Employers Holdings Inc · NYSE:EIG
Employers — Q3 2023 Earnings Presentation
27 slides from Employers's earnings presentation, Oct 26, 2023
Slide 1: Investor Presentation Third Quarter 2023
INVESTOR PRESENTATION Third Quarter 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements In this presentation, 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, economic or market
Slide 3: Business Overview
EMPLOYERS® Business Overview www.employers.com 3
Slide 4: Who We Are (the Numbers)
Who We Are (the Numbers) EMPLOYERS® is a mono-line writer of workers’ compensation (WC) insurance focused on low-to-medium hazard risk small businesses. MARKETS AND DISTRIBUTION $590 Million $722 Million Gross Written Premiums In-force Premium as of 9/30/2023 at September 30, 2023 (incl. est. audit
Slide 5: Who We Are (the Words)
Who We Are (the Words) UNIQUE GROWTH Over 100-year operating history DRIVERS SPECIFIC TO EMPLOYERS Strong underwriting focus with Transforming how small established presence in attractive markets businesses and insurance agents utilize digital capabilities to improve Record number of policies in-for
Slide 6: What We Write
What We Write Top Ten Employer Classifications % of Premium Classes of Business Food & Beverage Personal Services Restaurants & Other Eating Places 19% Tech and Scientific services Clothing retail Traveler Accommodation 7% Legal and Financial services Personal product retail Automobile Dealers 4% Ho
Slide 7: Marketing And Distribution
Marketing And Distribution We market and sell our workers' compensation insurance products through: • Local, regional, specialty and national insurance agents and brokers; • National, regional, and local trade groups and associations; and • Direct-to-customer interactions. Traditional Insurance Spec
Slide 8: 2022 Workers' Compensation Market
2022 Workers’ Compensation Market RANK GROUP/COMPANY NAME DIRECT PREMIUMS WRITTEN MARKET SHARE % 1 TRAVELERS GRP $3,807,285,569 6.7 2 HARTFORD FIRE & CAS GRP $3,636,838,515 6.4 3 AMTRUST FINANCIAL SERV GRP $3,161,523,545 5.6 4 ZURICH INS GRP $2,749,958,192 4.8 5 CHUBB LTD GRP $2,441,329,450 4.3 6 LI
Slide 9: Valuation and Comparing Public Comps
Valuation and Comparing Public Comps Top Ten Publicly-held Workers’ Compensation Writers (EIG and AMSF are the only pure-play publicly traded workers’ compensation writers) 3.00 2.82 2.50 2.37 2.00 Price-to-book Ratio 1.50 Peer Average: 1.70x 1.71 1.58 1.62 1.00 1.22 1.25 1.04 1.01 0.50 0.00 AIG EIG
Slide 10: Market Conditions
Market Conditions In-Force Policies and Premium $750 175,000 $722 $700 150,000 $650 125,000 # of policies $ in millions 126,120 $627 $600 100,000 $550 85,494 BEFORE AFTER 75,000 COVID-19 COVID-19 PANDEMIC PANDEMIC $500 50,000 12/31/17 12/31/18 12/31/19 12/31/20* 12/31/21* 12/31/22* 9/30/23* In-Force
Slide 11: COVID-19 Claims (through September 30, 2023)
COVID-19 Claims (through September 30, 2023) Covid-19 Claims - Total Incurred Covid-19 Claims - Setup per Quarter $9,000,000 400 $8,000,000 350 $7,000,000 300 $6,000,000 250 $5,000,000 200 $4,000,000 $3,000,000 150 $2,000,000 100 $1,000,000 50 $- 0 Covid-19 Claims - Closed Status per Covid-19 Claims
Slide 12: Five-Year Annual Financial Performance
Five-Year Annual Financial Performance Adjusted EPS (Diluted) Adjusted ROE $4.11 12.5% $3.20 $3.10 $2.93 8.6% $2.37 7.6% 6.6% 5.5% 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Combined Ratio – Employers Segment Adjusted Book Value per Share 93.1% 94.1% 89.1% 88.5% $45.67 84.9% $42.82 $43.78 22.
