Nevada
(State or other jurisdiction
of incorporation or organization)
|
|
04-3850065
(I.R.S. Employer
Identification Number)
|
|
|
|
10375 Professional Circle, Reno, Nevada 89521
(Address of principal executive offices and zip code)
|
Large accelerated filer
R
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
Class
|
|
April 24, 2015
|
Common Stock, $0.01 par value per share
|
|
31,892,010 shares outstanding
|
|
|
Page
No.
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
|
|
|
|
|
|
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||
Consolidated Statements of Comprehensive Income
|
||||||||
(in thousands, except per share data)
|
||||||||
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Revenues
|
|
(unaudited)
|
||||||
Net premiums earned
|
|
$
|
159,000
|
|
|
$
|
167,200
|
|
Net investment income
|
|
16,900
|
|
|
18,000
|
|
||
Net realized gains on investments
|
|
1,200
|
|
|
3,300
|
|
||
Other income
|
|
100
|
|
|
—
|
|
||
Total revenues
|
|
177,200
|
|
|
188,500
|
|
||
Expenses
|
|
|
|
|
||||
Losses and loss adjustment expenses
|
|
106,200
|
|
|
122,300
|
|
||
Commission expense
|
|
18,700
|
|
|
20,000
|
|
||
Underwriting and other operating expenses
|
|
33,500
|
|
|
33,300
|
|
||
Interest expense
|
|
700
|
|
|
800
|
|
||
Total expenses
|
|
159,100
|
|
|
176,400
|
|
||
Net income before income taxes
|
|
18,100
|
|
|
12,100
|
|
||
Income tax expense
|
|
4,100
|
|
|
1,300
|
|
||
Net income
|
|
$
|
14,000
|
|
|
$
|
10,800
|
|
|
|
|
|
|
||||
Earnings per common share (Note 9):
|
|
|
|
|
||||
Basic
|
|
$
|
0.44
|
|
|
$
|
0.34
|
|
Diluted
|
|
$
|
0.43
|
|
|
$
|
0.34
|
|
Cash dividends declared per common share
|
|
$
|
0.06
|
|
|
$
|
0.06
|
|
|
|
|
|
|
||||
Comprehensive income
|
|
|
|
|
||||
Unrealized gains during the period (net of tax expense of $5,000 and $5,500 for the three months ended March 31, 2015 and 2014, respectively)
|
|
$
|
9,200
|
|
|
$
|
10,200
|
|
Reclassification adjustment for realized gains in net income (net of taxes of $400 and $1,200 for the three months ended March 31, 2015 and 2014, respectively)
|
|
(800
|
)
|
|
(2,100
|
)
|
||
Other comprehensive income, net of tax
|
|
8,400
|
|
|
8,100
|
|
||
|
|
|
|
|
||||
Total comprehensive income
|
|
$
|
22,400
|
|
|
$
|
18,900
|
|
|
|
|
|
|
||||
Net realized gains on investments
|
|
|
|
|
||||
Net realized gains on investments before credit related impairments on fixed maturity securities
|
|
$
|
1,200
|
|
|
$
|
3,300
|
|
Other than temporary impairment, credit losses recognized in earnings
|
|
—
|
|
|
—
|
|
||
Net realized gains on investments
|
|
$
|
1,200
|
|
|
$
|
3,300
|
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||||||||||
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
Financial assets
|
|
|
|
|
|
|
|
|
||||||||
Investments
|
|
$
|
2,541.7
|
|
|
$
|
2,541.7
|
|
|
$
|
2,448.4
|
|
|
$
|
2,448.4
|
|
Cash and cash equivalents
|
|
45.6
|
|
|
45.6
|
|
|
103.6
|
|
|
103.6
|
|
||||
Restricted cash and cash equivalents
|
|
8.4
|
|
|
8.4
|
|
|
10.8
|
|
|
10.8
|
|
||||
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||
Notes payable
|
|
92.0
|
|
|
97.8
|
|
|
92.0
|
|
|
97.8
|
|
•
|
Level 1 - Inputs are unadjusted quoted market prices for identical assets or liabilities in active markets at the measurement date.
|
•
|
Level 2 - Inputs other than Level 1 prices that are observable for similar assets or liabilities through corroboration with market data at the measurement date.
|
•
|
Level 3 - Inputs that are unobservable that reflect management's best estimate of what willing market participants would use in pricing the assets or liabilities at the measurement date.
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasuries
|
|
$
|
—
|
|
|
$
|
160.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
166.7
|
|
|
$
|
—
|
|
U.S. Agencies
|
|
—
|
|
|
38.5
|
|
|
—
|
|
|
—
|
|
|
39.6
|
|
|
—
|
|
||||||
States and municipalities
|
|
—
|
|
|
813.4
|
|
|
—
|
|
|
—
|
|
|
745.8
|
|
|
—
|
|
||||||
Corporate securities
|
|
—
|
|
|
914.7
|
|
|
—
|
|
|
—
|
|
|
908.3
|
|
|
—
|
|
||||||
Residential mortgage-backed securities
|
|
—
|
|
|
294.3
|
|
|
—
|
|
|
—
|
|
|
288.4
|
|
|
—
|
|
||||||
Commercial mortgage-backed securities
|
|
—
|
|
|
71.2
|
|
|
—
|
|
|
—
|
|
|
65.4
|
|
|
—
|
|
||||||
Asset-backed securities
|
|
—
|
|
|
67.6
|
|
|
—
|
|
|
—
|
|
|
61.5
|
|
|
—
|
|
||||||
Total fixed maturity securities
|
|
—
|
|
|
2,360.1
|
|
|
—
|
|
|
—
|
|
|
2,275.7
|
|
|
—
|
|
||||||
Equity securities
|
|
172.6
|
|
|
—
|
|
|
—
|
|
|
172.7
|
|
|
—
|
|
|
—
|
|
||||||
Short-term investments
|
|
$
|
—
|
|
|
$
|
9.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Cost or Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
At March 31, 2015
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries
|
|
$
|
153.6
|
|
|
$
|
6.8
|
|
|
$
|
—
|
|
|
$
|
160.4
|
|
U.S. Agencies
|
|
36.2
|
|
|
2.3
|
|
|
—
|
|
|
38.5
|
|
||||
States and municipalities
|
|
768.1
|
|
|
45.5
|
|
|
(0.2
|
)
|
|
813.4
|
|
||||
Corporate securities
|
|
878.1
|
|
|
37.7
|
|
|
(1.1
|
)
|
|
914.7
|
|
||||
Residential mortgage-backed securities
|
|
282.5
|
|
|
12.0
|
|
|
(0.2
|
)
|
|
294.3
|
|
||||
