Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2010	Dec. 31, 2009
Available for sale:
Fixed maturity securities at fair value (amortized cost $1,901,778 at December 31, 2010 and $1,859,074 at December 31, 2009	$ 2,000,364	$ 1,960,292
Equity securities at fair value (cost $49,281 at December 31, 2010 and $39,936 at December 31, 2009)	80,130	69,268
Total investments	2,080,494	2,029,560
Cash and cash equivalents	119,825	188,833
Restricted Cash And Cash Equivalents	16,949	2,739
Accrued investment income	23,022	23,055
Premiums receivable, less bad debt allowance of $7,603 at December 31, 2010 and $9,879 at December 31, 2009	109,987	119,976
Reinsurance recoverable for:
Paid losses	14,415	13,673
Unpaid losses, less allowance of $0 at December 31, 2010 and $1,335 at December 31, 2009	956,043	1,051,170
Funds held by or deposited with reinsureds	3,701	82,339
Deferred policy acquisition costs	32,239	33,695
Federal income taxes recoverable	4,048	4,092
Deferred income taxes, net	38,078	43,502
Property and equipment, net	11,712	13,059
Intangible assets, net	13,279	15,442
Goodwill	36,192	36,192
Other assets	20,136	19,326
Total assets	3,480,120	3,676,653
Claims and Policy liabilities:
Unpaid losses and loss adjustment expenses	2,279,729	2,425,658
Unearned premiums	149,485	158,577
Policyholders' dividends accrued	5,218	7,958
Total claims and policy liabilities	2,434,432	2,592,193
Commissions and premium taxes payable	17,313	20,763
Accounts payable and accrued expenses	18,601	19,033
Deferred reinsurance gain - LPT Agreement	370,341	388,574
Notes payable	132,000	132,000
Other liabilities	17,317	25,691
Total liabilities	2,990,004	3,178,254
Stockholders' equity
Common stock, $0.01 par value; 150,000,000 shares authorized; 53,779,118 and 53,563,299 shares issued and 38,965,126 and 42,908,165 shares outstanding at December 31, 2010 and 2009 respectively	538	536
Preferred stock, par value (in dollars per share)	0	0
Additional paid-in capital	314,212	311,282
Retained earnings	319,341	266,491
Accumulated other comprehensive income, net	84,133	83,812
Treasury stock, at cost (14,813,992 shares at December 31, 2010 and 10,655,134 shares at December 31, 2009)	(228,108)	(163,722)
Total stockholders' equity	490,116	498,399
Total liabilities and stockholders' equity	$ 3,480,120	$ 3,676,653

Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2010	Dec. 31, 2009
Available for sale:
Fixed maturity securities at fair value amortized cost	$ 1,901,778	$ 1,859,074
Available for sale, equity securities, at cost	49,281	39,936
Premiums receivable, less bad debt allowance	7,603	9,879
Reinsurance recoverable for Unpaid losses, less allowance	$ 0	$ 1,335
Stockholders' equity
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	150,000,000	150,000,000
Common stock, shares issued (in shares)	53,779,118	53,563,299
Common stock, shares outstanding (in shares)	38,965,126	42,908,165
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	25,000,000	25,000,000
Treasury stock, at cost (in shares)	14,813,992	10,655,134

Consolidated Statements Of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Revenues
Net premiums earned	$ 321,786	$ 404,247	$ 328,947
Net investment income	83,032	90,484	78,062
Realized gains (losses) on investments, net	10,137	791	(11,524)
Other income	649	413	1,293
Total revenues	415,604	495,935	396,778
Expenses
Losses and loss adjustment expenses	194,779	214,461	136,515
Commission expense	38,468	36,150	43,618
Dividends to policyholders	4,316	6,930	1,295
Underwriting and other operating expenses	106,026	138,687	101,164
Interest expense	5,693	7,409	2,135
Total expenses	349,282	403,637	284,727
Net income before income taxes	66,322	92,298	112,051
Income tax (benefit)	3,523	9,277	10,266
Net income	$ 62,799	$ 83,021	$ 101,785
Earnings per common share (Note 14):
Basic (in dollars per share)	$ 1.52	$ 1.81	$ 2.07
Diluted (in dollars per share)	$ 1.51	$ 1.80	$ 2.07
Common Stock Dividends Per Share Declared	$ 0.24	$ 0.24	$ 0.24

Consolidated Statements Of Stockholders Equity (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Treasury Stock [Member]
Balance at Dec. 31, 2007	$ 379,453	$ 535	$ 302,862	$ 104,536	$ 46,520	$ (75,000)
Balance (in shares) at Dec. 31, 2007		53,527,907
Stock-based compensation	3,161	0	3,161	0	0	0
Stock options exercised	5	0	5	0	0	0
Stock options exercised (in shares)		300
Acquisition of treasury stock	(14,152)	0	0	0	0	(14,152)
Dividend to common stockholders	(11,808)	0	4	(11,812)	0	0
Comprehensive income:
Net income for the period	101,785	0	0	101,785	0	0
Change in net unrealized gains on investments, net of taxes	(13,716)	0	0	0	(13,716)	0
Total comprehensive income	88,069
Balance at Dec. 31, 2008	444,728	535	306,032	194,509	32,804	(89,152)
Balance (in shares) at Dec. 31, 2008		53,528,207
Stock-based compensation	5,366	0	5,366	0	0	0
Vesting of restricted stock units, net of shares withheld to satisfy minimum tax withholding	(123)	1	(124)	0	0	0
Vesting of restricted stock units, net of shares withheld to satisfy minimum tax withholding (in shares)		35,092
Acquisition of treasury stock	(74,570)	0	0	0	0	(74,570)
Dividend to common stockholders	(11,031)	0	8	(11,039)	0	0
Comprehensive income:
Net income for the period	83,021	0	0	83,021	0	0
Change in net unrealized gains on investments, net of taxes	51,008	0	0	0	51,008	0
Total comprehensive income	134,029
Balance at Dec. 31, 2009	498,399	536	311,282	266,491	83,812	(163,722)
Balance (in shares) at Dec. 31, 2009		53,563,299
Stock-based compensation	4,053	0	4,053	0	0	0
Stock options exercised	94	0	94	0	0	0
Stock options exercised (in shares)		7,783
Vesting of restricted stock units, net of shares withheld to satisfy minimum tax withholding	(1,229)	2	(1,231)	0	0	0
Vesting of restricted stock units, net of shares withheld to satisfy minimum tax withholding (in shares)		208,036
Acquisition of treasury stock	(64,386)	0	0	0	0	(64,386)
Dividend to common stockholders	(9,935)	0	14	(9,949)	0	0
Comprehensive income:
Net income for the period	62,799	0	0	62,799	0	0
Change in net unrealized gains on investments, net of taxes	321	0	0	0	321	0
Total comprehensive income	63,120
Balance at Dec. 31, 2010	$ 490,116	$ 538	$ 314,212	$ 319,341	$ 84,133	$ (228,108)
Balance (in shares) at Dec. 31, 2010		53,779,118

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Operating activities
Net income	$ 62,799	$ 83,021	$ 101,785
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,098	9,899	7,226
Stock-based compensation	4,053	5,366	3,161
Amortization of premium on investments, net	6,105	5,047	6,226
Allowance for doubtful accounts - premiums receivable	(3,611)	1,968	(678)
Deferred income tax expense	4,680	10,991	4,503
Realized (gains) losses on investments, net	(10,137)	(791)	11,524
Realized losses on retirement of assets	420	69	22
Change in operating assets and liabilities:
Accrued investment income	33	1,146	(469)
Premiums receivable	12,265	28,558	27,341
Reinsurance recoverable on paid and unpaid losses	95,720	22,895	37,938
Funds held by or deposited with reinsureds	78,638	5,824	7,721
Federal income taxes	44	6,950	(20,672)
Unpaid losses and loss adjustment expenses	(145,929)	(80,820)	(71,980)
Unearned premiums	(9,092)	(38,118)	(24,476)
Accounts payable, accrued expenses and other liabilities	(10,455)	(13,188)	(3,660)
Deferred reinsurance gain - LPT Agreement	(18,233)	(18,007)	(18,421)
Restricted cash and cash equivalents	(12,210)	0	0
Other	(5,207)	9,941	223
Net cash provided by operating activities	56,981	40,751	67,314
Investing activities
Purchase of fixed maturities	(273,833)	(175,790)	(113,587)
Purchase of equity securities	(17,673)	(12,614)	(558)
Proceeds from sale of fixed maturities	102,659	85,541	42,467
Proceeds from sale of equity securities	17,753	20,634	4,010
Proceeds from maturities and redemptions of investments	123,672	170,278	105,424
Cash paid for acquisition, net of cash and cash equivalents acquired	0	100	168,903
Capital expenditures and other, net	(1,905)	(4,682)	(3,926)
Restricted cash (used in) provided by investment activities	(2,000)	2,725	(145)
Net cash provided by (used in) investing activities	(51,327)	85,992	(135,218)
Financing activities
Acquisition of treasury stock	(63,592)	(74,185)	(14,152)
Cash transactions related to stock-based compensation	(1,135)	(123)	0
Dividend paid to stockholders	(9,935)	(11,031)	(11,808)
Debt issuance costs	0	0	(375)
Payments on notes payable	0	(50,000)	(2,678)
Proceeds from notes payable	0	0	150,000
Other	0	0	(38)
Net cash used in financing activities	(74,662)	(135,339)	120,949
Net decrease in cash and cash equivalents	(69,008)	(8,596)	53,045
Cash and cash equivalents at the beginning of the period	188,833	197,429	144,384
Cash and cash equivalents at the end of the period	119,825	188,833	197,429
Cash paid (received) for income taxes	1,007	(8,581)	26,277
Cash paid for interest	6,000	7,514	1,782
Schedule of non-cash transactions
Financed property and equipment purchases	$ 2,009	$ 1,283	$ 0

Basis of Presentation and Summary of Operations	12 Months Ended
Basis of Presentation and Summary of Operations	Dec. 31, 2010
Notes to Financial Statements [Abstract]
Basis of Presentation and Summary of Operations	1. Basis of Presentation and Summary of Operations Nature of Operations and Organization Employers Holdings, Inc. (EHI) is a Nevada holding company. Through its wholly owned insurance subsidiaries, Employers Insurance Company of Nevada (EICN), Employers Compensation Insurance Company (ECIC), Employers Preferred Insurance Company (EPIC), and Employers Assurance Company (EAC), EHI is engaged in the commercial property and casualty insurance industry, specializing in workers’ compensation products and services. Unless otherwise indicated, all references to the “Company” refer to EHI, together with its subsidiaries. On October 31, 2008, the Company acquired 100% of the outstanding common stock of AmCOMP Incorporated (AmCOMP), including two insurance subsidiaries, AmCOMP Preferred Insurance Company and AmCOMP Assurance Corporation (the Acquisition) (see Note 4). On December 16, 2008, the Florida Insurance Commissioner approved the name changes of AmCOMP Preferred Insurance Company and AmCOMP Assurance Corporation to EPIC and EAC, respectively. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). All intercompany transactions and balances have been eliminated in consolidation. The accompanying consolidated statement of income for the year ended December 31, 2008, does not include the results of AmCOMP for the period prior to the Acquisition Date. The Company considers an operating segment to be any component of its business whose operating results are regularly reviewed by the Company’s chief operating decision makers to make decisions about resources to be allocated to the segment and assess its performance based on discrete financial information. Currently, the Company has one operating segment, workers’ compensation insurance and related services. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. As a result, actual results could differ from these estimates. The most significant areas that require management judgment are the estimate of unpaid losses and loss adjustment expenses (LAE), evaluation of reinsurance recoverables, recognition of premium revenue, deferred policy acquisition costs, deferred income taxes, policyholders’ dividends, the valuation of assets acquired and liabilities assumed in its business combination and the valuation of investments. Reclassifications Certain prior year information has been reclassified to conform to the current period presentation

- Definition

Description containing the entire organization, consolidation and basis of presentation of financial statements disclosure. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.

+ References+ Details

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2010

Summary of Significant Accounting Policies

Significant Accounting Policies

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company considers all highly liquid investments with an initial maturity of three months or less at the date of purchase to be cash equivalents.

Restricted Cash and Cash Equivalents

The Company had $16.9 million and $2.7 million of restricted cash at December 31, 2010 and 2009, respectively, primarily related to funds held in trust for Clarendon National Insurance Company (Clarendon).

Investments

Investments with remaining maturities of one year or less at the time of acquisition are classified as short-term investments. The Company’s investments in fixed maturity securities, equity securities, and short-term investments are classified as available-for-sale and are reported at fair value with unrealized gains and losses excluded from earnings and reported as a separate component of equity, net of deferred taxes, in accumulated other comprehensive income, net.

Investment income consists primarily of interest and dividends. Interest is recognized on an accrual basis, and dividends are recorded as earned at the ex-dividend date. Interest income on mortgage-backed and asset-backed securities is determined using the effective-yield method based on estimated principal repayments.

Realized capital gains and losses on investments are determined on a specific-identification basis.

When, in the opinion of management, a decline in the fair value of an equity security below its cost is considered to be “other-than-temporary,” the equity security’s cost is written-down to its fair value at the time the other-than-temporary decline is identified. The determination of an other-than-temporary decline for debt securities includes, in addition to other relevant factors, a presumption that if the market value is below cost by a significant amount for a period of time, a bifurcation of the write-down may be necessary. If management has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery, the investment is written-down to its fair value and the entire impairment is recorded as a realized loss due to credit in the accompanying consolidated statements of income. If management does not have the intent to sell or will not be required to sell the debt security but does not expect to recover the amortized cost basis of the debt security, the amount of the other-than-temporary impairment is bifurcated between credit loss and other loss and recorded as a component of realized gains and losses in the consolidated statements of income and to other comprehensive income, respectively. The amount of any write-down is determined by the difference between the cost or amortized cost of the debt security and its fair value at the time the other-than-temporary decline is identified (see Note 6).

