eig-20200723
0001379041false00013790412020-07-232020-07-23

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): July 23, 2020

EMPLOYERS HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
——————
Nevada
(State or Other Jurisdiction of Incorporation)
001-3324504-3850065
(Commission File Number)(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:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareEIGNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o



Section 2 – Financial Information
Item 2.02. Results of Operations and Financial Condition.
On July 23, 2020, Employers Holdings, Inc. (the “Company”) issued a press release and financial supplement announcing results for the quarter ended June 30, 2020. The press release and financial supplement are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by reference, and are 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 July 23, 2020, the Company announced that its Board of Directors declared a third quarter 2020 cash dividend of $0.25 per share on the Company’s common stock. The dividend is payable on August 19, 2020 to stockholders of record as of August 5, 2020.

Section 9 – Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
99.1 Employers Holdings, Inc. press release, dated July 23, 2020.
99.2 Employers Holdings, Inc. financial supplement, dated July 23, 2020.


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.
Dated:July 23, 2020/s/ Michael S. Paquette
Michael S. Paquette
Executive Vice President,
Chief Financial Officer

Exhibit Index
Exhibit No.Exhibit
99.1July 23, 2020
99.2July 23, 2020


Document

https://cdn.kscope.io/0c3bd3a4e8e55bb35dd0c5aa0ddafadc-ehilogoa09302019a0121.jpg Exhibit 99.1
news release
For Immediate Release
Employers Holdings, Inc. Reports Second Quarter 2020 Results;
Declares Third Quarter 2020 Cash Dividend of $0.25 per Share

Company to Host Conference Call on Friday, July 24, 2020, at 11:30 a.m. Eastern Daylight Time

Reno, Nevada-July 23, 2020-Employers Holdings, Inc. (the “Company”) (NYSE:EIG), 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, today reported financial results for its second quarter ended June 30, 2020.
Financial Highlights
Net income of $59.6 million, or $1.97 per diluted share;
Adjusted net income of $25.7 million, or $0.85 per diluted share;
Net realized and unrealized gains on investments recorded through the income statement of $39.7 million;
Net investment income of $19.9 million, down 7% year-over-year;
Net premiums earned of $151.5 million, down 14% year-over-year;
Favorable prior year loss reserve development on voluntary business of $23.5 million, versus $24.0 million a year ago;
The Company repurchased 1,033,048 shares of its common stock at an average price of $29.76 per share;
Book value per share including the Deferred Gain of $43.43, up 11% for the quarter including dividends declared.

Management Commentary
Chief Executive Officer Douglas Dirks commented: “During the second quarter we delivered an 8.9% annualized return on adjusted equity, a terrific result given the disruption being experienced throughout the U.S. attributable to the COVID-19 pandemic. Although our operating results were solid for the second quarter, our top line was adversely impacted by a decrease in new business premium, a reduction in estimated final audit premium and additional, but moderating, premium-reducing midterm endorsements.
New business writings were down sharply in April and May, driven by lower submission volume, but rebounded nicely in June. For June, new business submissions were up 5% and new policies bound were up 14%, each year-over-year. We are hopeful that this is a strong sign that our targeted businesses have successfully reopened and are resuming their operations, and that the significant investments we have made in delivering a superior customer experience for our agents and insureds are contributing to growth in our business in an unprecedentedly challenging time. Notably, the positive results we observed in June have not yet been observed in California, although the year-over-year changes in submissions, new policies bound and bound premium in California were less negatively impacted in June than in the first two months of the quarter."
Mr. Dirks continued, “Our balance sheet and income statement were each favorably impacted by $120 million of pretax investment gains arising during the quarter, thanks to the strong recovery in the financial markets. We were also very successful in terms of managing our capital. During the quarter we repurchased $31 million of our common stock and, year-to-date, we have returned $92 million to our shareholders through share repurchases and regular quarterly dividends. Our balance sheet and capital position remain strong and supportive of our aggressive business objectives.
The Company has been fully functional since we closed all of our buildings to employees and the general public on March 20, 2020, and we have remained in work-from-home mode in order to protect the safety and well-being of our employees, their families and our stakeholders.”
Summary of Second Quarter 2020 Operating Results
(All comparisons vs. second quarter 2019, unless noted otherwise).
Gross premiums written were $140.2 million, a decrease of 21%. The decrease was primarily due to declines in new business writings, particularly in California, a reduction in estimated final audit premiums and processed premium-reducing midterm endorsements. Net premiums earned were $151.5 million, a decrease of 14% year-over-year.
Losses and loss adjustment expenses were $73.1 million, a decrease of 16%. The Company recognized $23.5 million of favorable prior year loss reserve development on voluntary business during the current period versus $24.0 million of favorable prior year loss reserve development a year ago.