Commercial mortgage-backed securities
|
|
70.3
|
|
|
1.0
|
|
|
(0.1
|
)
|
|
71.2
|
|
||||
Asset-backed securities
|
|
67.6
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
67.6
|
|
||||
Total fixed maturity securities
|
|
2,256.4
|
|
|
105.4
|
|
|
(1.7
|
)
|
|
2,360.1
|
|
||||
Equity securities
|
|
98.9
|
|
|
75.0
|
|
|
(1.3
|
)
|
|
172.6
|
|
||||
Short-term investments
|
|
9.0
|
|
|
—
|
|
|
—
|
|
|
9.0
|
|
||||
Total investments
|
|
$
|
2,364.3
|
|
|
$
|
180.4
|
|
|
$
|
(3.0
|
)
|
|
$
|
2,541.7
|
|
At December 31, 2014
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries
|
|
$
|
160.9
|
|
|
$
|
5.8
|
|
|
$
|
—
|
|
|
$
|
166.7
|
|
U.S. Agencies
|
|
37.2
|
|
|
2.4
|
|
|
—
|
|
|
39.6
|
|
||||
States and municipalities
|
|
701.6
|
|
|
44.4
|
|
|
(0.2
|
)
|
|
745.8
|
|
||||
Corporate securities
|
|
880.7
|
|
|
30.8
|
|
|
(3.2
|
)
|
|
908.3
|
|
||||
Residential mortgage-backed securities
|
|
278.6
|
|
|
10.6
|
|
|
(0.8
|
)
|
|
288.4
|
|
||||
Commercial mortgage-backed securities
|
|
65.5
|
|
|
0.5
|
|
|
(0.6
|
)
|
|
65.4
|
|
||||
Asset-backed securities
|
|
61.6
|
|
|
—
|
|
|
(0.1
|
)
|
|
61.5
|
|
||||
Total fixed maturity securities
|
|
2,186.1
|
|
|
94.5
|
|
|
(4.9
|
)
|
|
2,275.7
|
|
||||
Equity securities
|
|
97.8
|
|
|
75.5
|
|
|
(0.6
|
)
|
|
172.7
|
|
||||
Total investments
|
|
$
|
2,283.9
|
|
|
$
|
170.0
|
|
|
$
|
(5.5
|
)
|
|
$
|
2,448.4
|
|
|
|
Amortized Cost
|
|
Estimated Fair Value
|
||||
|
|
(in millions)
|
||||||
Due in one year or less
|
|
$
|
165.2
|
|
|
$
|
167.2
|
|
Due after one year through five years
|
|
798.6
|
|
|
836.0
|
|
||
Due after five years through ten years
|
|
619.5
|
|
|
653.3
|
|
||
Due after ten years
|
|
252.6
|
|
|
270.4
|
|
||
Mortgage and asset-backed securities
|
|
420.5
|
|
|
433.2
|
|
||
Total
|
|
$
|
2,256.4
|
|
|
$
|
2,360.1
|
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||
|
|
Estimated Fair Value
|
|
Gross Unrealized Losses
|
|
Number of Issues
|
|
Estimated Fair Value
|
|
Gross Unrealized Losses
|
|
Number of Issues
|
||||||||||
|
|
(in millions, except number of issues data)
|
||||||||||||||||||||
Less than 12 months:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
States and municipalities
|
|
$
|
36.9
|
|
|
$
|
(0.2
|
)
|
|
8
|
|
|
$
|
20.6
|
|
|
$
|
(0.2
|
)
|
|
5
|
|
Corporate securities
|
|
59.8
|
|
|
(0.5
|
)
|
|
27
|
|
|
109.9
|
|
|
(0.8
|
)
|
|
42
|
|
||||
Residential mortgage-backed securities
|
|
25.8
|
|
|
(0.1
|
)
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Commercial mortgage-backed securities
|
|
10.3
|
|
|
(0.1
|
)
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total fixed maturity securities
|
|
132.8
|
|
|
(0.9
|
)
|
|
49
|
|
|
130.5
|
|
|
(1.0
|
)
|
|
47
|
|
||||
Equity securities
|
|
20.2
|
|
|
(1.2
|
)
|
|
30
|
|
|
10.1
|
|
|
(0.6
|
)
|
|
15
|
|
||||
Total less than 12 months
|
|
$
|
153.0
|
|
|
$
|
(2.1
|
)
|
|
79
|
|
|
$
|
140.6
|
|
|
$
|
(1.6
|
)
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
12 months or greater:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate securities
|
|
$
|
46.0
|
|
|
$
|
(0.6
|
)
|
|
15
|
|
|
$
|
129.4
|
|
|
$
|
(2.4
|
)
|
|
39
|
|
Residential mortgage-backed securities
|
|
9.8
|
|
|
(0.1
|
)
|
|
27
|
|
|
44.1
|
|
|
(0.8
|
)
|
|
36
|
|
||||
Commercial mortgage-backed securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31.3
|
|
|
(0.6
|
)
|
|
8
|
|
||||
Asset-backed securities
|
|
19.9
|
|
|
(0.1
|
)
|
|
6
|
|
|
18.3
|
|
|
(0.1
|
)
|
|
6
|
|
||||
Total fixed maturity securities
|
|
75.7
|
|
|
(0.8
|
)
|
|
48
|
|
|
223.1
|
|
|
(3.9
|
)
|
|
89
|
|
||||
Equity securities
|
|
0.6
|
|
|
(0.1
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total 12 months or greater
|
|
$
|
76.3
|
|
|
$
|
(0.9
|
)
|
|
50
|
|
|
$
|
223.1
|
|
|
$
|
(3.9
|
)
|
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
States and municipalities
|
|
$
|
36.9
|
|
|
$
|
(0.2
|
)
|
|
8
|
|
|
$
|
20.6
|
|
|
$
|
(0.2
|
)
|
|
5
|
|
Corporate securities
|
|
105.8
|
|
|
(1.1
|
)
|
|
42
|
|
|
239.3
|
|
|
(3.2
|
)
|
|
81
|
|
||||
Residential mortgage-backed securities
|
|
35.6
|
|
|
(0.2
|
)
|
|
37
|
|
|
44.1
|
|
|
(0.8
|
)
|
|
36
|
|
||||
Commercial mortgage-backed securities
|
|
10.3
|
|
|
(0.1
|
)
|
|
4
|
|
|
31.3
|
|
|
(0.6
|
)
|
|
8
|
|
||||
Asset-backed securities
|
|
19.9
|
|
|
(0.1
|
)
|
|
6
|
|
|
18.3
|
|
|
(0.1
|
)
|
|
6
|
|
||||
Total fixed maturity securities
|
|
208.5
|
|
|
(1.7
|
)
|
|
97
|
|
|
353.6
|
|
|
(4.9
|
)
|
|
136
|
|
||||
Equity securities
|
|
20.8
|
|
|
(1.3
|
)
|
|
32
|
|
|
10.1
|
|
|
(0.6
|
)
|
|
15
|
|
||||
Total available-for-sale
|
|
$
|
229.3
|
|
|
$
|
(3.0
|
)
|
|
129
|
|
|
$
|
363.7
|
|
|
$
|
(5.5
|
)
|
|
151
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
(in millions)
|
|||||||
Net realized gains on investments
|
|
|
|
|
||||
Fixed maturity securities
|
|
|
|
|
||||
Gross gains
|
|
$
|
—
|
|
|
$
|
0.8
|
|
Gross losses
|
|
—
|
|
|
—
|
|
||
Net realized gains on fixed maturity securities
|
|
$
|
—
|
|
|
$
|
0.8
|
|
Equity securities
|
|
|
|
|
||||
Gross gains
|
|
$
|
1.5
|
|
|
$
|
2.5
|
|
Gross losses
|
|
(0.3
|
)
|
|
—
|
|
||
Net realized gains on equity securities
|
|
$
|
1.2
|
|
|
$
|
2.5
|
|
