UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_____________________
FORM
8-K
_____________________
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of report (Date of earliest event reported): May 6, 2009
EMPLOYERS
HOLDINGS, INC.
(Exact
Name of Registrant as Specified in its Charter)
_____________________
|
NEVADA
(State
or Other Jurisdiction of
Incorporation)
|
001-33245
(Commission
File Number)
|
04-3850065
(I.R.S.
Employer Identification No.)
|
|
10375
Professional Circle
Reno,
Nevada
(Address
of Principal Executive Offices)
|
89521
(Zip
Code)
|
|
|
Registrant's
telephone number including area code: (888)
682-6671
|
||
|
No
change since last report
(Former
Name or Address, if Changed Since Last
Report)
|
||
_____________________
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
| o |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
| o |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
| o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
| o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Section
2 – Financial Information
Item
2.02. Results of Operations and Financial Condition.
On
May 6, 2009, Employers Holdings, Inc. (the "Company") issued a press release
announcing results for the first quarter ended March 31, 2009. The
press release is attached hereto as Exhibit 99.1 and is incorporated by
reference herein, and is being furnished, not filed, under Item 2.02 to this
Current Report on Form 8-K.
Section
8 – Other Information
Item
8.01. Other Events.
On
May 6, 2009, the Company announced that its Board of Directors has declared a
second quarter cash dividend of six cents per share on the Company's common
stock. The dividend is payable on June 3, 2009 to stockholders of
record as of May 20, 2009. Furnished as Exhibit 99.1 and incorporated
herein by reference is the press release issued by the Company.
Section
9 – Financial Statements and Exhibits
Item
9.01. Financial Statements and Exhibits.
99.1 Employers
Holdings, Inc. press release, dated May 6, 2009.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
EMPLOYERS
HOLDINGS, INC.
|
|||||
|
By:
|
/s/
Lenard T. Ormsby
|
||||
|
Name:
|
Lenard
T. Ormsby
|
||||
|
Title:
|
Executive
Vice President, Chief
|
||||
|
Legal
Officer and General Counsel
|
|||||
Dated: May
6, 2009
Exhibit
Index
|
Exhibit
No.
|
Exhibit
|
|
99.1
|
Employers
Holdings, Inc. press release, dated May 6,
2009.
|
Exhibit
99.1
 |
news release |
May 6,
2009
Employers
Holdings, Inc. Reports First Quarter Earnings and Declares Second Quarter
Dividend
Key
Highlights
|
●
|
Diversified
direct written premium
|
|
o
|
California
40%, Florida 10%, Wisconsin 9%, Nevada 6%
|
|
●
|
Continued
favorable prior accident year development of $13.5
million
|
|
●
|
Portfolio
fair market value increased 2% from December 31, 2008 to $2.1 billion at
March 31, 2009
|
|
●
|
Generated
book value per share growth of 5% from $17.43 at December 31, 2008 to
$18.26 at March 31, 2009
|
Reno, NV—May 6, 2009—Employers Holdings, Inc. (“EHI” or the “Company”)
(NYSE:EIG)
today reported first quarter 2009 net income of $20.9 million or $0.43 per share
compared with $25.5 million or $0.51 per share in the first quarter of 2008, a
decrease of $4.6 million or $0.08 per share. Net income includes amortization of
the deferred reinsurance gain related to the Loss Portfolio Transfer (“LPT”)
Agreement. Consolidated net income before the impact of the LPT (the Company’s
non-GAAP measure described below) was $16.5 million or $0.34 per share in the
first quarter of 2009 compared with $20.7 million or $0.42 per share in the
first quarter of 2008.
Douglas
D. Dirks, President and Chief Executive Officer commented: “In the
first quarter, EHI continued to perform well under difficult economic and
investment conditions. We successfully diversified earnings with California
representing only 40% of our total direct written premium at the end of the
quarter. Our investment strategy has been highly successful despite
unprecedented volatility in worldwide financial markets. The strength of our
balance sheet and confidence in our business model is reflected in our
repurchase of 1.6 million shares of common stock through March 31, 2009. We grew
book value per share nearly 5% since year-end 2008 with 35% of the three month
growth in book value directly related to share repurchases.”
