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
|
|
|
|
Emerging growth company
o
|
Class
|
|
April 20, 2017
|
Common Stock, $0.01 par value per share
|
|
32,278,012 shares outstanding
|
|
|
Page
No.
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||
Consolidated Balance Sheets
|
||||||||
(in millions, except share data)
|
||||||||
|
|
As of
|
|
As of
|
||||
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
(unaudited)
|
|
|
||||
Available for sale:
|
|
|
|
|
||||
Fixed maturity securities at fair value (amortized cost $2,350.6 at March 31, 2017 and $2,305.9 at December 31, 2016)
|
|
$
|
2,395.3
|
|
|
$
|
2,344.4
|
|
Equity securities at fair value (cost $117.6 at March 31, 2017 and $116.1 at December 31, 2016)
|
|
199.8
|
|
|
192.2
|
|
||
Short-term investments at fair value (amortized cost $15.4 at March 31, 2017 and $16.0 at December 31, 2016)
|
|
15.4
|
|
|
16.0
|
|
||
Total investments
|
|
2,610.5
|
|
|
2,552.6
|
|
||
Cash and cash equivalents
|
|
58.6
|
|
|
67.2
|
|
||
Restricted cash and cash equivalents
|
|
4.1
|
|
|
3.6
|
|
||
Accrued investment income
|
|
20.1
|
|
|
20.6
|
|
||
Premiums receivable (less bad debt allowance of $9.4 at March 31, 2017 and $9.8 at December 31, 2016)
|
|
323.8
|
|
|
304.7
|
|
||
Reinsurance recoverable for:
|
|
|
|
|
||||
Paid losses
|
|
8.1
|
|
|
8.7
|
|
||
Unpaid losses
|
|
572.9
|
|
|
580.0
|
|
||
Deferred policy acquisition costs
|
|
48.1
|
|
|
44.3
|
|
||
Deferred income taxes, net
|
|
52.1
|
|
|
59.4
|
|
||
Property and equipment, net
|
|
23.9
|
|
|
22.2
|
|
||
Intangible assets, net
|
|
8.1
|
|
|
8.2
|
|
||
Goodwill
|
|
36.2
|
|
|
36.2
|
|
||
Contingent commission receivable—LPT Agreement
|
|
31.1
|
|
|
31.1
|
|
||
Other assets
|
|
36.0
|
|
|
34.6
|
|
||
Total assets
|
|
$
|
3,833.6
|
|
|
$
|
3,773.4
|
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
||
Claims and policy liabilities:
|
|
|
|
|
|
|
||
Unpaid losses and loss adjustment expenses
|
|
$
|
2,298.2
|
|
|
$
|
2,301.0
|
|
Unearned premiums
|
|
330.8
|
|
|
310.3
|
|
||
Total claims and policy liabilities
|
|
2,629.0
|
|
|
2,611.3
|
|
||
Commissions and premium taxes payable
|
|
49.3
|
|
|
48.8
|
|
||
Accounts payable and accrued expenses
|
|
21.0
|
|
|
24.2
|
|
||
Unsettled purchases of investments
|
|
18.0
|
|
|
—
|
|
||
Deferred reinsurance gain—LPT Agreement
|
|
171.9
|
|
|
174.9
|
|
||
Notes payable
|
|
32.0
|
|
|
32.0
|
|
||
Other liabilities
|
|
44.9
|
|
|
41.6
|
|
||
Total liabilities
|
|
$
|
2,966.1
|
|
|
$
|
2,932.8
|
|
Commitments and contingencies
|
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
|
||
Common stock, $0.01 par value; 150,000,000 shares authorized; 56,373,568 and 56,226,277 shares issued and 32,276,213 and 32,128,922 shares outstanding at March 31, 2017 and December 31, 2016, respectively
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
372.7
|
|
|
372.0
|
|
||
Retained earnings
|
|
795.4
|
|
|
777.2
|
|
||
Accumulated other comprehensive income, net of tax
|
|
82.5
|
|
|
74.5
|
|
||
Treasury stock, at cost (24,097,355 shares at March 31, 2017 and December 31, 2016)
|
|
(383.7
|
)
|
|
(383.7
|
)
|
||
Total stockholders’ equity
|
|
867.5
|
|
|
840.6
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
3,833.6
|
|
|
$
|
3,773.4
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||
Consolidated Statements of Comprehensive Income
|
||||||||
(in millions, except per share data)
|
||||||||
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Revenues
|
|
(unaudited)
|
||||||
Net premiums earned
|
|
$
|
175.3
|
|
|
$
|
172.6
|
|
Net investment income
|
|
18.8
|
|
|
17.8
|
|
||
Net realized gains on investments
|
|
2.2
|
|
|
1.5
|
|
||
Other income
|
|
—
|
|
|
0.1
|
|
||
Total revenues
|
|
196.3
|
|
|
192.0
|
|
||
Expenses
|
|
|
|
|
||||
Losses and loss adjustment expenses
|
|
109.0
|
|
|
107.3
|
|
||
Commission expense
|
|
21.5
|
|
|
20.3
|
|
||
Underwriting and other operating expenses
|
|
35.9
|
|
|
36.3
|
|
||
Interest expense
|
|
0.4
|
|
|
0.4
|
|
||
Total expenses
|
|
166.8
|
|
|
164.3
|
|
||
Net income before income taxes
|
|
29.5
|
|
|
27.7
|
|
||
Income tax expense
|
|
6.3
|
|
|
5.9
|
|
||
Net income
|
|
$
|
23.2
|
|
|
$
|
21.8
|
|
Comprehensive income
|
|
|
|
|
||||
Unrealized gains during the period (net of tax expense of $5.1 and $11.2 for the three months ended March 31, 2017 and 2016, respectively)
|
|
$
|
9.4
|
|
|
$
|
20.8
|
|
