Eastern Insurance Plc · DSEBD:EASTERNINS
Eastern Insurance — Fox-Pitt Kelton Cochran Caronia Waller Small & Mid-Cap Bank and Insurance Conference 2009
31 slides from Eastern Insurance's conference presentation, Jun 18, 2009
Slide 1: Fox-Pitt Kelton Small & Mid-Cap Bank and Insurance Conference
Fox-Pitt Kelton Cochran Caronia Waller Small & Mid-Cap Bank and Insurance Conference June 18, 2009 Eastern Insurance Holdings, Inc. Michael Boguski President and Chief Operating Officer Kevin M. Shook Treasurer & Chief Financial Officer Exhibit 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may include forward-looking statements. These forward-looking statements include comments with respect to our objectives and strategies, and the results of our operations and business. By their nature, however, these forward-looking statements involve num
Slide 3: Overview of Eastern Insurance Holdings, Inc.
Overview of Eastern Insurance Holdings, Inc. • Headquartered in Lancaster, Pennsylvania • NASDAQ Listing: EIHI • Initial Public Offering in June of 2006
Slide 4: Overview of Eastern Insurance Holdings, Inc.
Overview of Eastern Insurance Holdings, Inc. • Insurance Subsidiaries Rated “A-” (Excellent) by A.M. Best • As of March 31, 2009, Total Assets of $385.5 Million and Shareholders’ Equity of $137.2 Million • March 31, 2009 Diluted Book Value per Share of $14.16 • For the Three Months Ended March 31, 2
Slide 5: Summary Organizational Structure
Eastern Life & Health Insurance Company 100% Owned Eastern Holding Company, Ltd. 100% Owned Employers Security Insurance Co. 100% Owned Eastern Alliance Insurance Group 100% Owned Eastern Re Ltd., S.P.C 100% Owned Segregated Portfolio Cells Eastern Insurance Holdings, Inc. (Registrant) Summary Organ
Slide 6: EIHI Business Segments
EIHI Workers’ Compensation Segregated Portfolio Cell Reinsurance Third Party Administration and Corporate Specialty Reinsurance (Currently in Run-Off) Group Benefits EIHI Business Segments
Slide 7: EIHI Direct Written Premium Distribution
EIHI Direct Written Premium Distribution Percentages as of March 31, 2009 Group Benefits, 20.9% Specialty Reinsurance, (0.2)% Workers' Compensation, 55.2% Segregated Portfolio Cells, 24.1%
Slide 8: What Makes EIHI Different?
What Makes EIHI Different? INTEGRITY : Our behavior is the benchmark to which others aspire. •Diversity of Underwriting Risk •Conservative Loss Reserving Practices •Consideration of Unemployment Data •Controlled Geographic Expansion INNOVATION : Our employees are committed to identifying progressive
Slide 9: Workers' Compensation Highlights
Workers’ Compensation Highlights • Direct Written Premium of $36.2 Million for the Three Months Ended 03.31.09, and $34.1 Million for the Three Months Ended 03.31.08 • Focused State Expansion • Broad Product Spectrum • Select Agency Partnerships - Direct Written Premium - Licensed
Slide 10: Workers' Compensation Direct Written Premium Geography
Workers’ Compensation Direct Written Premium Geography Percentages as of March 31, 2009 North Carolina, 2.0% Delaware, 1.9% Other, 1.8% Maryland, 1.3% Indiana, 9.3% Pennsylvania, 83.7%
Slide 11: Workers' Compensation Specialist
Workers’ Compensation Specialist • Proactive Claims Management, and Strategic use of Return-to-Work Initiatives • Disciplined Underwriting Focused on Rate Adequacy • Value-Added Risk Management Services • Strategic Partnerships with Independent Agencies that Share Philosophies on Controlling Workers
Slide 12: Workers' Compensation Claim Closing Patterns
Workers’ Compensation Claim Closing Patterns Results as of March 31, 2009 Number of Net Claims Claims Open Claims Closed
Slide 13: Workers' Compensation Risk Diversification
Workers’ Compensation Risk Diversification •Over 250 Class Codes Actively Written •21% < $20K, 44% $20K-$100K, 35% $100K+ Top 10 Classes Exposure Base: PA, DE, MD, VA, NC, SC Doctors/Dentists, 6.3% Salesmen - Outside, 5.3% Auto Dealers, 4.5% Auto Salesman, 3.2% Social Rehabilitation Facility, 3.0% H
Slide 14: Workers' Compensation Alternative Markets
Workers’ Compensation Alternative Markets … Alternative Options • Services to employers who self-insure their workers’ compensation exposure • Fee Based Revenue for EIHI • 13 Active Segregated Portfolio Cell Programs as of March 31, 2009 $847,167 $2,450,939 $5,081,647 $12,158,590 $17,257,335 $25,785
Slide 15: Pennsylvania Workers' Compensation Market Share (Top 20)
Pennsylvania Workers’ Compensation Market Share (Top 20) (dollars in thousands) 2008 Gross Written Premium Five Year Average Loss Ratio Three Year Average Loss Ratio 1. Liberty Mutual Insurance Company $ 207,741 76.61% 80.11% 2. American International Group 198,492 76.36% 73.68% 3. Zurich Financial
