Employers Holdings, Inc. Reports Fourth Quarter 2022 and Full-Year Financial Results; Declares Quarterly Cash Dividend of $0.26 per Share

Company to Host Conference Call on Friday, February 17, 2023, at 11:00 a.m. Eastern Standard Time

RENO, Nev.--(BUSINESS WIRE)-- 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 fourth quarter and year ended December 31, 2022.

Fourth Quarter 2022 Financial Highlights

• Net income of $47.2 million, or $1.72 per diluted share;
• Adjusted net income of $34.4 million, or $1.25 per diluted share;
• Net investment income of $27.0 million, up 53% year-over-year;
• Net realized and unrealized gains on investments recorded through the income statement of $13.7 million;
• Gross premiums written of $173.8 million, up 22% year-over-year;
• Net premiums earned of $181.1 million, up 16% year-over-year;
• Favorable prior year loss reserve development of $23.2 million, versus $24.2 million a year ago;
• Returned $43.6 million to stockholders through a combination of share repurchases, quarterly and special dividends.

Full-Year 2022 Financial Highlights

• Net income of $48.4 million, or $1.75 per diluted share;
• Adjusted net income of $81.0 million, or $2.93 per diluted share;
• Net investment income of $89.8 million, up 24% year-over-year;
• Net realized and unrealized losses on investments recorded through the income statement of $51.8 million;
• Gross premiums written of $714.2 million, up 21% year-over-year;
• Net premiums earned of $675.2 million, up 18% year-over-year;
• Record number of ending policies in-force of 121,356, up 9% year-over-year;
• Favorable prior year loss reserve development of $33.5 million, versus $39.8 million a year ago;
• Returned $121.7 million to stockholders through a combination of share repurchases, quarterly and special dividends;
• Adjusted Book value per share of $43.78, up 3.0% year-over-year including dividends declared.

CEO Commentary

Chief Executive Officer Katherine Antonello commented: “We are pleased with our fourth quarter and full-year 2022 results and closed the year with strong revenue growth driven by sharp increases in both premium writings and net investment income. The growth in written premium in 2022 resulted from a 16% increase in new business coupled with an 8% increase in renewal business, and notable audit premium recognition.

“We maintained our current accident year loss and loss adjustment expense ratio on voluntary business at 64.0%, largely consistent with the 63.5% we recorded throughout 2021. During the fourth quarter, we recognized $23.2 million of net favorable prior year loss reserve development resulting from lower-than-expected loss emergence.”

Ms. Antonello continued, “Underwriting discipline remains a top priority as we continue to thoughtfully execute our growth strategy for both Employers and Cerity. The higher premium we experienced throughout 2022, along with our strict focus on managing our fixed expenses, resulted in a consolidated underwriting and general and administrative expense ratio of 24.7% for 2022, far lower than any other year since 2018.

“Our Cerity operating segment, which offers direct-to-consumer digital workers' compensation insurance solutions, continues to successfully grow its business within our targeted low-to-medium hazard groups. Cerity’s written premium increased to $6.7 million in 2022, from just $1.5 million in 2021.

“Our active capital management efforts throughout 2022, which consisted of $30.4 million of share repurchases, $28.8 million of regular quarterly dividends and $61.5 million of special dividends, coupled with the greater economies of scale we are achieving, bode well for the future of Employers. Our strong balance sheet and abundant underwriting capital are highly supportive of our plans for continued growth and success. Finally, I want to thank our dedicated employees for an outstanding 2022. The unwavering service you provide our agents, our policyholders and their injured workers drive our continued success.”

Summary of Consolidated Fourth Quarter 2022 Results

(All comparisons vs. fourth quarter 2021, unless noted otherwise).

Gross premiums written were $173.8 million, an increase of 22%. The increase was primarily due to higher new and renewal business writings and higher final audit premiums. Net earned premiums were $181.1 million, an increase of 16%.

Losses and loss adjustment expenses were $91.2 million, an increase of 29%. The increase was primarily due to higher earned premium and lower favorable prior year loss reserve development. The Company recognized $23.2 million of favorable prior year loss reserve development during the quarter versus $24.2 million a year ago.