Reclassification adjustment for realized gains in net income (net of taxes of $0.8 and $0.5 for the three months ended March 31, 2017 and 2016, respectively)
|
|
(1.4
|
)
|
|
(1.0
|
)
|
||
Other comprehensive income, net of tax
|
|
8.0
|
|
|
19.8
|
|
||
Total comprehensive income
|
|
$
|
31.2
|
|
|
$
|
41.6
|
|
|
|
|
|
|
||||
Net realized gains on investments
|
|
|
|
|
||||
Net realized gains on investments before credit related impairments
|
|
$
|
2.4
|
|
|
$
|
6.8
|
|
Other than temporary impairment recognized in earnings
|
|
(0.2
|
)
|
|
(5.3
|
)
|
||
Net realized gains on investments
|
|
$
|
2.2
|
|
|
$
|
1.5
|
|
|
|
|
|
|
||||
Earnings per common share (Note 10):
|
|
|
|
|
||||
Basic
|
|
$
|
0.72
|
|
|
$
|
0.67
|
|
Diluted
|
|
$
|
0.70
|
|
|
$
|
0.66
|
|
Cash dividends declared per common share and eligible RSUs and PSUs
|
|
$
|
0.15
|
|
|
$
|
0.09
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||||||||||||||||||||
Consolidated Statements of Stockholders' Equity
|
||||||||||||||||||||||||||
For the Three Months Ended March 31, 2017 and 2016
|
||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income, Net
|
|
Treasury Stock at Cost
|
|
Total Stockholders' Equity
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
|
(in millions, except share data)
|
|||||||||||||||||||||||||
Balance, January 1, 2017
|
56,226,277
|
|
|
$
|
0.6
|
|
|
$
|
372.0
|
|
|
$
|
777.2
|
|
|
$
|
74.5
|
|
|
$
|
(383.7
|
)
|
|
$
|
840.6
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
||||||
Stock options exercised
|
37,005
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
||||||
Vesting of restricted and performance stock units, net of shares withheld to satisfy minimum tax withholding
|
110,286
|
|
|
—
|
|
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.9
|
)
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.0
|
)
|
|
—
|
|
|
—
|
|
|
(5.0
|
)
|
||||||
Net income for the period
|
|
|
—
|
|
|
—
|
|
|
23.2
|
|
|
—
|
|
|
—
|
|
|
23.2
|
|
|||||||
Change in net unrealized gains on investments, net of taxes of $(4.3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.0
|
|
|
—
|
|
|
8.0
|
|
|||||||
Balance, March 31, 2017
|
56,373,568
|
|
|
$
|
0.6
|
|
|
$
|
372.7
|
|
|
$
|
795.4
|
|
|
$
|
82.5
|
|
|
$
|
(383.7
|
)
|
|
$
|
867.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, January 1, 2016
|
55,589,454
|
|
|
$
|
0.6
|
|
|
$
|
357.2
|
|
|
$
|
682.0
|
|
|
$
|
83.6
|
|
|
$
|
(362.6
|
)
|
|
$
|
760.8
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
||||||
Stock options exercised
|
262,239
|
|
|
—
|
|
|
4.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.0
|
|
||||||
Vesting of restricted and performance stock units, net of shares withheld to satisfy minimum tax withholding
|
42,595
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
||||||
Acquisition of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
(1.0
|
)
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
||||||
Net income for the period
|
|
|
—
|
|
|
—
|
|
|
21.8
|
|
|
—
|
|
|
—
|
|
|
21.8
|
|
|||||||
Change in net unrealized gains on investments, net of taxes $(10.7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19.8
|
|
|
—
|
|
|
19.8
|
|
|||||||
Balance, March 31, 2016
|
55,894,288
|
|
|
$
|
0.6
|
|
|
$
|
362.4
|
|
|
$
|
700.9
|
|
|
$
|
103.4
|
|
|
$
|
(363.6
|
)
|
|
$
|
803.7
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||
Consolidated Statements of Cash Flows
|
||||||||
(in millions)
|
||||||||
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Operating activities
|
|
(unaudited)
|
||||||
Net income
|
|
$
|
23.2
|
|
|
$
|
21.8
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
2.1
|
|
|
2.2
|
|
||
Stock-based compensation
|
|
1.9
|
|
|
1.8
|
|
||
Amortization of premium on investments, net
|
|
3.6
|
|
|
3.7
|
|
||
Allowance for doubtful accounts
|
|
(0.4
|
)
|
|
(2.6
|
)
|
||
Deferred income tax expense
|
|
3.0
|
|
|
1.7
|
|
||
Net realized gains on investments
|
|
(2.2
|
)
|
|
(1.5
|
)
|
||
Other
|
|
(0.3
|
)
|
|
0.1
|
|
||
Change in operating assets and liabilities:
|
|
|
|
|
|
|
||
Premiums receivable
|
|
(18.7
|
)
|
|
(11.4
|
)
|
||
Reinsurance recoverable on paid and unpaid losses
|
|
7.7
|
|
|
6.6
|
|
||
Federal income taxes
|
|
3.2
|
|
|
4.1
|
|
||
Unpaid losses and loss adjustment expenses
|
|
(2.8
|
)
|
|
(5.6
|
)
|
||
Unearned premiums
|
|
20.5
|
|
|
14.8
|
|
||
Payables and other liabilities