As
of March 31, 2009, the Company had a combined ratio of 99.8% (103.6% before the
LPT), an increase from the first quarter 2008 combined ratio of 83.0% (89.3%
before the LPT). The acquired operations comprised 11.7 percentage points of the
increase.
Dirks
further remarked: “Our expense ratio at 46.7% remains high due to declines in
premium largely from rate decreases, economic contraction, competition and our
underwriting discipline. Restructuring and integration costs in the quarter
added 3.4 percentage points to the expense ratio. Recently, we increased pure
premium rates in
California
in line with our expected loss costs and LAE. We are making excellent progress
on the integration of our acquired operations. We are implementing expense
controls and reducing staff, as previously announced, although the impacts of
these actions won’t be fully realized until year-end.”
Looking
ahead to the rest of 2009, Dirks concluded: “Given current economic conditions,
we expect the decline in premium to continue as in the first quarter, partially
mitigated by premium growth in a number of our markets; in particular, those
which did not previously have access to our A- rated paper. We are moving to
restructure our cost base more in line with our revenues and continue to
implement technology for straight-through processing that will enhance our
performance. As the economy improves, we believe that we will be well positioned
to meet the needs of the marketplace and to benefit from our restructured cost
base. Historically, small businesses lead recoveries.”
First
quarter net premiums earned increased $35.7 million or 47.0% to $111.6 million
in 2009 from $75.9 million in first quarter 2008. First quarter net premiums
earned for acquired operations were $44.6 million. Excluding acquired
operations, net premiums earned declined $8.9 million or 11.7% quarter over
quarter with declines in direct written premium of $6.2 million and $6.6 million
in California and Nevada, respectively.
First
quarter net investment income increased $4.4 million or 23.3% due to an increase
in invested assets as a result of the acquisition. Realized losses on
investments for the first quarter of 2009 were $2.1 million compared with $1.5
million in the first quarter of 2008 primarily due to $1.8 million in
other-than-temporary impairments on certain equity securities.
First
quarter losses and LAE increased 93.3% to $59.2 million in 2009 compared with
$30.6 million in 2008. Excluding acquired operations, losses and LAE decreased
9.8% to $27.6 million. Losses and LAE before the LPT was $63.5 million in the
first quarter of 2009 and $35.4 million in the first quarter of 2008. Favorable
prior accident year development in the first quarter of 2009 was $13.5 million
compared with $11.4 million in the first quarter of 2008. Current accident year
loss estimates were 67.9% and 61.6% in the first quarters of 2009 and 2008,
respectively.
In
the first quarter of 2009, commission expense of $13.7 million increased from
$10.6 million in the first quarter of 2008. First quarter 2009 commission
expenses excluding acquired operations were $9.1 million.
First
quarter 2009 underwriting and other operating expenses increased to $36.5
million from $21.7 million in 2008. Excluding acquired operations, a
restructuring charge of $3.0 million and integration costs of $0.8 million,
underwriting and other operating expenses declined $1.2 million or
5.4%.
The
income tax benefit of $1.2 million for the first quarter of 2009 was primarily
due to a decrease in pre-tax income, a higher proportion of tax exempt
investment income and tax benefits associated with reserve reductions related to
periods prior to the Company’s privatization.
Total
invested assets were $2.1 billion at the end of the first quarter 2009 with a
2.0% increase in the fair market value of the portfolio in the first three
months of this year. There was a net unrealized gain of $18.0 million in the
portfolio during the first quarter of 2009. For your information, we are
including, in the “Investors” section of our web site at www.employers.com,
a list of portfolio securities by CUSIP.
Page
2 of 12
As
of March 31, 2009, total stockholders’ equity increased 3.4% to $459.9 million
from $444.7 million at December 31, 2008. Equity including the deferred
reinsurance gain related to the LPT increased 1.3% to $862.2 million from $851.3
million in December 31, 2008.
