Eastern Insurance Holdings Inc. (EIHI, Financial) filed Quarterly Report for the period ended 2010-09-30.
Eastern Insurance Holdings Inc. has a market cap of $102.2 million; its shares were traded at around $10.9299 with a P/E ratio of 24.3 and P/S ratio of 0.7. The dividend yield of Eastern Insurance Holdings Inc. stocks is 2.4%.EIHI is in the portfolios of John Keeley of Keeley Fund Management.
The workers compensation insurance segment reported net income of $2.0 million and $5.1 million for the three and nine months ended September 30, 2010, respectively, compared to net income of $2.5 million and $6.3 million for the same periods in 2009. The segment reported a combined ratio of 95.1% and 93.3% for the three and nine months ended September 30, 2010, respectively, compared to a combined ratio of 89.0% and 88.3% for the same periods in 2009. The increase in the combined ratio primarily reflects an increase in the loss ratio and return premiums to insureds as a result of premium audits, partially offset by a decrease in the expense ratio. The increase in the loss ratio primarily reflects the impact of the current economic environment on the Companys loss and LAE reserve estimates. The Company did not record any favorable development during the three and nine months ended September 30, 2010, compared to favorable development of $350,000 and $1.6 million, respectively, for same periods in 2009. Net premiums earned were reduced by $1.1 million for the nine months ended September 30, 2010, reflecting return premiums to insureds and a decrease in the earned but unbilled premium estimate as a result of decreasing payrolls. Net premiums earned increased by $632,000 for the nine months ended September 30, 2009 as a result of additional premium from insureds. The decrease in the expense ratio for the three months ended September 30, 2010, compared to the same period in 2009, primarily reflects the impact of audit premiums, which increased premiums by $81,000 in 2010 and decreased premiums by $179,000 in 2009. The decrease in the expense ratio for the nine months ended September 30, 2010, compared to the same period in 2009, primarily reflects the reversal of the 2009 Security Fund accrual as a result of receiving notice from the Security Fund that an assessment for 2009 would not be made, partially offset by the impact of return premiums to insureds.
The Company discounts its workers compensation reserves, using a discount rate of approximately 3.0%. As of September 30, 2010 and December 31, 2009, the Companys reserves for unpaid losses and LAE were reduced by $4.4 million and $4.3 million, respectively, related to the effects of discounting.
Unrealized investment gains or losses on investments carried at fair value, net of applicable income taxes, are reflected directly in shareholders equity as a component of comprehensive income (loss) and, accordingly, have no effect on net income. When, in the opinion of management, a decline in the fair value of an investment below its cost or amortized cost is considered to be other-than-temporary, such investment is written down to its fair value. The amount written down is recorded in earnings as a net realized investment loss. Generally, the determination of other-than-temporary impairment includes, in addition to other relevant factors, a presumption that if the market value is below cost by a significant amount for a period of time, a write down is necessary. Notwithstanding this presumption, the determination of other-than-temporary impairment requires judgment about future prospects for an investment and is therefore a matter of inherent uncertainty. For the three and nine months ended September 30, 2010, the Company recognized other-than-temporary impairments, excluding impairments in the segregated portfolio cell reinsurance segment, of $0 and $6,000, respectively, compared to other-than-temporary impairments of $398,000 and $3.6 million for the same periods in 2009. As of September 30, 2010, the Company held securities with gross unrealized losses of $137,000, excluding those securities in the segregated portfolio cell reinsurance segment, of which $83,000 were in an unrealized loss position for more than 12 months. Adverse investment market conditions, poor operating results of underlying investments, or the passage of time with respect to equity securities in an unrealized loss position, could result in impairment charges in the future. The Company generally applies the following standards in determining whether the decline in fair value of an investment is other-than-temporary:
For the three and nine months ended September 30, 2010, the Company recognized other-than-temporary impairments of $0 and $6,000 related to its fixed income security portfolio.
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Eastern Insurance Holdings Inc. has a market cap of $102.2 million; its shares were traded at around $10.9299 with a P/E ratio of 24.3 and P/S ratio of 0.7. The dividend yield of Eastern Insurance Holdings Inc. stocks is 2.4%.EIHI is in the portfolios of John Keeley of Keeley Fund Management.