Recognition of Revenue and Expense

Revenue Recognition

Premiums are billed and collected according to policy terms, predominantly in the form of installments during the policy period. Premiums are earned pro rata over the terms of the policies. Billed premiums applicable to the unexpired terms of policies in-force are recorded in the accompanying consolidated balance sheets as a liability for unearned premiums.

Earned premiums include an estimate for earned but unbilled premiums. The Company estimates the amount of earned but unbilled premiums by analyzing the historical final premiums billed compared to the original estimated amounts billed. At December 31, 2010, premiums receivable on the consolidated balance sheet are net of $4.0 million to be returned to policyholders for final audits. At December 31, 2009, premiums receivable included $0.2 million of additional premiums expected to be received from policyholders for final audits.

The Company establishes a bad debt allowance on its premiums receivable through a charge included in underwriting and other operating expenses in the accompanying consolidated statements of income. This bad debt allowance is determined based on estimates and assumptions to project future experience. After all collection efforts have been exhausted, the Company reduces the bad debt allowance for write-offs of premiums receivable that have been deemed uncollectible. The Company had write-offs, net of recoveries of amounts previously written off, of $0.8 million, $1.2 million, and $1.0 million for the years ended December 31, 2010, 2009, and 2008, respectively.

Deferred Policy Acquisition Costs

Policy acquisition costs, consisting of commissions, premium taxes, and certain other underwriting costs that vary with, and are primarily related to, the production of new or renewal business are deferred and amortized as the related premiums are earned.

A premium deficiency is recognized if the sum of expected claims costs, claims adjustment expenses, expected dividends to policyholders, unamortized acquisition costs, and policy maintenance costs exceed the related unearned premiums and future investment income from related in-force policies. A premium deficiency would first be recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. If the premium deficiency was greater than unamortized acquisition costs, a liability would be accrued for the excess deficiency. There was no premium deficiency at December 31, 2010 or 2009.

Deferred policy acquisition costs were $32.2 million and $33.7 million at December 31, 2010 and 2009, respectively. Amortization for the years ended December 31, 2010, 2009, and 2008, was $72.1 million, $87.6 million, and $66.4 million, respectively.

Unpaid Loss and Loss Adjustment Expense (LAE) Reserves

Loss and LAE reserves represent management’s best estimate of the ultimate net cost of all reported and unreported losses incurred for the applicable periods. The estimated reserves for losses and LAE include the accumulation of estimates for all claims reported prior to the balance sheet date, estimates (based on projections of relevant historical data) of claims incurred but not reported, and estimates of expenses for investigating and adjusting all incurred and unadjusted claims. Amounts reported are necessarily subject to the impact of future changes in economic, regulatory and social conditions. Management believes that, subject to the inherent variability in any such estimate, the reserves are within a reasonable and acceptable range of adequacy. Estimates for claims reported prior to the balance sheet date are continually monitored and reviewed, and as settlements are made or reserves adjusted, the differences are reported in current operations. Salvage and subrogation recoveries are estimated based on a review of the level of historical salvage and subrogation recoveries.

Commission Expense

Commission expense includes direct commissions to agents and brokers for the premiums that they produce for the Company, as well as incentive payments, other marketing costs, and fees. Additionally, the Company is entitled to receive a contingent profit commission under the LPT Agreement. The contingent profit is an amount based on the favorable difference between actual paid losses and LAE and expected paid losses and LAE under the LPT Agreement. Loss expenses are deemed to be 7% of total losses paid and are paid to the Company as compensation for management of the LPT claims. The calculation of actual amounts paid versus expected amounts is determined every five years beginning June 30, 2004 for the first twenty-five years of the agreement. The reinsurers pay the Company 30% of any favorable difference between the actual and expected amounts paid at each calculation point. Conversely, the Company could be required to return any previously paid contingent profit commission, plus interest, in the event of unfavorable differences. The Company accrues the estimated ultimate contingent profit commission through June 30, 2024. Increases or decreases in the estimated contingent profit commission are reflected in commission expense in the period that the estimate is revised.

At December 31, 2010, the Company reduced its estimate of certain administrative fees due under its joint marketing agreements (Change in Estimate), which reduced its accrual for commission expense by $3.0 million. This Change in Estimate was the result of new information that materially impacted conditions that existed as of December 31, 2010 and is reflected in the financial statements for the period ended December 31, 2010. This Change in Estimate increased net income by $3.0 million, or $0.07 per basic and diluted share, for the three and twelve months ended December 31, 2010.

Reinsurance

In the ordinary course of business and in accordance with general insurance industry practices, the Company purchases excess of loss reinsurance to protect the Company against the impact of large and/or catastrophic losses in its workers’ compensation business. Additionally, the Company is a party to a 100% quota share retroactive reinsurance agreement, (see Note 10). This reinsurance reduces the financial impact of such losses on current operations and the equity of the Company. Reinsurance makes the assuming reinsurer liable to the ceding company to the extent of the reinsurance coverage provided. It does not, however, discharge the Company from its liability to its policyholders in the event the reinsurer is unable or unwilling to meet its obligations under its reinsurance agreement with the Company.

Net premiums earned and losses and LAE incurred are stated in the accompanying consolidated statements of income after deduction of amounts ceded to reinsurers. Balances due from reinsurers on unpaid losses, including an estimate of such recoverables related to reserves for incurred but not reported losses, are reported as assets and are included in reinsurance recoverables even though amounts due on unpaid losses and LAE are not recoverable from the reinsurer until such losses are paid. Recoverables from reinsurers on unpaid losses and LAE amounted to $1.0 billion and $1.1 billion at December 31, 2010 and 2009, respectively.

Ceded losses and LAE are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the relevant reinsurance agreement.

The 100% quota share retroactive reinsurance agreement was entered into in 1999 by the Nevada State Industrial Insurance System (the Fund) and assumed by EICN, which the Company refers to as the Loss Portfolio Transfer (LPT) Agreement (see Note 10). The Company accounts for this transaction as retroactive reinsurance, whereby the initial deferred gain was recorded as a liability in the accompanying consolidated balance sheets as deferred reinsurance gain – LPT Agreement. This gain is amortized using the recovery method, whereby the amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries, and is recorded in losses and LAE incurred in the accompanying consolidated statements of income. Any adjustment to the estimated reserves ceded under the LPT Agreement is recognized in earnings in the period of change with a corresponding change to reinsurance recoverables for unpaid losses and deferred reinsurance gain. A cumulative amortization adjustment is also then recognized in earnings so that the deferred reinsurance gain reflects the balance that would have existed had the revised reserves been available at the inception of the LPT Agreement.

In addition, the Company is entitled to receive a contingent profit commission under the LPT Agreement. The contingent profit is an amount based on the favorable difference between actual paid losses and LAE and expected paid losses and LAE as established in the LPT Agreement. The calculation of actual amounts paid versus expected amounts is determined every five years beginning June 30, 2004 for the first twenty-five years of the agreement. The Company is paid 30% of the favorable difference between the actual and expected losses and LAE paid at each calculation point.

Conversely, the Company could be required to return any previously paid contingent profit commission, plus interest, in the event of unfavorable differences.

The Company accrues the estimated ultimate contingent profit commission through June 30, 2024. Increases or decreases in the estimated contingent profit commission are reflected in commission expense in the period that the estimate is revised.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation (see Note 7). Expenditures for maintenance and repairs are charged against operations as incurred.

Electronic data processing equipment, software, furniture and equipment, and automobiles are depreciated using the straight-line method over three to seven years. Leasehold improvements are carried at cost less accumulated amortization. The Company amortizes leasehold improvements using the straight-line method over the lesser of the useful life of the asset or the remaining original lease term, excluding options or renewal periods. Leasehold improvements are generally amortized over three to five years.

Obligations Held Under Capital Leases

Leased property and equipment meeting capital lease criteria are capitalized at the lower of the present value of the related lease payments or the fair value of the leased asset at the inception of the lease. Amortization is calculated using the straight-line method based on the term of the lease and is included in the depreciation expense of property and equipment. See Note 13 for additional disclosures related to capital leases.

Restructuring

The Company accounts for its restructuring plans by recording a loss when it is probable that a liability has been incurred. The amount of the loss is estimated and recorded at fair value using the Company’s incremental interest rate.

Policyholder Dividends

Certain policyholders have entered into agreements that provide the opportunity for dividends. Dividends are accrued on such policies based on specific dividend contract provisions and the policies’ earned premiums and loss ratios. Additionally, dividend agreements also allow the Company to reduce the amount to be paid at the Company’s discretion, based on the overall profitability. Should management choose to reduce the ultimate dividends to be paid, once the amount of the total dividend that will be paid for a policy year is determined, the dividend accrued would be reduced to the level determined by the Company. The reduced dividend amount would be allocated ratably to the participating policies, based on the dividend amount calculated prior to the reduction. Approximately 5.2%, 9.6%, and 2.6% of direct written premiums were subject to dividend participation during the years ended December 31, 2010, 2009, and 2008,

respectively. Policyholder dividends are ultimately paid at the sole discretion of the Board of Directors and must be approved by the Board prior to payment. Board-approved dividends accrued for 2010, 2009, and 2008 policies reflect the full potential amount allowed under the respective policies.

Income Taxes

Deferred tax assets, net of any applicable valuation allowance, and deferred tax liabilities are provided for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The net deferred tax asset is recorded in the accompanying consolidated balance sheets as deferred income taxes, net.

Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, investments, premiums receivable, and reinsurance recoverable balances.

Cash equivalents include investments in commercial paper of companies with high credit ratings, investments in money market securities and securities backed by the U.S. government. Investments are diversified throughout many industries and geographic regions. The Company limits the amount of credit exposure with any one financial institution and believes that no significant concentration of credit risk exists with respect to cash and cash equivalents and investments.

At December 31, 2010 and 2009, the outstanding premiums receivable balance was generally diversified due to the large number of entities composing the Company’s policyholder base and their dispersion across many different industries. To reduce credit risk, the Company performs ongoing evaluations of its policyholders’ financial condition, but does not generally require collateral. The Company also has recoverables from its reinsurers. Reinsurance contracts do not relieve the Company of its obligations to claimants or policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. The Company obtains collateral to mitigate the risks related to reinsurance insolvencies. At December 31, 2010, $11.6 million was collateralized by cash or letter of credit and an additional $962.1 million was in trust accounts for reinsurance related to the LPT Agreement.

The Company enters into securities lending agreements with financial institutions to improve investment income. Selected securities are loaned and are secured by collateral equal to at least 102% of the fair value of the securities. Collateral is in the form of cash or securities issued or guaranteed by the U.S. government, and the securities lending agent has provided counterparty indemnification in the event of borrower insolvency. The maximum amounts loaned under our securities lending program during the years ended 2010 and 2009 were $36.2 million and $36.7 million, respectively. As of December 31, 2010 and 2009, there were no outstanding securities lending transactions.

Fair Value of Financial Instruments

Estimated fair value amounts, defined as the quoted market price of a financial instrument, have been determined using available market information and other appropriate valuation methodologies. Judgment is required in developing the estimates of fair value where quoted market prices are not available. Accordingly, these estimates are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions or estimating methodologies may have an effect on the estimated fair value amounts.

The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial investments in the accompanying consolidated financial statements and in these notes for the years ended 2010 and 2009:

Cash and cash equivalents, premiums receivable, and accrued expenses and other liabilities. The carrying amounts for these financial instruments as reported in the accompanying consolidated balance sheets approximate their fair values.

Investments. The estimated fair values for available-for-sale securities generally represent quoted market prices for securities traded in the public marketplace or estimated values for securities not traded in the public marketplace. Additional data with respect to fair values of the Company’s investment securities is disclosed in Note 6. The fair values reported in the accompanying consolidated balance sheets equal the carrying amounts for these investments.

Derivatives. The fair value of the Company’s interest rate swap was derived by using an industry standard swap valuation model, with market based inputs for swaps having similar characteristics (see Note 12). The fair value, reported as a component of other liabilities in the accompanying consolidated balance sheets, equals the carrying amount.

Notes payable. The Company’s notes payable are composed of floating rate long-term debt. Accordingly, the carrying amount reported in the accompanying consolidated balance sheets is estimated to approximate fair value.

The estimated fair values of the Company’s financial instruments at December 31, 2010, are as follows:

	Carrying Value		Estimated Fair Value
Financial assets	(in thousands)
Investments (Note 6)	$	2,080,494	$	2,080,494
Cash and cash equivalents		119,825		119,825
Financial liabilities
Notes payable (Note 11)		132,000		132,000

Other financial instruments qualify as insurance-related products and are specifically exempted from fair value disclosure requirements.

Goodwill and Other Intangible Assets

The Company tests for impairment of goodwill and non-amortizable intangible assets in the fourth quarter of each year. At the end of each quarter, management considers the results of the previous analysis as well as any recent developments that may constitute triggering events requiring the impairment analysis of goodwill and other intangible assets to be updated. The Company has assessed the continuing negative effects of the economic slowdown on the Company’s gross premiums written and changes in the Company’s stock price and determined that there were no impairments as of December 31, 2010 and 2009.

The Company acquired intangible assets in the acquisition of AmCOMP (see Note 4) comprised of state licenses, insurance relationships and other intangible assets. The intangible assets related to state licenses are not subject to amortization, and the remaining intangibles are being amortized over an eight year period.