In
the first quarter, pursuant to the 2008 Stock Repurchase Program, the Company
repurchased 1.6 million shares of common stock through March 31, 2009 at an
average cost of $9.56 per share. As of March 31, 2009, pursuant to both of our
stock repurchase programs, the Company repurchased a total of 6.3 million shares
of common stock at an average price of $16.56 per share. Book value per share
increased 4.8% to $18.26 at March 31, 2009 from $17.43 at December 31,
2008.
The
Board of Directors declared a second quarter cash dividend of six cents per
share. The dividend is payable on June 3, 2009, to stockholders of record as of
May 20, 2009.
Conference
Call and Web Cast, Form 10-Q
The
Company will host a conference call Thursday, May 7, 2009 at 10:30 a.m. Pacific
Daylight Time. The conference call will be available via a live web cast on the
Company’s web site at www.employers.com.
An archived version will be available following the call. The conference call
replay number is (888) 286-8010 with a passcode of 77042913. International
callers may dial (617) 801-6888.
EHI
will file its Form 10-Q for the quarterly period ended March 31, 2009, with the
Securities and Exchange Commission (“SEC”) on Thursday, May 7, 2009. The Form
10-Q will be available without charge through the EDGAR system at the SEC's web
site and will also be posted on the Company's web site, www.employers.com,
and is accessible through the “Investors” link.
Discussion
of Non-GAAP Financial Measures
This
earnings release includes non-GAAP financial measures used to analyze the
Company’s operating performance for the periods presented.
These
non-GAAP financial measures exclude impacts related to the LPT Agreement. The
1999 LPT Agreement was a non-recurring transaction that does not result in
ongoing cash benefits and, consequently, the Company believes these non-GAAP
measures are useful in providing stockholders and management a meaningful
understanding of the Company’s operating performance. In addition, these
measures, as defined, are helpful to management in identifying trends in the
Company’s performance because the items excluded have limited significance in
current and ongoing operations.
The
Company strongly urges stockholders and other interested persons not to rely on
any single financial measure to evaluate its business. The non-GAAP measures are
not a substitute for GAAP measures and investors should be careful when
comparing the Company’s non-GAAP financial measures to similarly titled measures
used by other companies.
Net Income
before impact of LPT. Net income less (i) amortization of
deferred reinsurance gain—LPT Agreement and (ii) adjustments to LPT Agreement
ceded reserves.
Page
3 of 12
Deferred
reinsurance gain—LPT Agreement. This reflects the unamortized
gain from the LPT Agreement. Under GAAP, this gain is deferred and amortized
using the recovery method, whereby the amortization is determined by the
proportion of actual reinsurance recoveries to total estimated recoveries, and
the amortization is reflected in losses and
LAE.
Gross Premiums
Written. Gross premiums written is the sum of both direct
premiums written and assumed premiums written before the effect of ceded
reinsurance. Direct premiums written represents the premiums on all policies the
Company’s insurance subsidiaries have issued during the year. Assumed premiums
written represents the premiums that the insurance subsidiaries have received
from an authorized state-mandated pool.
Net Premiums
Written. Net premiums written is the sum of direct premiums
written and assumed premiums written less ceded premiums written. Ceded premiums
written is the portion of direct premiums written that are ceded to reinsurers
under reinsurance contracts. The Company uses net premiums written, primarily in
relation to gross premiums written, to measure the amount of business retained
after cession to reinsurers.
Losses and LAE
before impact of LPT. Losses and LAE less (i)
amortization of deferred reinsurance gain—LPT Agreement and (ii) adjustments to
LPT Agreement ceded reserves.
Losses and LAE
Ratio. The losses and LAE ratio is a measure of underwriting
profitability. Expressed as a percentage, it is the ratio of losses and LAE to
net premiums earned.
Commission
Expense Ratio.