Commission expenses were $26.0 million, an increase of 21%. The increase was primarily due to higher earned premiums and higher 2022 agency incentive accruals.

Underwriting and general and administrative expenses were $46.7 million, an increase of 19%. The increase resulted primarily from higher premium taxes, assessments, policyholder dividends and bad debt expenses, each of which vary with earned premium.

Net investment income was $27.0 million, an increase of 53%. The increase was due to higher bond yields and higher invested balances of fixed maturity securities, short-term investments and cash and cash equivalents, as measured by amortized cost.

Income tax expense was $8.7 million (15.6% effective rate) versus $13.6 million (19.9% effective rate). The effective rates in each period included income tax benefits and exclusions associated with tax-advantaged investment income, LPT adjustments, and deferred gain amortization. The effective rate in the fourth quarter of 2022 further benefited from pre-privatization favorable prior year loss and loss adjustment expense reserve adjustments and a non-recurring tax benefit attributable to the repeal of Internal Revenue Code section 847.

The Company’s book value per share including the deferred gain of $38.67 decreased by 12.3% during 2022, computed after taking into account dividends declared. This measure was adversely impacted by $202.3 million of after-tax unrealized losses arising from fixed maturity securities (which are reflected on the balance sheet) and $38.2 million of net after tax unrealized losses arising from equity securities and other investments (which are reflected on the income statement). The Company’s adjusted book value per share of $43.78 increased by 3.0% during 2022, computed after taking into account dividends declared. This measure was adversely impacted by $38.2 million of net after tax unrealized losses arising from equity securities and other investments (which are reflected on the income statement).

Summary of Fourth Quarter 2022 Results by Segment

(see page 16 of the Financial Supplement for a description of our reportable segments. All comparisons are vs. fourth quarter 2021, unless noted otherwise).

Employers Segment

The Employers segment reported net income before income taxes of $58.7 million versus $69.7 million.

Highlights included the following:

– Underwriting income of $24.2 million versus $27.5 million;
– Calendar year combined ratio of 86.6% versus 82.4%;
– Current accident year loss and loss adjustment expense ratio of 64.3% versus 64.2%;
– Favorable prior year loss reserve development of 12.8 percentage points versus 15.6 percentage points;
– Commission expense ratio of 14.5% versus 13.7%;
– Underwriting expense ratio of 20.6% versus 20.1%;
– Net investment income of $24.3 million versus $16.7 million; and
– Net realized and unrealized gains on investments of $12.0 million versus $24.8 million.

Cerity Segment

The Cerity segment reported a net loss before income tax of $1.6 million versus $2.4 million.

Highlights included the following:

– Underwriting loss of $3.3 million versus $3.2 million;
– Gross premiums written of $3.2 million versus $0.5 million;
– Consistent current accident year loss and loss adjustment expense ratios to that of the Employers segment;
– Favorable prior year loss reserve development of $0.1 million,
– Net investment income of $1.4 million versus $0.7 million; and
– Net realized and unrealized gains on investments of $0.3 million versus $0.1 million.

Corporate and Other

Corporate and Other activities reported net income (loss) before income taxes of $(1.2) million versus $1.1 million. Highlights included the following:

– LPT amortization, which served to reduce losses and loss adjustment expenses, of $2.0 million versus $5.4 million;
– Net investment income of $1.3 million versus $0.3 million;
– Net realized and unrealized gains on investments of $1.4 million versus $0.1 million, and
– General and administrative expenses of $5.7 million versus $4.6 million.

Share Repurchases and First Quarter 2023 Dividend Declarations

During the fourth quarter of 2022, the Company repurchased 40,355 shares of its common stock at an average price of $42.15 per share. During the period from January 1, 2023 through February 15, 2023, the Company repurchased a further 98,631 shares of its common stock at an average price of $42.75 per share. The Company currently has a remaining share repurchase authorization of $43.2 million.

On February 15, 2023, the Board of Directors declared a first quarter 2023 dividend of $0.26 per share. The dividend is payable on March 15, 2023 to stockholders of record as of March 1, 2023.

Earnings Conference Call and Webcast

The Company will host a conference call on Friday, February 17, 2023 at 11:00 a.m. Eastern Standard Time / 8:00 a.m. Pacific Standard Time.