Commission expenses were $19.2 million, a decrease of 19%. The decrease was primarily due to the decrease in earned premiums.
Underwriting and general and administrative expenses were $44.8 million, an increase of 2%. The increase was largely the result of higher premium taxes, assessments and insurance licensing fees, partially offset by lower information technology expenses.
Net investment income was $19.9 million, a decrease of 7%. The decrease was primarily due to an increase in the amortization of bond premiums associated with the Company's residential mortgage-backed securities, which resulted from an acceleration in near-term mortgage loan prepayment speed assumptions.
Income tax expense was $14.7 million (20% effective rate) versus $9.0 million (18% effective rate). The increase in the effective rate was due primarily to having a higher proportion of fully taxable income in the current period versus the proportion of fully taxable income a year ago.
The Company’s book value per share of $38.93 and book value per share including the Deferred Gain of $43.43 increased by 13% and 11% during the second quarter of 2020, respectively, each computed after taking into account dividends declared. These measures were favorably impacted during the current period by $25.4 million of net after tax unrealized gains arising from equity securities and other investments (which are reflected on the income statement) and $69.3 million of after tax unrealized gains arising from fixed maturity securities (which are reflected on the balance sheet).

Summary of Results by Segment
(see page 14 of the Financial Supplement for a description of our reportable segments. All comparisons vs. second quarter 2019, unless noted otherwise).

Employers Segment
The Employers segment reported net income before income taxes of $75.5 million versus $50.3 million.

Highlights included the following:
Underwriting income of $18.2 million versus $23.3 million;
Combined ratio of 88.0% versus 86.8%;
Current accident year loss and LAE ratio of 65.5% versus 66.2%;
Favorable prior year loss reserve development of 15.6 percentage points versus 13.5 percentage points;
Underwriting expense ratio of 25.4% versus 20.5%;
Net investment income of $18.8 million versus $20.3 million; and
Net realized and unrealized gains on investments recorded through the income statement of $38.2 million versus $6.9 million.

Cerity Segment
The Cerity segment reported a net loss before income taxes of $2.0 million versus $4.1 million, and an underwriting loss of $4.2 million versus $4.1 million.

Corporate and Other
Corporate and Other activities reported net income before income taxes of $0.8 million versus $3.5 million.

Highlights included the following:
LPT amortization, which served to reduce losses and LAE, of $2.5 million versus $5.7 million;
Net investment income of $0.2 million versus $1.1 million;
Net realized and unrealized gains on investments recorded through the income statement of $0.2 million versus $0.5 million; and
General and administrative expenses of $2.1 million versus $3.8 million.

Share Repurchases and Third Quarter 2020 Dividend Declaration
During the second quarter of 2020, the Company repurchased 1,033,048 shares of its common stock at an average price of $29.76 per share. During the period from July 1, 2020 through July 22, 2020, the Company repurchased a further 111,899 shares of its common shares at an average price of $29.21 per share.
On July 22, 2020, the Board of Directors authorized a $50.0 million expansion to its existing share repurchase program and extended the repurchase authority pursuant to the expanded program through September 30, 2021. As a result of this action, the Company currently has a remaining share repurchase authorization of $51.8 million.



On July 22, 2020, the Board of Directors declared a third quarter 2020 dividend of $0.25 per share. The dividend is payable on August 19, 2020 to stockholders of record as of August 5, 2020.

Earnings Conference Call and Webcast
The Company will host a conference call on Friday, July 24, 2020, at 11:30 a.m. Eastern Daylight Time / 8:30 a.m. Pacific Daylight Time.

To participate in the live conference call by telephone, dial +1 (888) 364-8443 or +1 (484) 747-6630 and use the conference call access code 4173417.

The webcast will be accessible on the Company’s web site at www.employers.com through theInvestors link. An archived version of the webcast will remain on the Company’s web site for up to seven days following the live call. To listen to a recording of the call by telephone, dial +1 (855) 859-2056 or +1 (404) 537-3406 and use the conference call access code 4173417.

Reconciliation of Non-GAAP Financial Measures to GAAP
The information in this press release should be read in conjunction with the Financial Supplement that is attached to this press release and is available on our website.

Within this earnings release we present various financial measures, some of which are “Non-GAAP financial measures” as defined in Regulation G pursuant to Section 401 of the Sarbanes - Oxley Act of 2002. A description of these Non-GAAP financial measures, as well as a reconciliation of such Non-GAAP measures to our most directly comparable GAAP financial measures is included in the attached Financial Supplement. Management believes that these Non-GAAP measures are important to the Company's investors, analysts and other interested parties who benefit from having an objective and consistent basis for comparison with other companies within our industry. Management further believes that these measures are more relevant than comparable GAAP measures in evaluating our financial performance.

