Employers Holdings Inc (EIG) 2023 Q4 法說會逐字稿

Good day, and thank you for standing by, and welcome to Employers Holdings, Inc. Fourth quarter 2023 earnings conference call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session question. During this session, you'll need to press star one on your telephone. You will then hear an automated message advising Johannes Ries. So your question, please press star one. Once again, please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Lloyd Brown, General Counsel. Please go ahead.

美好的一天，感謝您的支持，歡迎來到 Employers Holdings, Inc.。2023 年第四季財報電話會議。此時，所有參與者都處於只聽模式。演講者演講結束後，將進行問答環節。在此會話期間，您需要按電話上的星號一。然後，您將聽到一條自動通知 Johannes Ries 的訊息。所以你的問題，請按星號一。再次請注意，今天的會議正在錄製中。現在我想將會議交給今天的第一位發言人，總法律顧問勞埃德·布朗。請繼續。

Thank you, Norma. Good morning, and welcome, everyone to the Fourth Quarter 2023 earnings call for Employers. Today's call is being recorded and webcast from the West Investors section of our website where a replay will be available following the call.

謝謝你，諾瑪。早安，歡迎大家參加 2023 年第四季雇主財報電話會議。今天的電話會議正在我們網站的西方投資者部分進行錄音和網路直播，電話會議後將進行重播。

Presenting today on the call will be Kathy Antonella, our Chief Executive Officer, and Mike Paquette, our Chief Financial Officer.

我們的執行長凱西安東內拉 (Kathy Antonella) 和財務長 Mike Paquette 出席今天的電話會議。

Statements made during this conference call that are not based on historical facts are considered forward looking statements. These statements are made in reliance on the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Although we believe the expectations expressed in our forward-looking statements are reasonable risks and uncertainties could cause actual results to be materially different from our expectations, including the risks set forth in our filings with the Securities and Exchange Commission. Its All remarks made during the call are current only at the time of the call and will not be updated to reflect subsequent developments. The company also uses its website as a means of disclosing material nonpublic information and for complying with disclosure obligations under SEC's Regulation FD, Such disclosures will be included in the Investors section of the company's website. Accordingly, investors should monitor that portion of the Company's website. In addition to following the Company's press releases, SEC filings, public conference calls and webcasts in our earnings press release and in our remarks or responses to questions. We may use non-GAAP financial measures. Reconciliations of these non-GAAP measures to our GAAP results are included in our financial supplement and as an attachment to our earnings press release, our investor presentation and any other materials are available in the investor section on our website.

本次電話會議期間發表的並非基於歷史事實的聲明被視為前瞻性聲明。這些聲明是根據 1995 年《私人證券訴訟改革法案》的安全港條款做出的。儘管我們認為前瞻性陳述中表達的預期是合理的，但風險和不確定性可能導致實際結果與我們的預期有重大差異，包括我們向美國證券交易委員會提交的文件中提出的風險。通話期間發表的所有言論僅在通話時有效，且不會更新以反映後續進展。該公司還利用其網站作為披露重大非公開資訊的手段，並遵守 SEC FD 法規規定的揭露義務。因此，投資者應關注公司網站的該部分。除了關注公司的新聞稿、美國證券交易委員會 (SEC) 文件、公開電話會議和網路廣播之外，還應關注我們的收益新聞稿以及我們的言論或問題答复。我們可能會使用非公認會計準則財務指標。這些非公認會計原則衡量指標與我們公認會計原則結果的對帳已包含在我們的財務補充資料中，並作為我們收益新聞稿的附件、我們的投資者介紹和任何其他材料，可在我們網站的投資者部分獲取。

Now I'll turn the call over to Cathy.

現在我將把電話轉給凱西。

Thank you, Laurie. Good morning to everyone, and thank you for joining us today.