The following table presents the gross carrying value, accumulated amortization and net carrying value for the Company’s intangible assets, by major class, as of December 31:

	2010							2009
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
	(in thousands)
State licenses	$	7,700	$	—		$	7,700	$	7,700	$	—		$	7,700
Insurance relationships		9,400		(3,821	)		5,579		9,400		(1,848	)		7,552
Other		1,700		(1,700	)		—		1,700		(1,510	)		190
Total	$	18,800	$	(5,521	)	$	13,279	$	18,800	$	(3,358	)	$	15,442

During the years ended December 31, 2010, 2009, and 2008, the Company recognized $2.2 million, $2.8 million, and $0.6 million in amortization expenses, respectively. These amortization expenses are included in the accompanying consolidated statements of income in underwriting and other operating expenses. Amortization expense for the next five years related to amortizable intangible assets is expected to be as follows:

Year	Amount
	(in thousands)
2011	$	1,550
2012		1,170
2013		873
2014		651
2015		489
Thereafter		846
	$	5,579

Stock-Based Compensation

The Company issues stock-based payments, which are recognized in the consolidated statements of income based on their fair values over the employees’ service period (see Note 15).

New Accounting Standards	12 Months Ended
New Accounting Standards	Dec. 31, 2010
Notes to Financial Statements [Abstract]
New Accounting Standards	3. New Accounting Standards In January 2010, the Financial Accounting Standards Board (FASB) issued guidance on Improving Disclosures about Fair Value Measurements that requires additional disclosures regarding fair value measurements. The update changes fair value disclosures by requiring: (a) separate disclosure of the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and a description of the reasons for the transfers; and (b) separate disclosure of information about purchases, sales, issuances, and settlements of Level 3 fair value measurements. This guidance was effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures regarding Level 3 fair value measurements, which were effective for fiscal years beginning after December 15, 2010. The Company has included the required disclosures in the Notes to Consolidated Financial Statements. In October 2010, the FASB issued Update Number 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts. This update changes the definition of acquisition costs which may be capitalized to specify costs which relate directly to the successful acquisition of new or renewal insurance contracts; adds to the definition the concept of incremental costs; further restricts costs to be capitalized by identifying only those costs which may be capitalized; and requires additional granularity in the disclosures related to type of acquisition costs capitalized during the period. This guidance becomes effective for interim and annual reporting periods beginning after December 15, 2011. The Company has not yet determined if it will adopt the standard on a prospective or retrospective basis and is evaluating the impact the adoption will have on its financial statements.

Acquisition of AmCOMP

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Acquisition of AmCOMP

4. Acquisition of AmCOMP

On October 31, 2008, EHI acquired 100% of the outstanding common stock of AmCOMP for $188.4 million. The Company believes the Acquisition has significantly advanced its strategic goals and vision of being the leader in the property and casualty insurance industry specializing in workers’ compensation.

Unaudited Pro Forma Financial Information

Net income for the years ended December 31, 2010 and 2009, presented in the accompanying consolidated statements of income, includes the results of AmCOMP for the full year. The unaudited financial information in the table below summarizes the combined results of operations of EHI and AmCOMP, on a pro forma basis, as though the companies had been combined as of the beginning of the period presented. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results that would have been achieved if the Acquisition had taken place at the beginning of the period presented, nor is the pro forma information intended to be indicative of the Company’s future results of operations.

The unaudited pro forma financial information for the year ended December 31, 2008 combines the results for EHI for the year ended December 31, 2008, which includes the results of AmCOMP subsequent to the acquisition date, and the historical results of AmCOMP for the period January 1, 2008 through October 31, 2008, including a charge of $8.0

million for realized Florida excessive profits for accident years 2003-2006. The historical financial information has been adjusted to give effect to pro forma items that are directly attributable to the Acquisition and are expected to have a continuing impact on the consolidated results. These items include adjustments for amortization of intangible assets acquired, increases in interest expense and decreases in underwriting and other expenses for integration and restructuring savings. The following table summarizes the pro forma financial information:

	Year Ended December 31, 2008
	(in thousands, except per share data)
Net premiums earned	$ 495,080
Net income	105,770
Earnings per common share – basic	2.15
Earnings per common share – diluted	2.15

Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Fair Value Of Financial Instruments

5. Fair Value of Financial Instruments

The Company’s estimates of fair value for financial assets and liabilities are based on the inputs used in the valuation and give the highest priority to quoted prices in active markets and require that observable inputs be used in the valuations when available. The disclosure of fair value estimates is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions.

The three levels of the hierarchy are as follows:

Level 1 – Valuations based on unadjusted quoted market prices for identical assets or liabilities in active markets. The Company uses the quoted market prices as fair value and includes these prices in the amounts disclosed in Level 1 of the hierarchy.

Level 2 – Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets or liabilities at the measurement date; quoted prices in inactive markets; or other inputs that are observable, either directly or indirectly. When quoted market prices are unavailable, the Company estimates fair value based on objectively verifiable information, if available, and these estimates are included in the amount disclosed in Level 2 of the hierarchy.

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement and involve management judgment. The fair value of certain privately held or thinly traded securities is determined using internal analytical methods based on the best information available.

If quoted market prices and an estimate determined by using objectively verifiable information are unavailable, the Company produces an estimate of fair value based on internally developed valuation techniques, which, depending on the level of observable market inputs, will render the fair value estimate as Level 2 or Level 3. The Company bases all of its estimates of fair value for assets on the bid price as it represents what a third party market participant would be willing to pay in an arm’s length transaction. The valuation methods used by the Company, by type of investment, are described below.

Equity Securities. The Company utilizes market quotations for equity securities that have quoted prices in active markets.

Fixed Maturities, Short-Term Investments. Fair value measurements for these securities are estimated using relevant inputs, including available market information, benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing. An Option Adjusted Spread model is also used to develop prepayment and interest rate scenarios. Industry standard models are used to analyze and value securities with embedded options or prepayment sensitivities.

Derivatives. The fair value of the Company’s interest rate swap, reported as a component of other liabilities in the accompanying 2009 consolidated balance sheet, was derived by using an industry standard swap valuation model, with market-based inputs for swaps having similar characteristics (see Note 12).

Each asset class is evaluated based on relevant market information, credit information, perceived market movements, and sector news. The market inputs utilized in the pricing evaluation include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and industry and economic events. The extent of the use of each market input depends on the asset class and the market conditions.

These methods of valuation will only produce an estimate of fair value if there is objectively verifiable information to produce a valuation. If objectively verifiable information is not available, the Company would be required to produce an estimate of fair value using some of the same methodologies, making assumptions for market based inputs that are unavailable.

Most estimates of fair value for fixed maturities are based on estimates using objectively verifiable information and are included in the amount disclosed in Level 2 of the hierarchy. The fair value estimates for determining Level 3 fair value include the Company’s assumptions about risk assessments and market participant assumptions based on the best information available, including quotes from market makers and other broker/dealers recognized as market participants, using standard or trade derived inputs, new issue data, monthly payment information, cash flow generation, prepayment speeds, spread adjustments, or rating updates.

The following table presents the items in the accompanying consolidated balance sheets that are stated at fair value and the fair value measurements.

	Level 1		Level 2		Level 3
At December 31, 2010	(in thousands)
Fixed maturity securities
U.S. Treasuries	$	—	$	144,725	$	—
U.S. Agencies		—		123,802		—
States and municipalities		—		966,002		—
Corporate		—		479,424		—
Residential mortgage-backed securities		—		246,756		—
Commercial mortgage-backed securities		—		25,077		—
Asset-backed securities		—		14,578		—
Total fixed maturity securities	$	—	$	2,000,364	$	—

Equity securities
Consumer goods		26,646		—		—
Energy and utilities		10,265		—		—
Financial		9,500		—		—
Technology and communications		15,990		—		—
Industrial and other		17,729		—		—
Total equity securities	$	80,130	$	—	$	—

	Level 1		Level 2			Level 3
At December 31, 2009	(in thousands)
Fixed maturity securities
U.S. Treasuries	$	—	$	146,464		$	—
U.S. Agencies		—		124,969			—
States and municipalities		—		1,028,277			—
Corporate		—		337,610			—
Residential mortgage-backed securities		—		279,963			—
Commercial mortgage-backed securities		—		29,774			—
Asset-backed securities		—		13,235			—
Total fixed maturity securities	$	—	$	1,960,292		$	—

Equity securities
Consumer goods	$	22,484	$	—		$	—
Energy and utilities		9,782		—			—
Financial		9,400		—			—
Technology and communications		15,601		—			—
Industrial and other		12,001		—			—
Total equity securities	$	69,268	$	—		$	—

Derivatives
Other liabilities	$	—	$	(2,180	)	$	—

A reconciliation of the beginning and ending balances, for the above items, that are measured using Level 3 inputs were as follows:

	Residential Mortgage-backed Securities			Asset-backed Securities
	(in thousands)
Balance January 1, 2009	$	—		$	4,950
Transfers in (out) of Level 3		80			(5,449	)
Unrealized gains in other comprehensive income		13			499
Purchase, settlements and issuances, net		(93	)		—
Balance, December 31, 2009	$	—		$	—

The Company had no Level 3 investment activity during the year ended December 31, 2010

- Definition

This item represents the complete disclosure regarding the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the Company is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risk is are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References+ Details

Investments

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Investments

6. Investments

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the Company’s investments were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
At December 31, 2010	(in thousands)
Fixed maturity securities
U.S. Treasuries	$	135,265	$	9,619	$	(159	)	$	144,725
U.S. Agencies		116,747		7,142		(87	)		123,802
States and municipalities		927,668		43,054		(4,720	)		966,002
Corporate		453,851		28,655		(3,082	)		479,424
Residential mortgage-backed securities		230,518		16,926		(688	)		246,756
Commercial mortgage-backed securities		23,877		1,201		(1	)		25,077
Asset-backed securities		13,852		727		(1	)		14,578
Total fixed maturity securities		1,901,778		107,324		(8,738	)		2,000,364

Equity securities
Consumer goods		19,141		7,550		(45	)		26,646
Energy and utilities		5,106		5,160		(1	)		10,265
Financial		6,603		2,916		(19	)		9,500
Technology and communications		7,499		8,500		(9	)		15,990
Industrial and other		10,932		6,841		(44	)		17,729
Total equity securities		49,281		30,967		(118	)		80,130
Total investments	$	1,951,059	$	138,291	$	(8,856	)	$	2,080,494

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
At December 31, 2009	(in thousands)
Fixed maturity securities
U.S. Treasuries	$	140,269	$	6,366	$	(171	)	$	146,464
U.S. Agencies		117,844		7,125		—			124,969
States and municipalities		979,364		50,600		(1,687	)		1,028,277
Corporate		314,692		23,335		(417	)		337,610
Residential mortgage-backed securities		265,056		15,697		(790	)		279,963
Commercial mortgage-backed securities		29,407		391		(24	)		29,774
Asset-backed securities		12,442		793		—			13,235
Total fixed maturity securities		1,859,074		104,307		(3,089	)		1,960,292

Equity securities
Consumer goods		14,421		8,069		(6	)		22,484
Energy and utilities		4,715		5,067		—			9,782
Financial		6,613		2,861		(74	)		9,400
Technology and communications		7,930		7,686		(15	)		15,601
Industrial and other		6,257		5,758		(14	)		12,001
Total equity securities		39,936		29,441		(109	)		69,268
Total investments	$	1,899,010	$	133,748	$	(3,198	)	$	2,029,560

The amortized cost and estimated fair value of fixed maturity securities at December 31, 2010, by contractual maturity, are shown below. Expected maturities differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Estimated Fair Value
	(in thousands)
Due in one year or less	$	113,888	$	115,532
Due after one year through five years		577,069		612,759
Due after five years through ten years		576,440		610,784
Due after ten years		366,134		374,878
Mortgage and asset backed securities		268,247		286,411
Total	$	1,901,778	$	2,000,364

The following is a summary of investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 months or greater, in each case as of December 31, 2010 and December 31, 2009:

	December 31, 2010
	Less Than 12 Months					12 Months or Greater					Total
	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
Fixed maturity securities	(in thousands)
U.S. Treasuries	$	4,548	$	(159	)	$	—	$	—		$	4,548	$	(159	)
U.S. Agencies		14,500		(87	)		—		—			14,500		(87	)
States and municipalities		124,245		(4,720	)		—		—			124,245		(4,720	)
Corporate		123,216		(3,082	)		—		—			123,216		(3,082	)
Residential mortgage-backed securities		15,161		(304	)		3,465		(384	)		18,626		(688	)
Commercial mortgage-backed securities		1,365		(1	)		—		—			1,365		(1	)
Asset-backed securities		923		(1	)		—		—			923		(1	)
Total fixed maturity securities		283,958		(8,354	)		3,465		(384	)		287,423		(8,738	)

Equity securities
Consumer goods		4,993		(45	)		—		—			4,993		(45	)
Energy and utilities		163		(1	)		—		—			163		(1	)
Financial		1,695		(16	)		66		(3	)		1,761		(19	)
Technology and communications		801		(9	)		—		—			801		(9	)
Industrial and other		2,999		(44	)		—		—			2,999		(44	)
Total equity securities		10,651		(115	)		66		(3	)		10,717		(118	)
Total investments	$	294,609	$	(8,469	)	$	3,531	$	(387	)	$	298,140	$	(8,856	)

	December 31, 2009
	Less Than 12 Months					12 Months or Greater					Total
	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
Fixed maturity securities	(in thousands)
U.S. Treasuries	$	10,922	$	(171	)	$	—	$	—		$	10,922	$	(171	)
States and municipalities		45,939		(889	)		15,715		(798	)		61,654		(1,687	)
Corporate		21,238		(312	)		5,506		(105	)		26,744		(417	)
Residential mortgage-backed securities		28		—			4,164		(790	)		4,192		(790	)
Commercial mortgage-backed securities		1,998		(24	)		—		—			1,998		(24	)
Total fixed maturity securities		80,125		(1,396	)		25,385		(1,693	)		105,510		(3,089	)

Equity securities
Consumer goods		79		(6	)		—		—			79		(6	)
Financial		1,271		(74	)		—		—			1,271		(74	)
Technology and communications		270		(15	)		—		—			270		(15	)
Industrial and other		214		(14	)		—		—			214		(14	)
Total equity securities		1,834		(109	)		—		—			1,834		(109	)
Total investments	$	81,959	$	(1,505	)	$	25,385	$	(1,693	)	$	107,344	$	(3,198	)

Based on reviews of the fixed maturity securities, the Company determined that unrealized losses as of December 31, 2010 and 2009 were primarily the result of changes in prevailing interest rates and not the credit quality of the issuers.