To participate in the live conference call you must first register here. Once registered you will receive dial-in numbers and a unique PIN number.

The webcast will be accessible on the Company’s web site at www.employers.com through the “Investors” link. An archived version of the webcast will be accessible on the Company’s website following the live call.

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 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, including the effects of the Coronavirus (COVID-19) pandemic, 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 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.

Employers Holdings, Inc.
Fourth Quarter and Full Year 2022
Financial Supplement

EMPLOYERS HOLDINGS, INC.
Table of Contents
Page
3		Consolidated Financial Highlights
4		Summary Consolidated Balance Sheets
5		Summary Consolidated Income Statements
6-9		Net Income Before Income Taxes by Segment
10		Return on Equity
11		Roll-forward of Unpaid Losses and LAE
12		Consolidated Investment Portfolio
13		Book Value Per Share
14		Earnings Per Share
15		Non-GAAP Financial Measures
16		Description of Reportable Segments

EMPLOYERS HOLDINGS, INC.
Consolidated Financial Highlights (unaudited)
$ in millions, except per share amounts
		Three Months Ended											Years Ended
		December 31,											December 31,
			2022				2021			% change				2022				2021			% change
Selected financial highlights:
Gross premiums written		$	173.8			$	142.0			22	%		$	714.2			$	589.7			21	%
Net premiums written			171.9				140.4			22				707.2				583.1			21
Net premiums earned			181.1				156.4			16				675.2				574.4			18
Net investment income			27.0				17.7			53				89.8				72.7			24
Net income before impact of the LPT(1)			45.2				49.5			(9	)			40.1				107.8			(63	)
Adjusted net income(1)			34.4				29.8			15				81.0				67.9			19
Net income before income taxes			55.9				68.4			(18	)			55.8				147.0			(62	)
Net income			47.2				54.8			(14	)			48.4				119.3			(59	)
Comprehensive income (loss)			67.2				37.0			82				(151.1	)			64.8			(333	)
Total assets														3,716.7				3,783.2			(2	)
Stockholders' equity														944.2				1,213.1			(22	)
Stockholders' equity including the Deferred Gain(2)														1,050.3				1,327.5			(21	)
Adjusted stockholders' equity(2)														1,189.2				1,266.9			(6	)
Annualized adjusted return on stockholders' equity(3)			11.6	%			9.5	%		22	%			6.6	%			5.5	%		20
Amounts per share:
Cash dividends declared per share		$	1.51			$	0.25			504	%		$	3.28			$	1.00			228	%
Earnings per diluted share(4)			1.72				1.94			(11	)			1.75				4.17			(58	)
Earnings per diluted share before impact of the LPT(4)			1.65				1.76			(6	)			1.45				3.77			(62	)
Adjusted earnings per diluted share(4)			1.25				1.06			18				2.93				2.37			24
Book value per share(2)														34.76				43.73			(21	)
Book value per share including the Deferred Gain(2)														38.67				47.85			(19	)
Adjusted book value per share(2)														43.78				45.67			(4	)
Financial information by Segment(5):
Net income (loss) before income taxes:
Employers		$	58.7			$	69.7			(16	) %		$	75.3			$	161.3			(53	) %
Cerity			(1.6	)			(2.4	)		33				(9.9	)			(9.6	)		(3	)
Corporate and Other			(1.2	)			1.1			(209	) %			(9.6	)			(4.7	)		(104	)
(1) See Page 5 for calculations and Page 15 for information regarding our use of Non-GAAP Financial Measures.
(2) See Page 13 for calculations and Page 15 for information regarding our use of Non-GAAP Financial Measures.
(3) See Page 10 for calculations and Page 15 for information regarding our use of Non-GAAP Financial Measures.
(4) See Page 14 for calculations and Page 15 for information regarding our use of Non-GAAP Financial Measures.
(5) See Pages 6-9 for details and Page 16 for a description of our reportable segments.