Total
|
|
$
|
1.2
|
|
|
$
|
3.3
|
|
|
|
|
|
|
||||
Change in unrealized gains (losses)
|
|
|
|
|
||||
Fixed maturity securities
|
|
$
|
14.1
|
|
|
$
|
13.3
|
|
Equity securities
|
|
(1.2
|
)
|
|
(0.8
|
)
|
||
Total
|
|
$
|
12.9
|
|
|
$
|
12.5
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
(in millions)
|
|||||||
Fixed maturity securities
|
|
$
|
16.4
|
|
|
$
|
17.6
|
|
Equity securities
|
|
1.1
|
|
|
1.0
|
|
||
Cash equivalents and restricted cash
|
|
—
|
|
|
—
|
|
||
|
|
17.5
|
|
|
18.6
|
|
||
Investment expenses
|
|
(0.6
|
)
|
|
(0.6
|
)
|
||
Net investment income
|
|
$
|
16.9
|
|
|
$
|
18.0
|
|
|
|
Three Months Ended
|
||||
|
|
March 31,
|
||||
|
|
2015
|
|
2014
|
||
Expense computed at statutory rate
|
|
35.0
|
%
|
|
35.0
|
%
|
Dividends received deduction and tax-exempt interest
|
|
(8.8
|
)
|
|
(16.0
|
)
|
LPT deferred gain amortization
|
|
(4.2
|
)
|
|
(8.5
|
)
|
LPT reserve adjustment
|
|
—
|
|
|
(0.4
|
)
|
Other
|
|
0.5
|
|
|
0.8
|
|
Effective tax rate
|
|
22.5
|
%
|
|
10.9
|
%
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
(in millions)
|
||||||
Unpaid losses and LAE, gross of reinsurance, at beginning of period
|
|
$
|
2,369.7
|
|
|
$
|
2,330.5
|
|
Less reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE
|
|
669.5
|
|
|
743.1
|
|
||
Net unpaid losses and LAE at beginning of period
|
|
1,700.2
|
|
|
1,587.4
|
|
||
Losses and LAE, net of reinsurance, related to:
|
|
|
|
|
|
|
||
Current period
|
|
107.7
|
|
|
124.8
|
|
||
Prior periods
|
|
1.7
|
|
|
1.8
|
|
||
Total net losses and LAE incurred during the period
|
|
109.4
|
|
|
126.6
|
|
||
Paid losses and LAE, net of reinsurance, related to:
|
|
|
|
|
|
|
||
Current period
|
|
4.2
|
|
|
4.5
|
|
||
Prior periods
|
|
98.1
|
|
|
87.1
|
|
||
Total net paid losses and LAE during the period
|
|
102.3
|
|
|
91.6
|
|
||
Ending unpaid losses and LAE, net of reinsurance
|
|
1,707.3
|
|
|
1,622.4
|
|
||
Reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE
|
|
663.0
|
|
|
735.8
|
|
||
Unpaid losses and LAE, gross of reinsurance, at end of period
|
|
$
|
2,370.3
|
|
|
$
|
2,358.2
|
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
|
(in millions)
|
||||||
Net unrealized gain on investments, before taxes
|
|
$
|
177.4
|
|
|
$
|
164.5
|
|
Deferred tax expense on net unrealized gains
|
|
(62.1
|
)
|
|
(57.6
|
)
|
||
Total accumulated other comprehensive income, net
|
|
$
|
115.3
|
|
|
$
|
106.9
|
|
|
Number Awarded
|
|
Weighted Average Fair Value on Date of Grant
|
|
Weighted Average Exercise Price
|
|
Aggregate Fair Value on Date of Grant
|
|||||||
|
|
|
|
|
|
|
(in millions)
|
|||||||
March 2015
|
|
|
|
|
|
|
|
|||||||
Stock options
(1)
|
80,800
|
|
|
$
|
7.63
|
|
|
$
|
24.20
|
|
|
$
|
0.6
|
|
RSUs
(1)
|
89,602
|
|
|
24.20
|
|
|
—
|
|
|
2.2
|
|
|||
PSUs
(2)
|
110,000
|
|
|
24.20
|
|
|
—
|
|
|
2.7
|
|
(1)
|
The stock options and RSUs awarded in
March 2015
were awarded to certain officers of the Company and
vest 25% on March 15, 2016, and each of the subsequent three anniversaries of that date
. The stock options and RSUs are subject to accelerated vesting in certain circumstances, including but not limited to: death, disability, retirement, or in connection with change of control of the Company. The stock options expire
seven years
from the date of grant.
|
(2)
|
The PSUs awarded in
March 2015
were awarded to certain officers of the Company and have a performance period of
two years
followed by an additional one year vesting period. The PSU awards are subject to certain performance goals with payouts that range from
0%
to
200%
of the target awards. The value shown in the table represents the aggregate number of PSUs awarded at the target level.
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
(in millions, except share data)
|
||||||
Net income available to stockholders—basic and diluted
|
|
$
|
14.0
|
|
|
$
|
10.8
|
|
Weighted average number of shares outstanding—basic
|
|
31,740,923
|
|
|
31,409,322
|
|
||
Effect of dilutive securities:
|
|
|
|
|
||||
PSUs
|
|
322,850
|
|
|
214,121
|
|
||
Stock options
|
|
310,899
|
|
|
277,376
|
|
||
RSUs
|
|
79,392
|
|
|
89,151
|
|
||
Dilutive potential shares
|
|
713,141
|
|
|
580,648
|
|
||
Weighted average number of shares outstanding—diluted
|
|
32,454,064
|
|
|
31,989,970
|
|
|
|
Three Months Ended
|
||||
|
|
March 31,
|
||||
|
|
2015
|
|
2014
|
||
Options and RSUs excluded under the treasury method as the potential proceeds on settlement or exercise price were greater than the value of shares acquired
|
|
267,444
|
|
|
296,844
|
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
|
(in millions, except share data)
|
||||||
GAAP stockholders' equity
|
|
$
|
709.5
|
|
|
$
|
686.8
|
|
Deferred reinsurance gain–LPT Agreement
|
|
204.1
|
|
|
207.0
|
|
||
Stockholders' equity including the Deferred Gain
(1)
|
|
$
|
913.6
|
|
|
$
|
893.8
|
|
Common shares outstanding
|
|
31,875,156
|
|
|
31,493,828
|
|
(1)
|
Stockholders' equity including the Deferred Gain is a non-GAAP measure that is defined as total stockholders' equity plus the Deferred Gain, which we believe is an important supplemental measure of our capital position.
