Employers (EIG) Q3 2024 earnings summary

Executive summary

• Net income per share rose 124% year-over-year to $1.21, with adjusted net income per share up 19%, driven by higher earned premiums, strong net investment income, and lower expenses.

• Book value per share reached all-time highs, with adjusted book value per share at $49.83 and total book value per share including deferred gain at $47.99.

• Cerity integration drove significant expense ratio improvements and operational efficiencies.

• Record number of policies in-force reached 129,879, up 3% year-over-year, with California as the largest market but increasing diversification outside the state.

• Recognized for trustworthiness and as a top employer by Newsweek and U.S. News & World Report in 2024.

Financial highlights

• Gross premiums written were $181.2 million for Q3 2024 (down 8% year-over-year), with YTD gross premiums written at $599.9 million (up 2% YTD); net premiums earned increased 1% to $186.6 million for Q3.

• Net investment income grew 3% to $26.6 million for Q3, with YTD at $80.3 million and a weighted average book yield of 4.4%.

• Net income benefited from $10.9 million in net after-tax unrealized gains from equity and other investments in Q3.

• Book value per share including deferred gain rose 24% year-over-year to $47.99; adjusted book value per share up 11.5% to $49.83.

• Underwriting and general/admin expense ratio improved to 23.2% from 23.6%; commission expense ratio decreased to 14.1% from 14.5%.

Outlook and guidance

• Management expresses high confidence in future operations, citing strong capital, abundant underwriting capacity, and continued premium growth.

• Appetite expansion and innovation initiatives are expected to drive further profitability and premium growth, with no plans to halt the strategy through 2025 and beyond.

• Loss ratios in new segments remain in line or better than traditional segments, supporting future growth.

• Expectation of continued downward pressure on loss costs due to decreases in frequency and moderate severity changes.

• Management expects adequate liquidity and capital for the next 12 months and beyond, with no plans to suspend dividends or seek additional capital.