On July 31, 2024, Employers Holdings Inc (EIG, Financial) released its 8-K filing detailing the financial results for the second quarter of 2024. Employers Holdings Inc provides workers' compensation insurance to small businesses in low- to medium-hazard industries, with a significant portion of its business concentrated in California.
Performance Overview
Employers Holdings Inc reported net income per diluted share of $1.25, slightly above the analyst estimate of $1.22. Adjusted net income per diluted share came in at $1.10, compared to $1.17 in the same quarter last year. The company achieved gross premiums written of $207.9 million, a 5% increase year-over-year, and net premiums earned of $187.8 million, a 6% increase.
Financial Achievements and Challenges
The company saw a record number of policies in-force, reaching 128,522, reflecting a 3% increase year-over-year. However, the net favorable prior year loss reserve development decreased to $9.1 million from $19.7 million in the previous year. The GAAP combined ratio was 94.2%, up from 90.4% in the same period last year, indicating higher losses and expenses relative to earned premiums.
Income Statement Highlights
Net investment income was $26.9 million, a slight increase from the previous year. The underwriting and general and administrative expense ratio improved significantly to 22.0% from 26.0%, primarily due to the successful integration of Cerity. However, the commission expense ratio increased to 14.3% from 13.3%, driven by higher new business writings.
Balance Sheet and Cash Flow
The company's book value per share, including the deferred gain, increased by 14.0% year-over-year to $44.91. Adjusted book value per share rose by 10.2% to $48.89. Employers Holdings Inc returned $27.0 million to shareholders through share repurchases and dividends, reflecting its strong balance sheet and abundant underwriting capital.
Management Commentary
Chief Executive Officer Katherine Antonello commented: “Higher new and renewal premiums, strong and steady net investment income and continued net investment gains drove year-over-year increases in revenue for both the second quarter and the first six months of 2024. We also ended the period with yet another record number of policies in-force, which were up 3% year-over-year.”
Analysis and Outlook
Employers Holdings Inc's performance in Q2 2024 demonstrates resilience and growth in key areas such as gross premiums written and net premiums earned. However, the increase in the combined ratio and the decrease in net favorable prior year loss reserve development highlight ongoing challenges. The company's strategic focus on reducing underwriting and administrative expenses has yielded positive results, contributing to improved financial metrics.
Overall, Employers Holdings Inc continues to show strong fundamentals, with a robust balance sheet and a commitment to returning value to shareholders. Investors will be keen to see how the company navigates the evolving market conditions and maintains its growth trajectory in the coming quarters.
Explore the complete 8-K earnings release (here) from Employers Holdings Inc for further details.