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
(in millions)
|
||||||
Gross premiums written
|
|
$
|
174.0
|
|
|
$
|
186.0
|
|
Net premiums written
|
|
171.9
|
|
|
183.3
|
|
||
|
|
|
|
|
||||
Net premiums earned
|
|
$
|
159.0
|
|
|
$
|
167.2
|
|
Net investment income
|
|
16.9
|
|
|
18.0
|
|
||
Net realized gains on investments
|
|
1.2
|
|
|
3.3
|
|
||
Other income
|
|
0.1
|
|
|
—
|
|
||
Total revenues
|
|
177.2
|
|
|
188.5
|
|
||
|
|
|
|
|
||||
Losses and LAE
|
|
106.2
|
|
|
122.3
|
|
||
Commission expense
|
|
18.7
|
|
|
20.0
|
|
||
Underwriting and other operating expenses
|
|
33.5
|
|
|
33.3
|
|
||
Interest expense
|
|
0.7
|
|
|
0.8
|
|
||
Income tax expense
|
|
4.1
|
|
|
1.3
|
|
||
Total expenses
|
|
163.2
|
|
|
177.7
|
|
||
Net income
|
|
$
|
14.0
|
|
|
$
|
10.8
|
|
Less amortization of the Deferred Gain related to losses
|
|
$
|
2.4
|
|
|
$
|
2.9
|
|
Less amortization of the Deferred Gain related to contingent commission
|
|
0.5
|
|
|
0.4
|
|
||
Less impact of LPT Reserve Adjustments
(1)
|
|
—
|
|
|
0.7
|
|
||
Less impact of LPT Contingent Commission Adjustments
(2)
|
|
0.2
|
|
|
0.3
|
|
||
Net income before impact of the LPT Agreement
(3)
|
|
$
|
10.9
|
|
|
$
|
6.5
|
|
(1)
|
Any adjustment to the estimated reserves ceded under the LPT Agreement results in a cumulative adjustment to the Deferred Gain, which is also included in losses and LAE incurred in the consolidated statements of comprehensive income, such that the Deferred Gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the LPT Agreement (LPT Reserve Adjustment).
|
(2)
|
Any adjustment to the contingent profit commission under the LPT Agreement results in a cumulative adjustment to the Deferred Gain, which is also recognized in losses and LAE incurred in the consolidated statements of comprehensive income, such that the Deferred Gain
|
(3)
|
We define net income before impact of the LPT Agreement as net income before the impact of: (a) amortization of Deferred Gain; (b) adjustments to LPT Agreement ceded reserves; and (c) adjustments to contingent commission receivable–LPT Agreement. Deferred Gain reflects the unamortized gain from our LPT Agreement. Under GAAP, this gain is deferred and is being amortized using the recovery method. Amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries over the life of the LPT Agreement, except for the contingent profit commission, which is amortized through June 30, 2024. The amortization is reflected in losses and LAE. We periodically reevaluate the remaining direct reserves subject to the LPT Agreement and the expected losses and LAE subject to the contingent profit commission under the LPT Agreement. Our reevaluation results in corresponding adjustments, if needed, to reserves, ceded reserves, contingent commission receivable, and the Deferred Gain, with the net effect being an increase or decrease, as the case may be, to net income. Net income before impact of the LPT Agreement is not a measurement of financial performance under GAAP, but rather reflects a difference in accounting treatment between statutory and GAAP, and should not be considered in isolation or as an alternative to net income before income taxes or net income, or any other measure of performance derived in accordance with GAAP.
|
|
As of March 31, 2015
|
||||||||||
|
Year-to-Date Increase (Decrease)
|
|
Year-Over-Year Increase (Decrease)
|
||||||||
|
Overall
|
|
California
|
|
Overall
|
|
California
|
||||
In-force premiums
|
(0.3
|
)%
|
|
(1.4
|
)%
|
|
(0.7
|
)%
|
|
(3.2
|
)%
|
In-force policy count
|
(0.8
|
)
|
|
(2.5
|
)
|
|
(0.8
|
)
|
|
(5.8
|
)
|
Average in-force policy size
|
0.5
|
|
|
1.1
|
|
|
0.1
|
|
|
2.7
|
|
In-force payroll exposure
|
(0.3
|
)
|
|
(3.8
|
)
|
|
(3.6
|
)
|
|
(13.9
|
)
|
Net rate
(1)
|
—
|
|
|
2.5
|
|
|
3.1
|
|
|
12.4
|
|
(1)
|
Net rate, defined as total in-force premiums divided by total insured payroll exposure, is a function of a variety of factors, including rate changes, underwriting risk profiles and pricing, and changes in business mix related to economic and competitive pressures.