|
|
(3.1
|
)
|
|
(4.0
|
)
|
||
Deferred reinsurance gain—LPT Agreement
|
|
(3.0
|
)
|
|
(3.1
|
)
|
||
Other
|
|
(4.0
|
)
|
|
(7.0
|
)
|
||
Net cash provided by operating activities
|
|
30.7
|
|
|
21.6
|
|
||
Investing activities
|
|
|
|
|
|
|
||
Purchase of fixed maturity securities
|
|
(138.3
|
)
|
|
(102.5
|
)
|
||
Purchase of equity securities
|
|
(5.6
|
)
|
|
(32.6
|
)
|
||
Purchase of short-term investments
|
|
(7.9
|
)
|
|
—
|
|
||
Proceeds from sale of fixed maturity securities
|
|
27.3
|
|
|
42.4
|
|
||
Proceeds from sale of equity securities
|
|
5.8
|
|
|
26.3
|
|
||
Proceeds from maturities and redemptions of fixed maturity securities
|
|
63.3
|
|
|
61.5
|
|
||
Proceeds from maturities of short-term investments
|
|
8.5
|
|
|
—
|
|
||
Net change in unsettled investment purchases and sales
|
|
18.0
|
|
|
—
|
|
||
Capital expenditures and other
|
|
(3.5
|
)
|
|
(0.2
|
)
|
||
Change in restricted cash and cash equivalents
|
|
(0.5
|
)
|
|
(1.7
|
)
|
||
Net cash used in investing activities
|
|
(32.9
|
)
|
|
(6.8
|
)
|
||
Financing activities
|
|
|
|
|
|
|
||
Acquisition of common stock
|
|
—
|
|
|
(1.0
|
)
|
||
Cash transactions related to stock-based compensation
|
|
(1.3
|
)
|
|
3.4
|
|
||
Stockholder dividends paid
|
|
(5.0
|
)
|
|
(2.9
|
)
|
||
Payments on notes payable and capital leases
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Net cash used in financing activities
|
|
(6.4
|
)
|
|
(0.6
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
|
(8.6
|
)
|
|
14.2
|
|
||
Cash and cash equivalents at the beginning of the period
|
|
67.2
|
|
|
56.6
|
|
||
Cash and cash equivalents at the end of the period
|
|
$
|
58.6
|
|
|
$
|
70.8
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
Financial assets
|
|
|
|
|
|
|
|
|
||||||||
Investments
|
|
$
|
2,610.5
|
|
|
$
|
2,610.5
|
|
|
$
|
2,552.6
|
|
|
$
|
2,552.6
|
|
Cash and cash equivalents
|
|
58.6
|
|
|
58.6
|
|
|
67.2
|
|
|
67.2
|
|
||||
Restricted cash and cash equivalents
|
|
4.1
|
|
|
4.1
|
|
|
3.6
|
|
|
3.6
|
|
||||
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||
Notes payable
|
|
$
|
32.0
|
|
|
$
|
34.5
|
|
|
$
|
32.0
|
|
|
$
|
33.0
|
|
•
|
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, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasuries
|
|
$
|
—
|
|
|
$
|
133.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
127.4
|
|
|
$
|
—
|
|
U.S. Agencies
|
|
—
|
|
|
15.0
|
|
|
—
|
|
|
—
|
|
|
12.8
|
|
|
—
|
|
||||||
States and municipalities
|
|
—
|
|
|
817.5
|
|
|
—
|
|
|
—
|
|
|
851.6
|
|
|
—
|
|
||||||
Corporate securities
|
|
—
|
|
|
985.7
|
|
|
—
|
|
|
—
|
|
|
956.7
|
|
|
—
|
|
||||||
Residential mortgage-backed securities
|
|
—
|
|
|
302.9
|
|
|
—
|
|
|
—
|
|
|
258.0
|
|
|
—
|
|
||||||
Commercial mortgage-backed securities
|
|
—
|
|
|
94.9
|
|
|
—
|
|
|
—
|
|
|
95.5
|
|
|
—
|
|
||||||
Asset-backed securities
|
|
—
|
|
|
40.2
|
|
|
5.4
|
|
|
—
|
|
|
35.4
|
|
|
7.0
|
|
||||||
Total fixed maturity securities
|
|
$
|
—
|
|
|
$
|
2,389.9
|
|
|
$
|
5.4
|
|
|
$
|
—
|
|
|
$
|
2,337.4
|
|
|
$
|
7.0
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Industrial and miscellaneous
|
|
$
|
174.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
167.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-redeemable preferred (FHLB stock)
|
|
—
|
|
|
—
|
|
|
4.9
|
|
|
—
|
|
|
—
|
|
|
4.9
|
|
||||||
Other
|
|
20.7
|
|
|
—
|
|
|
—
|
|
|
20.1
|
|
|
—
|
|
|
—
|
|
||||||
Total equity securities
|
|
$
|
194.9
|
|
|
$
|
—
|
|
|
$
|
4.9
|
|
|
$
|
187.3
|
|
|
$
|
—
|
|
|
$
|
4.9
|
|
Short-term investments
|
|
$
|
—
|
|
|
$
|
15.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16.0
|
|
|
$
|
—
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|||
|
(in millions)
|
||||||
Cash and cash equivalents at fair value
|
$
|
23.6
|
|
|
$
|
9.7
|
|
Cash equivalents measured at NAV, which approximates fair value
|
35.0
|
|
|
57.5
|
|
||
Total cash and cash equivalents
|
$
|
58.6
|
|
|
$
|
67.2
|
|
|
|
Level 3 Securities
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(in millions)
|
||||||
Beginning balance, January 1
|
|
$
|
11.9
|
|
|
$
|
—
|
|
Transfers in (out) of Level 3
(1)
|
|
(1.4
|
)
|
|
—
|
|
||
Purchases and sales, net
|
|
(0.2
|
)
|
|
5.3
|
|
||
Ending balance, March 31
|
|
$
|
10.3
|
|
|
$
|
5.3
|
|
(1)
|
Transferred from Level 3 to Level 2 because observable market data became available for the securities.