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 of, among other things, the Company's future performance, business growth, retention rates, loss costs, claim trends and the impact of key business initiatives, future technologies and planned investments. Certain of these statements may constitute “forward-looking” statements 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. The Company and its management caution investors that such forward-looking statements are not guarantees of future performance. Risks and uncertainties are inherent in the Company’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 the Company’s public filings with the U.S. Securities and Exchange Commission (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. Except as required by applicable securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Filings with the SEC
The Company’s filings with the SEC and its quarterly investor presentations can be accessed through the “Investors” link on the Company's website, www.employers.com. The Company's filings with the SEC can also be accessed through the SEC's EDGAR Database at www.sec.gov (EDGAR CIK No. 0001379041).

About Employers Holdings, Inc.
EMPLOYERS® and America’s small business insurance specialist® are registered trademarks of EIG Services, Inc. Employers 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 operates throughout the United States, with the exception of four states that are served exclusively by their state funds. Insurance is offered through Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company, Employers Assurance Company and Cerity Insurance Company, all rated A- (Excellent) by the A.M. Best



Company. Not all companies do business in all jurisdictions. See www.employers.com and www.cerity.com for coverage availability.

Contact Information
Company contact:
Mike Paquette (775) 327-2562 or mpaquette@employers.com

Investor relations contact:
Adam Prior, The Equity Group, Inc. (212) 836-9606 or aprior@equityny.com


Document

Exhibit 99.2
Employers Holdings, Inc.
Second Quarter 2020
Financial Supplement













https://cdn.kscope.io/0c3bd3a4e8e55bb35dd0c5aa0ddafadc-ehilogoa09302019a0111.jpg




EMPLOYERS HOLDINGS, INC.
Table of Contents



Page
Consolidated Financial Highlights
Summary Consolidated Balance Sheets
Summary Consolidated Income Statements
Net Income Before Income Taxes by Segment
Return on Equity
Roll-forward of Unpaid Losses and LAE
Consolidated Investment Portfolio
Book Value Per Share
Earnings Per Share
Non-GAAP Financial Measures
Description of Reportable Segments




EMPLOYERS HOLDINGS, INC.
Consolidated Financial Highlights (unaudited)
$ in millions, except per share amounts
Three Months EndedSix Months Ended
June 30,June 30,
20202019% change20202019% change
Selected financial highlights:
Gross premiums written$140.2  $176.6  (21)%$324.9  $386.6  (16)%
Net premiums written139.0  175.2  (21) 322.4  383.9  (16) 
Net premiums earned151.5  175.5  (14) 319.4  350.3  (9) 
Net investment income19.9  21.4  (7) 39.8  43.2  (8) 
Net income before impact of the LPT(1)
57.1  35.0  63  19.8  84.4  (77) 
Adjusted net income(1)
25.7  29.2  (12) 36.7  60.1  (39) 
Net income before income taxes74.3  49.7  49  29.0  111.6  (74) 
Net income59.6  40.7  46  24.7  92.6  (73) 
Comprehensive income123.0  70.4  75  64.4  159.6  (60) 
Total assets4,004.0  3,954.3   
Stockholders' equity1,144.0  1,121.5   
Stockholders' equity including the Deferred Gain(2)
1,276.2  1,263.2   
Adjusted stockholders' equity(2)
1,171.2  1,209.9  (3) 
Annualized adjusted return on stockholders' equity(3)
8.9 %9.7 %(8)%6.1 %10.1 %(40) 
Amounts per share:
Cash dividends declared per share$0.25  $0.22  14 %$0.50  $0.44  14 %
Earnings per diluted share(4)
1.97  1.25  58  0.80  2.84  (72) 
Earnings per diluted share before impact of the LPT(4)
1.89  1.08  75  0.62  2.59  (76) 
Adjusted earnings per diluted share(4)
0.85  0.90  (6) 1.18  1.84  (36) 
Book value per share(2)
38.93  35.15  11  
Book value per share including the Deferred Gain(2)
43.43  39.59  10  
Adjusted book value per share(2)
39.86  37.92   
Financial information by Segment(5):
Net income (loss) before income taxes
Employers$75.5  $50.3  50 %$37.8  $114.2  (67)%
Cerity(2.0) (4.1) (51) (6.7) (7.6) 12  
Corporate and Other0.8  3.5  (77) (2.1) 5.0  (142) 
(1) See Page 3 for calculations and Page 13 for information regarding our use of Non-GAAP Financial Measures.
(2) See Page 11 for calculations and Page 13 for information regarding our use of Non-GAAP Financial Measures.
(3) See Page 8 for calculations and Page 13 for information regarding our use of Non-GAAP Financial Measures.
(4) See Page 12 for description and calculations and Page 13 for information regarding our use of Non-GAAP Financial Measures.
(5) See Pages 4-7 for details and Page 14 for a description of our reportable segments.
1