|
|
|
March 31, 2015
|
|
December 31, 2014
|
|
March 31, 2014
|
|
December 31, 2013
|
||||||||||||||||||||
State
|
|
In-force
Premiums
|
|
Policies
In-force |
|
In-force
Premiums
|
|
Policies
In-force |
|
In-force
Premiums
|
|
Policies
In-force |
|
In-force
Premiums
|
|
Policies
In-force |
||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||
California
|
|
$
|
365.7
|
|
|
45,915
|
|
|
$
|
370.8
|
|
|
47,093
|
|
|
$
|
377.8
|
|
|
48,732
|
|
|
$
|
367.8
|
|
|
48,032
|
|
Other
|
|
260.2
|
|
|
38,689
|
|
|
257.1
|
|
|
38,209
|
|
|
252.4
|
|
|
36,569
|
|
|
249.6
|
|
|
36,024
|
|
||||
Total
|
|
$
|
625.9
|
|
|
84,604
|
|
|
$
|
627.9
|
|
|
85,302
|
|
|
$
|
630.2
|
|
|
85,301
|
|
|
$
|
617.4
|
|
|
84,056
|
|
|
|
Three Months Ended
|
||||
|
|
March 31,
|
||||
|
|
2015
|
|
2014
|
||
Loss and LAE ratio
|
|
66.8
|
%
|
|
73.1
|
%
|
Underwriting and other operating expenses ratio
|
|
21.1
|
|
|
20.0
|
|
Commission expense ratio
|
|
11.7
|
|
|
12.0
|
|
Combined ratio
|
|
99.6
|
%
|
|
105.1
|
%
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
(in millions)
|
||||||
Prior accident year (unfavorable) loss development, net
|
|
$
|
(1.7
|
)
|
|
$
|
(1.8
|
)
|
Amortization of the Deferred Gain related to losses
|
|
2.4
|
|
|
2.9
|
|
||
Amortization of the Deferred Gain related to contingent commission
|
|
0.5
|
|
|
0.4
|
|
||
Impact of LPT Reserve Adjustments
|
|
—
|
|
|
0.7
|
|
||
Impact of LPT Contingent Commission Adjustments
|
|
0.2
|
|
|
0.3
|
|
||
Total Impact of the LPT
|
|
$
|
3.1
|
|
|
$
|
4.3
|
|
|
|
March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
(in millions)
|
||||||
Cash and cash equivalents provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
24.8
|
|
|
$
|
38.6
|
|
Investing activities
|
|
(81.2
|
)
|
|
(20.8
|
)
|
||
Financing activities
|
|
(1.6
|
)
|
|
(1.2
|
)
|
||
(Decrease) Increase in cash and cash equivalents
|
|
$
|
(58.0
|
)
|
|
$
|
16.6
|
|
|
|
Payment Due By Period
|
||||||||||||||||||
|
|
Total
|
|
Less Than
1-Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More Than
5 Years
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Operating leases
|
|
$
|
11.5
|
|
|
$
|
4.6
|
|
|
$
|
5.8
|
|
|
$
|
0.9
|
|
|
$
|
0.2
|
|
Purchased liabilities
|
|
3.4
|
|
|
1.7
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|||||
Notes payable
(1)
|
|
120.5
|
|
|
62.6
|
|
|
2.8
|
|
|
2.8
|
|
|
52.3
|
|
|||||
Capital leases
|
|
1.3
|
|
|
0.5
|
|
|
0.7
|
|
|
0.1
|
|
|
—
|
|
|||||
Losses and LAE reserves
(2)(3)
|
|
2,370.3
|
|
|
376.4
|
|
|
461.2
|
|
|
267.8
|
|
|
1,264.9
|
|
|||||
Total contractual obligations
|
|
$
|
2,507.0
|
|
|
$
|
445.8
|
|
|
$
|
472.2
|
|
|
$
|
271.6
|
|
|
$
|
1,317.4
|
|
(1)
|
Notes payable obligations reflect payments for the principal and estimated interest expense based on LIBOR rates plus a margin. The estimated interest expense was based on the contractual obligations of the debt outstanding as of
March 31, 2015
. The interest rates range from
1.9%
to
4.5%
.
|
(2)
|
Estimated losses and LAE reserve payment patterns have been computed based on historical information. Our calculation of loss and LAE reserve payments by period is subject to the same uncertainties associated with determining the level of reserves and to the additional uncertainties arising from the difficulty of predicting when claims (including claims that have not yet been reported to us) will be paid. Actual payments of losses and LAE by period will vary, perhaps materially, from the above table to the extent that current estimates of losses and LAE reserves vary from actual ultimate paid claims due to variations between expected and actual payout patterns.
|
(3)
|
The losses and LAE reserves are presented gross of reinsurance recoverables for unpaid losses, which are as follows for each of the periods presented above:
|
|
|
Recoveries By Period
|
||||||||||||||||||
|
|
Total
|
|
Less Than
1-Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More Than
5 Years
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Reinsurance recoverables for unpaid losses
|
|
$
|
(663.0
|
)
|
|
$
|
(33.7
|
)
|
|
$
|
(63.9
|
)
|
|
$
|
(59.3
|
)
|
|
$
|
(506.1
|
)
|
Category
|
|
Estimated Fair
Value
|
|
Percentage
of Total
|
|
Book Yield
|
|
Tax Equivalent Yield
|
|||||
|
|
(in millions, except percentages)
|
|||||||||||
U.S. Treasuries
|
|
$
|
160.4
|
|
|
6.3
|
%
|
|
2.0
|
%
|
|
2.0
|
%
|
U.S. Agencies
|
|
38.5
|
|
|
1.5
|
|
|
3.7
|
|
|
3.7
|
|
|
States and municipalities
|
|
813.4
|
|
|
32.0
|
|
|
3.4
|
|
|
5.0
|
|
|
Corporate securities
|
|
914.7
|
|
|
36.0
|
|
|
3.1
|
|
|
3.1
|
|
|
Residential mortgage-backed securities
|
|
294.3
|
|
|
11.6
|
|
|
3.3
|
|
|
3.3
|
|
|
Commercial mortgage-backed securities
|
|
71.2
|
|
|
2.8
|
|
|
2.4
|
|
|
2.4
|
|
|
Asset-backed securities
|
|
67.6
|
|
|
2.7
|
|
|
0.8
|
|
|
0.8
|
|
|
Equity securities
|
|
172.6
|
|
|
6.8
|
|
|
4.4
|
|
|
5.8
|
|
|
Short-term investments
|
|
$
|
9.0
|
|
|
0.3
|
%
|
|
0.5
|
|
|
0.5
|
|
Total
|
|
$
|
2,541.7
|
|
|
100.0
|
%
|
|
|
|
|
|
|
Weighted average yield
|
|
|
|
|
|
|
|
3.1
|
%
|
|
3.8
|
%
|
|
|
|
|
|
|
Incorporated by Reference Herein
|
||||
Exhibit
No.
|
|
Description of Exhibit
|
|
Included
Herewith
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
10.1
|
|
Form of Performance Share Agreement
|
|
X
|
|
|
|
|
|
|
10.2
|
|
Form of Restricted Stock Unit Agreement
|
|
X
|
|
|
|
|
|
|
10.3
|
|
Form of Stock Option Agreement
|
|
X
|
|
|
|
|
|
|
31.1
|
|
Certification of Douglas D. Dirks Pursuant to Section 302
|
|
X
|
|
|
|
|
|
|
31.2
|
|
Certification of Terry Eleftheriou Pursuant to Section 302
|
|
X
|
|
|
|
|
|
|
32.1
|
|
Certification of Douglas D. Dirks Pursuant to Section 906
|
|
X
|
|
|
|
|
|
|
32.2
|
|
Certification of Terry Eleftheriou Pursuant to Section 906
|
|
X
|
|
|
|
|
|
|
*101.INS
|
|
XBRL Instance Document
|
|
X
|
|
|
|
|
|
|
*101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
X
|
|
|
|
|
|
|
*101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
X
|
|
|
|
|
|
|
*101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
X
|
|
|
|
|
|
|
*101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
X
|
|
|
|
|
|
|
*101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
X
|
|
|
|
|
|
|
Date:
|
April 30, 2015
|
/s/ Douglas D. Dirks
|
|
|
Douglas D. Dirks
|
|
|
President and Chief Executive Officer
|
|
|
Employers Holdings, Inc.