As of December 31, 2010, the Company expected to sell one fixed maturity security that was in an unrealized loss position before reaching maturity and recognized an impairment of less than $0.1 million as a realized loss on investments. All other fixed maturity securities whose fair values were less than amortized cost were not determined to be other-than-temporarily impaired given the severity and duration of the impairment, the credit quality of the issuers, the Company’s intent on not selling the securities, and a determination was made that it is not more likely than not that the Company will be required to sell the securities until fair value recovers above cost, or to maturity.

Based on reviews of the equity securities as of December 31, 2010, the Company determined that the unrealized losses as of that date were not considered to be other-than-temporary due to the financial condition and near term prospects of the issuers. Based on reviews of the equity securities as of December 31, 2009, the Company recognized total impairments of $1.9 million in the fair values of 26 equity securities as of that date because of the severity and duration of the change in fair values of those securities.

Net realized gains (losses) and the change in unrealized gains (losses) on fixed maturity and equity securities are determined on a specific-identification basis and were as follows:

	Years Ended December 31,
	2010			2009			2008
Net realized gains (losses)	(in thousands)
Fixed maturity securities	$	710		$	(855	)	$	(560	)
Equity securities		9,427			1,820			(10,964	)
Short-term investments		—			(174	)		—
Total	$	10,137		$	791		$	(11,524	)

Change in unrealized gains (losses)
Fixed maturity securities	$	(2,632	)	$	62,054		$	14,420
Equity securities		1,517			13,820			(31,314	)
Short-term investments		—			(72	)		72
Total	$	(1,115	)	$	75,802		$	(16,822	)

Net investment income was as follows:

	Years Ended December 31,
	2010			2009			2008
	(in thousands)
Fixed maturity securities	$	83,730		$	89,522		$	72,602
Equity securities		1,399			1,402			1,855
Short-term investments and cash equivalents		327			1,910			6,017
		85,456			92,834			80,474
Investment expenses		(2,424	)		(2,350	)		(2,412	)
Net investment income	$	83,032		$	90,484		$	78,062

The Company is required by various state laws and regulations to keep securities or letters of credit on deposit with the states in which it does business. As of December 31, 2010 and 2009, securities having a fair value of $558.6 million and $554.2 million, respectively, were on deposit. These laws and regulations govern not only the amount, but also the type of security that is eligible for deposit. Additionally, certain reinsurance contracts require Company funds to be held in trust for the benefit of the ceding reinsurer to secure the outstanding liabilities assumed by the Company. The fair value of securities held in trust for reinsurance at December 31, 2010 and 2009, was $52.9 million and $6.1 million, respectively.

- Definition

This item represents the entire disclosure related to Investments in Certain Debt and Equity Securities (and certain other trading assets) which include all debt and equity securities (other than those equity securities accounted for under the equity or cost methods of accounting) with readily determinable fair values. Other trading assets include assets that are carried on the balance sheet at fair value and held for trading purposes. A debt security represents a creditor relationship with an enterprise that is in the form of a security. Debt securities include, among other items, US Treasury securities, US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments. An equity security represents an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices. Equity securities include, among other things, common stock, certain preferred stock, warrant rights, call options, and put options, but do not include convertible debt. An entity may opt to provide the reader with additional narrative text to better understand the nature of investments in debt and equity securities (and other trading assets).

+ References+ Details

Property and Equipment

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Property Plant And Equipment Disclosure

7. Property and Equipment

Property and equipment consists of the following:

	As of December 31,
	2010			2009
	(in thousands)
Land	$	95		$	95
Furniture and equipment		3,129			4,006
Leasehold improvements		4,283			4,486
Computers and software		21,993			31,955
Automobiles		1,844			139
		31,344			40,681
Accumulated amortization and depreciation		(19,632	)		(27,622	)
Property and equipment, net	$	11,712		$	13,059

Depreciation and amortization expenses related to property and equipment for the years ended December 31, 2010, 2009 and 2008, were $4.8 million, $6.9 million, and $6.5 million, respectively. Internally developed software costs of $0.1 million and $0.7 million were capitalized during the years ended December 31, 2010 and 2009, respectively.

Income Taxes

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Income Taxes

8. Income Taxes

The Company files a consolidated federal income tax return. The insurance subsidiaries pay premium taxes on gross premiums written in lieu of some states’ income or franchise taxes.

The provision for income taxes consisted of the following:

	Years Ended December 31,
	2010			2009			2008
Current tax (benefit) expense:	(in thousands)
Federal	$	(1,228	)	$	(2,061	)	$	5,591
State		71			347			172
Total current tax (benefit) expense:		(1,157	)		(1,714	)		5,763
Deferred tax expense:
Federal		4,680			10,991			4,561
State		—			—			(58	)
Total deferred tax expense		4,680			10,991			4,503
Income tax expense	$	3,523		$	9,277		$	10,266

The difference between the statutory federal tax rate of 35% and the Company’s effective tax rate on net income before income taxes as reflected in the consolidated statements of income was as follows:

	Years Ended December 31,
	2010			2009			2008
	(in thousands)
Expense computed at statutory rate	$	23,213		$	32,304		$	39,218
LPT contingent profit commission		(284	)		(5,259	)		—
Dividends received deduction and tax-exempt interest		(12,039	)		(12,176	)		(11,197	)
LPT deferred gain amortization		(6,381	)		(6,302	)		(6,447	)
Pre-privatization reserve adjustments		(1,358	)		(576	)		(2,394	)
Impact of previously unrecognized tax benefits		—			—			(10,155	)
Other		372			1,286			1,241
Income tax expense	$	3,523		$	9,277		$	10,266

On January 1, 2000, EICN assumed the assets, liabilities, and operations of the Fund pursuant to legislation passed in the 1999 Nevada Legislature (the Privatization). Prior to the Privatization, the Fund was a part of the State of Nevada and therefore was not subject to federal income tax; accordingly, it did not take an income tax deduction with respect to the

establishment of its unpaid loss and LAE reserves. Due to favorable loss experience after the Privatization, it was determined that certain of the pre-Privatization unpaid loss and LAE reserves assumed by EICN as part of the Privatization were no longer necessary and the unpaid loss and LAE reserves were reduced accordingly. Such downward adjustments of pre-Privatization unpaid loss reserves increases GAAP net income, but does not increase taxable income. For the years ended December 31, 2010, 2009, and 2008 there were downward adjustments of pre-Privatization unpaid loss reserves of $3.9 million, $1.6 million, and $6.8 million, respectively.

For the years ended December 31, 2010 and 2009, the Company increased the estimated ultimate contingent profit commission related to the LPT Agreement by $0.8 million and $15.0 million, respectively. Such increases to the estimated ultimate contingent profit commission increases GAAP net income but does not increase taxable income. There was no change to the estimate during the year ended December 31, 2008.

As of December 31, 2010 and 2009, the Company had no unrecognized tax benefits. The following is a reconciliation of the beginning and ending amounts for unrecognized tax benefits and related interest for the year ended:

	December 31, 2008
	(in thousands)
Balance, January 1, 2008	$	10,155
Gross amount of interest accrued		406
Less:
Recognition of tax benefits		(8,274	)
Gross amount of related interest accrued		(2,287	)
Balance, December 31, 2008	$	—

During the third quarter of the year ended December 31, 2008, the Company reversed $10.6 million of liabilities for previously unrecognized tax benefits (including $2.3 million of related accrued interest) as a result of certain statutory periods expiring. The total amount of the reversals reduced the effective tax rate during 2008.

Tax years 2007 through 2009 are subject to examination by the federal taxing authority.

The significant components of deferred income taxes, net, were as follows as of December 31:

	2010				2009
	Deferred Tax				Deferred Tax
	Assets		Liabilities		Assets		Liabilities
	(in thousands)
Unrealized capital gains, net	$	—	$	45,302	$	—	$	44,142
Deferred policy acquisition costs		—		11,430		—		13,216
Intangible assets		—		4,648		—		6,106
Loss reserve discounting for tax reporting		65,353		—		75,315		—
Unearned premiums		10,257		—		11,988		—
Allowance for bad debt		2,661		—		3,925		—
Accrued liabilities		9,735		—		15,688		—
Minimum tax credit		13,055		—		2,831		—
Other		3,173		776		5,841		8,622
Total	$	104,234	$	66,156	$	115,588	$	72,086
Deferred income taxes, net	$	38,078			$	43,502

At December 31, 2010, the Company had no net operating loss carry forward.

Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than not that all or some portion of the deferred tax asset will not be realized. Realization of the deferred income tax asset is dependent on the Company generating sufficient taxable income in future years as the deferred income tax charges become currently deductible for tax reporting purposes. Although realization is not assured, management believes that it is more likely than not that the net deferred income tax asset will be realized.

Liability for Unpaid Losses and Loss Adjustment Expenses

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Liability For Unpaid Losses And Loss Adjustment Expenses

9. Liability for Unpaid Losses and Loss Adjustment Expenses

The following table represents a reconciliation of changes in the liability for unpaid losses and LAE for the years ended:

	December 31,
	2010			2009			2008
	(in thousands)
Unpaid losses and LAE, gross of reinsurance, at beginning of period	$	2,425,658		$	2,506,478		$	2,269,710
Less reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE		1,052,505			1,076,350			1,052,641
Net unpaid losses and LAE at beginning of period		1,373,153			1,430,128			1,217,069
Losses and LAE, net of reinsurance, acquired in business combination		—			—			247,006
Losses and LAE, net of reinsurance, incurred in:
Current year		227,143			283,827			226,643
Prior years		(14,130	)		(51,359	)		(71,707	)
Total net losses and LAE incurred during the period		213,013			232,468			154,936
Deduct payments for losses and LAE, net of reinsurance, related to:
Current year		55,827			74,944			53,397
Prior years		206,653			214,499			135,486
Total net payments for losses and LAE during the period		262,480			289,443			188,883
Ending unpaid losses and LAE, net of reinsurance		1,323,686			1,373,153			1,430,128
Reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE		956,043			1,052,505			1,076,350
Unpaid losses and LAE, gross of reinsurance, at end of period	$	2,279,729		$	2,425,658		$	2,506,478

Total net losses and LAE included in the above table excludes the impact of the amortization of the deferred reinsurance gain–LPT Agreement (Note 10).

Estimates of incurred losses and LAE attributable to insured events of prior years have decreased due to continued favorable development in such prior accident years.

The major sources of this favorable development include actual paid losses that have been less than expected and the impact of new information on selected patterns of claims emergence and payment used in the projection of future loss payments.

In California, where the Company’s operations began on July 1, 2002, the actuaries’ and management’s initial expectations of the ultimate level of its losses and patterns of loss emergence and payment were based on benchmarks derived from analyses of historical insurance industry data in California. No historical data from the Company’s California insurance subsidiary existed prior to July 1, 2002; however, some historical data was available for the prior years for some of the market segments the Company entered in California, but was limited as to the number of loss reserve evaluation points available. The industry-based benchmarks were judgmentally adjusted for the anticipated impact of significant environmental changes, specifically the enactment of major changes to the statutory workers’ compensation benefit structure and the manner in which claims are administered and adjudicated in California. The actual emergence and payment of claims by the Company’s California insurance subsidiary has been more favorable than those initial expectations, due at least in part to the enactment of the major changes in the California workers’ compensation environment. Other insurance companies writing workers’ compensation insurance in California also have experienced claims emergence and payment patterns more favorable than anticipated following the enactment of legislative changes.

In Nevada, the Company has compiled a lengthy history of workers’ compensation claims payment patterns based on the business of the Fund and EICN, but the emergence and payment of claims in recent years has been more favorable than in the long-term history in Nevada with the Fund. The expected patterns of claim payments and emergence used in the projection of the Company’s ultimate claim payments are based on both the long and short-term historical data. In recent evaluations, claim patterns have continued to emerge in a manner consistent with short-term historical data.

Consequently, the Company’s selection of claim projection patterns has relied more heavily on patterns observed in recent years.

The Company continues to develop its own loss experience and will rely more on its experience and less on historical industry data in projecting its reserve requirements as such data becomes available. As the actual experience of the Company emerges, it will continue to evaluate prior estimates, which may result in additional adjustments in reserves.

A $1.6 million expense related to the commutation of certain reinsurance treaties, and a $0.9 million expense related to the write-off of certain reinsurance recoverables that had previously been accounted for as an allowance for bad debt, increased losses and LAE incurred in prior periods for the year ended December 31, 2010, which are included in the $14.1 million prior period development.

Loss reserves shown in the consolidated balance sheets are net of $18.2 million and $19.2 million for anticipated subrogation recoveries as of December 31, 2010 and 2009, respectively.

Reinsurance

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Reinsurance

10. Reinsurance

The Company is involved in the cession and assumption of reinsurance with non-affiliated companies. Risks are reinsured with other companies on both a quota share and excess of loss basis.

Reinsurance transactions reflected in the accompanying consolidated statements of income were as follows for the years ended December 31:

	2010						2009						2008
	Written			Earned			Written			Earned			Written			Earned
	(in thousands)
Direct premiums	$	319,773		$	328,165		$	376,651		$	411,897		$	315,818		$	335,547
Assumed premiums		2,504			2,800			3,298			4,009			2,574			3,475
Gross premiums		322,277			330,965			379,949			415,906			318,392			339,022
Ceded premiums		(9,179	)		(9,179	)		(11,659	)		(11,659	)		(10,075	)		(10,075	)
Net premiums	$	313,098		$	321,786		$	368,290		$	404,247		$	308,317		$	328,947
Ceded losses and LAE incurred	$	15,111					$	38,075					$	23,558

Ceded losses and LAE incurred includes the amortization of the deferred reinsurance gain – LPT Agreement.