謝謝你，勞裡。大家早安，感謝您今天加入我們。

To start this morning, I will provide some highlights of our full fourth quarter and full year 2023 financial results. I'll then hand it over to Mike for more details on our financials and prior to Q&A, I'll speak to you about our focus for 2024 activities. The fourth quarter was a strong end to a very successful year for employers. We finished the year with impressive revenue growth, driven by strong increases in both premium writings and investment income. Our steady growth in written premium in 2023 resulted from a 20% increase in new business, a 9% increase in renewal business and continued solid audit premium recognition. Gross written premium, excluding final audit premium and the change in audit accrual increased 12% for both the full year and fourth quarter. Our investment performance was also a boost to revenue, with net investment income increasing by 19% and 2023. In addition, the partial recovery of last year's unrealized losses from common stock and other investments benefited our income statement. The impact of numerous initiatives led to year-over-year increases in our XLPT. underwriting income of 38% in the fourth quarter and 128% for the full year. Our adjusted net income for the same periods, increased 5% and 26% with even stronger increases when expressed on a per-share basis. The intra-year volatility in market interest rates throughout 2023 enabled us to buy and sell fixed maturities securities opportunistically, which contributed to a $59 million after-tax reversal of last year's unrealized bond losses. As a result, our book value per share including the deferred gain increased 16% for the year after considering dividends declared, we also hit an all-time high in terms of our policies in force, which which we expect will serve us well in 2024. I want to thank our highly dedicated employees for their outstanding efforts in 2023. They are our most valued asset and have successfully positioned the Company for even better results in the coming years.

今天早上開始，我將提供我們第四季和 2023 年全年財務表現的一些要點。然後我會將其交給 Mike，以了解有關我們財務狀況的更多詳細信息，在問答之前，我將向您介紹我們 2024 年活動的重點。對雇主來說，第四季是非常成功的一年的有力結束。在優質著作和投資收入強勁增長的推動下，我們以令人印象深刻的收入成長結束了這一年。2023 年，我們的承保保費穩定成長，這得益於新業務成長 20%、續保業務成長 9% 以及持續穩健的審計保費認可。總承保保費（不包括最終審計保費和應計審計費用的變化）全年和第四季度均增加了 12%。我們的投資績效也促進了收入的成長，淨投資收入到 2023 年將成長 19%。此外，去年普通股和其他投資未實現損失的部分恢復也使我們的損益表受益。許多措施的影響導致我們的 XLPT 逐年增加。第四季承保收入成長38%，全年承保收入成長128%。我們同期調整後的淨利潤分別成長了 5% 和 26%，以每股計算時成長更為強勁。2023 年市場利率的年內波動使我們能夠機會性地買賣固定期限證券，這為去年未實現債券損失帶來了 5,900 萬美元的稅後逆轉。因此，在考慮已宣布的股息後，我們的每股帳面價值（包括遞延收益）在這一年增長了16%，我們的現行政策也創下了歷史新高，我們預計這將在2024 年為我們帶來良好的結果。我要感謝我們高度敬業的員工在 2023 年所做的傑出努力。他們是我們最寶貴的資產，並成功幫助公司在未來幾年取得更好的表現。

With that, Mike will now provide a deeper dive into our impressive financial results, and then I'll return to provide my closing remarks. Mike?

接下來，麥克將更深入地介紹我們令人印象深刻的財務業績，然後我將返回發表我的結束語。麥克風？

Thank you, Gabby. Gross premiums written were $178 million for the fourth quarter, $768 million for the full year increases of 3% and 7%, respectively. Increases were due to higher new and renewal premiums. Net premiums earned were $188 million for the fourth quarter and $722 million for 2023 increases of 4% and 7% respectively. Our fourth quarter and full year loss and LAE ratios, excluding the impact of LPT. have 50.2% and 57.2%, respectively. Each represented meaningful improvements from the ratio reported a year ago. These improvements reflect a lower current accident year loss claim provision as well as higher prior prior year loss development, we recognized $25 million and $45 million dollars of favorable prior year loss reserve development during the fourth quarter and full year on a voluntary basis respectively, versus $23 million and $32 million, respectively, a year ago. We continued to settle claims throughout the year on an accelerated basis to both mitigate our overall tail risk and generate additional reserve salvage.