|
Date:
|
April 30, 2015
|
/s/ Terry Eleftheriou
|
|
|
Terry Eleftheriou
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
Employers Holdings, Inc.
|
|
|
(Principal Financial and Accounting Officer)
|
1.
|
Performance and Vesting Periods: January 1, 201__ (the “Performance Period Start Date”) to December 31, 201__ (the “Performance Period End Date,” and the period from the Performance Period Start Date to the Performance Period End Date, the “Performance Period”); January 1, 201__
-
(the “Vesting Start Date”) until December 31, 201__ (the “Vesting End Date”) is referred to as the “Vesting Period.”
|
2.
|
Award Term: The Performance Period and the Vesting Period together comprise the “Award Term.”
|
3.
|
Number of Performance Shares: The number of Performance Shares that the Grantee may earn hereunder will be determined in accordance with the provisions of Exhibit A, which is attached to and forms a part of this Agreement.
|
4.
|
Performance Goals: The Performance Shares will become payable only upon the achievement of certain Performance Goals (as defined in Exhibit A) and the satisfaction of such other terms and conditions as are set forth herein and in the Plan.
|
5.
|
Performance Certification Date: The date following the Performance Period End Date that the Compensation Committee of the Board of Directors of the Company (the “Committee”) certifies that the Performance Goals have been achieved, but no later than 75 days following the Performance Period End Date.
|
6.
|
Vesting and Payment of Performance Shares: To the extent Performance Shares are payable pursuant to this Agreement, then, except as otherwise provided in Sections 7 and 8 of this Agreement, payment of one share of common stock, par value $.01, of the Company (“Stock”) for each Performance Share that becomes payable under this Agreement will be made only (a) following certification by the Committee that the Performance Goals have been achieved (as described in Section 5 of this Agreement), and (b) so long as the Grantee has remained continuously employed during the entire Award Term, but payment shall be made no later than two and one-half months after the Vesting End Date (the “Payment Date”).
|
7.
|
Termination:
|
(a)
|
General
. In the event the Grantee's employment terminates prior to the Vesting End Date, payment of the Performance Shares shall be made to the extent provided in subsections (b) through (e) of this Section 7.
|
(b)
|
Death or Disability
. If the Grantee's employment terminates prior to the Vesting End Date by reason of the Grantee’s total and permanent disability (as defined in any agreement between the Grantee and the Company or, if no such agreement is in effect, as determined by the Committee in its good faith discretion, in accordance with the definition used by the Company’s then current Long Term Disability insurance carrier) or death, then a portion (or all) of the Performance Shares shall be deemed earned as of the date of such termination of employment equal to the product of (i) the total number of Performance Shares granted pursuant to this Agreement and (ii) a fraction, the numerator of which is the number of full months elapsed from the Performance Period Start Date until the earlier of (A) the date of the Grantee’s termination of employment and (B) the Performance Period End Date, and the denominator of which is 24, and shall become payable within 30 days following the later of the Performance Certification Date and the date the Grantee’s employment terminates, based on, and to the extent of, the actual achievement of the Performance Goals, as determined by the Committee.
|
(c)
|
Retirement
. If the Grantee's employment terminates prior to the Vesting End Date by reason of the Grantee’s Retirement (as defined below), then a portion (or all) of the Performance Shares shall be deemed earned as of the date of such termination of employment equal to the product of (i) the total number of Performance Shares granted pursuant to this Agreement and (ii) a fraction, the numerator of which is the number of full months elapsed from the Performance Period Start Date until the earlier of (A) the date of the Grantee’s termination of employment and (B) the Performance Period End Date, and the denominator of which is 24, and shall become payable within 30 days following the later of the Performance Certification Date and the
|
(d)
|
Involuntary Termination
. If the Grantee’s employment is terminated prior to the Vesting End Date other than for any of the reasons described in subsections (b), (c) or (e) of this Section 7, then a portion (or all) of the Performance Shares shall be deemed earned as of the date of such termination of employment equal to the product of (ii) the total number of Performance Shares granted pursuant to this Agreement and (B) a fraction, the numerator of which is the number of full months elapsed from the Performance Period Start Date until the earlier of (A) the date of the Grantee’s termination of employment and (B) the Vesting End Date, and the denominator of which is 36, and shall become payable within 30 days following the later of the Performance Certification Date and the date the Grantee’s employment terminates, based on, and to the extent of, the actual achievement of the Performance Goals, as determined by the Committee.
|
(e)
|
For Cause; Voluntary Termination
. If the Grantee’s employment terminates prior to the Vesting End Date for Cause or the Grantee voluntarily terminates his/her employment for any reason other than for any of the reasons described in subsections (b) or (c), above, the Performance Shares, and any rights thereto, shall terminate immediately and the Grantee shall have no right thereafter to payment of any portion of the Performance Shares.
|
8.
|
Change in Control Provisions: The following provisions shall apply in the event of a Change in Control that constitutes a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A of the Code (a “Section 409A Change in Control”):
|
(a)
|
Acceleration of Performance Shares
. Upon the occurrence of a Section 409A Change in Control, (i) if the Section 409A Change in Control occurs before the Performance Period End Date, the number of Performance Shares that would have been earned at target level of achievement shall be deemed earned as of the date of such Section 409A Change in Control, and shall become payable upon (or within 15 days following) the date of the Section 409A Change in Control and any other performance conditions or vesting requirements imposed with respect to such shares shall be deemed to have been fully achieved and satisfied, and (ii) if the Section 409A Change in Control occurs on or after the Performance Period End Date, the number of Performance Shares earned as of that date, and shall become payable upon (or within 15 days following) the date of the Section 409A Change in Control and any vesting conditions imposed with respect to such shares shall be deemed to have been fully satisfied.
|
(b)
|
Discretionary Cashout
. Notwithstanding any other provision of the Plan or this Agreement, in the event of a Section 409A Change in Control, the Committee may, in its discretion, provide that upon the occurrence of the Section 409A Change in Control, in lieu of the treatment described in Section 8(a) above, the Performance Shares shall be cancelled in exchange for a payment made upon (or within 15 days following) the date of the Section 409A Change in Control in an amount equal to (i) the value (as determined by the Committee) of the consideration paid per share of Stock in the Section 409A Change in Control multiplied by (ii) the number of Performance Shares that would have been payable pursuant to the preceding paragraph, and any other performance conditions or vesting requirements imposed with respect to such shares shall be deemed to have been fully achieved and satisfied.
|
9.
|
Tax Withholding: The Company shall have the power and the right to deduct or withhold, or require the Grantee or beneficiary to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Agreement. Without limiting the foregoing, the Company shall be entitled to require, as a condition of delivery of the shares of Stock (or, if applicable, cash or other consideration) in settlement of the Performance Shares, that the Grantee agree to remit an amount in cash sufficient to satisfy all then current and/or estimated future federal, state and local withholding, and other taxes relating thereto.