Excess of Loss Reinsurance

The Company maintains reinsurance for losses from a single occurrence or event in excess of $5.0 million and up to $200.0 million, subject to a $2.0 million annual aggregate deductible and certain exclusions. The reinsurance coverage includes coverage for acts of terrorism, excluding nuclear, biological, chemical, and radiological events. Any liability outside the coverage limits of the reinsurance program is retained by the Company.

LPT Agreement

Recoverables from reinsurers on unpaid losses and LAE amounted to $1.0 billion and $1.1 billion at December 31, 2010 and 2009, respectively. At December 31, 2010 and 2009, approximately $0.8 billion and $0.9 billion, respectively, of those recoverables were related to the LPT Agreement that was entered into in 1999 by the Fund and assumed by EICN. Under the LPT Agreement, substantially all of the Fund’s losses and LAE on claims incurred prior to July 1, 1995, have been ceded to three unaffiliated reinsurers on a 100% quota share basis. Investments have been placed in trust by the three reinsurers as security for payment of the reinsured claims. Under the LPT Agreement, $1.5 billion in liabilities for the incurred but unpaid losses and LAE related to claims incurred prior to July 1, 1995, were reinsured for consideration of $775 million. The LPT Agreement provides coverage up to $2.0 billion. Through December 31, 2010, the Company has paid losses and LAE claims totaling $530.8 million related to the LPT Agreement.

The initial deferred gain resulting from the LPT Agreement was recorded as a liability in the accompanying consolidated balance sheets and is being amortized using the recovery method, whereby the amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries. The Company amortized $18.2 million, $18.0 million, and $18.4 million of the deferred gain for the years ended December 31, 2010, 2009, and 2008, respectively. There were no adjustments to the direct reserves ceded under the LPT Agreement or related adjustment to the deferred

gain for the years ended December 31, 2010, 2009, and 2008. The amortization of the deferred gain and adjustments due to development in the reserves are recorded in losses and LAE incurred in the accompanying consolidated statements of income. The remaining deferred gain was $370.3 million and $388.6 million as of December 31, 2010 and 2009, respectively, which is included in the accompanying consolidated balance sheets as deferred reinsurance gain – LPT Agreement.

The Company is also entitled to receive a contingent profit commission under the LPT Agreement. The Company accrues the estimated ultimate contingent profit commission to be received through June 30, 2024. The estimate was revised to increase the ultimate contingent profit commission by $0.8 million and $15.0 million, for the years ended December 31, 2010 and 2009, respectively. The Company recorded no change to the estimate for the year ended December 31, 2008. As of December 31, 2010, and 2009, the Company had a receivable of $1.7 million and a receivable of $0.9 million related to the contingent profit commission, respectively.

Funds Held

In the fourth quarter of 2010, the Company re-negotiated the terms of a reinsurance agreement with Clarendon, which resulted in the release and return of funds held by Clarendon in the amount of $74.6 million, The Company placed $47.1 million in trust, of which $35.0 million was placed in an investment trust and $12.1 million is classified as restricted cash and cash equivalents, for the benefit of Clarendon to support the liabilities under the reinsurance agreement and invested the remaining $27.5 million.

Notes Payable

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Notes Payable

11. Notes Payable

Notes payable is comprised of the following:

	December 31,
	2010		2009
	(in thousands)
Amended Credit Facility, due December 31, 2015 with variable interest, as described below	$	100,000	$	100,000
Dekania Surplus Note, due April 30, 2034 with variable interest of 425 basis points above 90-day LIBOR		10,000		10,000
ICONS Surplus Note, due May 26, 2034 with variable interest of 425 basis points above 90-day LIBOR		12,000		12,000
Alesco Surplus Note, due December 15, 2034 with variable interest of 405 basis points above 90-day LIBOR		10,000		10,000
Balance	$	132,000	$	132,000

On December 28, 2010, the Company entered into the Third Amended and Restated Credit Agreement (Amended Credit Facility) with Wells Fargo Bank, National Association (Wells Fargo), under which the Company is provided with: (a) $100.0 million line of credit through December 31, 2011; (b) $90.0 million line of credit from January 1, 2012 through December 31, 2012; (c) $80.0 million line of credit from January 1, 2013 through December 31, 2013; (d) $70 million line of credit from January 1, 2014 through December 31, 2014; and (e) $60 million line of credit from January 1, 2015 through December 31, 2015. Amounts outstanding bear interest at a rate equal to, at the Company’s option: (a) a fluctuating rate of 1.75% above prime rate or (b) a fixed rate that is 1.75% above the LIBOR rate then in effect. The Amended Credit Facility is secured by fixed maturity securities and cash and cash equivalents that had a fair value of $131.0 million at December 31, 2010. The Amended Credit Facility contains customary non-financial covenants and requires EHI to maintain $5.0 million of cash and cash equivalents at all times. The Company is currently in compliance with all applicable covenants.

On September 30, 2008, EHI borrowed $150.0 million through the Second Amended Restated Credit Facility with Wells Fargo (Existing Credit Facility. The proceeds borrowed under the Existing Credit Facility were used to finance the acquisition of AmCOMP (see Note 4) and for general working capital purposes. Interest paid during the years ended December 31, 2010, 2009, and 2008, including the interest rate swap (see Note 12), totaled $4.4 million, $5.8 million, and $1.2 million, respectively. In accordance with the terms of the contract, a repayment of $50.0 million was made toward the Amended Credit Facility on December 30, 2009.

EPIC has a $10.0 million surplus note to Dekania CDO II, Ltd., issued as part of a pooled transaction. The note matures in 2034 and became callable by the Company in the second quarter of 2009. The terms of the note provide for quarterly interest payments at a rate 425 basis points in excess of the 90-day LIBOR. Both the payment of interest and repayment of the principal under this note and the surplus notes described in the succeeding two paragraphs are subject to the prior

approval of the Florida Department of Financial Services. Interest paid during the year ended December 31, 2010 and 2009 was $0.5 million and $0.6 million, respectively, and during the two months ended December 31, 2008 was $0.2 million. Interest accrued as of December 31, 2010 and 2009 was $0.1 million.

EPIC has a $12.0 million surplus note, to ICONS, Inc., issued as part of a pooled transaction. The note matures in 2034 and became callable by the Company in the second quarter of 2009. The terms of the note provide for quarterly interest payments at a rate 425 basis points in excess of the 90-day LIBOR. Interest paid during the years ended December 31, 2010 and 2009, was $0.6 million and $0.7 million, respectively, and during the two months ended December 31, 2008, was $0.2 million. Interest accrued as of December 31, 2010 and 2009 was $0.1 million.

EPIC has a $10.0 million surplus note, to Alesco Preferred Funding V, LTD, issued as part of a pooled transaction. The note matures in 2034 and became callable by the Company in the fourth quarter of 2009. The terms of the note provide for quarterly interest payments at a rate 405 basis points in excess of the 90-day LIBOR. Interest paid during the years ended December 31, 2010 and 2009, was $0.4 million and $0.5 million, respectively, and during the two months ended December 31, 2008, was $0.2 million. Interest accrued as of December 31, 2010 and 2009 was $0.1 million and less than $0.1 million, respectively.

Principal payment obligations on notes payable outstanding at December 31, 2010, were as follows:

Year	Principal Due
	(in thousands)
2011	$	10,000
2012		10,000
2013		10,000
2014		10,000
2015		60,000
Thereafter		32,000

Derivatives	12 Months Ended
Derivatives	Dec. 31, 2010
Notes to Financial Statements [Abstract]
Derivatives	12. Derivatives Interest Rate Swap On September 30, 2008, the Company, in connection with the borrowings made under the Existing Credit Facility (Note 11), executed an interest rate swap with Wells Fargo with a notional amount of $100.0 million. Execution of the interest rate swap established a fixed interest rate of 4.84%, on the notional amount, which expired September 30, 2010. The Company used its interest rate swap to mitigate the risks associated with unexpected cash outflows resulting from shifts in variable interest rates. As of December 31, 2009, the interest rate swap had a negative fair value of $2.2 million, and is included in other liabilities on the accompanying consolidated balance sheets. The corresponding unrealized losses of $2.2 million for the year ended December 31, 2009 is included in accumulated other comprehensive income, net.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies

Leases

The Company leases office facilities and certain equipment under operating and capital leases. Most leases have renewal options, typically with increased rental rates during the option period. Certain of these leases contain options to purchase the property at amounts that approximate fair market value; other leases contain options to purchase at a bargain purchase price. At December 31, 2010, the remaining lease terms expire over the next eight years.

The future lease payments for the next five years and thereafter on these non-cancelable operating and capital leases at December 31, 2010, were as follows:

Year	Operating Leases		Capital Leases
	(in thousands)
2011	$	6,825	$	614
2012		6,549		1,065
2013		5,380		486
2014		5,034		—
2015		3,998		—
Thereafter		5,381		—
	$	33,167	$	2,165

Included in the future minimum capital lease payments are future interest charges of $0.2 million. Facilities rent expense was $8.9 million, $7.4 million, and $5.9 million for the years ended December 31, 2010, 2009, and 2008, respectively.

Property held under capital leases is included in property and equipment as follows:

Asset Class	2010			2009
	(in thousands)
Furniture and equipment	$	100		$	100
Computers and software		1,282			1,758
Automobiles		1,880			—
		3,262			1,858
Accumulated amortization		(1,076	)		(379	)
Total	$	2,186		$	1,479

Contingencies Surrounding Insurance Assessments

The Company writes workers’ compensation insurance in California in which unpaid workers’ compensation liabilities from insolvent insurers are the responsibility of the California Insurance Guarantee Association (CIGA). The Company passes through the CIGA assessment to its policyholders via a surcharge based upon the estimated annual premium at the policy’s inception and has received, and expects to continue to receive, these guarantee fund assessments which are paid to CIGA based on premiums written by the Company. As of December 31, 2010 and 2009, the Company recorded an asset of $6.2 million and $7.1 million, respectively, in other assets, for assessments paid to the CIGA that includes prepaid policy surcharges still to be collected in the future from policyholders.

The Company also writes workers’ compensation insurance in other states with similar obligations as those in California. In these states, the Company is directly responsible for payment of the assessment. Generally, assessments are levied by guaranty associations within the state up to prescribed limits on all insurers doing business in that state on the basis of the proportionate share of premiums written by insurers doing business in that state in the lines of business in which the impaired, insolvent or failed insurer is engaged. The Company accrues a liability for estimated assessments as direct premiums are written and defers these costs and recognizes them as an expense as the related premiums are earned. The Company is continually notified of assessments from various states relating to insolvencies in that particular state; however, the Company estimates the potential future assessment in the absence of an actual assessment. As of December 31, 2010 and 2009, the Company recorded an estimate of $2.1 million and $4.5 million, respectively, for its expected liability for guaranty fund assessments, in states other than California. The guaranty fund assessments are expected to be paid within two years of recognition.

Additionally, as of December 31, 2010 and 2009 guarantee fund receivable assets, excluding CIGA, of $0.6 million and $1.1 million, respectively, are included in other assets, as they can be used as a credit against future premium taxes owed. Maximum contributions required by law in any one state in which the Company offers insurance vary between 0.2% and 2.0% of direct premiums written.

Stockholders' Equity	12 Months Ended
Stockholders' Equity	Dec. 31, 2010
Notes to Financial Statements [Abstract]
Stockholders' Equity	14. Stockholders’ Equity Stock Repurchase Program On February 21, 2008, the EHI Board of Directors (Board of Directors) authorized a stock repurchase program (the 2008 Program). The 2008 Program authorized the Company to repurchase up to $100.0 million of the Company’s common stock through June 30, 2009. On February 25, 2009, the Board of Directors extended the 2008 Program through December 31, 2009. From inception of the 2008 Program through the end of the 2008 Program on December 31, 2009, the Company repurchased 6,743,862 shares at a cost of $88.7 million, or $13.16 per share, including commissions. On November 4, 2009, the Board of Directors authorized a share repurchase program for up to $50.0 million of the Company’s common stock from January 1, 2010 through December 31, 2010 (the 2010 Program). Through September 30, 2010, the Company repurchased 3,291,709 shares of common stock under the 2010 Program at an average price of $15.19 per share, including commissions, for a total of $50.0 million. On November 3, 2010, the Board of Directors authorized a share repurchase program for up to $100.0 million of the Company’s common stock from November 8, 2010 through June 30, 2012 (the 2011 Program). The Company expects that shares may be purchased at prevailing market prices through a variety of methods, including open market or private transactions, in accordance with applicable laws and regulations. The timing and actual number of shares repurchased will depend on a variety of factors, including the share price, corporate and regulatory requirements, and other market and economic conditions. Repurchases under the 2011 Program may be commenced or suspended from time to time without prior notice, and the program may be suspended or discontinued at any time. Through December 31, 2010, the Company repurchased 867,149 shares of common stock under the 2011 Program at an average price per share of $16.59, including commissions, for a total of $14.4 million. The 14,813,992 shares of common stock repurchased by the Company since its initial public offering in February 2007 under all programs are reported as treasury stock, at cost, in the accompanying consolidated balance sheets. As of December 31, 2010, the average cost of common stock repurchased through the Company’s stock repurchase programs since inception was $15.40 per share.

- Definition

Disclosures related to accounts comprising shareholders' equity, including other comprehensive income. Includes: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables; effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References+ Details

Stock Based Compensation

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Stock Based Compensation

15. Stock-Based Compensation

The Employers Holdings, Inc. Amended and Restated Equity and Incentive Plan (the Plan) is administered by the Compensation Committee of the Board of Directors, which is authorized to grant, at its discretion, awards to officers, employees, non-employee directors, consultants, and independent contractors. The maximum number of common shares reserved for grants of awards under the Plan is 7,105,838 shares. The Plan provides for the grant of stock options (both incentive stock options and nonqualified stock options), stock appreciation rights, restricted stock, restricted stock units, stock-based performance awards, and other stock-based awards.