EMPLOYERS HOLDINGS, INC.
Summary Consolidated Balance Sheets (unaudited)
$ in millions, except per share amounts
June 30,
2020
December 31,
2019
ASSETS
Investments, cash and cash equivalents$2,882.9  $2,933.6  
Accrued investment income16.2  16.4  
Premiums receivable, net
284.2  285.7  
Reinsurance recoverable, net of allowance, on paid and unpaid losses and LAE530.8  539.7  
Deferred policy acquisition costs49.3  47.9  
Contingent commission receivable—LPT Agreement13.2  13.2  
Other assets227.4  167.6  
Total assets$4,004.0  $4,004.1  
LIABILITIES
Unpaid losses and LAE$2,170.7  $2,192.8  
Unearned premiums341.5  337.1  
Commissions and premium taxes payable48.5  48.6  
Deferred Gain132.2  137.1  
FHLB Advances(1)
35.0  —  
Other liabilities132.1  122.7  
Total liabilities$2,860.0  $2,838.3  
STOCKHOLDERS' EQUITY
Common stock and additional paid-in capital$399.8  $397.0  
Retained earnings1,167.8  1,158.8  
Accumulated other comprehensive income, net105.0  65.3  
Treasury stock, at cost
(528.6) (455.3) 
Total stockholders’ equity1,144.0  1,165.8  
Total liabilities and stockholders’ equity$4,004.0  $4,004.1  
Stockholders' equity including the Deferred Gain (2)
$1,276.2  $1,302.9  
Adjusted stockholders' equity (2)
1,171.2  1,237.6  
Book value per share (2)
$38.93  $37.18  
Book value per share including the Deferred Gain(2)
43.43  41.55  
Adjusted book value per share (2)
39.86  39.47  
(1) FHLB=Federal Home Loan Bank
(2) See Page 11 for calculations and Page 13 for information regarding our use of Non-GAAP Financial Measures.
2


EMPLOYERS HOLDINGS, INC.
Summary Consolidated Income Statements (unaudited)
$ in millions
Three Months EndedSix Months Ended
June 30,June 30,
2020201920202019
Revenues:
Gross premiums written$140.2  $176.6  $324.9  $386.6  
Premiums ceded(1.2) (1.4) (2.5) (2.7) 
Net premiums written139.0  175.2  322.4  383.9  
Net premiums earned$151.5  $175.5  $319.4  $350.3  
Net investment income19.9  21.4  39.8  43.2  
Net realized and unrealized gains (losses) on investments(1)
39.7  7.4  (21.4) 30.7  
Other income0.3  —  0.6  0.4  
Total revenues211.4  204.3  338.4  424.6  
Expenses:
Losses and LAE incurred(73.1) (86.8) (177.4) (175.3) 
Commission expense(19.2) (23.8) (40.5) (45.8) 
Underwriting and general and administrative expenses(44.8) (43.8) (91.5) (91.3) 
Interest and financing expenses—  (0.2) —  (0.6) 
Total expenses(137.1) (154.6) (309.4) (313.0) 
Net income before income taxes74.3  49.7  29.0  111.6  
Income tax expense(14.7) (9.0) (4.3) (19.0) 
Net income59.6  40.7  24.7  92.6  
Unrealized AFS investment gains arising during the period, net of tax(2)
69.3  29.9  40.2  67.7  
Reclassification adjustment for realized AFS investment gains in net income, net of tax(2)
(5.9) (0.2) (0.5) (0.7) 
Total comprehensive income$123.0  $70.4  $64.4  $159.6  
Net income$59.6  $40.7  $24.7  $92.6  
Amortization of the Deferred Gain - losses(2.1) (3.2) (4.1) (5.2) 
Amortization of the Deferred Gain - contingent commission(0.4) (0.5) (0.8) (1.0) 
LPT reserve adjustment—  (1.8) —  (1.8) 
LPT contingent commission adjustments—  (0.2) —  (0.2) 
Net income before impact of the LPT Agreement (3)
57.1  35.0  19.8  84.4  
Net realized and unrealized (gains) losses on investments(39.7) (7.4) 21.4  (30.7) 
Income tax expense (benefit) related to items excluded from Net income8.3  1.6  (4.5) 6.4  
Adjusted net income$25.7  $29.2  $36.7  $60.1  
(1) Includes unrealized gains (losses) on equity securities of $42.3 million and $6.8 million for the three months ended June 30, 2020 and 2019, respectively, and $(26.9) million and $28.0 million for the six months ended June 30, 2020 and 2019, respectively.
(2) AFS = Available for Sale securities.
(3) See Page 13 regarding our use of Non-GAAP Financial Measures.
3