|
10.
|
Legend on Certificates: The certificates representing the shares of Stock issued in respect of the Performance Shares that are delivered to the Grantee pursuant to this Agreement shall be subject to such stop transfer orders and other restrictions as the Committee may determine are required by the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such shares of Stock are listed, any applicable federal or state laws or the Company's Certificate of Incorporation and Bylaws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
|
11.
|
Transferability: The Performance Shares may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee otherwise than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
|
12.
|
Repayment Upon Restatement; Clawbacks Generally: In the event that the Company is required to restate any of its financial statements applicable to the Performance Period, the Company may require the Grantee to repay to the Company the aggregate Fair Market Value of any Performance Shares that became payable upon the achievement of the Performance Goals, to the extent such Performance Goals would not have been achieved had such restatement not been required. In addition, the Performance Shares shall be subject to such other repayment, clawback or similar provisions as may be required by the terms of the Plan or applicable law or applicable policy in effect from time to time.
|
13.
|
Securities Laws: Upon the acquisition of any shares of Stock pursuant to the settlement of the Performance Shares, the Grantee will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with this Agreement.
|
14.
|
No Right to Continued Employment: Neither the Plan nor this Agreement shall be construed as giving the Grantee the right to continue in the employ or service of the Company or any Subsidiary thereof or to be entitled to any remuneration or benefits not set forth in the Plan, this Agreement or other agreement or to interfere with or limit in any way the right of the Company or any such Subsidiary to terminate such Grantee's employment. Nor does this Agreement constitute an employment contract.
|
15.
|
Notices: Any notice under this Agreement shall be addressed to the Company in care of the Chief Legal Officer, addressed to the principal executive office of the Company and to the Grantee at the address last appearing in the records of the Company for the Grantee or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.
|
16.
|
Acknowledgement: By entering into this Agreement the Grantee agrees and acknowledges that the Grantee has received and read a copy of the Plan.
|
17.
|
No Stockholders Rights: The Grantee shall have no rights of a stockholder of the Company with respect to the Performance Shares, including, but not limited to, the rights to vote and receive ordinary dividends until the date of issuance of a stock certificate for such shares of Stock.
|
18.
|
Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to the conflicts of laws provisions thereof.
|
19.
|
Amendment: This Agreement may not be amended, terminated, suspended or otherwise modified except in a written instrument duly executed by both parties.
|
20.
|
Entire Agreement: This Agreement (and the other writings incorporated by reference herein) constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto.
|
21.
|
Signature in Counterparts: This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
|
EMPLOYERS HOLDINGS, INC.
|
GRANTEE
|
||
|
|
||
By:
|
|
By:
|
|
Douglas D. Dirks
|
[Insert Name of Grantee]
|
||
President and Chief Executive Officer
|
|
1.
|
Exercise Price: $[___] per Option Share
|
2.
|
Number of Option Shares: [_____]
|
3.
|
Type of Option: Nonqualified stock option
|
4.
|
Vesting: The Options granted hereunder will become vested as to 25% of the Option Shares on March 15, 201
, and as to an additional 25% of the Option Shares on each of the first three anniversaries of the first vesting date, provided that the Optionee has been continuously employed by the Company or any Subsidiary thereof through the relevant vesting dates and subject to accelerated vesting as set forth in Section 7 of the Plan and Sections 6 and 7 below. All Option Shares that have not vested as of the date that the Optionee terminates employment for any reason (after taking into effect any accelerated vesting by reason of such termination as set forth in the Plan or in this Agreement), shall terminate as of the date of such termination, and the Optionee shall have no right thereafter to exercise all or any part of such unvested Option Shares.
|
5.
|
Exercise of Option:
|
(a)
|
The Option may be exercised with respect to vested Option Shares, from time to time, in whole or in part (but with respect to whole shares only), by delivery of a written notice (the “Exercise Notice”) from the Optionee to the Company, which Exercise Notice shall:
|
(i)
|
state that the Optionee elects to exercise the Option;
|
(ii)
|
state the number of Option Shares with respect to which the Optionee is exercising the Option;
|
(iii)
|
in the event that the Option shall be exercised by the representative of the Optionee’s estate, include appropriate proof of the right of such person to exercise the Option;
|
(iv)
|
state the date upon which the Optionee desires to consummate the purchase of such Option Shares (which date must be prior to the termination of the Option); and
|
(v)
|
comply with such further provisions as the Company may reasonably require.
|
(b)
|
Payment of the Exercise Price for the Option Shares to be purchased on the exercise of the Option shall be made, in full, by: (i) certified or bank cashier’s check payable to the order of the Company, (ii) unless otherwise determined by the Committee at the time of exercise, in the form of shares of Stock already owned by the Optionee that have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Option Shares as to which such Option shall be exercised, (iii) unless otherwise determined by the Committee at the time of exercise, authorization for the Company to withhold a number of shares otherwise payable pursuant to the exercise of the Option having a Fair Market Value less than or equal to the aggregate Exercise Price, (iv) any other form of consideration approved by the Committee and permitted by applicable law or (v) any combination of the foregoing.
|
(c)
|
As a condition of delivery of the Option Shares, the Company shall have the right to require the Optionee to remit to the Company in cash an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. The Optionee may satisfy the foregoing requirement by electing to have the Company withhold from delivery shares of Stock or by delivering already owned unrestricted shares of Stock, in each case, having a value equal to the minimum amount of tax required to be withheld.
|
6.
|
Expiration Date:
|
(a)
|
General
. Subject to earlier termination upon the occurrence of certain events related to the termination of the Optionee’s employment as described in Sections 6(b) - (e) below, the Options granted hereunder shall expire on the seventh annual anniversary of the Date of Grant, unless earlier exercised or terminated (such seven year period, the “Option Term”).
|
(b)
|
Cause
. If the Optionee’s employment is terminated for Cause, the unexercised portion of the Option Shares, whether vested or unvested, shall terminate immediately and the Optionee shall have no right thereafter to exercise any part of the Option Shares.
|
(c)
|
Death or Disability
. If the Optionee's employment terminates by reason of the Optionee’s total and permanent disability (as defined in any agreement between the Optionee and the Company or, if no such agreement is in effect, as determined by the Committee (or its delegate) in its good faith discretion, in accordance with the definition used by the Company’s then current Long Term Disability insurance carrier) or death, the Option Shares shall vest in full as of the date of such termination of employment and the Option shall remain exercisable for a period of one year thereafter, but in no event following the expiration of the Option Term, provided, however, that if the Optionee's employment terminates by reason of the Optionee’s total and permanent disability and the Optionee dies during such post-termination exercise period, the vested Option Shares shall remain exercisable for not less than one year following the Optionee’s death, but in no event following the expiration of the Option Term.