|
|
|
Cost or Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
At March 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries
|
|
$
|
130.5
|
|
|
$
|
3.4
|
|
|
$
|
(0.2
|
)
|
|
$
|
133.7
|
|
U.S. Agencies
|
|
14.2
|
|
|
0.8
|
|
|
—
|
|
|
15.0
|
|
||||
States and municipalities
|
|
794.2
|
|
|
28.3
|
|
|
(5.0
|
)
|
|
817.5
|
|
||||
Corporate securities
|
|
969.1
|
|
|
19.8
|
|
|
(3.2
|
)
|
|
985.7
|
|
||||
Residential mortgage-backed securities
|
|
301.5
|
|
|
4.2
|
|
|
(2.8
|
)
|
|
302.9
|
|
||||
Commercial mortgage-backed securities
|
|
95.4
|
|
|
0.4
|
|
|
(0.9
|
)
|
|
94.9
|
|
||||
Asset-backed securities
|
|
45.7
|
|
|
0.1
|
|
|
(0.2
|
)
|
|
45.6
|
|
||||
Total fixed maturity securities
|
|
2,350.6
|
|
|
57.0
|
|
|
(12.3
|
)
|
|
2,395.3
|
|
||||
Equity securities
|
|
|
|
|
|
|
|
|
||||||||
Industrial and miscellaneous
|
|
102.0
|
|
|
73.0
|
|
|
(0.8
|
)
|
|
174.2
|
|
||||
Non-redeemable preferred (FHLB stock)
|
|
4.9
|
|
|
—
|
|
|
—
|
|
|
4.9
|
|
||||
Other
|
|
10.7
|
|
|
10.0
|
|
|
—
|
|
|
20.7
|
|
||||
Total equity securities
|
|
117.6
|
|
|
83.0
|
|
|
(0.8
|
)
|
|
199.8
|
|
||||
Short-term investments
|
|
15.4
|
|
|
—
|
|
|
—
|
|
|
15.4
|
|
||||
Total investments
|
|
$
|
2,483.6
|
|
|
$
|
140.0
|
|
|
$
|
(13.1
|
)
|
|
$
|
2,610.5
|
|
At December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries
|
|
$
|
124.1
|
|
|
$
|
3.5
|
|
|
$
|
(0.2
|
)
|
|
$
|
127.4
|
|
U.S. Agencies
|
|
11.9
|
|
|
0.9
|
|
|
—
|
|
|
12.8
|
|
||||
States and municipalities
|
|
833.0
|
|
|
24.7
|
|
|
(6.1
|
)
|
|
851.6
|
|
||||
Corporate securities
|
|
942.3
|
|
|
18.9
|
|
|
(4.5
|
)
|
|
956.7
|
|
||||
Residential mortgage-backed securities
|
|
255.9
|
|
|
4.7
|
|
|
(2.6
|
)
|
|
258.0
|
|
||||
Commercial mortgage-backed securities
|
|
96.1
|
|
|
0.4
|
|
|
(1.0
|
)
|
|
95.5
|
|
||||
Asset-backed securities
|
|
42.6
|
|
|
—
|
|
|
(0.2
|
)
|
|
42.4
|
|
||||
Total fixed maturity securities
|
|
2,305.9
|
|
|
53.1
|
|
|
(14.6
|
)
|
|
2,344.4
|
|
||||
Equity securities
|
|
|
|
|
|
|
|
|
||||||||
Industrial and miscellaneous
|
|
100.5
|
|
|
67.4
|
|
|
(0.7
|
)
|
|
167.2
|
|
||||
Non-redeemable preferred (FHLB stock)
|
|
4.9
|
|
|
—
|
|
|
—
|
|
|
4.9
|
|
||||
Other
|
|
10.7
|
|
|
9.4
|
|
|
—
|
|
|
20.1
|
|
||||
Total equity securities
|
|
116.1
|
|
|
76.8
|
|
|
(0.7
|
)
|
|
192.2
|
|
||||
Short-term investments
|
|
16.0
|
|
|
—
|
|
|
—
|
|
|
16.0
|
|
||||
Total investments
|
|
$
|
2,438.0
|
|
|
$
|
129.9
|
|
|
$
|
(15.3
|
)
|
|
$
|
2,552.6
|
|
|
|
Amortized Cost
|
|
Estimated Fair Value
|
||||
|
|
(in millions)
|
||||||
Due in one year or less
|
|
$
|
180.5
|
|
|
$
|
181.8
|
|
Due after one year through five years
|
|
874.7
|
|
|
899.4
|
|
||
Due after five years through ten years
|
|
600.4
|
|
|
615.5
|
|
||
Due after ten years
|
|
252.4
|
|
|
255.2
|
|
||
Mortgage and asset-backed securities
|
|
442.6
|
|
|
443.4
|
|
||
Total
|
|
$
|
2,350.6
|
|
|
$
|
2,395.3
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasuries
|
|
$
|
32.8
|
|
|
$
|
(0.2
|
)
|
|
16
|
|
|
$
|
33.3
|
|
|
$
|
(0.2
|
)
|
|
14
|
|
States and municipalities
|
|
120.7
|
|
|
(5.0
|
)
|
|
32
|
|
|
200.9
|
|
|
(6.1
|
)
|
|
50
|
|
||||
Corporate securities
|
|
228.9
|
|
|
(2.8
|
)
|
|
215
|
|
|
289.5
|
|
|
(4.1
|
)
|
|
101
|
|
||||
Residential mortgage-backed securities
|
|
165.2
|
|
|
(2.8
|
)
|
|
59
|
|
|
137.5
|
|
|
(2.6
|
)
|
|
51
|
|
||||
Commercial mortgage-backed securities
|
|
50.5
|
|
|
(0.9
|
)
|
|
21
|
|
|
48.0
|
|
|
(1.0
|
)
|
|
21
|
|
||||
Asset-backed securities
|
|
23.8
|
|
|
(0.2
|
)
|
|
22
|
|
|
30.1
|
|
|
(0.2
|
)
|
|
20
|
|
||||
Total fixed maturity securities
|
|
621.9
|
|
|
(11.9
|
)
|
|
365
|
|
|
739.3
|
|
|
(14.2
|
)
|
|
257
|
|
||||
Equity securities
|
|
13.1
|
|
|
(0.7
|
)
|
|
29
|
|
|
13.6
|
|
|
(0.6
|
)
|
|
28
|
|
||||
Total less than 12 months
|
|
$
|
635.0
|
|
|
$
|
(12.6
|
)
|
|
394
|
|
|
$
|
752.9
|
|
|
$
|
(14.8
|
)
|
|
285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
12 months or greater:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate securities
|
|
$
|
16.4
|
|
|
$
|
(0.4
|
)
|
|
6
|
|
|
$
|
15.2
|
|
|
$
|
(0.4
|
)
|
|
5
|
|
Total fixed maturity securities
|
|
16.4
|
|
|
(0.4
|
)
|
|
6
|
|
|
15.2
|
|
|
(0.4
|
)
|
|
5
|
|
||||
Equity securities
|
|
1.5
|
|
|
(0.1
|
