
2016 Net premiums earned
A $ 171.7 $ 176.9 $
347.1 $ 349.5 Losses and LAE incurred
B 106.1 111.7 215.0
219.0 Amortization of deferred reinsurance gain - losses 2.5 2.2
4.9 4.8 Amortization of deferred reinsurance gain - contingent
commission 0.6 0.5 1.1 1.0 LPT reserve adjustment — 3.1 — 3.1 LPT
contingent commission adjustments — 1.8 — 1.8
Losses and LAE before impact of the LPT (1)
C $ 109.2
$ 119.3 $ 221.0 $ 229.7 Less: favorable prior year loss reserve
development (0.3 ) (2.0 ) (0.3 ) (2.3 ) Losses and LAE before
impact of the LPT - current accident year
D $ 109.5 $
121.3 $ 221.3 $ 232.0 Commission expense
E $ 21.5 $ 21.9 $ 43.0 $ 42.2 Underwriting and other
operating expenses
F 32.6 33.6
68.6 69.9
GAAP combined ratio: Loss and
LAE ratio
B/A 61.8 % 63.1 % 61.9 % 62.7 % Commission expense
ratio
E/A 12.5 12.4 12.4 12.1 Underwriting and other
operating expense ratio
F/A 19.0 19.0 19.8
19.9 GAAP combined ratio 93.3 % 94.5 %
94.1 % 94.7 % Combined ratio before impact of the
LPT: (1) Loss and LAE ratio before impact of the LPT
C/A
63.6 % 67.4 % 63.7 % 65.7 % Commission expense ratio
E/A
12.5 12.4 12.4 12.1 Underwriting and other operating expense ratio
F/A 19.0 19.0 19.8 19.9 Combined
ratio before impact of the LPT 95.1 % 98.8 %
95.8 % 97.8 % Combined ratio before impact of the LPT:
current accident year (1) Loss and LAE ratio before impact of the
LPT
D/A 63.8 % 68.6 % 63.8 % 66.4 % Commission expense ratio
E/A 12.5 12.4 12.4 12.1 Underwriting and other operating
expense ratio
F/A 19.0 19.0 19.8 19.9
Combined ratio before impact of the LPT: current accident
year 95.3 % 99.9 % 95.9 % 98.5 %
(1) See Page 10 for information regarding our use of Non-GAAP
Financial Measures.
EMPLOYERS HOLDINGS, INC.
Roll-forward of Unpaid Losses and LAE
(unaudited)
$ in millions
Three Months Ended Six Months Ended
June 30, June 30, 2017 2016
2017 2016 Unpaid losses and LAE at
beginning of period $ 2,298.2 $ 2,341.9 $ 2,301.0 $ 2,347.5
Reinsurance recoverable on unpaid losses and LAE 572.9 621.4
580.0 628.2 Net unpaid losses and LAE at
beginning of period 1,725.3 1,720.5 1,721.0
1,719.3 Losses and LAE incurred: Current year losses 109.4
121.3 221.3 232.0 Prior year losses on voluntary business — — — —
Prior year losses on involuntary business (0.3 ) (2.0 ) (0.3 ) (2.3
) Total losses incurred 109.1 119.3 221.0
229.7 Losses and LAE paid: Current year losses 17.0 14.4
21.7 19.1 Prior year losses 92.3 91.9 195.2
196.4 Total paid losses 109.3 106.3 216.9
215.5 Net unpaid losses and LAE at end of period
1,725.1 1,733.5 1,725.1 1,733.5 Reinsurance recoverable on unpaid
losses and LAE 559.8 598.8 559.8 598.8
Unpaid losses and LAE at end of period $ 2,284.9 $ 2,332.3
$ 2,284.9 $ 2,332.3
EMPLOYERS HOLDINGS, INC.