Highlight of Business Operations:
The Company reported net income from continuing operations of $2.3 million and $2.0 million for the three and nine months ended September 30, 2010, respectively, compared to net income of $2.3 million and $3.4 million for the same periods in 2009. The decrease in operating results for the nine months ended September 30, 2010, compared to the same period in 2009, primarily reflects an increase in the loss ratio in the workers compensation insurance and segregated portfolio call reinsurance segments and a reduction in net investment income, partially offset by an increase in net premiums earned and net realized investment gains. The 2010 results were also impacted by reserve strengthening in the run-off specialty reinsurance segment totaling $2.3 million in the second quarter of 2010.The workers compensation insurance segment reported net income of $2.0 million and $5.1 million for the three and nine months ended September 30, 2010, respectively, compared to net income of $2.5 million and $6.3 million for the same periods in 2009. The segment reported a combined ratio of 95.1% and 93.3% for the three and nine months ended September 30, 2010, respectively, compared to a combined ratio of 89.0% and 88.3% for the same periods in 2009. The increase in the combined ratio primarily reflects an increase in the loss ratio and return premiums to insureds as a result of premium audits, partially offset by a decrease in the expense ratio. The increase in the loss ratio primarily reflects the impact of the current economic environment on the Companys loss and LAE reserve estimates. The Company did not record any favorable development during the three and nine months ended September 30, 2010, compared to favorable development of $350,000 and $1.6 million, respectively, for same periods in 2009. Net premiums earned were reduced by $1.1 million for the nine months ended September 30, 2010, reflecting return premiums to insureds and a decrease in the earned but unbilled premium estimate as a result of decreasing payrolls. Net premiums earned increased by $632,000 for the nine months ended September 30, 2009 as a result of additional premium from insureds. The decrease in the expense ratio for the three months ended September 30, 2010, compared to the same period in 2009, primarily reflects the impact of audit premiums, which increased premiums by $81,000 in 2010 and decreased premiums by $179,000 in 2009. The decrease in the expense ratio for the nine months ended September 30, 2010, compared to the same period in 2009, primarily reflects the reversal of the 2009 Security Fund accrual as a result of receiving notice from the Security Fund that an assessment for 2009 would not be made, partially offset by the impact of return premiums to insureds.
The Company discounts its workers compensation reserves, using a discount rate of approximately 3.0%. As of September 30, 2010 and December 31, 2009, the Companys reserves for unpaid losses and LAE were reduced by $4.4 million and $4.3 million, respectively, related to the effects of discounting.
Unrealized investment gains or losses on investments carried at fair value, net of applicable income taxes, are reflected directly in shareholders equity as a component of comprehensive income (loss) and, accordingly, have no effect on net income. When, in the opinion of management, a decline in the fair value of an investment below its cost or amortized cost is considered to be other-than-temporary, such investment is written down to its fair value. The amount written down is recorded in earnings as a net realized investment loss. Generally, the determination of other-than-temporary impairment includes, in addition to other relevant factors, a presumption that if the market value is below cost by a significant amount for a period of time, a write down is necessary. Notwithstanding this presumption, the determination of other-than-temporary impairment requires judgment about future prospects for an investment and is therefore a matter of inherent uncertainty. For the three and nine months ended September 30, 2010, the Company recognized other-than-temporary impairments, excluding impairments in the segregated portfolio cell reinsurance segment, of $0 and $6,000, respectively, compared to other-than-temporary impairments of $398,000 and $3.6 million for the same periods in 2009. As of September 30, 2010, the Company held securities with gross unrealized losses of $137,000, excluding those securities in the segregated portfolio cell reinsurance segment, of which $83,000 were in an unrealized loss position for more than 12 months. Adverse investment market conditions, poor operating results of underlying investments, or the passage of time with respect to equity securities in an unrealized loss position, could result in impairment charges in the future. The Company generally applies the following standards in determining whether the decline in fair value of an investment is other-than-temporary:
For the three and nine months ended September 30, 2010, the Company recognized other-than-temporary impairments of $0 and $6,000 related to its fixed income security portfolio.
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