As of December 31, 2010, nonqualified stock options, restricted stock units, and performance share awards have been granted, but no incentive stock options, stock appreciation rights, or restricted stock have been granted under the Plan.

Net stock-based compensation expense recognized in the accompanying consolidated statements of income was as follows:

	Years Ended
	2010		2009		2008
Stock-based compensation expense related to:	(in thousands)
Nonqualified stock options	$	2,039	$	1,782	$	1,254
Restricted stock units		2,014		1,473		902
Performance shares		—		2,111		1,005
Total		4,053		5,366		3,161
Less: related tax benefit		1,419		1,759		1,096
Net stock-based compensation expense	$	2,634	$	3,607	$	2,065

Nonqualified Stock Options

During the year ended December 31, 2007, the Company made “founders’ grants” to employees, excluding senior officers, in the form of 186,000 nonqualified stock options and also awarded 420,916 nonqualified stock options to its officers. The founders’ grants awards vest pro rata on each of the first three anniversaries of the effective date of EHI’s IPO. The options awarded to the officers of the Company vested 25% on February 8, 2008, 2009, and 2010 and the remaining 25% vested pro rata on February 8, 2011. All options granted in 2007 have an exercise price equal to the fair market value of the Company’s common stock on the date of grant.

On May 29, 2008, the Company awarded 475,167 options to the officers of the Company. These options have a service vesting period of four years and vested 25% on May 29, 2009 and 2010, and will vest 25% on the subsequent two anniversaries of such date. The options are subject to accelerated vesting in certain limited circumstances, such as: death or disability, or in connection with a change of control of the Company. The options expire seven years from the date of grant.

On May 28, 2009, the Company awarded 531,082 options to certain officers of the Company. These options have a service vesting period of four years and vested 25% on May 28, 2010, and will vest 25% on each of the subsequent three anniversaries of such date. The options are subject to accelerated vesting in the following circumstances: death or disability of the holder, or in connection with a change of control of the Company. The options expire seven years from the date of grant.

On March 30, 2010, the Company awarded 406,020 options to certain officers of the Company. These options have a service vesting period of four years and vest 25% on March 30, 2011, and 25% on each of the subsequent three anniversaries of such date. The options are subject to accelerated vesting in the following circumstances: death or disability of the holder, or in connection with a change of control of the Company. The options expire seven years from the date of grant.

The fair value of the stock options granted is estimated using a Black-Scholes option pricing model that uses the assumptions noted in the following table. During the years ended December 31, 2010 and 2009, the expected stock price volatility used to value the options granted in 2010 and 2009 was based on the volatility of the Company’s historical stock price since February 2007. During the year ended December 31, 2008, the expected stock price volatility used to value the options granted was based on a weighted average of the Company’s historical stock price volatility since February 2007 and the historical volatility of peer companies’ stock for a period of time equal to the expected term of the options. The expected term of the options granted in 2010, 2009, and 2008 was calculated using the ‘plain-vanilla’ calculation provided in the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin No. 107. The dividend yield was calculated using amounts authorized by the Board of Directors. The risk-free interest rate is the yield on the grant date of the options of U.S. Treasury zero coupon securities with a maturity comparable to the expected term of the options.

The Company anticipates issuing new shares upon exercise of stock options.

The fair market value of the stock options granted during the years ended December 31, 2010, 2009, and 2008 were calculated using the following weighted average assumptions:

	2010			2009			2008
Expected volatility		47.3	%		51.0	%		34.9	%
Expected life (in years)		4.8			4.8			4.8
Dividend yield		1.6	%		2.0	%		1.3	%
Risk-free interest rate		2.6	%		2.5	%		3.4	%

Weighted average grant date fair values of options granted	$	5.80		$	4.59		$	6.01

Changes in outstanding stock options for the year ended December 31, 2010 were as follows:

`	Number of Options			Weighted- Average Exercise Price		Weighted Average Remaining Contractual Life
Options outstanding at January 1, 2010:		1,512,706		$	16.30		4.5
Granted		406,020			15.31		6.2
Exercised		(7,783	)		12.03
Expired		(35,441	)		17.94
Forfeited		(112,399	)		15.03
Options outstanding at December 31, 2010		1,763,103			16.14		4.8
Exercisable at December 31, 2010		745,295			17.47		3.5

The fair value of options that vested in 2010 was $1.8 million and as of December 31, 2010, outstanding and exercisable options had intrinsic values of $3.5 million and $0.7 million, respectively. At December 31, 2010, the Company had yet to recognize $4.0 million in deferred compensation related to nonqualified stock options grants and expects to recognize these costs on a straight-line basis over the next 39 months.

Performance Share Awards

On August 8, 2007, officers of the Company were awarded, in aggregate, 140,311 performance share awards (PSAs) for a performance period that ended December 31, 2009. These PSAs were subject to certain performance targets with ultimate payouts of 150% of the target award. The fair market value of the PSAs on the date of grant was $2.6 million. In March 2010, 196,071 PSAs were vested.

Restricted Stock Units

On May 29, 2008, 23,760 restricted stock units (RSUs) awarded to the non-employee members of the Board of Directors during 2007, vested in connection with the annual stockholders meeting. The vested RSUs will be settled in common stock six months following the awardees’ termination of service from the Board of Directors. Prior to settlement, dividend equivalents are paid with respect to these vested RSUs and are credited as additional vested RSUs.

On May 29, 2009, 24,984 RSUs, awarded to the non-employee members of the Board of Directors during 2008, vested in connection with the annual stockholders meeting. 9,369 of the vested RSUs, at the awardees’ election, were settled in common stock and the remaining 15,615 RSUs were deferred until six months following the awardees’ termination of service from the Board of Directors. In the event of a deferral election, dividend equivalents are paid with respect to vested RSUs and are credited as additional vested RSUs. During the years ended December 31, 2009 and 2008, in connection with the Company’s dividends to its stockholders, an aggregate of 632 and 240 RSUs were credited to vested RSU holders, respectively.

On May 28, 2009, the Company awarded the non-employee members of the Board of Directors, in the aggregate, 40,536 RSUs. These RSUs vest on May 28, 2010, except for accelerated vesting in the case of death or disability of the Director or in connection with a change of control. Vested RSUs will be settled in common stock within 30 days after the vesting date or can be deferred until six months following the awardees’ termination of service from the Board of Directors, at the awardees’ election. In the event of a deferral election, dividend equivalents are paid with respect to vested RSUs and are credited as additional vested RSUs.

On May 27, 2010, the Company awarded the non-employee members of the Board of Directors, in the aggregate, 30,728 RSUs. These RSUs vest on May 27, 2011, except for accelerated vesting in the case of death or disability of the Director or in connection with a change of control. Vested RSUs will be settled in common stock within 30 days after the vesting date or can be deferred until six months following the awardees’ termination of service from the Board of Directors, at the awardees’ election. In the event of a deferral election, dividend equivalents are paid with respect to vested RSUs and are credited as additional vested RSUs.

On May 29, 2008, the Company awarded 152,564 RSUs to certain officers of the Company. The RSUs have a service vesting period of four years and vested 25% on May 29, 2009, and the subsequent three anniversaries of such date. On May 29, 2009, 35,874 RSUs, vested with an intrinsic value of $0.4 million. Of the 35,874 RSUs vested, 10,151 shares of

common stock were withheld to satisfy minimum employee tax withholding. The RSUs are subject to accelerated vesting in certain limited circumstances, such as: death or disability of the holder, or in connection with a change of control of the Company.

On May 28, 2009, the Company awarded 176,871 RSUs to certain officers of the Company. The RSUs have a service vesting period of four years and vest 25% on May 28, 2010 and 25% on each of the subsequent three anniversaries of such date. The RSUs are subject to accelerated vesting in certain limited circumstances, such as: death or disability of the holder, or in connection with a change of control of the Company.

On March 30, 2010, the Company awarded 163,660 RSUs to certain officers of the Company. The RSUs have a service vesting period of four years and vest 25% on March 30, 2011 and 25% on each of the subsequent three anniversaries of such date. The RSUs are subject to accelerated vesting in certain limited circumstances, such as: death or disability of the holder, or in connection with a change of control of the Company.

Changes in outstanding RSUs for the year ended December 31, 2010 were as follows:

	Number of RSUs			Weighted Average Grant Date Fair Value
RSUs outstanding at January 1, 2010		365,343		$	14.66
Granted		195,301			15.36
Forfeited		(38,837	)		14.81
Vested		(93,292	)		14.60
RSUs outstanding at December 31, 2010		428,515			14.98
Vested but unsettled RSUs at December 31, 2010		66,495			15.43

As of December 31, 2010 outstanding RSUs have an intrinsic value of $7.5 million.

Statutory Matters

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Statutory Matters

16. Statutory Matters

Statutory Financial Data

The combined capital stock, surplus and net income of the Company’s insurance subsidiaries (EICN, ECIC, EPIC, and EAC), prepared in accordance with the statutory accounting practices of the National Association of Insurance Commissioners (NAIC) as well as statutory accounting principles permitted by the states of California, Florida, and Nevada (SAP), were as follows:

	December 31,
	2010		2009
	(in thousands)
Capital stock and unassigned surplus	$	301,590	$	351,419
Paid in capital		64,900		64,900
Special surplus funds		55,771		213,027
Surplus notes		32,000		32,000
Total statutory surplus	$	454,261	$	661,346

Net income for the Company’s insurance subsidiaries prepared in accordance with SAP for the years ended December 31, 2010, 2009 and 2008 was $59.1 million, $89.5 million and $101.7 million, respectively. Under SAP, the statutory operating results of EPIC and EAC are combined with the operating results of EICN and ECIC for the entire year of 2008, the year of the Acquisition.

Treatment of the LPT Agreement and the surplus notes (see Notes 10 and 11) are the primary differences in the SAP-basis capital stock and total surplus of the insurance subsidiaries of $454.3 million and $661.3 million, and the GAAP-basis equity of the Company of $490.1 million and $498.4 million as of December 31, 2010 and 2009, respectively. Under SAP accounting, the retroactive reinsurance gain resulting from the LPT Agreement is recorded as a special component of surplus (special surplus funds) in the initial year of the contract, and not reported as unassigned surplus until the

Company has recovered amounts in excess of the original consideration paid. The special surplus funds are also reduced by the amount of extraordinary dividends as approved by the Nevada Division of Insurance. Under GAAP accounting, the gain is deferred and amortized over the period the underlying reinsured claims are paid (see Note 10). Under SAP, the surplus notes are recorded as a separate component of surplus. Under GAAP, the surplus notes are considered debt.

Insurance Company Dividends

The ability of EHI to pay dividends on the Company’s common stock and to pay other expenses will be dependent to a significant extent upon the ability of the Nevada domiciled insurance company, EICN, and the Florida domiciled insurance company, EPIC, to pay dividends to their immediate holding company, Employers Group, Inc. (EGI) and, in turn, the ability of EGI to pay dividends to EHI. ECIC and EAC have the ability to declare and pay dividends to EICN and EPIC, respectively, subject to certain restrictions. The amount of dividends each of the Company’s subsidiaries may pay to their immediate parent is limited by the laws of their respective state of domicile.

Nevada law limits the payment of cash dividends by EICN to its parent by providing that payments cannot be made except from available and accumulated surplus, otherwise unrestricted (unassigned), and derived from realized net operating profits and realized and unrealized capital gains. A stock dividend may be paid out of any available surplus. A cash or stock dividend prohibited by these restrictions may only be declared and distributed as an extraordinary dividend upon the prior approval of the Nevada Commissioner of Insurance (Nevada Commissioner). EICN may not pay such an extraordinary dividend or make an extraordinary distribution until the Nevada Commissioner either approves or does not disapprove the payment within 30 days after receiving notice of its declaration. An extraordinary dividend or distribution is defined by statute to include any dividend or distribution of cash or property whose fair market value, together with that of other dividends or distributions made within the preceding 12 months, exceeds the greater of: (a) 10% of EICN’s statutory surplus as regards to policyholders at the next preceding December 31; or (b) EICN’s statutory net income, not including realized capital gains, for the 12-month period ending at the next preceding December 31.

As of December 31, 2010, EICN had positive unassigned surplus of $243.4 million. During 2010, EICN paid dividends of $100.3 million to EGI, and subsequently from EGI to EHI. Additionally, as a result of approval by the Nevada Commissioner in 2010 and 2008, extraordinary dividends totaling $150.0 million and $355.0 million were paid to EGI, and in turn to EHI, prior to December 31, 2010 and 2008, respectively, from EICN’s special surplus. As a result of the payment of the extraordinary dividend from special surplus in 2010, any dividends paid by EICN through June 3, 2011 will require prior approval by the Nevada Commissioner. The maximum dividends that may be paid by EICN between June 3 and December 31, 2011 without prior approval is $51.9 million.

Under Florida law, without regulatory approval, EPIC may pay dividends if they do not exceed the greater of: the lesser of 10% of surplus or net income, not including realized capital gains, plus a 2-year carryforward; 10% of surplus, with dividends payable limited to unassigned funds minus 25% of unrealized capital gains; or, the lesser of 10% of surplus or net investment income plus a 3-year carryforward with dividends payable limited to unassigned funds minus 25% of unrealized capital gains. During 2010, EPIC declared and paid a dividend of $14.9 million to EGI, and in turn to EHI. The maximum dividends that may be paid in 2011 by EPIC without prior approval, is $15.5 million.