Commission expense ratio is the ratio (expressed as a percentage) of
commission expense to net premiums
earned.
Underwriting
and Other Operating Expense Ratio.
The underwriting and other operating expense ratio is the ratio
(expressed as a percentage) of underwriting and other operating expense to net
premiums earned.
Combined
Ratio.
The combined ratio represents a summary percentage of claims and expenses
to net premiums earned. The combined ratio is the sum of the losses and LAE
ratio, the commission expense ratio, the policyholder dividends ratio and the
underwriting and other operating expense
ratio.
Combined Ratio
before impacts of LPT. Combined ratio before impacts of LPT is the
GAAP combined ratio before (i) amortization of deferred reinsurance gain—LPT
Agreement and (ii) adjustments to LPT Agreement ceded
reserves.
Equity
including deferred reinsurance gain—LPT.
Equity including deferred reinsurance gain—LPT is total equity plus the
deferred reinsurance gain—LPT
Agreement.
Forward-Looking
Statements
In
this press release, the Company and its management discuss and make statements
based on currently available information regarding their intentions, beliefs,
current expectations, and projections regarding the Company’s future operations
and performance. Certain of these statements may constitute
"forward-looking" statements
Page
4 of 12
as
that term is defined in the Private Securities Litigation Reform Act of
1995. Forward-looking statements can be identified by the fact that
they do not relate strictly to historical or current facts and are often
identified by words such as "may," "will," "could," "would," "should," "expect,"
"plan," "anticipate," "target," "project," "intend," "believe," "estimate,"
"predict," "potential," "pro
forma," "seek," "likely," or "continue," or other comparable terminology
and their negatives.
EHI
and its management caution investors that such forward-looking statements are
not guarantees of future performance. Risks and uncertainties are inherent in
EHI’s future performance. Factors that could cause the Company’s actual results
to differ materially from those indicated by such forward-looking statements
include, among other things, those discussed or identified from time to time in
our public filings with the SEC, including the risks detailed in the Company's
Quarterly Reports on Form 10-Q and the Company’s Annual Reports on Form
10-K.
All
forward-looking statements made in this news release reflect EHI’s current views
with respect to future events, business transactions and business performance
and are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements involve risks and uncertainties,
which may cause actual results to differ materially from those set forth in
these statements. The business of EHI could be affected by, among other things,
competition, pricing and policy term trends, the levels of new and renewal
business achieved, market acceptance, changes in demand, the frequency and
severity of catastrophic events, actual loss experience, uncertainties in the
loss reserving and claims settlement process, new theories of liability,
judicial, legislative, regulatory and other governmental developments,
litigation tactics and developments, investigation developments, the amount and
timing of reinsurance recoverables, credit developments among reinsurers,
changes in the cost or availability of reinsurance, market developments
(including adverse developments in financial markets as a result of, among other
things, changes in local, regional or national economic conditions and continued
volatility and further deterioration of financial markets), credit and other
risks associated with EHI’s investment activities, significant changes in
investment yield rates, rating agency action, possible terrorism or the outbreak
and effects of war and economic, political, regulatory, insurance and
reinsurance business conditions, relations with and performance of employees and
agents, the integration of acquired operations (including the failure to realize
anticipated benefits of such acquisitions and potential disruption from the
acquisitions making it more difficult to maintain relationships with customers,
employees, agents or producers), as well as management’s response to these
factors, and other factors identified in EHI’s filings with the SEC. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date on which they are made.
The
SEC filings for EHI can be accessed through the “Investors” link on the
Company’s website, www.employers.com,
or through the SEC's EDGAR Database at www.sec.gov
(EHI EDGAR CIK No. 0001379041). EHI assumes no obligation to update this release
or the information contained herein, which speaks as of the date
issued.
CONTACT:
Media:
Ty Vukelich, (775) 327-2566, tvukelich@employers.com.
Analysts:
Vicki Erickson, (775) 327-2794, verickson@employers.com.
Copyright © 2009 EMPLOYERS. All rights reserved.