|
(d)
|
Termination by Reason of Retirement
. If the Optionee’s employment terminates by reason of Retirement (as defined below), then 50% of the Optionee’s then unvested Option Shares subject to the Option shall vest and become exercisable as of the date of such termination and all of the Optionee’s remaining unvested Option Shares shall cease to vest and shall be forfeited as of the date of such termination. In addition, all vested Option Shares shall remain exercisable for three years following the date of such termination, but in no event following the expiration of the Option Term, and if the Optionee dies during such post-termination exercise period, then the vested Options Shares shall remain exercisable for not less than one year following the Optionee’s death, but in no event following the expiration of the Option Term. For purposes of this Agreement, “Retirement” shall mean the Optionee’s termination of employment after attaining age 60 and completing 10 years of continuous service with the Company (or any Subsidiary thereof), and provided that the Optionee has given written notice of the Optionee’s intent to retire to the Company (or its designate), no fewer than six months prior to the date that the Optionee terminates employment, in a form satisfactory to the Company (or its designate).
|
(e)
|
Termination for any other Reason
. If the Optionee’s employment terminates other than for any of the reasons described in subsections 6(b)-(d) above, then the Option Shares shall cease to vest, all of the Optionee’s then unvested Option Shares shall be forfeited as of the date of such termination, and the Option Shares that are vested at the time of such termination of employment, shall remain exercisable for a period of one year thereafter, but in no event following the expiration of the Option Term, provided, however, that if the Optionee dies during such post-termination exercise period, the Option Shares shall remain exercisable for not less than one year following the Optionee’s death, but in no event following the expiration of the Option Term.
|
7.
|
Change in Control Provisions. In the event of a Change of Control:
|
(a)
|
If Option Is Assumed
. If the Option is assumed or substituted for in connection with a Change in Control, then, upon the termination of the Optionee’s employment without Cause during the 24-month period following such Change in Control (i) the Option shall become fully vested and exercisable, (ii) any restrictions, payment conditions, and forfeiture conditions applicable to such Option shall lapse and (iii) the Option Shares shall remain exercisable for a period of one year thereafter, but in no event following the
|
(b)
|
If Option Is Not Assumed
. If the Option is not assumed or substituted in connection with a Change in Control, then upon the occurrence of the Change in Control (i) the Option shall become fully vested and exercisable, (ii) any restrictions, payment conditions, and forfeiture conditions applicable to the Option granted shall lapse and (iii) the Option shall terminate immediately thereafter.
|
(c)
|
Definition of Assumed or Substituted For
. For purposes of this Section 7, the Option shall be considered assumed or substituted for if, following the Change in Control, the Option remains subject to the same terms and conditions that were applicable to the Option immediately prior to the Change in Control except that the Option confers the right to purchase or receive, for each share subject to the Option, the consideration (whether stock, cash or other securities or property) received in the Change in Control by holders of shares of Stock for each share of Stock held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the greatest number of holders of the outstanding shares). Such assumption or substitution shall comply with the applicable provisions of section 409A of the Code.
|
(d)
|
Discretionary Cashout
. Notwithstanding any other provision of the Plan or this Agreement, in the event of a Change in Control, the Committee may, in its discretion, provide that upon the occurrence of the Change in Control, the Option shall be cancelled in exchange for a payment in an amount equal to (i) the excess of the consideration paid per share of Stock in the Change in Control over the exercise price per share of Stock subject to the Option multiplied by (ii) the number of shares granted under the Option that have not been exercised at such time.
|
8.
|
No Right to Continued Employment: Neither the Plan nor this Agreement shall be construed as giving the Optionee the right to continue in the employ or service of the Company or any Subsidiary thereof or to be entitled to any remuneration or benefits not set forth in the Plan, this Agreement or other agreement or to interfere with or limit in any way the right of the Company or any such Subsidiary to terminate such Optionee's employment. Nor does this Agreement constitute an employment contract.
|
9.
|
Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to the conflicts of laws provisions thereof.
|
10.
|
Amendment: This Agreement may not be amended, terminated, suspended or otherwise modified except in a written instrument duly executed by both parties.
|
11.
|
Securities Laws: Upon the acquisition of any shares of Stock pursuant to the exercise of the Option, in whole or in part, the Optionee will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with this Agreement.
|
12.
|
Repayment Upon Restatement; Clawbacks Generally: The Option shall be subject to such repayment, clawback or similar provisions as may be required by the terms of the Plan or applicable law or applicable policy in effect from time to time.
|
13.
|
Legend on Certificates: The certificates representing the shares of Stock issued upon the exercise of the Option that are delivered to the Optionee pursuant to this Agreement shall be subject to such stop transfer orders and other restrictions as the Committee may determine are required by the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such shares of Stock are listed, any applicable federal or state laws or the Company's Certificate of Incorporation and Bylaws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
|
14.
|
Transferability: The Option may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Optionee otherwise than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Subsidiary thereof; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
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15.
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Notices: Any notice under this Agreement shall be addressed to the Company in care of the Chief Legal Officer, addressed to the principal executive office of the Company and to the Optionee at the address last appearing in the records of the Company for the Optionee or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.
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16.
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Acknowledgement: By entering into this Agreement the Optionee agrees and acknowledges that the Optionee has received and read a copy of the Plan.
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17.
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No Stockholders Rights: The Optionee shall have no rights of a stockholder of the Company with respect to the Option or the Option Shares, including, but not limited to, the rights to vote and receive ordinary dividends until the date of issuance of a stock certificate for such shares of Stock.
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18.
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Entire Agreement: This Agreement (and the other writings incorporated by reference herein) constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto.
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19.
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Signature in Counterparts: This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument
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EMPLOYERS HOLDINGS, INC.
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OPTIONEE
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||
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||
By:
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By:
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Douglas D. Dirks
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[Insert Name of Optionee]
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||
President and Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Employers Holdings, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
|
Date:
|
April 30, 2015
|
/s/ Douglas D. Dirks
|
|
|
Douglas D. Dirks
|
|
|
President and Chief Executive Officer
|
|
|
Employers Holdings, Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Employers Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
|
Date:
|
April 30, 2015
|
/s/ Terry Eleftheriou
|
|
|
Terry Eleftheriou
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
Employers Holdings, Inc.
|
|
|
(Principal Financial and Accounting Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
Date:
|
April 30, 2015
|
/s/ Douglas D. Dirks
|
|
|
Douglas D. Dirks
|
|
|
President and Chief Executive Officer
|
|
|
Employers Holdings, Inc.
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
Date:
|
April 30, 2015
|
/s/ Terry Eleftheriou
|
|
|
Terry Eleftheriou
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
Employers Holdings, Inc.
|
|
|
(Principal Financial and Accounting Officer)
|