Slide 16: Indiana Workers' Compensation Market Share (Top 20)
Indiana Workers’ Compensation Market Share (Top 20) (dollars in thousands) 2008 Gross Written Premium Five Year Average Loss Ratio Three Year Average Loss Ratio 1. Liberty Mutual Insurance Company $ 122,190 58.25% 60.92% 2. American International Group 52,246 66.87% 62.91% 3. Travelers Group 48,030
Slide 17: Group Benefits Highlights
Group Benefits Highlights • Direct Written Premium of $8.9 Million for the Three Months Ended 03.31.09, and $9.2 Million for the Three Months Ended 03.31.08 • Strong Regional Footprint • Re-focused Distribution Network • Multiple Product Enhancements - Direct Written Premium - Licensed
Slide 18: Group Benefits Direct Written Premium Geography
Group Benefits Direct Written Premium Geography Percentages as of March 31, 2009 New Jersey, 1.9% Other, 1.7% West Virginia, 1.7% Maryland, 11.6% North Carolina, 15.4% Minnesota, 2.6% South Carolina, 4.8% Ohio, 3.0% Delaware, 3.4% Virgina, 4.1% Pennsylvania, 49.8%
Slide 19: Group Benefits Direct Premium Written Distribution
Group Benefits Direct Premium Written Distribution • Superior Customer Service Coupled with Online Tools to Enhance the Ease of Doing Business • Enhancements on Voluntary, 2 to 9, and 10 Plus Product Lines • Cross-Selling Initiatives Percentages as of March 31, 2009 Dental, 58.0% STD, 16.8% LTD, 9.7
Slide 20: Financial Model
Financial Model • Underwriting Profit – Underwriting, Risk Management and Claims Philosophy – Low Expense Ratio • Investment Results • Strong Balance Sheet • Active Capital Management – M&A Opportunities – Geographic Expansion – Stock Repurchases – Shareholder Dividends
Slide 21: Workers' Compensation and Group Benefits Combined Ratio History
Workers’ Compensation and Group Benefits Combined Ratio History 79.1% 95.7% 65.6% 94.4% 80.2% 97.4% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% WC GB
Slide 22: Portfolio Mix
Portfolio Mix Total Cash and Invested Assets: $273.6 Million for the Three Months Ended March 31, 2009 55% 5% 6% 3% 31% Fixed Income Securities Convertible Bonds Equity Securities Other Long-Term Investments Cash and Cash Equivalents
Slide 23: Balance Sheet Strength
Balance Sheet Strength • 71.0% of March 31, 2009 Assets are in Cash and Invested Assets • Excellent Collection History on Premiums Receivable • Strong Reinsurer Security • Unpaid Loss and Loss Adjustment Expense – Reserves Recorded at High End of Actuarial Range – History of Favorable Workers’ Compe
Slide 24: Workers' Compensation Loss Reserving Practices
Workers’ Compensation Loss Reserving Practices (in thousands) 3-31-09 12-31-08 9-30-08 6-30-08 3-31-08 Case reserves $ 28,479 $ 28,069 $ 29,531 $ 23,611 $ 22,462 IBNR 23,370 22,945 19,746 23,240 23,863 Discount (2,568) (2,526) (2,448) (2,312) (2,306) Subtotal 49,281 48,488 46,829 44,539 44,019 Purch
Slide 25: Group Benefits Loss Reserving Practices
Group Benefits Loss Reserving Practices 3-31-09 12-31-08 9-30-08 6-30-08 3-31-08 Case / tabular reserves $ 10,277 $ 10,690 $ 10,848 $ 11,218 $ 11,459 IBNR (1) 3,583 3,956 4,582 4,611 4,501 Total $ 13,860 $ 14,646 $ 15,430 $ 15,829 $ 15,960 (1) Includes 100% of Dental and STD total reserves.
Slide 26: Capital Position
Capital Position (1) Net written premium represents a rolling twelve months. $ 11,308 137,234 $ 125,926 19,498 $ 106,428 20,300 29,035 $ 57,093 Implied Capital Requirement (in thousands) NPW (1) Target NPW / Surplus 3-31-09 GAAP Equity Workers’ compensation insurance $ 71,366 1.25 $ 65,757 Group ben
Slide 27: EIHI Fully Diluted Book Value Performance
EIHI Fully Diluted Book Value Performance $14.50 $14.95 $14.92 $15.16 $15.57 $16.27 $16.43 $16.33 $15.80 $14.13 $14.16 $12.50 $13.00 $13.50 $14.00 $14.50 $15.00 $15.50 $16.00 $16.50 Fully Diluted Book Value Quarter
Slide 28: Workers' Compensation Historical Diluted Earnings Per Share
Workers’ Compensation Historical Diluted Earnings Per Share $0.04 $0.19 $0.46 $0.59 $0.30 $0.32 $0.06 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009
Slide 29: Group Benefits Historical Diluted Earnings Per Share
Group Benefits Historical Diluted Earnings Per Share $0.12 $0.16 $0.03 $0.07 ($0.13) ($0.11) $0.02 -$0.15 -$0.10 -$0.05 $0.00 $0.05 $0.10 $0.15 $0.20 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009
Slide 30: Workers' Compensation Direct Written Premium Growth Rates
Workers’ Compensation Direct Written Premium Growth Rates 10.4% 7.7% 8.9% 13.6% 20.6% 5.9% $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 Q1
Slide 31: Eastern Insurance Holdings
vA < 2 eastern Insurance Holdings YW fresh outlooks. better outcomes.”