EMPLOYERS HOLDINGS, INC.
Net Income Before Income Taxes by Segment (1) (unaudited)
$ in millions
EmployersCerityCorporate and OtherConsolidated
Three Months Ended June 30, 2020
Gross premiums written$140.2  $—  $—  $140.2  
Net premiums written139.0  —  —  139.0  
Net premiums earnedA151.4  0.1  —  151.5  
Net investment income18.8  0.9  0.2  19.9  
Net realized and unrealized gains on investments38.2  1.3  0.2  39.7  
Other income0.3  —  —  0.3  
Total revenues208.7  2.3  0.4  211.4  
Losses and LAE incurredB(75.6) —  2.5  (73.1) 
Commission expenseC(19.2) —  —  (19.2) 
Underwriting and general and administrative expensesD(38.4) (4.3) (2.1) (44.8) 
Total expenses(133.2) (4.3) 0.4  (137.1) 
Net income (loss) before income taxes$75.5  $(2.0) $0.8  $74.3  
Underwriting income (loss)A+B+C+D18.2  (4.2) 
Loss and LAE expense ratio:
Current year65.5 %n/m
Prior years(15.6) —  
Loss and LAE ratio49.9  n/m
Commission expense ratio12.7  n/m
Underwriting expense ratio25.4  n/m
Combined ratio88.0 %n/m
n/m - not meaningful
(1) See Page 14 for a description of our reportable segments
4


EMPLOYERS HOLDINGS, INC.
Net Income Before Income Taxes by Segment (1) (unaudited)
$ in millions
EmployersCerityCorporate and OtherConsolidated
Three Months Ended June 30, 2019
Gross premiums written$176.6  $—  $—  $176.6  
Net premiums written175.2  —  —  175.2  
Net premiums earnedA175.5  —  —  175.5  
Net investment income20.3  —  1.1  21.4  
Net realized and unrealized gains on investments6.9  —  0.5  7.4  
Total revenues202.7  —  1.6  204.3  
Losses and LAE incurredB(92.5) —  5.7  (86.8) 
Commission expenseC(23.8) —  —  (23.8) 
Underwriting and general and administrative expensesD(35.9) (4.1) (3.8) (43.8) 
Interest and financing expenses(0.2) —  —  (0.2) 
Total expenses(152.4) (4.1) 1.9  (154.6) 
Net income (loss) before income taxes$50.3  $(4.1) $3.5  $49.7  
Underwriting income (loss)A+B+C+D$23.3  $(4.1) 
Loss and LAE expense ratio:
Current year66.2 %n/m
Prior years(13.5) —  
Loss and LAE ratio52.7  n/m
Commission expense ratio13.6  n/m
Underwriting expense ratio20.5  n/m
Combined ratio86.8 %n/m
n/m - not meaningful
(1) See Page 14 for a description of our reportable segments

5


EMPLOYERS HOLDINGS, INC.
Net Income Before Income Taxes by Segment (1) (unaudited)
$ in millions
EmployersCerityCorporate and OtherConsolidated
Six Months Ended June 30, 2020
Gross premiums written$324.9  $—  $—  $324.9  
Net premiums written322.4  —  —  322.4  
Net premiums earnedA319.3  0.1  —  319.4  
Net investment income37.4  1.7  0.7  39.8  
Net realized and unrealized losses on investments(19.1) (0.4) (1.9) (21.4) 
Other income0.6  —  —  0.6  
Total revenues338.2  1.4  (1.2) 338.4  
Losses and LAE incurredB(182.3) —  4.9  (177.4) 
Commission expenseC(40.5) —  —  (40.5) 
Underwriting and general and administrative expensesD(77.6) (8.1) (5.8) (91.5) 
Total expenses(300.4) (8.1) (0.9) (309.4) 
Net income (loss) before income taxes$37.8  $(6.7) $(2.1) $29.0  
Underwriting income (loss)A+B+C+D18.9  (8.0) 
Loss and LAE expense ratio:
Current year65.6 %n/m
Prior years(8.5) —  
Loss and LAE ratio57.1  n/m
Commission expense ratio12.7  n/m
Underwriting expense ratio24.3  n/m
Combined ratio94.1 %n/m
n/m - not meaningful
(1) See Page 14 for a description of our reportable segments


