Reno, NV – Employers Holdings, Inc. (NYSE:EIG) recently reported the following for the fourth quarter of 2017: (i) net income of $31.3 million ($0.94 per diluted share); (ii) net income excluding the impact of the LPT of $28.2 million ($0.85 per diluted share); and (iii) adjusted net income of $35.2 million ($1.06 per diluted share).
The Company also reported that the Board of Directors declared a first quarter 2018 dividend and authorized a new $50.0 million share repurchase program. The first quarter dividend, which was increased to $0.20 per share, will be paid on March 21, 2018 to stockholders of record on March 7, 2018. The new share repurchase authorization, which replaces an expiring program with a remaining authorization of $28.9 million, will expire on February 26, 2020.
The Company’s adjusted net income for the fourth quarter of 2017 increased $3.9 million year-over-year. This increase reflects strong underwriting results highlighted by an 83.0% combined ratio before the impact of the LPT and a 6% increase in net earned premiums.
The Company’s net income and net income before the impact of the LPT for the fourth quarter of 2017 decreased by $4.2 million and $4.4 million, respectively, year-over-year. The decreases were the result of a non-recurring income tax expense of $7.0 million in connection with U.S. corporate tax reform enacted in December. This incremental income tax expense represents the impact of re-measurement of the Company’s deferred tax assets and liabilities using the new U.S. statutory tax rate.
The Company’s book value per share of $29.07, book value per share including the Deferred Gain of $34.09 and adjusted book value per share of $30.80, increased 13.4%, 9.7% and 7.2% for the year, respectively, each computed after taking into account dividends declared during 2017.
Chief Executive Officer Douglas D. Dirks commented on the results: “The fourth quarter marked a strong end to a successful year for EMPLOYERS. During the fourth quarter we grew written premiums by 8% year-over-year, lowered our current and prior year loss reserve provisions and increased the quarterly dividend by 33.3%.
In addition, we have recently initiated a plan of aggressive development and implementation of new technologies and capabilities that we believe will fundamentally transform and enhance the digital experience of our customers. We have chosen to reinvest the expected financial benefits from corporate income tax reform back into our business over the next several years by greatly accelerating the development and deployment of these new digital capabilities. We believe that these new technological and intellectual capabilities will support our future growth initiatives, provide us with greater pricing precision and flexibility and promote long-term value creation.
We expect that the development and implementation of these new technologies and capabilities will increase our underwriting and other operating expense ratio by approximately four percentage points in 2018 and two percentage points in 2019, as compared to that experienced in 2017. However, we expect that these increased expenses will be offset by operational efficiency gains in future periods.”
Summary of Fourth Quarter 2017 Results
(All comparisons vs. fourth quarter 2016, unless noted otherwise).
Net earned premiums of $181.6 million increased $9.6 million due primarily to new business writings and increases in final audit premiums, partially offset by declines in renewal business premium.
The loss ratio before the impact of the LPT of 48.6% decreased 5.4 percentage points reflecting the continued impacts of key business initiatives including: an emphasis on settling open claims; diversifying our risk exposure across geographic markets; and leveraging data-driven strategies to target, underwrite and price profitable classes of business across all of our markets.
The commission expense ratio of 13.6% increased 2.0 percentage points due mainly to increases in agency incentives and in the amount of business produced by our partnerships and alliances.
The underwriting and other operating expense ratio of 20.8% increased 0.7 percentage points due mainly to increases in fourth quarter professional fees and incentive accruals.
Net investment income of $19.1 million was unchanged.
Stockholders’ Equity including the Deferred Gain
Stockholders’ equity including the Deferred Gain was $1,111.3 million, an increase of 9.4% from December 31, 2016.
The complete results release is available here: Employers Holdings, Inc. Fourth Quarter 2017 Results
Source: Employers Holdings, Inc.