Consolidated Investment Portfolio
(unaudited)
$ in millions
June 30, 2017 December 31, 2016
Investment Positions:
Cost
orAmortizedCost
Net UnrealizedGain
Fair Value % Fair Value
% Fixed maturities $ 2,361.3 $ 57.4 $ 2,418.7
91 % $ 2,344.4 89 % Equity securities 118.2
81.5 199.7 7 192.2 7 Short-term investments 5.5 — 5.5 — 16.0 1 Cash
and cash equivalents 42.6 — 42.6 2 67.2 3 Restricted cash and cash
equivalents 0.4 — 0.4 — 3.6
— Total investments and cash $ 2,528.0
$ 138.9 $ 2,666.9 100 % $ 2,623.4
100 %
Breakout of Fixed Maturities: U.S.
Treasuries and Agencies $ 146.1 $ 3.4 $ 149.5 6 % $ 140.2 6 %
States and Municipalities 785.9 31.2 817.1 34 851.6 36 Corporate
Securities 989.4 19.9 1,009.3 42 956.7 41 Mortgage-Backed
Securities 394.5 2.6 397.1 16 353.5 15 Asset-Backed Securities 45.4
0.3 45.7 2 42.4 2
Total fixed maturities
$ 2,361.3 $ 57.4 $ 2,418.7 100 % $
2,344.4 100 %
Weighted
average book yield 3.2% 3.1% Weighted average tax equivalent yield
3.7% 3.6% Average credit quality (S&P) AA- AA- Duration
4.1 4.3
EMPLOYERS HOLDINGS, INC.
Book Value Per Share
(unaudited)
$ in millions, except per share
amounts
June 30, 2017 December
31, 2016 June 30, 2016 December 31, 2015
Numerators: Stockholders' equity A $ 899.2 $
840.6 $ 845.3 $ 760.8 Plus: Deferred reinsurance gain 168.9
174.9 180.7 189.5
Stockholders' equity including
deferred reinsurance gain (1) B 1,068.1 1,015.5
1,026.0 950.3 Less: Accumulated other comprehensive income, net of
tax 90.3 74.5 122.8 83.6
Adjusted
stockholders' equity (1) C $ 977.8 $ 941.0
$ 903.2 $ 866.7
Denominator (shares
outstanding) D 32,412,997 32,128,922 32,463,660
32,216,480 GAAP book value per share (1)
A / D $
27.74 $ 26.16 $ 26.04 $ 23.62 Book value per share (1)
B / D
32.95 31.61 31.60 29.50 Adjusted book value per share (1)
C /
D 30.17 29.29 27.82 26.90 Cash dividends declared per
share $ 0.30 $ 0.36 $ 0.18 $ 0.24
YTD Change in:
(2) GAAP book value per share 7.2 % 11.0 % Book value per
share 5.2 7.7 Adjusted book value per share 4.0 4.1 (1) See
Page 10 for information regarding our use of Non-GAAP Financial
Measures. (2) Reflects the change in book value per share after
taking into account dividends declared in the period.
EMPLOYERS HOLDINGS, INC.
Earnings Per Share (unaudited)
$ in millions, except per share
amounts
Three Months Ended Six Months
Ended June 30, June 30, 2017
2016* 2017 2016* Numerators:
Net income A $ 24.8 $ 26.8 $ 48.0 $ 48.6 Add
(subtract): Impact of the LPT Agreement (3.1 ) (7.6 ) (6.0 ) (10.7
)
Net income before impact of
LPT (1) B $ 21.7 $ 19.2 $ 42.0
$ 37.9 Net realized gains on investments, net of tax
(0.7 ) (3.9 ) (2.1 ) (4.9 ) Gain on redemption of notes payable,
net of tax (1.4 ) — (1.4 ) — Amortization of intangibles, net of
tax 0.1 0.1 0.1 0.1
Operating
income (1) C $ 19.7 $ 15.4 $ 38.6
$ 33.1
Denominators: Average common
shares outstanding (basic)
D 32,469,137 32,629,525
32,398,858 32,521,672 Average common shares outstanding (diluted)
E 32,992,598 33,143,948 32,982,928 33,003,449
Net
income per share: Basic
A / D $ 0.76 $ 0.82 $ 1.48 $
1.49 Diluted
A / E 0.75 0.81 1.46 1.47
Net income
before impact of the LPT per share: (1) Basic
B /
D $ 0.67 $ 0.59 $ 1.30 $ 1.17 Diluted
B / E 0.66 0.58
1.27 1.15
Operating income per share: (1)
Basic
C / D $ 0.61 $ 0.47 $ 1.19 $ 1.02 Diluted
C / E
0.60 0.46 1.17 1.00 (1) See Page 10 for information
regarding our use of Non-GAAP Financial Measures.