EMPLOYERS®
and America’s small
business insurance specialist.®
are registered trademarks of Employers Insurance Company of Nevada.
Employers
Page
5 of 12
Holdings,
Inc. is a holding company with subsidiaries that are specialty providers of
workers’ compensation insurance and services focused on select, small businesses
engaged in low to medium hazard industries. The company, through its
subsidiaries, operates in 30 states. Insurance subsidiaries include Employers
Insurance Company of Nevada, Employers Compensation Insurance Company, Employers
Preferred Insurance Company, and Employers Assurance Company, all rated A-
(Excellent) by A.M. Best Company. Employers Preferred Insurance Company
and Employers Assurance Company are also known as AmCOMP Preferred Insurance
Company and AmCOMP Assurance Company in some jurisdictions. Additional
information can be found at: http://www.employers.com.
Page
6 of 12
Employers
Holdings, Inc.
Consolidated
Statements of Income
(In
thousands)
|
Three
Months Ended March 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Revenues
|
(unaudited)
|
|||||||
|
Gross
written premiums
|
$
|
128,089
|
$
|
81,674
|
||||
|
Net
written premiums
|
$
|
124,672
|
$
|
79,104
|
||||
|
Net
premiums earned
|
$
|
111,600
|
$
|
75,896
|
||||
|
Net
investment income
|
23,306
|
18,903
|
||||||
|
Realized
losses on investments, net
|
(2,112
|
)
|
(1,488
|
)
|
||||
|
Other
income
|
146
|
438
|
||||||
|
Total
revenues
|
132,940
|
93,749
|
||||||
|
Expenses
|
||||||||
|
Losses
and loss adjustment expenses
|
59,162
|
30,614
|
||||||
|
Commission
expense
|
13,658
|
10,623
|
||||||
|
Dividends
to policyholders
|
2,018
|
15
|
||||||
|
Underwriting
and other operating expense
|
36,484
|
21,711
|
||||||
|
Interest
expense
|
1,959
|
---
|
||||||
|
Total
expenses
|
113,281
|
62,963
|
||||||
|
Net
income before income taxes
|
19,659
|
30,786
|
||||||
|
Income
tax (benefit) expense
|
(1,196
|
)
|
5,292
|
|||||
|
Net
income
|
$
|
20,855
|
$
|
25,494
|
||||
|
Reconciliation
of net income to net income
before
the impacts of the LPT Agreement
|
||||||||
|
Net
income
|
$
|
20,855
|
$
|
25,494
|
||||
|
Less:
Impact of LPT Agreement:
Amortization
of deferred reinsurance gain –
LPT
Agreement
|
4,348
|
4,792
|
||||||
|
Net
Income before the impacts of LPT Agreement
|
$
|
16,507
|
$
|
20,702
|
||||
Page
7 of 12
Employers
Holdings, Inc.
Consolidated
Statements of Income
(In
thousands, except share and per share data)
|
Earnings
per common share
|
||||||
|
Three
Months Ended March 31,
|
||||||
|
2009
|
2008
|
|||||
|
(unaudited)
|
||||||
|
Net
Income
|
$
|
20,855
|
$
|
25,494
|
||
|
Earnings
per common share
|
||||||
|
Basic
|
$
|
0.43
|
$
|
0.51
|
||
|
Diluted
|
$
|
0.43
|
$
|
0.51
|
||
|
Weighted
average shares outstanding
|
||||||
|
Basic
|
48,576,655
|
49,611,213
|
||||
|
Diluted
|
48,612,853
|
49,646,553
|
||||
|
Reconciliation
of EPS to EPS
before
the impacts of the LPT Agreement
|
||||||
|
Earnings
per common share
|
||||||
|
Basic
|
$
|
0.43
|
$
|
0.51
|
||
|
Diluted
|
$
|
0.43
|
$
|
0.51
|
||
|
Earnings
per common share attributable to the LPT Agreement
|
||||||
|
Basic
|
$
|
0.09
|
$
|
0.09
|
||
|
Diluted
|
$
|
0.09
|
$
|
0.09
|
||
|
Earnings
per common share before the LPT
Agreement
|
||||||
|
Basic
|
$
|
0.34
|
$
|
0.42
|
||
|
Diluted
|
$
|
0.34
|
$
|
0.42
|
||
|
Reconciliation
of basic EPS before the impact of the LPT to
change
in book value per share
|
||||||
|
Basic
EPS before the impact of the LPT
|
$
|
0.34
|
||||
|
Treasury
stock repurchase
|
0.29
|
|||||
|
Change
in other comprehensive income
|
0.25
|
|||||
|
Dividend
to shareholders
|
(0.06
|
)
|
||||
|
Other
|
0.01
|
|||||
|
Change
in book value per share
|
$
|
0.83
|
||||
Page
8 of 12
Employers
Holdings, Inc.