)
|
|
3
|
|
|
1.7
|
|
|
(0.1
|
)
|
|
5
|
|
||||
Total 12 months or greater
|
|
$
|
17.9
|
|
|
$
|
(0.5
|
)
|
|
9
|
|
|
$
|
16.9
|
|
|
$
|
(0.5
|
)
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasuries
|
|
$
|
32.8
|
|
|
$
|
(0.2
|
)
|
|
16
|
|
|
$
|
33.3
|
|
|
$
|
(0.2
|
)
|
|
14
|
|
States and municipalities
|
|
120.7
|
|
|
(5.0
|
)
|
|
32
|
|
|
200.9
|
|
|
(6.1
|
)
|
|
50
|
|
||||
Corporate securities
|
|
245.3
|
|
|
(3.2
|
)
|
|
221
|
|
|
304.7
|
|
|
(4.5
|
)
|
|
106
|
|
||||
Residential mortgage-backed securities
|
|
165.2
|
|
|
(2.8
|
)
|
|
59
|
|
|
137.5
|
|
|
(2.6
|
)
|
|
51
|
|
||||
Commercial mortgage-backed securities
|
|
50.5
|
|
|
(0.9
|
)
|
|
21
|
|
|
48.0
|
|
|
(1.0
|
)
|
|
21
|
|
||||
Asset-backed securities
|
|
23.8
|
|
|
(0.2
|
)
|
|
22
|
|
|
30.1
|
|
|
(0.2
|
)
|
|
20
|
|
||||
Total fixed maturity securities
|
|
638.3
|
|
|
(12.3
|
)
|
|
371
|
|
|
754.5
|
|
|
(14.6
|
)
|
|
262
|
|
||||
Equity securities
|
|
14.6
|
|
|
(0.8
|
)
|
|
32
|
|
|
15.3
|
|
|
(0.7
|
)
|
|
33
|
|
||||
Total available-for-sale
|
|
$
|
652.9
|
|
|
$
|
(13.1
|
)
|
|
403
|
|
|
$
|
769.8
|
|
|
$
|
(15.3
|
)
|
|
295
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(in millions)
|
||||||
Net realized gains on investments
|
|
|
|
|
||||
Fixed maturity securities
|
|
|
|
|
||||
Gross gains
|
|
$
|
0.5
|
|
|
$
|
0.2
|
|
Gross losses
|
|
—
|
|
|
(0.1
|
)
|
||
Net realized gains on fixed maturity securities
|
|
$
|
0.5
|
|
|
$
|
0.1
|
|
Equity securities
|
|
|
|
|
||||
Gross gains
|
|
$
|
1.9
|
|
|
$
|
7.2
|
|
Gross losses
|
|
(0.2
|
)
|
|
(5.8
|
)
|
||
Net realized gains on equity securities
|
|
$
|
1.7
|
|
|
$
|
1.4
|
|
Total
|
|
$
|
2.2
|
|
|
$
|
1.5
|
|
|
|
|
|
|
||||
Change in unrealized gains
|
|
|
|
|
|
|
||
Fixed maturity securities
|
|
$
|
6.2
|
|
|
$
|
29.3
|
|
Equity securities
|
|
6.1
|
|
|
1.2
|
|
||
Total
|
|
$
|
12.3
|
|
|
$
|
30.5
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(in millions)
|
||||||
Fixed maturity securities
|
|
$
|
17.8
|
|
|
$
|
16.7
|
|
Equity securities
|
|
1.8
|
|
|
1.9
|
|
||
Cash equivalents and restricted cash
|
|
0.1
|
|
|
—
|
|
||
Gross investment income
|
|
19.7
|
|
|
18.6
|
|
||
Investment expenses
|
|
(0.9
|
)
|
|
(0.8
|
)
|
||
Net investment income
|
|
$
|
18.8
|
|
|
$
|
17.8
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(in millions)
|
||||||
Unpaid losses and LAE, gross of reinsurance, at beginning of period
|
|
$
|
2,301.0
|
|
|
$
|
2,347.5
|
|
Less reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE
|
|
580.0
|
|
|
628.2
|
|
||
Net unpaid losses and LAE at beginning of period
|
|
1,721.0
|
|
|
1,719.3
|
|
||
Losses and LAE, net of reinsurance, incurred during the period related to:
|
|
|
|
|
|
|
||
Current period
|
|
111.9
|
|
|
110.7
|
|
||
Prior periods
|
|
—
|
|
|
(0.3
|
)
|
||
Total net losses and LAE incurred during the period
|
|
111.9
|
|
|
110.4
|
|
||
Paid losses and LAE, net of reinsurance, related to:
|
|
|
|
|
|
|
||
Current period
|
|
4.7
|
|
|
4.7
|
|
||
Prior periods
|
|
102.9
|
|
|
104.5
|
|
||
Total net paid losses and LAE during the period
|
|
107.6
|
|
|
109.2
|
|
||
Ending unpaid losses and LAE, net of reinsurance
|
|
1,725.3
|
|
|
1,720.5
|
|
||
Reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE
|
|
572.9
|
|
|
621.4
|
|
||
Unpaid losses and LAE, gross of reinsurance, at end of period
|
|
$
|
2,298.2
|
|
|
$
|
2,341.9
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
|
(in millions)
|
||||||
Net unrealized gain on investments, before taxes
|
|
$
|
126.9
|
|
|
$
|
114.6
|
|
Deferred tax expense on net unrealized gains
|
|
(44.4
|
)
|
|
(40.1
|
)
|
||
Total accumulated other comprehensive income
|
|
$
|
82.5
|
|
|
$
|
74.5
|
|
|
Number Awarded
|
|
Weighted Average Fair Value on Date of Grant
|
|
Weighted Average Exercise Price
|
|
Aggregate Fair Value on Date of Grant
|
||||
|
|
|
|
|
|
|
(in millions)
|
||||
March 2017
|
|
|
|
|
|
|
|
||||
RSUs
(1)
|
72,020
|
|
|
37.60
|
|
|
—
|
|
|
2.7
|
|
PSUs
(2)
|
97,440
|
|
|
37.60
|
|
|
—
|
|
|
3.7
|
|
(1)
|
The RSUs awarded in
March 2017
were awarded to certain employees of the Company and
vest 25% on March 15, 2018, and each of the subsequent three anniversaries of that date
. The 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.