謝謝你，加比。第四季毛保費為 1.78 億美元，全年毛保費為 7.68 億美元，分別成長 3% 和 7%。增加的原因是新保費和續保保費增加。第四季淨保費收入為 1.88 億美元，2023 年淨保費收入為 7.22 億美元，分別成長 4% 和 7%。我們第四季和全年的虧損和 LAE 比率，不包括 LPT 的影響。分別為50.2%和57.2%。每一項都比一年前報告的比率有了顯著的改善。這些改進反映了當前事故年損失索賠準備金的減少以及上一年損失的增加，我們在第四季度和全年自願基礎上分別確認了2500 萬美元和4500 萬美元的有利上年損失準備金發展，而一年前分別為 2300 萬美元和 3200 萬美元。我們全年持續加速解決索賠，以減輕整體尾部風險並產生額外的準備金救助。

Our fourth quarter and full year commission expense ratios were 14% and 13.9%, respectively, each representing modest improvements from those ratios reported a year ago. Our fourth quarter and full year underwriting and general administrative expense ratios were 24.6% and 24.9%, respectively, with the full year expense ratio being highly consistent with that, I've a year ago, our net investment income for the quarter was $26 million versus $27 million a year ago. The slight decrease was due to a lower invested asset balance as measured by amortized cost, partially offset by higher bond yields. The reduction in our invested asset balance was partially the result of an unwinding of our Federal Home Loan Bank leveraged investment strategy. Net investment income from net investment income for the full year was $107 million versus $90 million a year ago. And our weighted average ending book yield on our fixed income investments was 4.3%. Net realized and unrealized gains on investments recorded through our income statement were $12 million for the quarter versus $14 million a year ago. For the full year, our net investment realized and unrealized gains were $23 million versus losses of $52 million experienced a year ago.

我們第四季和全年的佣金費用率分別為 14% 和 13.9%，均較一年前報告的比率略有改善。我們第四季和全年的承保和一般管理費用率分別為24.6%和24.9%，全年費用率與此高度一致，我一年前，我們該季度的淨投資收入為2600萬美元而一年前為2700 萬美元。略有下降是由於以攤餘成本衡量的投資資產餘額減少，但部分被債券殖利率上升所抵銷。我們投資資產餘額的減少部分是由於我們聯邦房屋貸款銀行槓桿投資策略的解除。全年淨投資收益的淨投資收益為 1.07 億美元，而一年前為 9,000 萬美元。我們固定收益投資的加權平均期末帳面收益率為 4.3%。本季損益表中記錄的已實現和未實現投資淨收益為 1,200 萬美元，而去年同期為 1,400 萬美元。全年，我們已實現和未實現的淨投資收益為 2,300 萬美元，而一年前的損失為 5,200 萬美元。

Interest and financing expenses for the quarter were less than $1 million versus $2 million a year ago. The decrease was due to the repayment of our federal home loan bank advances. As previously mentioned, interest and financing expenses for the full year were $6 million versus $4 million a year ago. Other investments of about $2 million consisted of a nonrecurring charge in connection with a write-off of previously capitalized cloud computing costs. We did not incur any noteworthy other expenses a year ago. Federal and state income tax expense for the quarter was $13 million, a 22% effective rate versus $9 million, a 16% effective rate a year ago. The effective rates in each of the periods included income tax benefits and exclusions associated with our tax-advantaged investment income and LPT. deferred gain amortization Our income tax expense for the full year was $30 million, a 28% effective tax rate versus $7 million, a 13% effective tax rate a year ago. Our net income this quarter was favorably impacted by $14 million of net after-tax unrealized gains arising from equity securities and other investments, which are reflected on our income statement and our stockholders' equity and book value per share this quarter was favorably impacted by $66 million of net after-tax unrealized gains arising from our fixed maturity securities, which are reflected on our balance sheet during the quarter, we repurchased $15.4 million of our common stock at an average price of $38.40 per share. And since year end, we bought a further $4.9 million of our stock at an average price of $39.45 per share, and our remaining share repurchase authority currently stands at $16.2 million.