Consolidated
Balance Sheets
(In
thousands, except share and per share data)
|
As
of
March
31,
|
As
of
December
31,
|
||||
|
2009
|
2008
|
||||
|
Assets
|
(unaudited)
|
||||
|
Available
for Sale:
|
|||||
|
Fixed
maturity investments at fair value (amortized cost $1,936,482
at
March
31, 2009 and $1,870,227 at December 31, 2008)
|
$
|
1,997,409
|
$
|
1,909,391
|
|
|
Equity
securities at fair value (cost of $41,232 at March 31, 2009 and
$43,014
at
December 31, 2008)
|
52,825
|
58,526
|
|||
|
Short-term
investments at fair value (amortized cost $32,752 at
March
31, 2009 and $74,952 at December 31, 2008)
|
32,985
|
75,024
|
|||
|
Total
investments
|
2,083,219
|
2,042,941
|
|||
|
Cash
and cash equivalents
|
190,431
|
202,893
|
|||
|
Accrued
investment income
|
22,667
|
24,201
|
|||
|
Premiums
receivable, less bad debt allowance of $8,606 at March 31,
2009
and $7,911
at December 31, 2008
|
105,097
|
91,273
|
|||
|
Reinsurance
recoverable for:
|
|||||
|
Paid
losses
|
11,504
|
12,723
|
|||
|
Unpaid
losses, less allowance of $1,335 at each
period
|
1,065,343
|
1,075,015
|
|||
|
Funds
held by or deposited with reinsureds
|
87,087
|
88,163
|
|||
|
Deferred
policy acquisition costs
|
33,861
|
32,365
|
|||
|
Federal
income taxes recoverable
|
9,672
|
11,042
|
|||
|
Deferred
income taxes, net
|
70,070
|
80,968
|
|||
|
Property
and equipment, net
|
13,211
|
14,098
|
|||
|
Intangible
assets, net
|
17,358
|
18,218
|
|||
|
Goodwill
|
36,192
|
36,192
|
|||
|
Other
assets
|
19,066
|
26,621
|
|||
|
Total
assets
|
$
|
3,764,778
|
$
|
3,756,713
|
|
|
Liabilities
and stockholders’ equity
|
|||||
|
Claims
and policy liabilities:
|
|||||
|
Unpaid losses and loss adjustment
expenses
|
$
|
2,494,554
|
$
|
2,506,478
|
|
|
Unearned
premiums
|
151,930
|
139,310
|
|||
|
Policyholders’ dividends
accrued
|
8,725
|
8,737
|
|||
|
Total
claims and policy liabilities
|
2,655,209
|
2,654,525
|
|||
|
Commissions
and premium taxes payable
|
14,030
|
12,691
|
|||
|
Accounts
payable and accrued expenses
|
20,624
|
24,192
|
|||
|
Deferred
reinsurance gain – LPT Agreement
|
402,233
|
406,581
|
|||
|
Notes
Payable
|
182,000
|
182,000
|
|||
|
Other
liabilities
|
30,740
|
31,996
|
|||
|
Total
liabilities
|
$
|
3,304,836
|
$
|
3,311,985
|
|
Page
9 of 12
Employers
Holdings, Inc.