EMPLOYERS HOLDINGS, INC.
Summary Consolidated Balance Sheets (unaudited)
$ in millions, except per share amounts
		December 31, 2022				December 31, 2021
ASSETS
Available for sale:
Investments, cash and cash equivalents		$	2,658.2			$	2,811.3
Accrued investment income			19.0				14.5
Premiums receivable, net			305.9				244.7
Reinsurance recoverable, net of allowance, on paid and unpaid losses and LAE			451.3				483.8
Deferred policy acquisition costs			48.3				43.7
Deferred income taxes, net			62.7				—
Contingent commission receivable—LPT Agreement			13.9				13.9
Other assets			157.4				171.3
Total assets		$	3,716.7			$	3,783.2
LIABILITIES
Unpaid losses and LAE		$	1,960.7			$	1,981.2
Unearned premiums			339.5				304.7
Commissions and premium taxes payable			58.2				42.1
Deferred Gain			106.1				114.4
FHLB Advances (1)			182.5				—
Other liabilities			125.5				127.7
Total liabilities		$	2,772.5			$	2,570.1
STOCKHOLDERS' EQUITY
Common stock and additional paid-in capital		$	415.2			$	411.3
Retained earnings			1,295.6				1,338.5
Accumulated other comprehensive (loss) income, net			(138.9	)			60.6
Treasury stock, at cost			(627.7	)			(597.3	)
Total stockholders’ equity			944.2				1,213.1
Total liabilities and stockholders’ equity		$	3,716.7			$	3,783.2
Stockholders' equity including the Deferred Gain (2)		$	1,050.3			$	1,327.5
Adjusted stockholders' equity (2)			1,189.2				1,266.9
Book value per share (2)		$	34.76			$	43.73
Book value per share including the Deferred Gain (2)			38.67				47.85
Adjusted book value per share (2)			43.78				45.67
(1) FHLB = Federal Home Loan Bank
(2) See Page 13 for calculations and Page 15 for information regarding our use of Non-GAAP Financial Measures.

EMPLOYERS HOLDINGS, INC.
Summary Consolidated Income Statements (unaudited)
$ in millions
		Three Months Ended								Years Ended
		December 31,								December 31,
			2022				2021				2022				2021
Revenues:
Net premiums earned		$	181.1			$	156.4			$	675.2			$	574.4
Net investment income			27.0				17.7				89.8				72.7
Net realized and unrealized gains (losses) on investments(1)			13.7				25.0				(51.8	)			54.6
Other income			—				0.7				0.3				1.4
Total revenues			221.8				199.8				713.5				703.1
Expenses:
Losses and LAE incurred			(91.2	)			(70.7	)			(391.0	)			(315.2	)
Commission expense			(26.0	)			(21.4	)			(95.9	)			(76.1	)
Underwriting and general and administrative expenses			(46.7	)			(39.2	)			(167.3	)			(160.2	)
Interest and financing expenses			(2.0	)			(0.1	)			(3.5	)			(0.5	)
Other expenses			—				—				—				(4.1	)
Total expenses			(165.9	)			(131.4	)			(657.7	)			(556.1	)
Net income before income taxes			55.9				68.4				55.8				147.0
Income tax expense			(8.7	)			(13.6	)			(7.4	)			(27.7	)
Net income			47.2				54.8				48.4				119.3
Unrealized AFS investment gains (losses) arising during the period, net of tax			19.9				(17.4	)			(202.3	)			(51.3	)
Reclassification adjustment for realized AFS investment gains (losses) in net income, net of tax			0.1				(0.4	)			2.8				(3.2	)
Total Comprehensive income (loss)		$	67.2			$	37.0			$	(151.1	)		$	64.8
Net income		$	47.2			$	54.8			$	48.4			$	119.3
Amortization of the Deferred Gain - losses			(1.7	)			(1.7	)			(6.8	)			(6.7	)
Amortization of the Deferred Gain - contingent commission			(0.3	)			(0.5	)			(1.5	)			(1.7	)
LPT reserve adjustment			—				(2.6	)			—				(2.6	)
LPT contingent commission adjustments			—				(0.5	)			—				(0.5	)
Net income before impact of the LPT Agreement (2)		$	45.2			$	49.5			$	40.1			$	107.8
Net realized and unrealized (gains) losses on investments			(13.7	)			(25.0	)			51.8				(54.6	)
Non-recurring severance costs and asset impairment charges			—				—				—				4.1
Income tax expense (benefit) related to items excluded from Net income			2.9				5.3				(10.9	)			10.6
Adjusted net income (2)		$	34.4			$	29.8			$	81.0			$	67.9
(1) Includes unrealized gains (losses) on equity securities and other invested assets of $16.9 million and $23.6 million for the three months ended December 31 2022 and 2021, respectively, and $(72.3) million and $34.9 million for the year ended December 31, 2022 and 2021, respectively
(2) See Page 15 regarding our use of Non-GAAP Financial Measures.