|
(2)
|
The PSUs awarded in
March 2017
were awarded to certain employees 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,
|
||||||
|
|
2017
|
|
2016
|
||||
|
(in millions, except share data)
|
|||||||
Net income available to stockholders—basic and diluted
|
|
$
|
23.2
|
|
|
$
|
21.8
|
|
Weighted average number of shares outstanding—basic
|
|
32,327,784
|
|
|
32,413,818
|
|
||
Effect of dilutive securities:
|
|
|
|
|
||||
PSUs
|
|
309,891
|
|
|
151,031
|
|
||
Stock options
|
|
225,664
|
|
|
304,073
|
|
||
RSUs
|
|
102,028
|
|
|
86,310
|
|
||
Dilutive potential shares
|
|
637,583
|
|
|
541,414
|
|
||
Weighted average number of shares outstanding—diluted
|
|
32,965,367
|
|
|
32,955,232
|
|
|
|
Three Months Ended
|
||||
|
|
March 31,
|
||||
|
|
2017
|
|
2016
|
||
Options excluded as the exercise price was greater than the average market price
|
|
—
|
|
|
—
|
|
Options, PSUs and RSUs excluded under the treasury method as the potential proceeds on settlement or exercise price were greater than the value of shares acquired
|
|
—
|
|
|
80,800
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
|
(in millions, except share data)
|
||||||
GAAP stockholders' equity
|
|
$
|
867.5
|
|
|
$
|
840.6
|
|
Deferred reinsurance gain–LPT Agreement
|
|
171.9
|
|
|
174.9
|
|
||
Less: Accumulated other comprehensive income, net
|
|
82.5
|
|
|
74.5
|
|
||
Adjusted stockholders' equity
(1)
|
|
$
|
956.9
|
|
|
$
|
941.0
|
|
(1)
|
Adjusted stockholders' equity is a non-GAAP measure consisting of total GAAP stockholders' equity plus the Deferred Gain, less Accumulated other comprehensive income, net.
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
(in millions)
|
|||||||
Gross premiums written
|
|
$
|
197.6
|
|
|
$
|
190.7
|
|
Net premiums written
|
|
$
|
196.1
|
|
|
$
|
188.7
|
|
|
|
|
|
|
||||
Net premiums earned
|
|
$
|
175.3
|
|
|
$
|
172.6
|
|
Net investment income
|
|
18.8
|
|
|
17.8
|
|
||
Net realized gains on investments
|
|
2.2
|
|
|
1.5
|
|
||
Other income
|
|
—
|
|
|
0.1
|
|
||
Total revenues
|
|
196.3
|
|
|
192.0
|
|
||
|
|
|
|
|
||||
Losses and LAE
|
|
109.0
|
|
|
107.3
|
|
||
Commission expense
|
|
21.5
|
|
|
20.3
|
|
||
Underwriting and other operating expenses
|
|
35.9
|
|
|
36.3
|
|
||
Interest expense
|
|
0.4
|
|
|
0.4
|
|
||
Income tax expense
|
|
6.3
|
|
|
5.9
|
|
||
Total expenses
|
|
173.1
|
|
|
170.2
|
|
||
Net income
|
|
$
|
23.2
|
|
|
$
|
21.8
|
|
Less amortization of the Deferred Gain related to losses
|
|
$
|
2.4
|
|
|
$
|
2.6
|
|
Less amortization of the Deferred Gain related to contingent commission
|
|
0.5
|
|
|
0.5
|
|
||
Net income before impact of the LPT Agreement
(1)
|
|
$
|
20.3
|
|
|
$
|
18.7
|
|
(1)
|
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 the LPT Agreement ceded reserves; and (c) adjustments to the Contingent commission receivable–LPT Agreement. The Deferred Gain reflects the unamortized gain from the LPT Agreement. Under GAAP, this gain is deferred and is being amortized using the recovery method in which 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 to our 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, 2017
|
||||||||||||||||
|
Year-to-Date (Decrease) Increase
|
|
Year-Over-Year (Decrease) Increase
|
||||||||||||||
|
Overall
|
|
California
|
|
All Other States
|
|
Overall
|
|
California
|
|
All Other States
|
||||||
In-force premiums
|
0.3
|
%
|
|
(0.3
|
)%
|
|
1.0
|
%
|
|
(0.5
|
)%
|
|
(1.5
|
)%
|
|
0.8
|
%
|
In-force policy count
|
0.3
|
|
|
(1.1
|
)
|
|
1.7
|
|
|
—
|
|
|
(5.0
|
)
|
|
5.3
|
|
Average in-force policy size
|
—
|
|
|
0.8
|
|
|
(0.7
|
)
|
|
(0.5
|
)
|
|
3.7
|
|
|
(4.2
|
)
|
In-force payroll exposure
|
1.3
|
|
|
1.7
|
|
|
1.1
|
|
|
0.2
|
|
|
0.3
|
|
|
0.2
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
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
|
|
$
|
347.2
|
|
|
41,657
|
|
|
$
|
348.3
|
|
|
42,120
|
|
|
$
|
352.5
|
|
|
43,843
|
|
|
$
|
352.2
|
|
|
44,080
|
|
Florida
|
|
37.7
|
|
|
5,392
|
|
|
35.2
|
|
|
5,263
|
|
|
30.3
|
|
|
4,958
|
|
|
29.4
|
|
|
4,735
|
|
||||
Illinois
|
|
29.9
|
|
|
3,073
|
|
|
30.6
|
|
|
3,106
|
|
|
33.1
|
|
|
3,264
|
|
|
32.5
|
|
|
3,286
|
|
||||
Other
(33 states and D.C.)