Consolidated
Balance Sheets
(In
thousands, except share and per share data)
(Continued)
|
As
of
March
31,
|
As
of
December
31,
|
||||||
|
2009
|
2008
|
||||||
|
(unaudited)
|
|||||||
|
Commitments
and contingencies
|
|||||||
|
Stockholders’
equity:
|
|||||||
|
Common
stock, $0.01 par value; 150,000,000 shares authorized;
|
|||||||
|
53,528,207
and 53,528,207 shares issued and 47,205,945 and 48,830,140
shares
outstanding at March 31, 2009 and December 31, 2008,
respectively
|
535
|
535
|
|||||
|
Preferred
stock, $0.01 par value; 25,000,000 shares authorized; none
issued
|
---
|
---
|
|||||
|
Additional
paid-in capital
|
306,854
|
306,032
|
|||||
|
Retained
earnings
|
212,454
|
194,509
|
|||||
|
Accumulated
other comprehensive income, net
|
44,781
|
32,804
|
|||||
|
Treasury
stock, at cost (6,322,262 shares at March 31, 2009 and
4,698,067
|
|||||||
|
shares
at December 31, 2008)
|
(104,682
|
)
|
(89,152
|
)
|
|||
|
Total
stockholders’ equity
|
459,942
|
444,728
|
|||||
|
Total
liabilities and stockholders’ equity
|
$
|
3,764,778
|
$
|
3,756,713
|
|||
|
Equity
including deferred reinsurance gain – LPT
|
|||||||
|
Total
stockholders’ equity
|
$
|
459,942
|
$
|
444,728
|
|||
|
Deferred
reinsurance gain – LPT Agreement
|
402,233
|
406,581
|
|||||
|
Total
equity including deferred reinsurance gain – LPT Agreement (A)
|
$
|
862,175
|
$
|
851,309
|
|||
|
Shares
outstanding (B)
|
47,205,945
|
48,830,140
|
|||||
|
Book
value per share (A * 1000
/ B)
|
$
|
18.26
|
$
|
17.43
|
|||
|
Increase
in book value per share for the three months ended March 31,
2009
|
$
|
0.83
|
|||||
Page
10 of 12
Employers
Holdings, Inc.
Consolidated
Statements of Cash Flows
(In
thousands)
|
Three
months ended March 31,
|
|||||||
|
2009
|
2008
|
||||||
|
(unaudited)
|
|||||||
|
Operating
activities
|
|||||||
|
Net
income
|
$
|
20,855
|
$
|
25,494
|
|||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
|
Depreciation
and amortization
|
3,006
|
1,618
|
|||||
|
Stock-based
compensation
|
821
|
632
|
|||||
|
Amortization
of premium on investments, net
|
1,218
|
1,687
|
|||||
|
Allowance
for doubtful accounts – premiums receivable
|
695
|
197
|
|||||
|
Deferred
income tax expense
|
4,355
|
4,531
|
|||||
|
Realized
losses on investments, net
|
2,112
|
1,488
|
|||||
|
Realized
losses on retirement of assets
|
26
|
---
|
|||||
|
Change
in operating assets and liabilities:
|
|||||||
|
Accrued
investment income
|
1,534
|
722
|
|||||
|
Premiums
receivable
|
(14,519
|
)
|
4,921
|
||||
|
Reinsurance
recoverable on paid and unpaid losses
|
10,891
|
8,724
|
|||||
|
Funds
held by or deposited with reinsureds
|
1,076
|
1,911
|
|||||
|
Unpaid
losses and loss adjustment expenses
|
(11,924
|
)
|
(14,470
|
)
|
|||
|
Unearned
premiums
|
12,620
|