Regulatory Requirements and Restrictions

ECIC is subject to regulation by the California Department of Insurance (California DOI). The ability of ECIC to pay dividends was further limited by restrictions imposed by the California DOI in its approval of the Company’s October 1, 2008 reinsurance pooling agreement. Under that approval: (a) ECIC must initiate discussions of its business plan with the California DOI if its premium to policyholder surplus ratio exceeds 1.5 to 1; (b) ECIC will not exceed a ratio of premium to policyholder surplus of 2 to 1 without approval of the California DOI; (c) if at any time ECIC’s policyholder surplus decreases to 80% or less than the September 30, 2008 balance, ECIC shall cease issuing new policies in California but may continue to renew existing policies until it has (i) received a capital infusion to bring its surplus position to the same level as that as of September 30, 2008 and (ii) submitted a new business plan to the California DOI; (d) ECIC will maintain a risk based capital (RBC) level of at least 350%; (e) should ECIC fail to comply with any commitments listed herein, ECIC will consent to any request by the California DOI to cease issuing new policies in California, but may continue to renew existing policies until such time that as ECIC is able to achieve full compliance with each commitment; and (f) the obligations listed shall only terminate with the written consent of the California DOI.

EPIC and EAC are subject to regulation by the Florida Department of Financial Services (FDFS). Florida statute Section 624.408 requires EPIC and EAC to maintain minimum capital and surplus of the greater of $4.0 million or 10% of total liabilities. Florida statute Section 624.4095 requires EPIC and EAC to maintain a ratio of written premiums times 1.25 to surplus of no greater than 10-to-1 for gross written premiums and 4-to-1 for net written premiums. During the years ended December 31, 2010, 2009, and 2008, EPIC and EAC were in compliance with these statutes.

Additionally, EICN, ECIC, EPIC, and EAC are required to comply with NAIC RBC requirements. RBC is a method of measuring the amount of capital appropriate for an insurance company to support its overall business operations in light of its size and risk profile. NAIC RBC standards are used by regulators to determine appropriate regulatory actions relating to insurers that show signs of weak or deteriorating conditions. As of December 31, 2010, 2009, and 2008, EICN, ECIC, EPIC, and EAC’s total adjusted capital was above all regulatory action levels.

ECIC, EPIC, and EAC are subject to Florida statute and applicable regulations related to Florida excessive profits for workers’ compensation insurance companies. Florida excessive profits are calculated based upon a complex statutory formula which is applied over a rolling three year period. Companies are required to file annual excessive profits forms, and they are required to return so-called “Florida excessive profits” to policyholders in the form of a cash refund or credit toward the future purchase of insurance. As of December 31, 2010 and 2009, the Company had no amounts accrued for estimated additional Florida excessive profits based on its statutory underwriting results for the years ended 2007-2009.

Accumulated Other Comprehensive Income, Net

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Accumulated Other Comprehensive Income

17. Accumulated Other Comprehensive Income, Net

Accumulated other comprehensive income, net, is comprised of unrealized appreciation on investments classified as available-for-sale and unrealized depreciation on derivatives, net of deferred tax expense. The following table summarizes the components of accumulated other comprehensive income, net:

	Years Ended December 31,
	2010			2009			2008
	(in thousands)
Net unrealized gain on investments, before taxes	$	129,435		$	130,550		$	54,748
Net unrealized loss on derivatives, before taxes		—			(2,180	)		(3,868	)
Deferred tax expense		(45,302	)		(44,558	)		(18,076	)
Total accumulated other comprehensive income, net	$	84,133		$	83,812		$	32,804

The following table summarizes the changes in the components of total comprehensive income:

	Years Ended December 31,
	2010		2009		2008
	(in thousands)
Unrealized gains (losses) during the period, before taxes	$	11,202	$	78,281	$	(32,214	)
Less: income tax expense (benefit)		4,292		26,759		(11,007	)
Unrealized gains (losses) during the period, net of taxes		6,910		51,522		(21,207	)
Less reclassification adjustment:
Realized gains (losses) in net income		10,137		791		(11,524	)
Income tax expense (benefit)		3,548		277		(4,033	)
Reclassification adjustment for gains (losses) realized in net income		6,589		514		(7,491	)
Other comprehensive income (loss)		321		51,008		(13,716	)
Net income		62,799		83,021		101,785
Total comprehensive income	$	63,120	$	134,029	$	88,069

- Definition

This label may include the following: 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income. Components of comprehensive income include: (1) foreign currency translation adjustments; (2) gains and losses on foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity; (3) gains and losses on intercompany foreign currency transactions that are of a long-term-investment nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements; (4) change in the market value of a futures contract that qualifies as a hedge of an asset reported at fair value; (5) unrealized holding gains and losses on available-for-sale securities and that resulting from transfers of debt securities from the held-to-maturity category to the available-for-sale category; (6) a net loss recognized as an additional pension liability not yet recognized as net periodic pension cost; and (7) the net gain or loss and net prior service cost or credit for pension plans and other postretirement benefit plans.

+ References+ Details

Employee Benefit and Retirement Plans	12 Months Ended
Employee Benefit and Retirement Plans	Dec. 31, 2010
Notes to Financial Statements [Abstract]
Employee Benefit and Retirement Plans	18. Employee Benefit and Retirement Plans The Company maintains two 401(k) defined contribution plans covering all eligible Company employees. One plan covers eligible employees of the Company that existed prior to the acquisition of AmCOMP (see Note 4) (the Employers 401(k) Plan). Beginning with the plan year 2007, the Company adopted a safe harbor matching contribution to the Employers 401(k) Plan. The safe harbor matching consists of a dollar-for-dollar matching contribution on salary deferrals up to 3% of compensation and then fifty-cents on the dollar matching contribution on salary deferrals from 3% to 5% of compensation. The Company’s contribution to the Employers 401(k) Plan was $1.4 million, $1.6 million, and $1.5 million for the years ended December 31, 2010, 2009, and 2008, respectively. 93 The second plan covers all eligible employees of the Company acquired in the AmCOMP acquisition (the AmCOMP 401(k) Plan). For employees covered under the AmCOMP 401(k) Plan, the Company’s discretionary match consists of a dollar-for-dollar matching contribution on salary deferrals up to 2% of compensation and then fifty-cents on the dollar matching contribution on salary deferrals for the next 4% of compensation. Expenses relating to the AmCOMP 401(k) Plan were $0.5 million and $0.7 million for the years ended December 31, 2010 and 2009, respectively, and $0.1 million for the two month period ended December 31, 2008.

- Definition

Description containing the entire pension and other postretirement benefits disclosure as a single block of text.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 158

-Paragraph 7, 21, 22

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5, 6, 7, 8

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 8

-Subparagraph m

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 106

-Paragraph 518

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 87

-Paragraph 264

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph b

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph a

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph h

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph q

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name FASB Staff Position (FSP)

-Number FAS106-2

-Paragraph 20, 21, 22

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Emerging Issues Task Force (EITF)

-Number 03-2

-Paragraph 8

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher AICPA

-Name Accounting Principles Board Opinion (APB)

-Number 30

-Paragraph 26

Reference 13: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Implementation Guide (Q and A)

-Number FAS88

-Paragraph 63

+ Details

Earnings Per Share

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Earnings Per Share

19. Earnings Per Share

Basic earnings per share includes no dilution and is computed by dividing income applicable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of equity. Diluted earnings per common share includes common shares assumed issued under the “treasury stock method,” which reflects the potential dilution that would occur if outstanding options were to be exercised.

The following table presents the net income and the weighted average shares outstanding used in the earnings per common share calculations for the years ended December 31:

	2010		2009		2008
	(in thousands, except share and per share data)
Net income available to common stockholders – basic and diluted	$	62,799	$	83,021	$	101,785

Weighted average number of common shares outstanding – basic		41,390,984		45,953,868		49,217,829

Effect of dilutive securities:
Performance share awards		—		114,968		40,504
Restricted stock units		129,335		21,996		2,895
Dilutive potential common shares		129,335		136,964		43,399

Weighted average number of common shares outstanding – diluted		41,520,319		46,090,832		49,261,228

Diluted earnings per share exclude outstanding options and other common stock equivalents in periods where the inclusion of such potential common stock instruments would be anti-dilutive in the periods presented. For the years ended December 31, 2010, 2009, and 2008, 0.9 million, 1.0 million, and 1.0 million, respectively, of stock options were excluded from diluted earnings per share, as the options’ exercise price was greater than the average market price of the common stock during the period. During the same periods, 0.4 million, 0.7 million, and 0.2 million, respectively, of outstanding RSU’s and stock options were excluded from diluted earnings per share under the treasury method, as the potential proceeds on settlement or exercise was greater than the value of shares acquired.

Strategic Restructuring Plan	12 Months Ended
Strategic Restructuring Plan	Dec. 31, 2010
Notes to Financial Statements [Abstract]
Strategic Restructuring Plan	20. Strategic Restructuring Plan On July 2, 2010, the Company announced the reorganization of its operations to eliminate duplicative services and better align resources with business activity and growth opportunities. The Company combined its four regional operating units into two units, Eastern and Western, with the Strategic Partnerships and Alliances unit remaining structurally unchanged. In connection with these efforts and with general cost control efforts, the Company eliminated approximately 160 positions and announced the closure of four offices. The changes to the Company’s workforce were substantially completed in the third quarter of 2010. During the year ended December 31, 2010, the Company recorded total restructuring charges of $6.1 million, including $3.9 million related to workforce reductions and $2.2 million related to leases for facilities that were vacated during the year. These charges are included in underwriting and other operating expense in the consolidated statements of income. As of December 31, 2010, the Company had accrued $0.2 million for personnel-related termination costs and $2.3 million related to leases for facilities that were vacated, which are included in accounts payable and accrued expenses in the accompanying consolidated balance sheets. 94 On January 23, 2009, the Company announced a strategic restructuring plan to achieve the corporate and operational objectives set forth as part of its acquisition and integration of AmCOMP, and in response to then current economic conditions. The restructuring plan included a staff reduction of 14% of the Company’s total workforce and consolidation of corporate activities into the Company’s Reno, Nevada headquarters. During the year ended December 31, 2009, the Company incurred integration and restructuring charges of $5.7 million, including $2.8 million in personnel-related termination costs. These charges are included in underwriting and other operating expenses in the consolidated statements of income. Cash payments relating to the 2009 restructuring were $0.6 million and $5.1 million during the years ending December 31, 2010 and 2009, respectively. As of December 31, 2010 and 2009, the Company had $0.0 million and $0.6 million accrued, respectively, for the remaining 2009 restructuring costs that are included in accounts payable and accrued expenses in the accompanying consolidated balance sheets.

Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2010

Notes to Financial Statements [Abstract]

Selected Quarterly Financial Data (Unaudited)

21. Selected Quarterly Financial Data (Unaudited)

Quarterly results for the years ended December 31, 2010 and 2009 were as follows:

	2010 Quarters Ended
	March 31			June 30		September 30		December 31
	(in thousands except per share data)
Net premiums earned	$	79,291		$	78,235	$	80,695	$	83,565
Realized (losses) gains on investment, net		540			352		8		9,237
Losses and loss adjustment expenses		40,288			45,045		52,764		56,682
Commission expense (benefit)		9,905			9,176		9,971		9,416
Underwriting and other operating expenses		32,267			25,143		25,722		22,894
Income tax (benefit) expense		(530	)		1,636		58		2,359
Net income		16,097			16,499		10,054		20,149
Earnings per common share:
Basic		0.38			0.39		0.25		0.51
Diluted		0.38			0.39		0.25		0.51

	2009 Quarters Ended
	March 31			June 30			September 30			December 31
	(in thousands, except per share data)
Net premiums earned	$	111,600		$	104,381		$	98,240		$	90,026
Realized (losses) gains on investment, net		(2,112	)		(392	)		3,564			(269	)
Losses and loss adjustment expenses		59,162			54,100			53,395			47,804
Commission expense (benefit)		13,658			13,229			(1,276	)		10,539
Underwriting and other operating expenses		36,484			32,452			33,688			36,063
Income tax expense (benefit)		(1,196	)		3,300			4,594			2,579
Net income		20,855			20,345			30,557			11,264
Earnings per common share:
Basic		0.43			0.44			0.68			0.26
Diluted		0.43			0.44			0.67			0.26

Net Premiums Earned

The decrease in net premiums earned in 2009 and the first six months of 2010 was primarily due to the decrease in gross premium written, resulting from lower rates, competitive pressures, and changes in business conditions due to the economy and its impact on small businesses. In the third and fourth quarters of 2010 the net premiums earned increased primarily as a result of favorable adjustments in the final audit accrual.

Realized (Losses) Gains on Investments, Net

The Company evaluated its portfolio allocation during the fourth quarter of 2010 and elected to shift $20.0 million of equity securities into a high-yield dividend portfolio, resulting in a $9.2 million realized gain.

During the third quarter of 2009, the Company sold equity securities, the majority of which were previously impaired and realized a gain of $3.6 million.

Losses and Loss Adjustment Expenses

Favorable prior accident year reserve development was recognized in each of the first two quarters of 2010 in the amounts of $11.1 million and $5.5 million, respectively, and unfavorable loss development of $0.9 million, was recognized in the fourth quarter of 2010. The unfavorable development in the fourth quarter was related to the write-off of certain reinsurance recoverables that had previously been accounted for as an allowance for bad debt.

Favorable prior accident year reserve development was recognized in each of the quarters of 2009 in the amount of $13.5 million, $15.7 million, $10.4 million, and $11.8 million, for the first quarter through fourth quarters, respectively.

Commission Expense

During the fourth quarter of 2010 the Company reduced its estimate of certain administrative fees due under its joint marketing agreements by $3.0 million, which decreased the commission expense in the fourth quarter of 2010. The Company also re-negotiated the terms of certain reinsurance agreements, which increased commission expense by $1.8 million in the fourth quarter of 2010.

During the third and fourth quarters of 2009, the estimate on the LPT ultimate contingent profit commission was increased by $14.1 million and $0.9 million, respectively, yielding a net negative commission expense for the third quarter 2009.

