LANCASTER, Pa. /PRNewswire/ — Eastern Insurance Holdings, Inc. (“EIHI” or the “Company”) (Nasdaq: EIHI) today reported earnings for the three months ended December 31, 2010. EIHI reported a net loss of $11.8 million, or $1.37 per diluted share, for the fourth quarter of 2010, compared to net income of $2.7 million, or $0.29 per diluted share, for the same period in 2009. Included in the net loss for the three months ended December 31, 2010 is an after-tax loss on the sale of Eastern Atlantic RE of $14.5 million, or $1.68 per diluted share. The sale of Eastern Atlantic RE, formerly of the Company’s run-off specialty reinsurance segment, was previously announced in a press release dated December 9, 2010. EIHI’s net income from continuing operations was $538,000, or $0.06 per diluted share, for the fourth quarter of 2010 compared to net income from continuing operations of $1.6 million, or $0.18 per diluted share, for the same period in 2009. EIHI’s diluted book value per share was $14.88 as of December 31, 2010 compared to $15.78 as of December 31, 2009.
“Despite the occurrence of an unusual amount of severity-related claims in the fourth quarter of 2010 in our Mid-Atlantic region, our workers’ compensation insurance segment posted solid results for the year ended December 31, 2010,” said Bruce M. Eckert, Vice Chairman. “Our combined ratio for the year ended December 31, 2010 was 96.0 percent, including a fourth quarter combined ratio of 103.4 percent. During the fourth quarter of 2010, we experienced three claims greater than our $500,000 reinsurance retention compared to no such claims for the same period in 2009 and also had an unusual amount of claims just under the reinsurance retention in the quarter. This unusual claim activity came exclusively from our Mid-Atlantic book of business on accounts that met our underwriting standards and that have been profitably underwritten for years. The combined ratios for the year ended December 31, 2010 in our Southeast and Midwest regions were 84.4 percent and 92.6 percent, respectively. I was very pleased with our overall year over year growth in direct written premium of 14.6 percent, premium renewal retention of 87.0 percent and renewal rate decreases of only 1.9 percent in this very competitive market place. December 2010 was the first month since 2005 that we experienced pure net rate increases on our renewal book of business and I am hopeful that this and stabilizing employers’ payrolls are positive signs for our workers’ compensation insurance segment prospectively.”
Eckert continued, “2010 was a year of significant strategic accomplishments. We successfully sold our group benefits insurance business and 96 percent of our run-off specialty reinsurance segment, positioning EIHI as a mono-line workers’ compensation insurance specialist going into 2011. The proceeds from the transactions are being used to grow our workers’ compensation insurance business and to repurchase EIHI common shares. During 2010, we repurchased 728,413 shares at an average price of $11.21. In August 2010, we announced our succession plan for EIHI’s Chief Executive Officer position. Effective January 1, 2011, Michael Boguski, our former President and Chief Operating Officer, became President and Chief Executive Officer, and I became Vice Chairman of the Board of Directors. Michael has played a key leadership role at EIHI over the years and has been instrumental in driving the Company’s strategic plans, profitable geographic expansion and overall success during changing economic and insurance cycles. I have the utmost confidence in his ability to lead EIHI successfully into the future.”
Eckert added, “There were also numerous workers’ compensation insurance strategic accomplishments in 2010 including an A.M. Best Company financial rating upgrade to A (Excellent), the opening of offices in western Pennsylvania and Nashville, Tennessee and the growth of “ParallelPay,” the Company’s pay-as-you-go initiative. In addition, we experienced favorable operating and financial results during 2010 in two of our past strategic initiatives, the 2008 opening of our Southeast regional office and the 2008 acquisition of Employers Security Insurance Company to serve as our Midwest regional office.”
Eckert concluded, “We are off to a tremendous start in direct written premium production in 2011 with a January that greatly exceeded our budget expectations and included pure net rate increases on our renewal book of business.”
The full Eastern Insurance Holdings Earnings Release can be found here.