1,073
|
|||||
|
Federal
income taxes
|
1,370
|
(3,017
|
)
|
||||
|
Accounts
payable, accrued expenses and other liabilities
|
(6,384
|
)
|
(2,900
|
)
|
|||
|
Deferred
reinsurance gain–LPT Agreement
|
(4,348
|
)
|
(4,792
|
)
|
|||
|
Other
|
7,372
|
(1,734
|
)
|
||||
|
Net
cash provided by operating activities
|
30,776
|
26,085
|
|||||
|
Investing
activities
|
|||||||
|
Purchase
of fixed maturities
|
(110,512
|
)
|
(5,414
|
)
|
|||
|
Purchase
of equity securities
|
(150
|
)
|
(764
|
)
|
|||
|
Proceeds
from sale of fixed maturities
|
21,890
|
11,687
|
|||||
|
Proceeds
from sale of equity securities
|
3,276
|
764
|
|||||
|
Proceeds
from maturities and redemptions of investments
|
59,883
|
2,500
|
|||||
|
Cash
paid of acquisition, net of cash and cash equivalents
acquired
|
(100
|
)
|
(758
|
)
|
|||
|
Capital
expenditures and other, net
|
(1,261
|
)
|
(1,925
|
)
|
|||
|
Net
cash (used in) provided by investing activities
|
(26,974
|
)
|
6,090
|
||||
|
Financing
activities
|
|||||||
|
Acquisition
of treasury stock
|
(13,355
|
)
|
(796
|
)
|
|||
|
Dividend
paid to stockholders
|
(2,909
|
)
|
(2,977
|
)
|
|||
|
Net
cash used in financing activities
|
(16,264
|
)
|
(3,773
|
)
|
|||
|
Net
(decrease) increase in cash and cash equivalents
|
(12,462
|
)
|
28,402
|
||||
|
Cash
and cash equivalents at the beginning of the period
|
202,893
|
149,703
|
|||||
|
Cash
and cash equivalents at the end of the period
|
$
|
190,431
|
$
|
178,105
|
|||
Page
11 of 12
Employers
Holdings, Inc.
Calculation
of Combined Ratio before the Impact of the LPT Agreement
(In
thousands, except for percentages)
|
Three
months ended March 31,
|
|||||||
|
2009
|
2008
|
||||||
|
(unaudited)
|
|||||||
|
Net
Premiums Earned
|
$
|
111,600
|
$
|
75,896
|
|||
|
Losses
and Loss Adjustment Expenses (LAE)
|
$
|
59,162
|
$
|
30,614
|
|||
|
Losses
& LAE Ratio
|
53.0
|
%
|
40.3
|
%
|
|||
|
Amortization
of deferred reinsurance gain – LPT
|
$
|
4,348
|
$
|
4,792
|
|||
|
Impacts
of LPT
|
3.9
|
%
|
6.3
|
%
|
|||
|
Losses
& LAE before impact of LPT
|
$
|
63,510
|
$
|
35,406
|
|||
|
Losses
& LAE Ratio before impact of LPT
|
56.9
|
%
|
46.7
|
%
|
|||
|
Commission
Expense
|
$
|
13,658
|
$
|
10,623
|
|||
|
Commission
Expense Ratio
|
12.2
|
%
|
14.0
|
%
|
|||
|
Dividends
to Policyholders
|
2,018
|
15
|
|||||
|
Dividend
Expense Ratio
|
1.8
|
%
|
0.0
|
%
|
|||
|
Underwriting
& Other Operating Expense
|
$
|
36,484
|
$
|
21,711
|
|||
|
Underwriting
& Other Operating Expense Ratio
|
32.7
|
%
|
28.6
|
%
|
|||
|
Total
Expense
|
$
|
111,322
|
$
|
62,963
|
|||
|
Combined
Ratio
|
99.8
|
%
|
83.0
|
%
|
|||
|
Total
Expense before impact of the LPT
|
$
|
115,670
|
$
|
67,755
|
|||
|
Combined
Ratio before the impact of the LPT
|
103.6
|
%
|
89.3
|
%
|
|||
Page 12
of 12