Eastern Insurance Plc · DSEBD:EASTERNINS
Eastern Insurance — FBR 2007 Investor Conference
27 slides from Eastern Insurance's conference presentation, Nov 27, 2007
Slide 1: FBR 2007 Investor Conference
FBR 2007 Investor Conference November 27, 2007 NASDAQ: EIHI Exhibit 99.1
Slide 2: Introductions
Introductions Bruce Eckert, Chief Executive Officer – Kevin Shook, Treasurer and Chief Financial Officer – Eastern Insurance Holdings, Inc.
Slide 3: 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 4: Bruce Eckert
Bruce Eckert Chief Executive Officer
Slide 5: Overview of Eastern Insurance Holdings, Inc.
Overview of Eastern Insurance Holdings, Inc. Headquartered in Lancaster, Pennsylvania NASDAQ listing – EIHI Formed as a result of “reverse demutualization” transaction in June 2006 Core products are workers’ compensation insurance, group benefits, and specialty reinsurance Distribution through indep
Slide 6: Summary Organizational Structure
Summary Organizational Structure (Registrant) Eastern Life & Health Insurance Company 100% owned Eastern Holding Company Ltd. 100% owned Eastern Alliance Insurance Group 100% owned Eastern Re Ltd., S.P.C. 100% owned Segregated Portfolio Cells
Slide 7: Experienced Leadership
Experienced Leadership Name Age Positions Bruce M. Eckert Chief Executive Officer and Director Michael L. Boguski President and Chief Operating Officer Kevin M. Shook Treasurer and Chief Financial Officer Robert A. Gilpin Senior Vice President of Marketing Suzanne M. Emmet Senior Vice President of C
Slide 8: EIHI's Business Segments
EIHI’s Business Segments Workers’ compensation insurance Group benefits insurance Specialty reinsurance Segregated portfolio cell reinsurance Third party administration and corporate
Slide 9: Workers' Compensation Insurance Overview
Workers’ Compensation Insurance Overview Individual account underwriting strategy Focused on selecting/retaining high quality accounts Diverse risk classification Financial underwriting Strong relationships with agency partners (average premium per agency = $1.9 million) Proactive risk management (l
Slide 10: Group Benefits Insurance Overview
Group Benefits Insurance Overview Provider of dental (56%), short-term disability (17%), long-term disability (11%) and term life (16%) Products are primarily marketed in mid- Atlantic and Southeastern states with a focus on smaller, non-metropolitan markets Direct written premium of $35.9 million f
Slide 11: Segregated Portfolio Cell Reinsurance Overview
Segregated Portfolio Cell Reinsurance Overview Services to employers who self-insure their workers’ compensation exposure Generates fee revenue for EIHI segments – fee revenue of $4.0 million Utilizes same underwriting, claims and loss control expertise as primary workers’ compensation business 13 p
Slide 12: Specialty Reinsurance Overview
Specialty Reinsurance Overview Cayman Island reinsurer – Eastern Re Ltd., SPC A.M. Best Company financial rating of “A-” (Excellent) First SPC ever rated by A.M. Best Company Participant in quota share reinsurance treaty with a large primary insurer: EnviroGuard EIA Liability Primarily marketed and
Slide 13: Corporate/Third Party Administration Overview
Corporate/Third Party Administration Overview Claims administration and risk management services 29 self insured clients TPA revenue of $3.0 million for the year ended December 31, 2006 and $2.7 million for the nine months ended September 30, 2007
Slide 14: Direct Written Premium Distribution
Direct Written Premium Distribution (in thousands) March 3 Months % of Total June 6 Months % of Total September 9 Months % of Total Workers’ compensation (excluding alternative markets) $ 21,202 46.0% $ 35,641 45.3% $ 55,433 47.3% Alternative markets (SPC) 12,458 27.0% 17,240 21.9% 22,958 19.6% Grou
