Employers Holdings, Inc. Q4 FY2025 earnings call

• Actively addressing elevated frequency of California cumulative trauma claims, implemented rate increases and tightened underwriting in CA, confident in actions strengthening underwriting profitability but likely reducing written premium in 2026. - Small commercial franchise maintained strong retention rates in 2025 due to investments in automation and ease of use. - Standard fourth quarter full actuarial assessment concluded no additional reserve strengthening needed, independent actuarial firm confirmed carried reserves were reasonable. - Launched new workers’ compensation excess product leveraging core expertise and AI, accepting submissions with strong early market response. - Returned $215,000,000 to stockholders in 2025 via share repurchases and dividends, completed $125,000,000 capital recapitalization plan in Jan 2026, book value per share increased 11% to $51.31. - Drove expense ratio down 180 basis points to 21.7% in 2025, leveraging AI initiatives for further expense ratio decline, including new claims platform enhancements and AI tools in various areas

Gross premiums written were $156,800,000 in Q4 2025 compared to $176,300,000 in the prior-year quarter, a decrease of 11% due to lower new business writings and final audit premiums, partially offset by higher renewal business premium. Losses and LAE were $134,400,000 vs $113,200,000 a year ago, up 18.7% due to increased accident year 2025 selected loss and LAE ratio. Commission expense was $25,800,000 vs $24,400,000 prior year, up 5.7% due to nonrecurring adjustments. Underwriting expenses were $39,800,000 vs $44,200,000 prior year, down 10% due to expense management efforts. Net investment income was $31,400,000 vs $26,700,000 prior year, up 17.6% due to private equity distributions and higher fixed income portfolio yield

• Expect share repurchases to return to normal level in 2026 absent change, will be opportunistic in timing. - Hoping to continue improving expense ratio in 2026 with ongoing AI initiatives. - Aim for excess workers’ comp product to be 10% of overall written premium over next 4 - 7 years

• Elevated frequency of California cumulative trauma claims could continue to impact business, although other states and non-CT claims in CA trend favorably. - Actions to address CA market may reduce written premium in 2026. - Investment rebalancing resulted in after-tax realized loss of $40,000,000, which could impact financial results. - Competitive market environment across the country, with some carriers exiting certain states or classes, remaining competitive could be challenging

Q: Anything about the trajectory of CT claims? Are they accelerating further or even keel?

A: Katherine mentioned that the acceleration of CT claim frequency saw a slowdown and flattening in 2025, although CT claims as a percentage of overall claims is still elevated.

Q: Talk about hardening market in 2026 and competitors taking share.

A: Katherine said hardening market is specific mostly to CA where bureau took rate increase and some in NV, but generally countrywide market is competitive, with some carriers exiting states/classes and tightening risk selection, and in CA renewal book saw average rate increase over 5%.

Q: View on buybacks for 2026?

A: Katherine expects share repurchases to return to normal level in 2026 absent change, and will be opportunistic in timing.

Q: Expense ratio if top line down in 2026?

A: Hoping to still improve expense ratio with ongoing AI initiatives like claims-focused tools and AI rollouts across organization.

Q: How to win business in excess workers’ comp?

A: Katherine said they will focus on areas not provided efficiently by others, using AI to ingest data faster for quotes, leveraging workers’ comp expertise as natural extension, and seeing room in the market.

Q: Performance of excess workers’ comp product in terms of combined ratio?

A: Relative to guaranteed cost business, excess comp space is expected to have a mid-80s combined ratio, with strong expense ratio and lower loss ratio compared to guaranteed cost.

Q: Proportion of total premium from excess vs primary book in future?

A: Hoping excess workers’ comp product could be 10% of overall written premium over next 4 - 7 years