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EMPLOYERS HOLDINGS, INC.
Net Income Before Income Taxes by Segment (1) (unaudited)
$ in millions
EmployersCerityCorporate and OtherConsolidated
Six Months Ended June 30, 2019
Gross premiums written$386.6  $—  $—  $386.6  
Net premiums written383.9  —  —  383.9  
Net premiums earnedA350.3  —  —  350.3  
Net investment income40.9  —  2.3  43.2  
Net realized and unrealized gains on investments27.7  —  3.0  30.7  
Other income0.4  —  —  0.4  
Total revenues419.3  —  5.3  424.6  
Losses and LAE incurredB(183.5) —  8.2  (175.3) 
Commission expenseC(45.8) —  —  (45.8) 
Underwriting and general and administrative expensesD(75.2) (7.6) (8.5) (91.3) 
Interest and financing expenses(0.6) —  —  (0.6) 
Total expenses(305.1) (7.6) (0.3) (313.0) 
Net income (loss) before income taxes$114.2  $(7.6) $5.0  $111.6  
Underwriting income (loss)A+B+C+D$45.8  $(7.6) 
Loss and LAE expense ratio:
Current year65.5 %n/m
Prior years(13.1) —  
Loss and LAE ratio52.4  n/m
Commission expense ratio13.1  n/m
Underwriting expense ratio21.5  n/m
Combined ratio87.0 %n/m
n/m - not meaningful
(1) See Page 14 for a description of our reportable segments
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EMPLOYERS HOLDINGS, INC.
Return on Equity (unaudited)
$ in millions
Three Months EndedSix Months Ended
June 30,June 30,
2020201920202019
Net incomeA$59.6  $40.7  $24.7  $92.6  
Impact of the LPT Agreement(2.5) (5.7) (4.9) (8.2) 
Net realized and unrealized (gains) losses on investments(39.7) (7.4) 21.4  (30.7) 
Income tax expense (benefit) related to items excluded from Net income8.3  1.6  (4.5) 6.4  
Adjusted net income (1)
B25.7  29.2  36.7  60.1  
Stockholders' equity - end of period$1,144.0  $1,121.5  $1,144.0  $1,121.5  
Stockholders' equity - beginning of period1,057.3  1,071.7  1,165.8  1,018.2  
Average stockholders' equityC1,100.7  1,096.6  1,154.9  1,069.9  
Stockholders' equity - end of period$1,144.0  $1,121.5  $1,144.0  $1,121.5  
Deferred Gain - end of period132.2  141.7  132.2  141.7  
Accumulated other comprehensive income - end of period(132.9) (67.5) (132.9) (67.5) 
Income taxes related to accumulated other comprehensive income - end of period27.9  14.2  27.9  14.2  
Adjusted stockholders' equity - end of period1,171.2  1,209.9  1,171.2  1,209.9  
Adjusted stockholders' equity - beginning of period1,150.4  1,195.2  1,237.6  1,181.5  
Average adjusted stockholders' equity (1)
D1,160.8  1,202.6  1,204.4  1,195.7  
Return on stockholders' equityA / C5.4 %3.7 %2.1 %8.7 %
Annualized return on stockholders' equity21.7  14.8  4.3  17.3  
Adjusted return on stockholders' equity (1)
B / D2.2 %2.4 %3.0 %5.0 %
Annualized adjusted return on stockholders' equity (1)
8.9  9.7  6.1  10.1  
(1) See Page 13 for information regarding our use of Non-GAAP Financial Measures.
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EMPLOYERS HOLDINGS, INC.
Roll-forward of Unpaid Losses and LAE (unaudited)
$ in millions
Three Months EndedSix Months Ended
June 30,June 30,
2020201920202019
Unpaid losses and LAE at beginning of period$2,191.7  $2,189.3  $2,192.8  $2,207.9  
Reinsurance recoverable on unpaid losses and LAE527.0  498.7  532.5  504.4  
Net unpaid losses and LAE at beginning of period1,664.7  1,690.6  1,660.3  1,703.5  
Losses and LAE incurred:
Current year losses99.2  116.1  209.4  229.4  
Prior year losses on voluntary business(23.5) (24.0) (26.5) (46.0) 
Prior year losses on involuntary business(0.1) 0.3  (0.6) 0.1  
Total losses incurred75.6  92.4  182.3  183.5  
Losses and LAE paid:
Current year losses17.1  23.2  24.0  30.6  
Prior year losses76.1  82.2  171.5  178.8  
Total paid losses93.2  105.4  195.5  209.4  
Net unpaid losses and LAE at end of period1,647.1  1,677.6  1,647.1  1,677.6  
Reinsurance recoverable, excluding CECL allowance, on unpaid losses and LAE523.6  484.2  523.6  484.2  
Unpaid losses and LAE at end of period$2,170.7  $2,161.8  $2,170.7  $2,161.8  
Total losses and LAE shown in the above table exclude amortization of the Deferred Gain, LPT Reserve Adjustments, and LPT Contingent Commission Adjustments which totaled $2.5 million and $5.7 million for the three months ended June 30, 2020 and 2019, respectively and $4.9 million and $8.2 million for the six months ended June 30, 2020 and 2019, respectively.

