Employers Holdings Inc · NYSE:EIG
Employers — Investor Presentation (March 2010)
30 slides from Employers's investor presentation, Mar 22, 2010
Slide 1: Employers Holdings, Inc. Investor Presentation
Employers Holdings, Inc. Investor Presentation March, 2010
Slide 2: Safe Harbor Disclosure
Safe Harbor Disclosure This slide presentation is for informational purposes only. It should be read in conjunction with our Form 10-K for the year 2009, our Form 10-Qs and our Form 8-Ks filed with the Securities and Exchange Commission (SEC), all of which are available on the “Investor Relations” s
Slide 3: Overview
· Specialty provider of workers’ compensation insurance · Coverage required by statute Ø Medical, temporary/permanent indemnity, death · 30 states with concentrations in CA, FL, WI, IL and NV Ø Unique markets by state and area · Small “main street” businesses · Low-to-medium hazard exposure industri
Slide 4: Key Strategies
FOCUS GROWTH CAPITAL Key Strategies • Target attractive small business market • Maintain disciplined risk selection, underwriting, pricing and claims operations • Focus on underwriting profitability • Selectively expand into additional markets • Increase penetration in current markets • Leverage inf
Slide 5: Geographic footprint and history
FL NM MD TX OK KS MT CO UT ID AZ CA OR KY PA VA IN IL NC TN SC AL AR MO IA MN MS NE SD ND WY NV WA NH MA CT WV OH LA VT NJ DE 1913 - 1999 State WC fund in NV Privatization Demutualization and IPO - entry into FL, IL and OR Acquisition, book of business in CA, UT, ID, MT, CO Formation of mutual hold
Slide 6: Increasing Market Penetration
$ million # policies Increasing Market Penetration Purchased Fremont Book of Business Purchased AmCOMP Incorporated Policy Count ‘02-’09 CAGR = 9.3% NPW ‘02-’09 CAGR = 10.2%
Slide 7: Disciplined Risk Selection
Disciplined Risk Selection Hazard Group A Hazard Group B Hazard Group C Hazard Group D Hazard Group E Hazard Group F Hazard Group G Lower Risk Higher Risk EMPLOYERS = 83% of Total In Force Premium, Hazard Groups A - D % In Force Premiums, 12/31/09 Top 10 Classes Top 10 Classes NCCI Hazard Group % In
Slide 8: Delivering Superior Loss Ratios
Delivering Superior Loss Ratios Consistently Lower Loss and LAE Ratios than the Industry A.M. Best, “Aggregates and Averages”
Slide 9: Unique Distribution Network
Strategic Partnerships Industry Focused Independent Agents and Brokers Unique Distribution Network • 1,600 in place • Strong relationships with agents • Two key partners Ø ADP Ø Anthem Blue Cross Restaurants and physicians are our top two classes of customers • California Restaurant Association prov
Slide 10: Increasing Points of Access
Increasing Points of Access Partnerships … a distribution advantage by expanding market reach and providing local knowledge … in high persistency … about 19% of in force premiums in 2009
Slide 11: Strong Retention Rates
Strong Retention Rates Strategic Partnerships Result in Consistently Higher Retention Rates
Slide 12: America's small business insurance specialist
America’s small business insurance specialist.” | In-house medical management staff | * Coordinate care and manage medical costs + URAC accreditation in case management and utilization review | Comprehensive fraud program | + $5.9 million savings in 2009 | Rigorous quality assurance processes i + En
Slide 13: Key Highlights
Income Statement ($ million except $ per share) Q 4 2009 Q 4 2008 2009 2008 Net Written Premium 72.2 89.0 368.3 308.3 Net Earned Premium 90.0 106.1 404.2 328.9 Net Investment Income 21.8 22.1 90.5 78.1 Net Income 11.3 15.9 83.0 101.8 Net Income Before LPT 6.6 11.3 65.0 83.4 Earnings Before LPT per S
Slide 14: Strong Capital Position
Strong Capital Position ($ million) .6 to 1 NPW/Statutory Surplus Ratio $355 million extraordinary dividends to parent in 2008 Strong Growth in Statutory Surplus Provides a Solid Basis for Underwriting
Slide 15: Loss Portfolio Transfer (LPT)
Loss Portfolio Transfer (LPT) Claims 6/30/1995 and prior - Approximately 3,500 claims open as of 12/31/09 with 5% closing each year Remaining liabilities at 12/31/09: $888.4 million
Slide 16: Continuing Profits
NOTE: 50,000,002 pro forma shares prior to February 5, 2007 (IPO date) (millions) Continuing Profits
Slide 17: Return on Average Adjusted Equity, Increasing Book Value per Share