EMPLOYERS HOLDINGS, INC.
Net Income Before Income Taxes by Segment(1) (unaudited)
$ in millions
Year Ended December 31, 2022			Employers				Cerity				Corporate and Other				Consolidated
Gross premiums written			$	707.5			$	6.7			$	—			$	714.2
Net premiums written				700.5				6.7				—				707.2
Net premiums earned		A		672.1				3.1				—				675.2
Net investment income				82.1				4.1				3.6				89.8
Net realized and unrealized losses on investments				(44.0	)			(1.3	)			(6.5	)			(51.8	)
Other income				0.3				—				—				0.3
Total revenues				710.5				5.9				(2.9	)			713.5
Losses and LAE incurred		B		(397.5	)			(1.8	)			8.3				(391.0	)
Commission expense		C		(95.8	)			(0.1	)			—				(95.9	)
Underwriting expenses		D		(138.9	)			(13.9	)			—				(152.8	)
General and administrative expenses				—				—				(14.5	)			(14.5	)
Interest and financing expenses				(3.0	)			—				(0.5	)			(3.5	)
Total expenses				(635.2	)			(15.8	)			(6.7	)			(657.7	)
Net income (loss) before income taxes			$	75.3			$	(9.9	)		$	(9.6	)		$	55.8
Underwriting income (loss)		A+B+C+D	$	39.9			$	(12.7	)
Loss and LAE expense ratio:
Current year				64.1	%			n/m
Prior years				(5.0	)			n/m
Loss and LAE ratio				59.1				n/m
Commission expense ratio				14.3				n/m
Underwriting expense ratio				20.7				n/m
Combined ratio				94.1	%			n/m
n/m - not meaningful
(1) See Page 16 for a description of our reportable segments.

EMPLOYERS HOLDINGS, INC.
Net Income Before Income Taxes by Segment(1) (unaudited)
$ in millions
Year Ended December 31, 2021			Employers				Cerity				Corporate and Other				Consolidated
Gross premiums written			$	588.2			$	1.5			$	—			$	589.7
Net premiums written				581.6				1.5				—				583.1
Net premiums earned		A		573.7				0.7				—				574.4
Net investment income				69.3				2.8				0.6				72.7
Net realized and unrealized gains (losses) on investments				54.5				0.3				(0.2	)			54.6
Other income				1.4				—				—				1.4
Total revenues				698.9				3.8				0.4				703.1
Losses and LAE incurred		B		(326.2	)			(0.5	)			11.5				(315.2	)
Commission expense		C		(76.1	)			—				—				(76.1	)
Underwriting expenses		D		(131.2	)			(12.9	)			—				(144.1	)
General and administrative expenses				—				—				(16.1	)			(16.1	)
Interest and financing expenses				—				—				(0.5	)			(0.5	)
Other expenses				(4.1	)			—				—				(4.1	)
Total expenses				(537.6	)			(13.4	)			(5.1	)			(556.1	)
Net income (loss) before income taxes			$	161.3			$	(9.6	)		$	(4.7	)		$	147.0
Underwriting income (loss)		A+B+C+D	$	40.2			$	(12.7	)
Loss and LAE expense ratio:
Current year				63.8	%			n/m
Prior years				(6.9	)			—
Loss and LAE ratio				56.9				n/m
Commission expense ratio				13.3				n/m
Underwriting expense ratio				22.9				n/m
Combined ratio				93.1	%			n/m
n/m - not meaningful
(1) See Page 16 for a description of our reportable segments.