Slide 15: Pennsylvania Workers' Compensation Market Share (Top 20)
Pennsylvania Workers’ Compensation Market Share (Top 20) Source: Best’s State/Line (P/C Lines) – P/C, US, Contains date compiled as of June 2, 2007. 2006 Gross Written Premium Five Year Average Loss Ratio Three Year Average Loss Ratio 1. American International Group $ 209,546 80.28% 82.47% 2. Libert
Slide 16: Kevin Shook
Kevin Shook Treasurer and Chief Financial Officer
Slide 17: Financial Model
Financial Model Underwriting profit Underwriting, risk management and claims philosophy Low expense ratio Solid investment results Strong balance sheet Active capital management M&A opportunities Geographic expansion Stock repurchases
Slide 18: Recent EIHI Quarterly Results
Recent EIHI Quarterly Results $ 11,026 $ (346) $ (2,999) $ (337) $ 3,157 $ - $ 11,551 Net income (loss) – months (September) $ 1.02 $ (0.03) $ (0.28) $ (0.03) $ 0.29 $ 0.00 $ 1.07 Diluted earnings per share – months (September) (in thousands, except per share data) Workers’ Compensation Segregated P
Slide 19: EIHI Key Indicators – September 30, 2007
EIHI Key Indicators – September 30, 2007 (in thousands, except per share data) September 3 Months September 9 Months Net income $ 3,561 $ 11,026 Basic earnings per share $ 0.35 $ 1.06 Diluted earnings per share $ 0.34 $ 1.02 Consolidated loss and LAE ratio 62.6% 60.8% Consolidated expense ratio 32.1
Slide 20: Combined Ratio Comparison
Combined Ratio Comparison 9 Months September 30, 2007 3 Months September 30, 2007 3 Months June 30, 2007 3 Months March 31, 2007 Workers’ compensation: Loss ratio 49.2% 40.5% 52.4% 56.8% Expense ratio 20.7% 22.2% 18.3% 22.3% Dividend ratio 0.8% 0.6% 1.1% 0.8% Combined ratio 70.7% 63.6% 71.8% 79.9% G
Slide 21: EIHI Investment Portfolio
EIHI Investment Portfolio Distribution As of September 30, 2007 Fixed Income 70.5% Cash and Cash Equivalents 14.0% Equity Securities 6.7% Convertible Bonds 5.1% Other Invested Assets 3.7% Total Cash and Invested Assets: $295.9 million
Slide 22: Loss Reserves – Workers' Compensation
Loss Reserves – Workers’ Compensation (in thousands) 9-30-07 6-30-07 3-31-07 12-31-06 Case reserves $ 19,758 $ 18,695 $ 19,326 $ 18,057 IBNR 27,120 27,468 25,642 25,910 Discount (2,376) (2,292) (1,964) (2,183) Subtotal 44,502 43,871 43,004 41,784 Purchase accounting 1,078 1,215 1,457 1,669 Total $ 4
Slide 23: Net Open Lost Time Claims – Workers' Compensation
Net Open Lost Time Claims (1) – Workers’ Compensation (1) Net of reinsured claims. Accident Year December 31, October 31, % Closed 0.0% 0.0% 0.0% 100.0% 25.0% 44.4% 41.2% 46.6% 48.5% 46.9%
Slide 24: Loss Reserves – Group Benefits
Loss Reserves – Group Benefits 9-30-07 6-30-07 3-31-07 12-31-06 Case / tabular reserves $ 12,586 $ 12,623 $ 13,008 $13,397 IBNR 4,428 4,375 4,138 4,143 Total $ 17,014 $ 16,998 $17,146 $17,540
Slide 25: Loss Reserves – Specialty Reinsurance
Loss Reserves – Specialty Reinsurance (in thousands) 9-30-07 6-30-07 3-31-07 12-31-06 Case $ 11,132 $ 8,476 $ 8,996 $ 8,985 IBNR 13,286 13,276 10,819 10,523 Subtotal 24,418 21,752 19,815 19,508 Purchase accounting (62) (71) (84) (97) Total $ 24,356 $ 21,681 $ 19,731 $ 19,411 IBNR to case 1.19 1.57 1
Slide 26: Capital Position
Capital Position (in thousands) Forecasted NPW Target NPW / Surplus Implied Capital Requirement Workers’ compensation insurance $ 58,304 1.0x $ 58,304 Group benefits insurance 36,264 2.0x 18,132 Specialty reinsurance 16,250 1.0x 16,250 Total require capital $ 92,686 Goodwill and other 11,946 Total a
Slide 27: Eastern Insurance Holdings
eastern Insurance Holdings fresh outlooks. better outcomes.’
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