|
|
205.5
|
|
|
34,955
|
|
|
204.5
|
|
|
34,333
|
|
|
207.4
|
|
|
33,030
|
|
|
205.4
|
|
|
32,395
|
|
||||
Total
|
|
$
|
620.3
|
|
|
85,077
|
|
|
$
|
618.6
|
|
|
84,822
|
|
|
$
|
623.3
|
|
|
85,095
|
|
|
$
|
619.5
|
|
|
84,496
|
|
|
|
Three Months Ended
|
||||
|
|
March 31,
|
||||
|
|
2017
|
|
2016
|
||
Loss and LAE ratio
|
|
62.2
|
%
|
|
62.2
|
%
|
Underwriting and other operating expenses ratio
|
|
20.4
|
|
|
21.0
|
|
Commission expense ratio
|
|
12.3
|
|
|
11.8
|
|
Combined ratio
|
|
94.9
|
%
|
|
95.0
|
%
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
(in millions)
|
|||||||
Prior accident year favorable loss development, net
|
|
$
|
—
|
|
|
$
|
0.3
|
|
Amortization of the Deferred Gain related to losses
|
|
$
|
2.4
|
|
|
$
|
2.6
|
|
Amortization of the Deferred Gain related to contingent commission
|
|
0.5
|
|
|
0.5
|
|
||
Total impact of the LPT on losses and LAE
|
|
2.9
|
|
|
3.1
|
|
||
Total losses and LAE reserve adjustments
|
|
$
|
2.9
|
|
|
$
|
3.4
|
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(in millions)
|
||||||
Cash and cash equivalents provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
30.7
|
|
|
$
|
21.6
|
|
Investing activities
|
|
(32.9
|
)
|
|
(6.8
|
)
|
||
Financing activities
|
|
(6.4
|
)
|
|
(0.6
|
)
|
||
(Decrease) Increase in cash and cash equivalents
|
|
$
|
(8.6
|
)
|
|
$
|
14.2
|
|
|
|
Payment Due By Period
|
||||||||||||||||||
|
|
Total
|
|
Less Than
1-Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More Than
5 Years
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Operating leases
|
|
$
|
14.1
|
|
|
$
|
4.8
|
|
|
$
|
6.3
|
|
|
$
|
3.0
|
|
|
$
|
—
|
|
Purchased liabilities
|
|
8.3
|
|
|
4.0
|
|
|
2.3
|
|
|
1.8
|
|
|
0.2
|
|
|||||
Notes payable
(1)
|
|
61.2
|
|
|
1.7
|
|
|
3.4
|
|
|
3.4
|
|
|
52.7
|
|
|||||
Capital leases
|
|
0.8
|
|
|
0.3
|
|
|
0.3
|
|
|
0.2
|
|
|
—
|
|
|||||
Losses and LAE reserves
(2)(3)
|
|
2,298.2
|
|
|
391.6
|
|
|
488.4
|
|
|
276.9
|
|
|
1,141.3
|
|
|||||
Total contractual obligations
|
|
$
|
2,382.6
|
|
|
$
|
402.4
|
|
|
$
|
500.7
|
|
|
$
|
285.3
|
|
|
$
|
1,194.2
|
|
(1)
|
Notes payable includes payments for the principal and estimated interest expense on our surplus notes outstanding based on LIBOR plus a margin. The interest rates used ranged from
5.2%
to
5.3%
.
|
(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 claims amounts due to variations between expected and actual payout patterns.
|
(3)
|
The unpaid losses and LAE reserves are presented gross of reinsurance recoverables for unpaid losses, which were as follows for each of the periods presented above:
|
|
|
Recoveries Due By Period
|
||||||||||||||||||
|
|
Total
|
|
Less Than
1-Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More Than
5 Years
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Reinsurance recoverables for unpaid losses and LAE
|
|
$
|
(572.9
|
)
|
|
$
|
(30.1
|
)
|
|
$
|
(57.1
|
)
|
|
$
|
(53.3
|
)
|
|
$
|
(432.4
|
)
|
Category
|
|
Estimated Fair
Value
|
|
Percentage
of Total
|
|
Book Yield
|
|
Tax Equivalent Yield
|
|||||
|
|
(in millions, except percentages)
|
|||||||||||
U.S. Treasuries
|
|
$
|
133.7
|
|
|
5.1
|
%
|
|
1.8
|
%
|
|
1.8
|
%
|
U.S. Agencies
|
|
15.0
|
|
|
0.6
|
|
|
4.1
|
|
|
4.1
|
|
|
States and municipalities
|
|
817.5
|
|
|
31.3
|
|
|
3.1
|
|
|
4.4
|
|
|
Corporate securities
|
|
985.7
|
|
|
37.8
|
|
|
3.1
|
|
|
3.1
|
|
|
Residential mortgage-backed securities
|
|
302.9
|
|
|
11.6
|
|
|
3.1
|
|
|
3.1
|
|
|
Commercial mortgage-backed securities
|
|
94.9
|
|
|
3.6
|
|
|
2.7
|
|
|
2.7
|
|
|
Asset-backed securities
|
|
45.6
|
|
|
1.7
|
|
|
2.3
|
|
|
2.3
|
|
|
Equity securities
|
|
199.8
|
|
|
7.7
|
|
|
5.6
|
|
|
7.4
|
|
|
Short-term investments
|
|
15.4
|
|
|
0.6
|
|
|
1.2
|
|
|
1.2
|
|
|
Total
|
|
$
|
2,610.5
|
|
|
100.0
|
%
|
|
|
|
|
|
|
Weighted average yield
|
|
|
|
|
|
|
|
3.1
|
%
|
|
3.6
|
%
|
Rating
|
|
Percentage of Total
Estimated Fair Value
|
|
“AAA”
|
|
10.6
|
%
|
“AA”
|
|
47.6
|
|
“A”
|
|
28.5
|
|
“BBB”
|
|
12.6
|
|
Below investment grade
|
|
0.7
|
|
Total
|
|
100.0
|
%
|
Period
|
|
Total Number of Shares Purchased
|
|
Average
Price Paid
Per Share
(1)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Approximate
Dollar Value of Shares that
May Yet be Purchased Under the Program
(2)
|
||||||
|
|
|
|
|
|
|
|
(in millions)
|
||||||
January 1 – January 31, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
28.9
|
|
February 1 – February 28, 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28.9
|
|
||
March 1 – March 31, 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28.9
|
|
||
Total
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
|
(1)
|
Includes fees and commissions paid on stock repurchases.
|
(2)
|
On February 16, 2016, the Board of Directors authorized a share repurchase program for repurchases of up to $50 million of the Company's common stock (the 2016 Program). We expect that shares may be purchased at prevailing market prices through February 22, 2018 through a variety of methods, including open market or private transactions, in accordance with applicable laws and regulations and as determined by management. The timing and actual number of shares that may be purchased will depend on a variety of factors, including the share price, corporate and regulatory requirements, and other market and economic conditions. Repurchases under the 2016 Program may be commenced, modified, or suspended from time to time without prior notice, and the program may be suspended or discontinued at any time.
