Reno, NV -(BusinessWire)- Employers Holdings, Inc. (NYSE:EIG) recently reported first quarter 2013 net income of $7.5 million or $0.24 per diluted share. Net income in the first quarter of 2012 was $6.3 million or $0.19 per diluted share.
Net income includes amortization of the deferred reinsurance gain related to the Loss Portfolio Transfer (“LPT”) Agreement. Consolidated net income before the impact of the LPT deferred reinsurance gain (the Company’s non-GAAP measure described below) was 3.5 million or $0.11 per diluted share in the first quarter of 2013 and 1.8 million or $0.05 per diluted share in the first quarter of 2012.
The first quarter 2013 combined ratio was 106.9% (109.6% before the impact of the LPT deferred reinsurance gain), compared with 115.9% (120.0% before the impact of the LPT deferred reinsurance gain) for the first quarter of 2012. Year over year, the combined ratio improved 9.0 percentage points on a GAAP basis and 10.4 percentage points before the impact of the LPT.
President and Chief Executive Officer Douglas D. Dirks commented on the results: “We are pleased with our strong start in 2013. Our continued focus on targeted growth and pricing produced positive results in the first quarter. Revenues grew 28%, we increased net income before the LPT by $1.7 million or $0.06 per diluted share and our combined ratio before the LPT improved 10.4 percentage points.”
Dirks continued: “Pricing improvements which began in late 2011 accelerated as the overall net rate increased 10.2% year over year. The net rate change at the end of the first quarter in our top (in terms of in-force premium) five states was positive relative to the end of last year’s first quarter with double digit increases in four of those states – California, Illinois, Georgia, and Nevada. The remaining state in our top five is Florida, an administered pricing state. There we saw a net rate increase of just under 5%. These improved rate trends continued to exceed our loss cost trends and, as expected, we lowered our loss provision rate by nearly two percentage points in the first quarter. Major drivers of the substantive combined ratio improvement were the decrease in the loss provision rate to 75.1% and an 8.7 percentage point decline in our underwriting and other operating expense ratio. The expense ratio improvement was a function of increased business scale as we grew premium at a faster rate than operating costs.”
Dirks concluded: “We are optimistic at this point in the year. It appears that loss trends are consistent with prior quarters while pricing continues to strengthen. Our balance sheet is strong and we believe our overall reserves are adequate. Targeted growth, pricing and cost containment will continue to be areas of focus for us throughout 2013.”
Second Quarter Dividend
The Board of Directors declared a second quarter 2013 dividend of six cents per share. The dividend is payable on June 5, 2013 to stockholders of record as of May 22, 2013.
The complete earnings release is available here: Employers Holdings, Inc. First Quarter 2013 Earnings