本季的利息和融資費用不到 100 萬美元，而一年前為 200 萬美元。減少的原因是我們償還了聯邦住房貸款銀行預付款。如前所述，全年利息和融資費用為 600 萬美元，而一年前為 400 萬美元。其他約 200 萬美元的投資包括與先前資本化雲端運算成本沖銷相關的非經常性費用。一年前我們沒有發生任何值得注意的其他費用。本季聯邦和州所得稅費用為 1,300 萬美元，有效稅率為 22%，而一年前為 900 萬美元，有效稅率為 16%。每個期間的有效稅率包括所得稅優惠以及與我們的稅收優惠投資收入和 LPT 相關的排除。遞延收益攤銷 我們全年的所得稅費用為 3,000 萬美元，有效稅率為 28%，而一年前為 700 萬美元，有效稅率為 13%。我們本季的淨利潤受到股本證券和其他投資產生的1400 萬美元稅後未實現淨收益的有利影響，這些收益反映在我們的損益表中，本季度我們的股東權益和每股賬面價值受到了66 美元的有利影響我們的固定期限證券產生了100 萬美元的稅後未實現淨收益（反映在本季度的資產負債表上），我們以每股38.40 美元的平均價格回購了1,540 萬美元的普通股。自年底以來，我們以每股 39.45 美元的平均價格進一步購買了 490 萬美元的股票，目前我們剩餘的股票回購權為 1,620 萬美元。

And now I'll turn the call back to Cathy.

現在我會把電話轉回給凱西。

Thank you. My we met our capital management objectives in 2023 by returning $107 million to our shareholders through share repurchases and regular quarterly dividends. Our success and opportunistically repurchasing our shares in 2023 allowed us to meet these objectives in the best possible way thereby improving several of our current and future key metrics without the need to declare any special dividends beyond our financial results, I am very excited to announce that we recently completed an ambitious full integration of Cyries operations into those of employers. The integration allows us to continue to offer direct to consumer policies through the CRT brand, and we expect to realize meaningful fixed underwriting expense savings going forward.

謝謝。我們透過股票回購和定期季度股利向股東返還 1.07 億美元，實現了 2023 年的資本管理目標。我們的成功以及在2023 年機會性地回購股票使我們能夠以最佳方式實現這些目標，從而改善我們當前和未來的幾個關鍵指標，而無需宣布超出我們財務業績的任何特別股息，我非常高興地宣布我們最近完成了一項雄心勃勃的計劃，將 Cyries 業務完全整合到雇主業務中。此次整合使我們能夠繼續透過 CRT 品牌直接向消費者提供保單，我們預計未來將實現有意義的固定承保費用節省。

We've also eliminated the former Cerity segment from our financial reporting returning to a single segment reporting with the seniority integration behind us. We are now exceptionally well positioned to focus our efforts on the future of small business, workers' compensation and how we can offer a superior experience to our growing customer base in 2024. We plan to deliver more self-service options to our policyholders, our agents and our injured workers. And we expect to continue our appetite expansion effort, which has led to very profitable growth. We are confident that our strong capital position will nicely support both our growth and technology initiatives, and we look forward to the year ahead. And with that normal, we will now take questions.

我們也從我們的財務報告中消除了先前的 Cerity 部門，返回單一部門報告，並支援資歷整合。我們現在處於非常有利的位置，可以將我們的努力集中在小型企業的未來、工人薪酬以及我們如何在 2024 年為不斷增長的客戶群提供卓越的體驗。我們計劃為我們的保單持有人、代理人和受傷工人提供更多自助選項。我們預計將繼續擴大食慾，從而帶來非常有利可圖的成長。我們相信，我們強大的資本狀況將很好地支持我們的成長和技術舉措，我們期待未來的一年。按照慣例，我們現在將回答問題。

Thank you.

謝謝。

As a reminder, to ask a question, you'll need to press star one one on your telephone. To withdraw your question, please press star one again, please wait for your name to be announced. Please stand by. I will compile the Q&A One moment for our first question, please.

提醒一下，要提問，您需要在電話上按星號鍵。要撤回您的問題，請再次按星號一，請等待您的名字被宣布。請稍候。我將為我們的第一個問題整理一下問答。

Our first question comes from the line of Mark Hughes with Truist. Your line is now.

我們的第一個問題來自 Mark Hughes 和 Truist 的對話。你的線路現在是。

Yes, thank you. Good morning. Candidly, why am I so a good morning or just Mike, maybe just comment on the strategic partnerships you have the distribution agreements with some of the payroll processors, for instance, I know you had been kind of restructuring some of the commissions for new versus renewal. Could you just give us an update on where we stand with those? Does the updated commissions? Is that fully reflected in the P&L? Or how do you feel about the growth prospects in that channel for 2024?

