Employers Holdings Reports Strong Growth in Q3 2024 Results

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Employers Holdings Reports Strong Growth in Q3 2024 Results

Employers Holdings, Inc. (EIG) reported a significant increase in net income per share in the third quarter of 2024, attributing this to higher earned premiums and strong net investment income. The company’s net income per share increased by 124%, while adjusted net income per share rose by 19%.

Employers Holdings also emphasized that, due to the sharp decline in interest rates during the quarter, it achieved record levels in net book value per share metrics. Earnings results were detailed under the leadership of CEO Katherine Antonello and CFO Michael Paquette, providing insights into the company's performance and strategic initiatives.

Key Highlights:

  • Net income per share increased by 124% year-over-year.
  • Adjusted net income per share grew by 19%.
  • Net book value per share metrics reached all-time highs.
  • New and renewal premiums increased, while premium audit collections and audit accruals decreased.
  • The current accident year loss and LAE ratio was slightly above the prior year’s figure.
  • The combined ratio improved to 23.2%.
  • Written gross premiums declined by 8%, while earned net premiums increased by 1%.
  • Net investment income rose by 3%, showing a 7% increase when accounting for the unwinding of the Federal Home Loan Bank strategy.
  • The company executed a $7 million common stock buyback and declared a quarterly dividend of $0.30 per share.

Company Outlook: Employers Holdings continues to see profitable growth through its appetite expansion efforts, contributing to a 7% premium increase since the beginning of the year, excluding premium audit adjustments. The company's loss ratios in new segments are on par or better than those in traditional segments, and it is expected to benefit from this strategy moving forward. Employers Holdings returned $15.1 million to shareholders through stock buybacks and dividends.

Negative Highlights:

  • Written gross premiums decreased by 8%, primarily due to lower final audit premiums and turnover.

Positive Highlights:

  • Strategic initiatives, such as the Cerity integration plan, effectively reduced expenses.
  • Strong operating results complemented by favorable market conditions, including falling interest rates.
  • Appetite expansion efforts continue to contribute to the company's growth.

Shortcomings:

  • The company reported a slight increase in the current accident year loss and LAE ratio from 63.3% to 64%.

Q&A Highlights: CEO Katherine Antonello addressed the company’s appetite expansion pace, noting it is ongoing and they continue to look for new class codes that fit their profiles. Antonello also discussed the fluctuations in audit premiums and how these relate to economic factors such as employment growth volatility. Despite downward pressure on loss costs, the firm is monitoring bureau filings and appropriately adjusting prices for its portfolios.

Employers Holdings, Inc. demonstrated resilience and strategic growth in the third quarter of 2024, focusing strongly on expanding market segments while maintaining cost efficiency. The company's financials indicate a solid foundation, and its initiatives present a positive outlook for future performance.

InvestingPro Forecasts: Employers Holdings, Inc. (EIG) exhibited impressive financial performance in the third quarter of 2024, and the latest data from InvestingPro provides further context about the company's position. According to InvestingPro, EIG has a market capitalization of $1.21 billion, reflecting its strong standing in the insurance sector. The company’s P/E ratio of 8.79 suggests it may be undervalued relative to its earnings, aligning with the reported increase in net income per share.

One InvestingPro insight highlights that EIG is trading at a low P/E ratio concerning its near-term earnings growth. This observation supports the company’s strong financial performance and may indicate greater potential for share price appreciation.

Another relevant InvestingPro insight notes that EIG has maintained uninterrupted dividend payments for 18 years. This consistent dividend history underscores the company’s commitment to returning value to shareholders, as emphasized by the announcement of a quarterly dividend of $0.30 per share.

The company’s profitability is further highlighted by another InvestingPro insight indicating that EIG has been profitable over the past twelve months, aligning with the reported increases in net income per share and adjusted net income.

It is also worth noting that InvestingPro provides additional insights and forecasts for EIG, offering investors a more comprehensive perspective on the company’s financial health and outlook.