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EMPLOYERS HOLDINGS, INC.
Consolidated Investment Portfolio (unaudited)
$ in millions
June 30, 2020December 31, 2019
Investment Positions:Cost or Amortized
Cost
Net Unrealized Gain (Loss)Fair Value%Fair Value%
Fixed maturity securities$2,318.9  $132.5  $2,451.4  85 %$2,485.9  85 %
Equity securities148.8  74.2  223.0   263.4   
Short-term investments42.7  0.4  43.1   —  —  
Other invested assets33.3  —  33.3   29.1   
Cash and cash equivalents131.8  —  131.8   154.9   
Restricted cash and cash equivalents0.3  —  0.3  —  0.3  —  
Total investments and cash$2,675.8  $207.1  $2,882.9  100 %$2,933.6  100 %
Breakout of Fixed Maturity Securities:
U.S. Treasuries and agencies$89.7  $5.4  $95.1  %$88.5  %
States and municipalities401.6  32.5  434.1  18  484.5  19  
Corporate securities952.4  76.1  1,028.5  42  1,079.0  43  
Mortgage-backed securities584.2  27.0  611.2  25  591.0  24  
Asset-backed securities42.0  (0.2) 41.8   61.2   
Collateralized loan obligations84.4  (3.5) 80.9   —  —  
Bank loans164.6  (4.8) 159.8   181.7   
Total fixed maturity securities$2,318.9  $132.5  $2,451.4  100 %$2,485.9  100 %
Weighted average book yield3.2%3.3%
Average credit quality (S&P)A+A+
Duration2.73.3

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EMPLOYERS HOLDINGS, INC.
Book Value Per Share (unaudited)
$ in millions, except per share amounts
June 30,
2020
March 31,
2020
December 31, 2019June 30,
2019
Numerators:
Stockholders' equityA$1,144.0  $1,057.3  $1,165.8  $1,121.5  
Plus: Deferred Gain132.2  134.7  137.1  141.7  
Stockholders' equity including the Deferred Gain (1)
B1,276.2  1,192.0  1,302.9  1,263.2  
Accumulated other comprehensive (income) loss(132.9) (52.7) (82.6) (67.5) 
Income taxes related to accumulated other comprehensive gains and losses27.9  11.1  17.3  14.2  
Adjusted stockholders' equity (1)
C$1,171.2  $1,150.4  $1,237.6  $1,209.9  
Denominator (shares outstanding)D29,382,894  30,403,012  31,355,378  31,904,916  
Book value per share (1)
A / D$38.93  $34.78  $37.18  $35.15  
Book value per share including the Deferred Gain(1)
B / D43.43  39.21  41.55  39.59  
Adjusted book value per share (1)
C / D39.86  37.84  39.47  37.92  
YTD Change in: (2)
Book value per share6.1 %14.5 %
Book value per share including the Deferred Gain5.7  12.3  
Adjusted book value per share2.3  6.4  
(1) See Page 13 for information regarding our use of Non-GAAP Financial Measures.
(2) Reflects the change in book value per share after taking into account dividends declared of $0.50 and $0.44 for the six months ended June 30, 2020 and 2019, respectively.


