Employers Holdings Inc · NYSE:EIG
Employers — Q2 2023 Earnings Presentation
29 slides from Employers's earnings presentation, Jul 27, 2023
Slide 1: Investor Presentation Second Quarter 2023
INVESTOR PRESENTATION Second 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, including the effe
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 $393 Million $698 Million 1H23 Gross Written Premiums In-force Premium at June 30, 2023 (incl. est. audit premium) Low Haz
Slide 5: Who We Are (the Words)
Who We Are (the Words) Over 100-year operating history UNIQUE GROWTH DRIVERS SPECIFIC TO EMPLOYERS Strong underwriting focus with established presence in attractive markets Transforming how small businesses and insurance agents utilize digital Record number of policies in-force, capabilities to impr
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: 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 8: 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) 3.50 3.00 3.07 2.50 Price-to-book Ratio 2.00 2.25 Peer Average: 1.69x 1.50 1.74 1.51 1.60 1.00 1.16 1.21 0.98 1.03 0.50 0.00 AI
Slide 9: Market Conditions
Market Conditions In-Force Policies and Premium $750 175,000 $700 $698 150,000 $650 125,000 # of policies $ in millions $627 124,848 $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* 6/30/23* In-Force
Slide 10: COVID-19 Claims (through December 31, 2022)
COVID-19 Claims (through December 31, 2022) Total Incurred $7.1 Million with Low Average Incurred for Closed Claims; Majority of remaining open claims are in California. www.employers.com 10
Slide 11: Five-Year Financial Performance
Five-Year 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 22.9 20.7
Slide 12: Strategy, Innovation and Capital Strength
EMPLOYERS® Strategy, Innovation and Capital Strength www.employers.com 12
Slide 13: Strategic Diversification
Strategic Diversification (by in-force premium) June 30, 2023 All other 31% CA December 31, 2013 45% 28% 3% NJ 4% 4% 60% GA 5% 8% 4% 5% IL 3% NY FL Growth outside of California is providing further diversification. www.employers.com 13
Slide 14: Focus on Low-to-Medium Hazard Groups
Focus on Low-to-Medium Hazard Groups Hazard Group Mix As of June 30, 2023 Group A Group B 19% 24% Groups F-G 5% Group C Group E 23% 8% Group D 21% We employ a thoughtful and conservative underwriting approach designed to individually select specific types of businesses that we believe will have fewe
Slide 15: North Star of Ease
North Star of Ease In 2021, we announced our strategic north star of ease to serve as a guide to making our internal operations more seamless and scalable and our external systems more customer friendly. With this vision, we shaped our near-term Corporate Goals to include three key elements: (i) the
Slide 16: Appetite Expansion
Appetite Expansion To expand our opportunities for growth, we continue to thoughtfully broaden our underwriting appetite at both Employers and Cerity. The additional classes of business reside within our targeted low-hazard groups, and we remain committed to maintaining the highest level of underwri
Slide 17: Cerity's Progression
Cerity’s Progression Less than Changing Customer Buying Behaviors 5 Quote & 76% of small business owners within Cerity’s target market Purchase indicate they would like to purchase commercial insurance Minutes online Up to Approx. 30 million small businesses in the U.S. Advanced Data & Analytics 100
Slide 18: Strong Capital Management
Strong Capital Management Share Repurchases and Cash Dividends 2022 2023 $30.4M $35.4M Aggregate share repurchases in 2022 Aggregate share repurchases in 2Q23 $28.8M $46.8M Regular quarterly dividends declared in 2022 Aggregate share repurchases in 1H23 $61.5M $14.7M Special dividends declared in 20
Slide 19: Strong History of Favorable Reserve Development
Strong History of Favorable Reserve Development Net Calendar Year Reserve Development Reserve Review in Recent Prior Accident Years ($ 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 20: Q2 2023 Financial Update
EMPLOYERS® Q2 2023 Financial Update www.employers.com 20
Slide 21: Second Quarter 2023 Highlights
Second Quarter 2023 Highlights Strong Extremely Insurance Financial Strong Operations Results Balance Sheet Adj. Net Income Gross Premiums Written Total Investments $31.4M and Cash $198.4M or $1.17/share +11% from 2Q22 $2.5B Net Investment 2Q23 Share In-Force Premiums Policies In-Force Repurchases I
Slide 22: Investment Portfolio (at June 30, 2023)
Investment Portfolio (at June 30, 2023) $2.5 billion at fair value ($2.6 billion including cash) • High quality (average credit quality of A) • Highly liquid with $922 million unencumbered at the operating companies and available within 3 business days • 2Q23 total return of 0.7% (2.8% annualized),
Slide 23: Environmental, Social and Governance (ESG)
EMPLOYERS® Environmental, Social and Governance (ESG) We are committed to delivering value to our shareholders while being conscientious of ESG concerns. For further information regarding our ESG efforts, please see our 2022 ESG Report and our 2022 Task Force on Climate Related Financial Disclosures
Slide 24: Environmental
Environmental As a mono-line Worker’s Compensation carrier, our Environmental concerns primarily include, among other things: OUR INVESTMENT PORTFOLIO - While we oversee all our investment activities, we employ several independent investment managers (Investment Managers). Our Investment Managers fo
Slide 25: Social
Social The Human Capital Management and Compensation Committee of our Board of Directors provides advice and oversight of our policies and strategies in relation to culture and human capital management, including diversity, equity and inclusion and oversees the Company’s compensation plans, policies
Slide 26: Social (continued)
Social (continued) POLICYHOLDERS AND THEIR EMPLOYEES - Our approach to our Risk Advisory services is focused on assisting our policyholders in developing a positive safety culture, helping to ensure employees have a voice and are active participants in their workplace safety and well-being. Among ou
Slide 27: 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 for the
Slide 28: Company and Investor Relations Contacts
Company Contact: Michael Paquette Executive Vice President, Chief Financial Officer (775) 327-2562 mpaquette@employers.com Investor Relations Contact: Karin Daly Vice President, The Equity Group Inc. (212) 836-9623 kdaly@equityny.com Katherine H. Antonello Michael S. Paquette President and Executive
Slide 29: 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