Slide 13: Strategy, Innovation and Capital Strength
EMPLOYERS® Strategy, Innovation and Capital Strength www.employers.com 13
Slide 14: Strategic Diversification
Strategic Diversification (by in-force premium) September 30, 2023 All other CA 34% December 31, 2013 45% 28% 4% 4% 60% GA 5% 8% 4% 5% IL 3% NY FL Growth outside of California is providing further diversification. www.employers.com 14
Slide 15: Focus on Low-to-Medium Hazard Groups
Focus on Low-to-Medium Hazard Groups 94% in Hazard Groups A-E September 30, 2023 Lower Risk Data shown as a % of in-force premium Group A Group B 20% 24% Groups F-G 6% Group E 8% Group C 21% Higher Risk Group D 21% 6% in Hazard Groups F-G We employ a thoughtful and conservative underwriting approach
Slide 16: North Star of Ease
North Star of Ease In 2021, we announced our strategic North Star of Ease initiative to serve as a guide to making our internal operations Key Element #3 more seamless and scalable and our external The formation of a Test and Learn Center to understand systems more customer the impacts of our projec
Slide 17: Strong Capital Management
Strong Capital Management 2022 3Q23 YTD $30.4M $61.6M Aggregate share repurchases Aggregate share repurchases $91.3M $29.3M Stockholder dividends declared Stockholder dividends declared (includes special dividends of $1.00 per share paid on June 15 and (through October 25, 2023) $1.25 per share paid
Slide 18: Strong History of Favorable Reserve Development
Strong History of Favorable Reserve Development Net Calendar Year Reserve Development Reserve Review in Recent Prior Accident Years ($ millions, excludes involuntary business) Reserves are reviewed $400 $357 internally each quarter, $350 $337 with full reviews $305 $300 occurring in 2Q and 4Q $267 $
Slide 19: 3Q23 Financial Update
EMPLOYERS® 3Q23 Financial Update www.employers.com 19
Slide 20: Third Quarter 2023 Highlights
Third Quarter 2023 Highlights Strong Extremely Insurance Financial Strong Operations Results Balance Sheet Adj. Net Income Gross Premiums Written Total Investments $17.7M and Cash $196.2M or $0.68/share +4% from 3Q22 $2.4B Net Investment 3Q23 Share In-Force Premiums Policies In-Force Repurchases Inc
Slide 21: Investment Portfolio (at September 30, 2023)
Investment Portfolio (at September 30, 2023) $2.3 billion at fair value ($2.4 billion including cash) • High quality (average credit quality of A+) • Highly liquid with $912 million unencumbered at the operating companies and available within 3 business days • Duration of 4.4 • 3Q23 YTD total invest
Slide 22: Environmental, Social and Governance (ESG)
EMPLOYERS® Environmental, Social and Governance (ESG) 2 0 2 3 TA S K F O R C E O N C L I M AT E R E L AT E D F I N A N C I A L D I S C L O S U R E S R E P O RT www.employers.com 22
Slide 23: Environmental
Environmental OUR INVESTMENT Our Investment Managers consider ESG criteria when evaluating investment opportunities. PORTFOLIO •Each of our Investment Managers are signatories to the United Nations Principles for Responsible Investment Group, an independent non-profit organization that encourages in
Slide 24: Social
Social • Committed to providing equal POLICYHOLDERS • The term "social inflation" employment opportunities to all qualified applicants AND THEIR generally refers to the trend of • Comprehensive Code of EMPLOYEES rising insurance costs due to increased litigation, plaintiff- Business Conduct and Ethi
Slide 25: Governance
Governance The Board Governance and Nominating Committee of our Board of Directors: Identifies and selects individuals qualified to serve as members of its Board and committees; Develops and recommends the Committee structure to the Board; Recommends to the Board a slate of Director-nominees f
Slide 26: Company Contact
Company Contact: Michael Paquette Executive Vice President, Chief Financial Officer (775) 327-2562 mpaquette@employers.com Katherine H. Antonello Michael S. Paquette President and Executive Vice President, Chief Executive Officer Chief Financial Officer www.employers.com 26
Slide 27: Additional Financial Information
Additional Financial Information Press Releases SEC Filings Reconciliation of Non-GAAP Financial Measures to GAAP Within this investor presentation we present various financial measures, some of which are "non-GAAP financial measures" as defined in Regulation G pursuant to Section 401 of the Sarbane