EMPLOYERS HOLDINGS, INC.
Net Income Before Income Taxes by Segment(1) (unaudited)
$ in millions
Three Months Ended December 31, 2022			Employers				Cerity				Corporate and Other				Consolidated
Gross premiums written			$	170.6			$	3.2			$	—			$	173.8
Net premiums written				168.8				3.1				—				171.9
Net premiums earned		A		180.0				1.1				—				181.1
Net investment income				24.3				1.4				1.3				27.0
Net realized and unrealized gains on investments				12.0				0.3				1.4				13.7
Total revenues				216.3				2.8				2.7				221.8
Losses and LAE incurred		B		(92.7	)			(0.5	)			2.0				(91.2	)
Commission expense		C		(26.1	)			0.1				—				(26.0	)
Underwriting expenses		D		(37.0	)			(4.0	)			—				(41.0	)
General and administrative expenses				—				—				(5.7	)			(5.7	)
Interest and financing expenses				(1.8	)			—				(0.2	)			(2.0	)
Total expenses				(157.6	)			(4.4	)			(3.9	)			(165.9	)
Net income (loss) before income taxes			$	58.7			$	(1.6	)		$	(1.2	)		$	55.9
Underwriting income (loss)		A+B+C+D	$	24.2			$	(3.3	)
Loss and LAE expense ratio:
Current year				64.3	%			n/m
Prior years				(12.8	)			n/m
Loss and LAE ratio				51.5				n/m
Commission expense ratio				14.5				n/m
Underwriting expense ratio				20.6				n/m
Combined ratio				86.6	%			n/m
n/m - not meaningful
(1) See Page 16 for a description of our reportable segments.

EMPLOYERS HOLDINGS, INC.
Net Income Before Income Taxes by Segment(1) (unaudited)
$ in millions
Three Months Ended December 31, 2021			Employers				Cerity				Corporate and Other				Consolidated
Gross premiums written			$	141.5			$	0.5			$	—			$	142.0
Net premiums written				139.9				0.5				—				140.4
Net premiums earned		A		156.1				0.3				—				156.4
Net investment income				16.7				0.7				0.3				17.7
Net realized and unrealized gains on investments				24.8				0.1				0.1				25.0
Other income				0.7				—				—				0.7
Total revenues				198.3				1.1				0.4				199.8
Losses and LAE incurred		B		(75.9	)			(0.2	)			5.4				(70.7	)
Commission expense		C		(21.4	)			—				—				(21.4	)
Underwriting expenses		D		(31.3	)			(3.3	)			—				(34.6	)
General and administrative expenses				—				—				(4.6	)			(4.6	)
Interest and financing expenses				—				—				(0.1	)			(0.1	)
Total expenses				(128.6	)			(3.5	)			0.7				(131.4	)
Net income (loss) before income taxes			$	69.7			$	(2.4	)		$	1.1			$	68.4
Underwriting income (loss)		A+B+C+D	$	27.5			$	(3.2	)
Loss and LAE expense ratio:
Current year				64.2	%			n/m
Prior years				(15.6	)			—
Loss and LAE ratio				48.6				n/m
Commission expense ratio				13.7				n/m
Underwriting expense ratio				20.1				n/m
Combined ratio				82.4	%			n/m
n/m - not meaningful
(1) See Page 16 for a description of our reportable segments.

