Employers Holdings, Inc. Q1 FY2026 earnings call

• Kathy Antonello, CEO, started by highlighting first quarter 2026 financial results, emphasizing discipline in underwriting, with underwriting expense ratio improvement, actuarial estimates on target, and $83 million returned to shareholders while growing book value per share by 8.9%. - Mentioned favorable market developments in California with the Bureau voting for a second consecutive double-digit pure premium rate increase. - Steps taken in certain jurisdictions and segments in 2025 working as intended, with new growth opportunities like entering new underwriting segments, appointing new agents, and a recently launched excess workers' compensation product. - Mike Pedraja, CFO, detailed gross premiums written decrease, loss and expense details, commission and underwriting expense changes, investment income outperformance, share repurchases, and board declaring a second quarter 2026 dividend increase and approving a new share repurchase authorization. - Highlighted operational discipline driving results, use of AI tools as a force multiplier, bringing together employees to introduce AI strategy, moving from AI experimentation to deployment of products using AI, and being the first insurance carrier to bring quoting directly into ChatGPT.

Gross premiums written were $181 million compared to $212 million for the prior year, a decrease of 15% due primarily to a reduction in new business writings. Losses and loss adjustment expenses were $129 million versus $121 million a year ago. Commission expense is $24 million for the quarter versus $23 million for the prior year, an increase of 3%, primarily driven by non-recurring 2025 favorable adjustment. Underwriting expenses were $41 million for the quarter versus $43 million for the prior year, a decrease of 5%. Excluding returns from private equity partnership investments, first quarter net investment income exceeded last year's by $1.5 million. Adjusted net income, which excludes net realized and unrealized investment gains and losses, and the benefit of our LPT deferred gain amortization was $10.3 million for the quarter, compared to $21.3 million last year. Book value per share, including the deferred gain, was $51.26. The underwriting expense ratio improved to 22.6% from 23.4% a year ago.

• Expect pricing and underwriting actions to pressure growth throughout 2026. - First quarter earned premium was essentially flat year over year, down 1%. - Expect to continue the same level of performance throughout 2026 with new markets and segments being introduced. - Board approved a new $125 million share repurchase authorization through December 31st of 2027.

Q: Could you talk about the competitive environment in California?

A: Kathy Antonello discussed pricing in workers' compensation, with some jurisdictions like New York, California, Massachusetts seeing exits, tightening risk selection in Florida. Mentioned average rate on renewals countrywide increased about six percent, significant portion from California.

Q: Outlook for reserve development?

A: They do actual versus expected analysis at end of Q1 and Q3, full analysis at end of Q2 and Q4. This quarter things came in right around where expected, will wait and see in Q2.

Q: Audit premium impact in the quarter?

A: Relatively small, 5 million adjustments, payrolls moderately increasing.

Q: What are your spidey senses telling you about what NCCI is going to say?

A: Expected accident year 2025 to show slight increase, redundancy for industry to decrease, no significant inflation impact seen.

Q: Regarding the top line, would you categorize it as ahead of expectations in terms of timing?

A: Exactly as expected in plans, expecting same level of performance throughout 2026 with new markets and segments introduced