是的，謝謝。早安.坦白說，為什麼我這麼早上好，或者只是麥克，也許只是評論一下您與一些工資處理者簽訂的分銷協議的戰略合作夥伴關係，例如，我知道您一直在重組一些新的佣金更新。您能否向我們介紹一下我們對這些問題的最新立場？佣金有更新嗎？這是否充分反映在損益表中？或者您對該通路 2024 年的成長前景有何看法？

Yes. So I would say that on the changes in any commission structures with our payroll partners have been fully reflected in the financials that you are seeing. That was that was a couple of years ago. So we don't expect that to have much of a change going going forward on the growth in all of our segments is really quite strong, whether you look at it from our payroll partners or on any of our alternative distribution channels. Our core business is growing, growing really strong. And I've said in the past that's due to our new sales and underwriting operating model. So we're seeing quite a bit of growth across all of our segments in addition to the payroll partner channels.

是的。所以我想說，我們與薪資合作夥伴的任何佣金結構的變化都已充分反映在您所看到的財務數據中。那是幾年前的事了。因此，無論您是從我們的薪資合作夥伴還是從我們的任何替代分銷管道來看，我們並不認為我們所有細分市場的成長會發生很大的變化。我們的核心業務正在成長，而且成長非常強勁。我過去曾說過，這是由於我們新的銷售和承保營運模式。因此，除了薪資合作夥伴管道之外，我們的所有細分市場都出現了相當大的成長。

And then just the question about medical inflation. I think you've suggested it's maintain or continue to be pretty benign. Is there a historical pattern of kind of a delayed impact in Medical? You know it takes a while for collective bargaining, the catch up for four, our government fee schedule to adjust. Is that a is that a real thing based on your experience or is that is there less reason to think there might be a delayed impact on costs, medical cost inflation?

然後就是關於醫療通膨的問題。我認為你已經建議它保持或繼續相當良性。醫療領域是否存在某種延遲影響的歷史模式？你知道，集體談判需要一段時間，要趕上四人，我們的政府收費表需要調整。根據您的經驗，這是真實的事情嗎？

Well, I would agree with what you said up to this point. Medical inflation in the economic data has been relatively mild, especially compared to the inflation and the other sectors like energy and housing are food. So that's really good for us. And we have not also also I'd say we have not seen it within our data. Any indication that medical inflation is creeping up in terms of whether or not there's a lag. I haven't necessarily seen any studies that are pointed at, just at looking at ad, I've seen the same news articles that you have seen that perhaps that's what's going on. What I will say, though, is we have taken a look at, you know, at some scenarios increase in case that does happen and we have recognized an explicit medical inflation addition to our reserves. And we did that a couple of years ago, maybe a year-and-a-half ago, and that's reflected in our and our current reserve. So we feel like if we do see something happen with medical inflation. We're in a good spot and we've tried to already contemplate that in our research.

嗯，到目前為止我同意你所說的。經濟數據中的醫療通膨一直相對溫和，尤其是與能源和住房等食品通膨相比。所以這對我們來說真的很好。我們也沒有在我們的數據中看到它。任何表明醫療通膨正在攀升的跡象，無論是否有滯後。我不一定看過任何指出的研究，只是看廣告，我看過和你看過的相同的新聞文章，也許這就是正在發生的事情。不過，我要說的是，我們已經考慮過，如果確實發生這種情況，某些情況會增加，並且我們已經認識到我們的儲備中存在明確的醫療通膨增加。我們幾年前，也許一年半前就這樣做了，這反映在我們和我們目前的儲備中。所以我們覺得如果我們確實看到醫療通膨發生一些事情。我們處於有利位置，我們已經在研究中嘗試考慮這一點。

Thank you very much.

非常感謝。

Thank you.

謝謝。

Thank you. As a reminder, sorry, one one to ask your question.

謝謝。提醒一下，抱歉，一個一個問你的問題。

I'm currently showing no further questions at this time. I'd like to hand the conference back over to Ms. Katharine Antonella for closing.

我目前沒有提出任何進一步的問題。我想將會議交回給凱瑟琳·安東內拉女士閉幕。

Okay. So thank you so much Norma, and thank you all for joining us this morning, and I look forward to meeting with you all again in April.

好的。非常感謝諾瑪，也感謝大家今天早上加入我們，我期待四月再次與大家見面。

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。祝大家有美好的一天。