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EMPLOYERS HOLDINGS, INC.
Earnings Per Share (unaudited)
$ in millions, except per share amounts
Three Months EndedSix Months Ended
June 30,June 30,
2020201920202019
Numerators:
Net incomeA$59.6  $40.7  $24.7  $92.6  
Impact of the LPT Agreement(2.5) (5.7) (4.9) (8.2) 
Net income before impact of the LPT (1)
B57.1  35.0  19.8  84.4  
Net realized and unrealized (gains) losses on investments(39.7) (7.4) 21.4  (30.7) 
Income tax expense related to items excluded from Net income8.3  1.6  (4.5) 6.4  
Adjusted net income (1)
C$25.7  $29.2  $36.7  $60.1  
Denominators:
Average common shares outstanding (basic)D30,043,900  32,077,698  30,697,975  32,197,523  
Average common shares outstanding (diluted)E30,229,553  32,450,628  31,020,128  32,639,885  
Earnings per share:
BasicA / D$1.98  $1.27  $0.80  $2.88  
DilutedA / E1.97  1.25  0.80  2.84  
Earnings per share before impact of the LPT: (1)
BasicB / D$1.90  $1.09  $0.64  $2.62  
DilutedB / E1.89  1.08  0.62  2.59  
Adjusted earnings per share: (1)
BasicC / D$0.86  $0.91  $1.20  $1.87  
DilutedC / E0.85  0.90  1.18  1.84  
(1) See Page 13 for information regarding our use of Non-GAAP Financial Measures.
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Non-GAAP Financial Measures
Within this earnings release we present the following measures, each of which are "non-GAAP financial measures." A reconciliation of these measures to the Company's most directly comparable GAAP financial measures is included herein. Management believes that these non-GAAP measures are important to the Company's investors, analysts and other interested parties who benefit from having an objective and consistent basis for comparison with other companies within our industry. Management further believes that these measures are more relevant than comparable GAAP measures in evaluating our financial performance.
The LPT Agreement is a non-recurring transaction that does not result in ongoing cash benefits to the Company. Management believes that providing non-GAAP measures that exclude the effects of the LPT Agreement (amortization of deferred reinsurance gain, adjustments to LPT Agreement ceded reserves and adjustments to contingent commission receivable) is useful in providing investors, analysts and other interested parties a meaningful understanding of the Company's ongoing underwriting performance.
Deferred reinsurance gain (Deferred Gain) reflects the unamortized gain from the LPT Agreement. This gain has been deferred and is being amortized using the recovery method, whereby the amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries, except for the contingent profit commission, which is being amortized through June 30, 2024. Amortization is reflected in losses and LAE incurred.
Adjusted net income (see Page 3 for calculations) is net income excluding the effects of the LPT Agreement, and net realized and unrealized gains and losses on investments (net of tax). Management believes that providing this non-GAAP measures is helpful to investors, analysts and other interested parties in identifying trends in the Company's operating performance because such items have limited significance to its ongoing operations or can be impacted by both discretionary and other economic factors and may not represent operating trends.
Stockholders' equity including the Deferred Gain (see Page 11 for calculations) is stockholders' equity including the Deferred Gain. Management believes that providing this non-GAAP measure is useful in providing investors, analysts and other interested parties a meaningful measure of the Company's total underwriting capital.
Adjusted stockholders' equity (see Page 11 for calculations) is stockholders' equity including the Deferred Gain, less accumulated other comprehensive income (net of tax). Management believes that providing this non-GAAP measure is useful to investors, analysts and other interested parties since it serves as the denominator to the Company's adjusted return on stockholders' equity metric.
Return on stockholders' equity and Adjusted return on stockholders' equity (see Page 8 for calculations). Management believes that these profitability measures are widely used by our investors, analysts and other interested parties.
Book value per share, Book value per share including the Deferred Gain, and Adjusted book value per share (see Page 11 for calculations). Management believes that these valuation measures are widely used by our investors, analysts and other interested parties.
Net income before impact of the LPT (see Page 3 for calculations). Management believes that these performance and underwriting measures are widely used by our investors, analysts and other interested parties.
13


Description of Reportable Segments
The Company has recently made changes to its corporate structure, mainly involving the launch and further development of a new digital insurance platform offered under the Cerity brand name (Cerity), resulting in changes to its reportable segments. The Company has determined that it has two reportable segments: Employers and Cerity. Each of these segments represents a separate and distinct underwriting platform through which the Company conducts insurance business.
The nature and composition of each reportable segment and its Corporate and Other activities are as follows:
The Employers segment is defined as traditional business offered through the EMPLOYERS brand name (Employers) through its agents, including business originated from its strategic partnerships and alliances;
The Cerity segment is defined as business offered under the Cerity brand name, which includes the Company's direct-to-customer business; and
Corporate and Other activities consist of those holding company expenses that are not considered to be underwriting in nature, the financial impact of the LPT agreement and legacy (pre-acquisition) business assumed and ceded by Cerity Insurance Company.  These expenses are not considered to be part of a reportable segment and are not otherwise allocated to a reportable segment.
Prior to December 31, 2019, the Company operated under a single reportable segment and presented its Combined Ratio on that basis. In light of its change in reporting segments, the Company now presents a separate Combined Ratio for each of its reporting segments.
All periods prior to December 31, 2019 presented herein have been conformed to the current presentation.

14