*The Company adopted ASU Number 2016-9,
Stock Compensation in the third quarter of 2016 with an effective
date of January 1, 2016. Adoption of this standardresulted in a
reduction to our income tax expense of $0.5 million and $1.3
million for the three and six months ended June 30, 2016,
respectively.
Glossary of Financial
Measures
Within this earnings release we present the following measures,
each of which are a "non-GAAP financial measure" as defined in
Regulation G pursuant to Section 401 of the Sarbanes - Oxley Act of
2002. A reconciliation of these measures to the Company's most
directly comparable GAAP financial measures is included herein.
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.
The LPT Agreement is a non-recurring transaction that
does not result in ongoing cash benefits to the Company. Management
believes that providing non-GAAP measures that exclude the effects
of the LPT Agreement (amortization of deferred reinsurance gain,
adjustments to LPT Agreement ceded reserves and adjustments to
contingent commission receivable) is useful in providing investors,
analysts and other interested parties a meaningful understanding of
the Company's ongoing underwriting performance.
Deferred reinsurance gain reflects the unamortized gain
from the LPT Agreement. This gain has been deferred and is being
amortized using the recovery method, whereby the amortization is
determined by the proportion of actual reinsurance recoveries to
total estimated recoveries, except for the contingent profit
commission, which is being amortized through June 30, 2024.
Amortization is reflected in losses and LAE incurred.
Operating income (see Page 4 for calculations) is net
income excluding the effects of the LPT Agreement, net realized
gains (losses) on investments (net of tax), gain on redemption of
notes payable (net of tax), and amortization of intangible assets
(net of tax). Management believes that providing this non-GAAP
measures is helpful to investors, analysts and other interested
parties in identifying trends in the Company's operating
performance because such items have limited significance to its
ongoing operations or can be impacted by both discretionary and
other economic factors and may not represent operating trends.
Stockholders' equity including the deferred reinsurance
gain is stockholders' equity including the deferred reinsurance
gain. Management believes that providing this non-GAAP measure is
useful in providing investors, analysts and other interested
parties a meaningful measure of the Company's total underwriting
capital.
Adjusted stockholders' equity (see Page 8 for
calculations) is stockholders' equity including the deferred
reinsurance gain, less accumulated other comprehensive income (net
of tax). Management believes that providing this non-GAAP measure
is useful to investors, analysts and other interested parties since
it serves as the denominator to the Company's operating return on
equity metric.
Return on stockholders' equity and Operating return on
stockholders' equity (see Page 4 for calculations).
Management believes that these profitability measures are widely
used by our investors, analysts and other interested parties.
GAAP book value per share , Book value per share and Adjusted
book value per share (see Page 8 for calculations). Management
believes that these valuation measures are widely used by our
investors, analysts and other interested parties.
Net income, Combined ratio and Combined ratio before impact
of the LPT (see Pages 3 and 5 for calculations). Management
believes that these performance and underwriting measures are
widely used by our investors, analysts and other interested
parties.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170726006206/en/
Employers Holdings, Inc.Media:Ty Vukelich,
775-327-2677tvukelich@employers.com.orAnalysts:Vicki Erickson
Mills, 775-327-2794vericksonmills@employers.com.
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