(Pro forma) (Pro forma) (Pro forma) Return on Average Adjusted Equity, Increasing Book Value per Share NOTE: 50,000,002 pro forma shares prior to February 5, 2007 (IPO date) Return on Average Equity includes deferred gain related to the LPT - equity in the ROE calculation is averaged for the period
Slide 18: Consistently Profitable Underwriting
(LPT is 10%) (LPT is 4.9%) (LPT is 5.2%) (LPT is 5.6%) (LPT is 4.5%) Consistently Profitable Underwriting Underwriting model targets a 100% combined ratio and a 12- 13% return on a premium dollar NOTE: LPT percentages include reserve adjustments 84.9% 72.6% 85.6% 91.5% 102.5% Expense ratio includes
Slide 19: History of Reserve Strength
Reserve Review Reserve Development History of Reserve Strength Net reserves for workers’ comp industry estimated to be deficient by $6 Billion at 12/31/08 (1) (1) NCCI, “2009 State of the Line” Net Calendar Year Reserve Releases for Prior Accident Years ($ million)
Slide 20: Prudent Capital Management
Share Repurchases Investing in the Future Returning Capital to Shareholders Holding Company Flexibility at 12/31/09 Dividends Prudent Capital Management • Debt ratio - 15% – Wells Fargo Secured Credit Facility - $100 million remaining – $32 million of acquired surplus notes • $197 million in cash an
Slide 21: High Quality Investment Portfolio
$2.0 billion fair market value • 97% fixed maturities with an average weighted AA+ rating • Average book yield of 4.5% • Tax equivalent book yield of 5.6% • Effective duration of 5.02 • Managed by Conning Asset Management • Minimal impacts during challenging markets – 2009 OTTI of $1.9 million – 200
Slide 22: High Quality Reinsurance
Program Structure, Effective 7/1/09 Reinsurance Management High Quality Reinsurance Reinsurers by Market
Slide 23: Summary of Financial Strength
Strong Underwriting Leverage Catastrophe Reinsurance Program Summary of Financial Strength Conservative Reserving High Quality Investment Portfolio .6 to 1 NPW to Surplus at 12/31/09 $2 billion - 97% invested in fixed maturity with average weighted rating of AA+ Track record of reserve strength: sin
Slide 24: Key Strengths
Key Strengths • Strong underwriting franchise with established presence in attractive markets – 97 year operating history - attractive, underserved target market segment with growth opportunities • Unique, long-standing strategic distribution relationships • Conservative risk profile and prudent cap
Slide 25: Contact details
Douglas D. Dirks President & Chief Executive Officer Employers Holdings, Inc. William E. (Ric) Yocke Chief Financial Officer Employers Holdings, Inc. Analyst Contact: Vicki Erickson Vice President, Investor Relations Employers Holdings, Inc. (775) 327-2794 verickson@employers.com 10375 Professional
Slide 26: Stock Ownership Limitations
Stock Ownership Limitations As a reminder to investors, Employers Holdings, Inc. (“EIG”) owns several insurance companies, domiciled in several different states. These wholly-owned insurers are regulated by insurance commissioners and are subject to the statutes and regulations of the various states
Slide 27: America's small business insurance specialist
America’s small business insurance specialist.” EMPLOYERS’ A [ i | 1493 awa 43499
Slide 28: Organization
Organization Employers Holdings, Inc. Employers Insurance Company of Nevada Employers Compensation Insurance Company Employers Preferred Insurance Company Employers Occupational Health, Inc . Employers Assurance Company Elite Insurance Services EIG Services, Inc. Pinnacle Benefits, Inc. AmSERV, Inc.
Slide 29: Selected Operating Results
Income Statement ($ million) 2005 2006 2007 2008 2009 Gross Written Premium $ 451.4 $ 386.8 $ 351.8 $ 318.4 $ 379.9 Net Written Premium 432.5 372.2 339.7 308.3 368.3 Net Earned Premium 438.3 393.0 346.9 328.9 404.2 Net Investment Income 54.4 68.2 78.6 78.1 90.5 Net Income 137.6 171.6 120.3 101.8 83.
Slide 30: Regional Pricing Trends
NY MA KY OH IN MO IA MN IL MIDWEST KS SD NM TX OK MT CO UT ID AZ NV WESTERN CA OR PACIFIC PA VA WV NC TN AL AR LA GA MS SC FL SOUTHEAST +3.0% -7.4% -4.2% -9.7% -2.6% -18.8% +7.0% -6.8% -2.8% -7.6% -7.5% Regional, Pricing Trends 09/30/09 thru 04/01/10 ME NH CT VT NJ RI NE ND WY WA Corporate Headquart
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