Underwriting and Other Operating Expenses

Underwriting and other operating expenses declined in the first, second, and fourth quarters of 2010 as the Company managed its expenses, primarily through workforce reductions. The first quarter included charges of a $0.9 million expense related to workforce reductions. In the third quarter of 2010, the Company recorded a $4.3 million expense related to workforce reductions and leases for facilities that were vacated during the quarter. The fourth quarter included a $0.9 million expense related to leases for facilities that were vacated during that quarter.

During the first quarter of 2009, the Company announced a strategic restructuring plan (Note 20) and recognized an additional expense of $3.0 million for personnel-related termination costs. The increase in underwriting and other operating expenses in the fourth quarter 2009 was primarily attributable to an accrual of $2.3 million for management bonuses.

Income Taxes

Income tax expense (benefit) for interim periods is measured using an estimated effective tax rate for the annual period based on projected net income and tax adjustments. On an interim basis, actual results to date replace the projections and the annual effective tax rate is updated. A cumulative change is recorded in the quarter the effective tax rate changes.

The third and fourth quarters of 2009 were impacted by the favorable adjustments to the LPT contingent profit commission which is tax-exempt. The remaining quarterly variances are due to changes in the relative level of tax-exempt investment income to net income for the quarters.

- Definition

This element can be used to disclose the entire quarterly financial data disclosure in the annual financial statements as a single block of text. The disclosure includes a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income (loss) before extraordinary items and cumulative effect of a change in accounting principle and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished. Alternatively, the details of this disclosure can be reported using the elements in this group, or by using other taxonomy elements and applying the appropriate quarterly date and period contexts when creating an instance document. For example, the element for "Interest and Dividend Income, Operating" may be used by financial institutions from the Statement of Income, applying the appropriate quarterly date and period context when creating an instance document.

+ References+ Details

Subsequent Events	12 Months Ended
Subsequent Events	Dec. 31, 2010
Subsequent Events
Schedule Of Subsequent Events	22. Subsequent Events On January 19, 2011, the Company and Martin J. Welch, the President and Chief Operating Officer of, among others, the insurance subsidiaries of the Company, mutually agreed to the separation of Mr. Welch’s employment with the Company. Effective February 1, 2011, Mr. Welch (i) ceased his employment with the Company and its subsidiaries, and (ii) resigned as a member of the Company’s Board of Directors and the Boards of Directors of all subsidiaries of the Company on which he served. Mr. Welch’s resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. The Company has negotiated a separation agreement with Mr. Welch that provided for severance pursuant to the terms of Mr. Welch’s existing employment agreement. Mr. Welch’s employment agreement is filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2008.

Schedule II - Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2010

Schedule To Financial Statements [Abstract]

Schedule II Condensed Financial Information of Registrant

Schedule II. Condensed Financial Information of Registrant


Employers Holdings, Inc.

Condensed Balance Sheets

	December 31,
	2010			2009
Assets	(in thousands, except share data)
Investments:
Investment in subsidiaries	$	196,714		$	395,510
Investment in securities available-for-sale (amortized cost $339,056 in 2010 and $131,749 in 2009)		345,060			141,973
Total investments		541,774			537,483

Cash and cash equivalents		27,991			55,176
Restricted cash and cash equivalents		2,017			17
Intercompany receivable		7,485			330
Federal income taxes receivable – intercompany		—			8,637
Deferred income taxes, net		7,541			—
Other assets		5,739			2,788
Total assets	$	592,547		$	604,431

Liabilities and stockholders’ equity
Accounts payable and accrued expenses	$	2,141		$	2,505
Income tax payable		256			1,325
Notes payable		100,000			100,000
Other liabilities		34			2,202
Total liabilities		102,431			106,032

Stockholders’ equity:
Common stock, $0.01 par value; 150,000,000 shares authorized 53,779,118 and 53,563,299 shares issued and 38,965,126 and 42,908,165 shares outstanding at December 31, 2010 and 2009, respectively		538			536
Preferred stock, $0.01 par value; 25,000,000 shares authorized non-issued		—			—
Additional paid-in capital		314,212			311,282
Retained earnings		319,341			266,491
Accumulated other comprehensive income, net		84,133			83,812
Treasury stock, at cost (14,813,992 shares at December 31, 2010 and 10,655,134 shares at December 31, 2009)		(228,108	)		(163,722	)
Total stockholders’ equity		490,116			498,399
Total liabilities and stockholders’ equity	$	592,547		$	604,431




See accompanying notes.

100

Employers Holdings, Inc.

Condensed Statements of Income

	Years Ended December 31,
	2010			2009			2008
	(in thousands, except per share data)
Revenues
Net investment income	$	8,740		$	7,089		$	7,125
Realized gains on investments		—			2,682			—
Total revenues		8,740			9,771			7,125

Expenses
Other operating expenses		10,597			14,036			12,179
Interest expense		4,080			5,719			1,738
Total expenses		14,677			19,755			13,917

Loss before income taxes and equity in earnings of subsidiaries		(5,937	)		(9,984	)		(6,792	)
Income tax benefit		(6,836	)		(5,990	)		(3,585	)
Net income (loss) before equity in earnings of subsidiaries		899			(3,994	)		(3,207	)
Equity in net income of subsidiaries		61,900			87,015			104,992
Net income	$	62,799		$	83,021		$	101,785

Earnings per common share for the stated periods (Note 19):

Basic	$	1.52		$	1.81		$	2.07
Diluted	$	1.51		$	1.80		$	2.07

Cash dividends declared per common share	$	0.24		$	0.24		$	0.24









See accompanying notes.

101

Employers Holdings, Inc.

Condensed Statement of Cash Flows

	Years Ended December 31,
	2010			2009			2008
	(in thousands)
Operating activities
Net income	$	62,799		$	83,021		$	101,785
Adjustments to reconcile net income to net cash provided
by operating activities:
Equity in net income of subsidiaries		(61,900	)		(87,015	)		(104,992	)
Amortization expense		94			188			148
Realized gains on investments		—			(2,682	)		—
Stock-based compensation		4,053			5,366			3,161
Amortization of premium or investments, net		3,794			1,428			849
Deferred income tax expense		(9,930	)		(47	)		(907	)
Change in operating assets and liabilities:
Accounts payable, accrued expense and other liabilities		(1,146	)		(1,106	)		381
Federal income taxes		8,637			(5,960	)		(750	)
Other assets		(470	)		924			(3,025	)
Intercompany payable/receivable		(7,155	)		(718	)		575
Net cash used in operating activities		(1,224	)		(6,601	)		(2,775	)

Investing activities
Purchase of fixed maturities		—			—			(1,994	)
Proceeds from sale of fixed maturities		—			59,660			997
Proceeds from maturities and redemptions of investments		12,319			10,000			—
Cash dividends received from subsidiaries		38,383			27,700			152,995
Capital contributions to subsidiary		—			—			(193,423	)
Restricted cash (used in) provided by investment activities		(2,000	)		(17	)		—
Net cash provided by (used in) investing activities		48,702			97,343			(41,425	)

Financing activities
Acquisition of treasury stock		(63,592	)		(74,185	)		(14,152	)
Cash transactions related to stock-based compensation		(1,135	)		(123	)		—
Dividends paid to stockholders		(9,935	)		(11,031	)		(11,808	)
Debt issuance costs		—			—			(375	)
Payments on notes payable		—			(50,000	)		—
Proceeds from notes payable		—			—			150,000
Other		—			—			5
Net cash (used in) provided by financing activities		(74,662	)		(135,339	)		123,670

Net (decrease) increase in cash and cash equivalents		(27,185	)		(44,597	)		79,470
Cash and cash equivalents at the beginning of the period		55,176			99,773			20,303
Cash and cash equivalents at the end of the period	$	27,991		$	55,176		$	99,773
Schedule of non-cash transactions
Fixed maturities transferred in for dividend	$	—		$	—		$	200,087
See accompanying notes.

102

1. Nature of Operations and Summary of Significant Accounting Policies

Operations and Basis of Presentation

Employers Holdings, Inc. (EHI) is a Nevada holding company. Through its wholly owned insurance subsidiaries, Employers Insurance Company of Nevada (EICN), Employers Compensation Insurance Company (ECIC), Employers Preferred Insurance Company (EPIC), and Employers Assurance Company (EAC), EHI is engaged in the commercial property and casualty insurance industry, specializing in workers’ compensation products and services. Unless otherwise indicated, all references to the “Company” refer to EHI, together with its subsidiaries.

EHI prepares its condensed financial statements in accordance with U.S. generally accepted accounting principles (GAAP), using the equity method. Under the equity method, the investment in subsidiaries is stated at cost plus equity in earnings (loss) of its subsidiaries. EHI receives dividends from its insurance subsidiaries in the form of cash and securities. The book value for these securities is stated at the fair market value at the date of transfer. These condensed financial statements should be read in conjunction with EHI’s consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Estimates and Assumptions

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. As a result, actual results could differ from these estimates.

2. Income Taxes

EHI files a consolidated federal income tax return with its subsidiaries and has a tax allocation agreement with its subsidiaries. The equity in the undistributed earnings of subsidiaries included in the accompanying condensed statements of income is net of income taxes.

3. Investments

EHI holds fixed maturity securities at December 31, 2010 for purposes of securing the Third and Amended and Restated Secured Revolving Credit Facility (Amended Credit Facility). The amortized cost and estimated fair value of fixed maturity securities at December 31, 2010, by contractual maturity are shown below. Expected maturities differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Estimated Fair Value
	(in thousands)
Due in one year or less	$	27,838	$	27,836
Due after one year through five years		202,103		211,093
Due after five years through ten years		53,109		52,476
Due after 10 years		56,906		53,655
Total	$	339,956	$	345,060

At December 31, 2010, the fixed maturity securities had unrealized gains of $5.1 million which are included in accumulated comprehensive income, net in the accompanying condensed balance sheets.

4. Notes Payable

Effective September 30, 2008, EHI and Wells Fargo Bank, National Association (Wells Fargo) entered into the Amended Credit Facility. See Note 13 of the Consolidated Financial Statements of Employers Holdings, Inc. and Subsidiaries included herein for a description of the terms of the Amended Credit Facility.

On September 30, 2008, EHI borrowed $150.0 million through the Amended Credit Facility. The proceeds borrowed under the Amended Credit Facility were used to finance the acquisition of AmCOMP Incorporated and for general working capital purposes. Interest paid during the years ended December 31, 2010, 2009, and 2008, including the interest rate swap (see Note 5), totaled $4.4 million, $5.8 million, and $1.2 million, respectively. In accordance with the terms of the contract, a repayment of $50.0 million was made toward the Amended Credit Facility on December 30, 2009. The Amended Credit Facility is secured by fixed maturity securities which had a fair value of $131.0 million at December 31, 2010.

103

5. Derivatives

Interest Rate Swap

On September 30, 2008, the Company, in connection with the borrowings made under the Amended Credit Facility (See Note 11 to the Consolidated Financial Statements), executed an interest rate swap with Wells Fargo with a notional amount of $100.0 million. Execution of the interest rate swap established a fixed interest rate of 4.84%, on the notional amount, which expired September 30, 2010. The Company used its interest rate swap to mitigate the risks associated with unexpected cash outflows resulting from shifts in variable interest rates. As of December 31, 2009, the interest rate swap had a negative fair value of $2.2 million, and is included in other liabilities on the accompanying consolidated balance sheets. The corresponding unrealized loss of $2.2 million for the year ended December 31, 2009 is included in accumulated other comprehensive income, net.

6. Stock-Based Compensation

During 2008, EHI granted 24,984 RSUs to non-employee Directors and 152,564 RSUs to officers and 475,167 non-qualified stock options to officers. During 2009, EHI granted 40,536 RSUs to non-employee Directors and 176,871 RSUs to officers and 531,082 non-qualified stock options to officers. See Note 15 of the Consolidated Financial Statements of Employers Holdings, Inc. and Subsidiaries’ included herein for a detailed description of the stock-based compensation.

During 2010, EHI granted 30,728 RSUs to non-employee Directors, 163,660 RSUs to officers, and 406,020 non-qualified stock options to officers.

- Definition

This element can be used to encapsulate the entire condensed financial information disclosure, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

+ References+ Details

Schedule VI - Supplemental Information Concerning Property - Casualty Insurance Operations

12 Months Ended

Dec. 31, 2010

Schedule To Financial Statements [Abstract]

Supplemental Information Concerning Property - Casualty Insurance Operations

Schedule VI. Supplemental Information Concerning Property — Casualty Insurance Operations

Employers Holdings, Inc. and Subsidiaries
Consolidated Supplemental Information Concerning Property and Casualty Insurance Operations

Year Ended	Deferred Policy Acquisition Costs		Reserves For Unpaid Losses And LAE		Unearned Premiums		Earned Premiums		Net Investment Income		Losses and LAE Related to Current Years		Losses and LAE Related to Prior Years			Amortization of Deferred Policy Acquisition Costs		Paid Losses And LAE		Net Premiums Written
(in thousands)
2010	$	32,239	$	2,279,729	$	149,485	$	321,786	$	83,032	$	227,143	$	(14,130	)	$	72,071	$	262,480	$	313,098
2009	$	33,695	$	2,425,658	$	158,577	$	404,247	$	90,484	$	283,827	$	(51,359	)	$	87,638	$	289,443	$	368,290
2008	$	41,521	$	2,506,478	$	196,695	$	328,947	$	78,062	$	226,643	$	(71,707	)	$	66,415	$	188,883	$	308,317

Document Information	12 Months Ended
Document Information	Dec. 31, 2010
Document Type	10-K
Amendment Flag	true
Amendment Description	Amendment No.1
Document Period End Date	Dec. 31, 2010

Entity Information (USD $)	12 Months Ended
Entity Information (USD $)	Dec. 31, 2010
Entity Registrant Name	Employers Holdings, Inc.
Entity Central Index Key	0001379041
Current Fiscal Year End Date	--12-31
Entity Well Known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float	$ 38,467,790
Entity Common Stock Shares Outstanding	38,467,790
Document Fiscal Year Focus	2010
Document Fiscal Period Focus	FY