EMPLOYERS HOLDINGS, INC.
Return on Equity (unaudited)
$ in millions
			Three Months Ended								Years Ended
			December 31,								December 31,
				2022				2021				2022				2021
Net income		A	$	47.2			$	54.8			$	48.4			$	119.3
Impact of the LPT Agreement				(2.0	)			(5.3	)			(8.3	)			(11.5	)
Net realized and unrealized (gains) losses on investments				(13.7	)			(25.0	)			51.8				(54.6	)
Non-recurring severance costs and asset impairment charges				—				—				—				4.1
Income tax expense (benefit) related to items excluded from Net income				2.9				5.3				(10.9	)			10.6
Adjusted net income(1)		B	$	34.4			$	29.8			$	81.0			$	67.9
Stockholders' equity - end of period			$	944.2			$	1,213.1			$	944.2			$	1,213.1
Stockholders' equity - beginning of period				919.0				1,189.9				1,213.1				1,212.8
Average stockholders' equity		C	$	931.6			$	1,201.5			$	1,078.7			$	1,213.0
Stockholders' equity - end of period			$	944.2			$	1,213.1			$	944.2			$	1,213.1
Deferred Gain - end of period				106.1				114.4				106.1				114.4
Accumulated other comprehensive loss (income), before taxes - end of period				175.8				(76.7	)			175.8				(76.7	)
Income tax related to accumulated other comprehensive (loss) income - end of period				(36.9	)			16.1				(36.9	)			16.1
Adjusted stockholders' equity - end of period				1,189.2				1,266.9				1,189.2				1,266.9
Adjusted stockholders' equity - beginning of period				1,186.0				1,230.7				1,266.9				1,223.1
Average adjusted stockholders' equity(1)		D	$	1,187.6			$	1,248.8			$	1,228.1			$	1,245.0
Return on stockholders' equity		A / C		5.1	%			4.6	%			4.5	%			9.8	%
Annualized return on stockholders' equity				20.3				18.2
Adjusted return on stockholders' equity(1)		B / D		2.9				2.4				6.6				5.5
Annualized adjusted return on stockholders' equity(1)				11.6				9.5
(1) See Page 15 for information regarding our use of Non-GAAP Financial Measures.

EMPLOYERS HOLDINGS, INC.
Roll-forward of Unpaid Losses and LAE (unaudited)
$ in millions
		Three Months Ended								Years Ended
		December 31,								December 31,
			2022				2021				2022				2021
Unpaid losses and LAE at beginning of period		$	1,979.9			$	2,002.1			$	1,981.2			$	2,069.4
Less reinsurance recoverable on unpaid losses and LAE			456.4				478.4				476.9				497.0
Net unpaid losses and LAE at beginning of period			1,523.5				1,523.7				1,504.3				1,572.4
Losses and LAE incurred:
Current year			116.5				100.3				432.8				366.5
Prior years - voluntary business			(22.5	)			(23.0	)			(32.1	)			(38.0	)
Prior years - involuntary business			(0.7	)			(1.2	)			(1.4	)			(1.8	)
Total losses incurred			93.3				76.1				399.3				326.7
Losses and LAE paid:
Current year			42.1				34.0				92.5				76.6
Prior years			59.4				61.5				295.8				318.2
Total paid losses			101.5				95.5				388.3				394.8
Net unpaid losses and LAE at end of period			1,515.3				1,504.3				1,515.3				1,504.3
Reinsurance recoverable, excluding CECL allowance, on unpaid losses and LAE			445.4				476.9				445.4				476.9
Unpaid losses and LAE at end of period		$	1,960.7			$	1,981.2			$	1,960.7			$	1,981.2

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 $2.0 million and $5.3 million for the three months ended December 31, 2022 and 2021, respectively, and $8.3 million and $11.5 million for the year ended December 31, 2022 and 2021, respectively.

EMPLOYERS HOLDINGS, INC.
Consolidated Investment Portfolio (unaudited)
$ in millions
		December 31, 2022													December 31, 2021
Investment Positions:		Cost or Amortized Cost(1)			Net Unrealized Gain (Loss)				Fair Value			%			Fair Value			%
Fixed maturity securities		$	2,366.7		$	(175.9	)		$	2,186.3		82	%		$	2,342.7		83	%
Equity securities			150.9			52.8				203.7		8				344.4		12
Other invested assets			54.4			5.3				59.7		2				38.4		1
Short-term investments			119.1			—				119.1		4				10.5		—
Cash and cash equivalents			89.2			—				89.2		3				75.1		3
Restricted cash and cash equivalents			0.2			—				0.2		—				0.2		—
Total investments and cash		$	2,780.5		$	(117.8	)		$	2,658.2		100	%		$	2,811.3		100	%
Breakout of Fixed Maturity Securities:
U.S. Treasuries and Agencies		$	97.3		$	(4.4	)		$	92.9		4	%		$	68.1		3	%
States and Municipalities			326.7			(9.1	)			317.6		15				436.1		19
Corporate Securities			963.4			(92.5	)			868.1		40				1,080.3		46
Mortgage-Backed Securities			465.0			(49.7	)			415.3		19				414.1		18
Asset-Backed Securities			74.0			(7.9	)			66.1		3				68.5		3
Collateralized loan obligations			268.1			(7.2	)			260.9		12				85.4		4
Bank loans and other			172.2			(5.1	)			165.4		8				190.2		8
Total fixed maturity securities		$	2,366.7		$	(175.9	)		$	2,186.3		100	%		$	2,342.7		100	%

Weighted average ending book yield			3.9	%		3.0	%
Average credit quality (S&P)			A			A+
Duration			3.9			3.4
(1) Amortized cost excludes an allowance for current expected credit losses (CECL) of $4.5 million

EMPLOYERS HOLDINGS, INC.
Book Value Per Share (unaudited)
$ in millions, except per share amounts
			December 31, 2022				December 31, 2021
Numerators:
Stockholders' equity		A	$	944.2			$	1,213.1
Deferred Gain				106.1				114.4
Stockholders' equity including the Deferred Gain(1)		B		1,050.3				1,327.5
Accumulated other comprehensive loss (income), before taxes				175.8				(76.7	)
Income taxes related to accumulated other comprehensive (loss) income, before taxes				(36.9	)			16.1
Adjusted stockholders' equity(1)		C	$	1,189.2			$	1,266.9
Denominator (shares outstanding)		D		27,160,748				27,741,400
Book value per share(1)		A / D	$	34.76			$	43.73
Book value per share including the Deferred Gain(1)		B / D		38.67				47.85
Adjusted book value per share(1)		C / D		43.78				45.67
Cash dividends declared per share			$	3.28			$	1.00
YTD Change in:(2)
Book value per share				(13.0	) %			5.3	%
Book value per share including the Deferred Gain				(12.3	)			4.3
Adjusted book value per share				3.0				9.0
(1) See Page 15 for information regarding our use of Non-GAAP Financial Measures.
(2) Reflects the change per share after taking into account dividends declared in the period.

EMPLOYERS HOLDINGS, INC.
Earnings Per Share (unaudited)
$ in millions, except per share amounts
			Three Months Ended								Years Ended
			December 31,								December 31,
				2022				2021				2022				2021
Numerators:
Net income		A	$	47.2			$	54.8			$	48.4			$	119.3
Impact of the LPT Agreement				(2.0	)			(5.3	)			(8.3	)			(11.5	)
Net income before impact of the LPT (1)		B	$	45.2			$	49.5			$	40.1			$	107.8
Net realized and unrealized (gains) losses on investments				(13.7	)			(25.0	)			51.8				(54.6	)
Non-recurring severance costs and asset impairment charges				—				—				—				4.1
Income tax expense (benefit) related to items excluded from Net income				2.9				5.3				(10.9	)			10.6
Adjusted net income (1)		C	$	34.4			$	29.8			$	81.0			$	67.9
Denominators:
Average common shares outstanding (basic)		D		27,258,246				27,931,565				27,503,941				28,289,118
Average common shares outstanding (diluted)		E		27,435,134				28,178,237				27,680,988				28,600,993
Earnings per share:
Basic		A / D	$	1.73			$	1.96			$	1.76			$	4.22
Diluted		A / E		1.72				1.94				1.75				4.17
Earnings per share before impact of the LPT:(1)
Basic		B / D	$	1.66			$	1.77			$	1.46			$	3.81
Diluted		B / E		1.65				1.76				1.45				3.77
Adjusted earnings per share:(1)
Basic		C / D	$	1.26			$	1.07			$	2.95			$	2.40
Diluted		C / E		1.25				1.06				2.93				2.37
(1) See Page 15 for information regarding our use of Non-GAAP Financial Measures.

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 5 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), and any miscellaneous non-recurring transactions (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 13 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 13 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 10 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 13 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 5 for calculations). Management believes that these performance and underwriting measures are widely used by our investors, analysts and other interested parties.

Description of 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 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. 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230216005643/en/

Company Contact:

Mike Paquette (775) 327-2562 or mpaquette@employers.com

Investor Relations Contact:

Karin Daly, The Equity Group Inc. (212) 836-9632 or kdaly@equityny.com

Source: Employers Holdings, Inc.