|
|
|
|
|
|
|
Incorporated by Reference Herein
|
||||
Exhibit
No.
|
|
Description of Exhibit
|
|
Included
Herewith
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
3.1
|
|
Amended and Restated Bylaws of Employers Holdings, Inc.
|
|
X
|
|
|
|
|
|
|
10.1
|
|
Employment Agreement by and between Employers Holdings, Inc. and Tracey L. Berg, dated January 12, 2017, and effective as of January 31, 2017
|
|
X
|
|
|
|
|
|
|
10.2
|
|
Form of Performance Share Agreement
|
|
X
|
|
|
|
|
|
|
10.3
|
|
Form of Restricted Stock Unit Agreement
|
|
X
|
|
|
|
|
|
|
31.1
|
|
Certification of Douglas D. Dirks Pursuant to Section 302
|
|
X
|
|
|
|
|
|
|
31.2
|
|
Certification of Michael S. Paquette Pursuant to Section 302
|
|
X
|
|
|
|
|
|
|
32.1
|
|
Certification of Douglas D. Dirks Pursuant to Section 906
|
|
X
|
|
|
|
|
|
|
32.2
|
|
Certification of Michael S. Paquette 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 27, 2017
|
/s/ Michael S. Paquette
|
|
|
Michael S. Paquette
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
Employers Holdings, Inc.
|
|
|
(Principal Financial and Accounting Officer)
|
(a)
|
During the Term, the Company shall pay to the Employee an annual salary of not less than $325,000 ("Base Salary"), which amount shall be paid according to the Company's regular payroll practices. The Company agrees to review the Base Salary on an annual basis and adjust the salary to comply with the executive compensation policy in effect at the time of the review. Any adjustment made to the annual salary will establish the new Base Salary for the Employee. All payments made pursuant to this Agreement, including but not limited to subsections 4(a) and 4(b), shall be reduced by and subject to withholding for all federal, state, and local taxes and any other withholding required by applicable laws and regulations.
|
(b)
|
The Company will provide an annual incentive (the "Annual Incentive") to the Employee during the Term based on the Employee's and the Company's performance, as determined by the Board (or a committee thereof) in its sole discretion. In this regard, the Board (or a committee thereof) shall set an annual incentive target of not less than fifty percent (50%) of Base Salary, and the Annual Incentive shall be paid in accordance with the Company's regular practice for its senior officers, as in effect from time to time. To the extent not duplicative of the specific benefits provided herein, the Employee shall be eligible to participate in all incentive compensation, retirement, supplemental retirement and deferred compensation plans, policies and arrangements that are provided generally to other senior officers of the Company at a level (in terms of the amount and types of benefits and incentive compensation that the Employee has the opportunity to receive and the terms thereof) determined in the sole discretion of the Board (or a committee thereof). In addition, the Company will provide the Employee with an initial cash sign-on bonus in the amount of $150,000, which will be paid to her no later than the first payroll date next following the Effective Date.
|
(c)
|
The Employee agrees that the amounts payable and benefits provided under this Agreement, including but not limited to any amounts payable or benefits provided under this Section 4 and Section 7 constitute good, valuable and separate consideration for the non-competition, assignment and release of liability provisions contained herein. The Employee acknowledges that she is aware of the effect of the non-competition, assignment and release of liability provisions contained herein and agrees that the amounts payable and benefits provided under this Agreement, including but not limited to the amounts payable and benefits provided under this Section 4 and Section 7, if any, constitute sufficient consideration for her agreement to these provisions.
|
(d)
|
In
addition to the compensation called for in this Agreement, the Employee shall be entitled to receive any and all employee benefits and perquisites as the Company from time to time in its discretion determines to offer.
In
addition, the Employee shall be entitled to the applicable relocation and moving benefits described in Appendix A attached hereto.
|
(a)
|
The Company, at any time, may terminate this Agreement and the Employee's employment immediately for "Cause." Cause is defined as:
|
(ii)
|
Failure or inability of the Employee to obtain or maintain any required licenses or certificates;
|
(iii)
|
Willful violation by the Employee of any law, rule or regulation, including but not limited to any material insurance law or regulation, which violation may, as determined by the Company, adversely affect the ability of the Employee to perform her duties hereunder or may subject the Company to liability or negative publicity; or
|
(iv)
|
Conviction or commission of or the entry of a guilty plea or plea of no contest to any felony or to any other crime involving moral turpitude.
|
(b)
|
The Employee may terminate this Agreement and her employment with the Company immediately for "Good Reason," which shall mean the occurrence of any of the following events with respect to which the Employee has notified the Company of the existence thereof within no more than ninety (90) days of the initial existence thereof and which is not cured by the Company within thirty (30) days of the Company's receipt of written notice from the Employee of the events alleged to constitute such Good Reason:
|
(ii)
|
A material diminution in the Employee's authority, duties or responsibilities; or
|
(c)
|
The Company may also terminate this Agreement and the Employee's employment upon the occurrence of one or more of the following events or reasons, subject to applicable law (or, in the case of subsection 6(c)(i) below, termination of this Agreement and the Employee's employment will be automatic):
|
(i)
|
Death of the Employee;
|
(ii)
|
The Employee is deemed to be disabled in accordance with the policies of the Company or the law or if the Employee is unable to perform the essential job functions of the Employee's position with the Company, with or without reasonable accommodation, for a period of more than 100 business days in any 120 consecutive business day period. The Employee is entitled to any and all short term or long term disability programs, like any other employee, in accordance with the terms of such programs and the policies of the Company; or
|
(iii)
|
At any time for any other reason or no reason in the sole and absolute discretion of the Company.
|
(a)
|
Qualifying Termination and Severance Pay.
If the Company terminates the Employee's employment prior to the expiration of the Term but other than during the CIC Period (as defined below) for any reason other than as specified above in subsection 6(a) for Cause, subsection 6(c)(i) by reason of the death of the Employee, or subsection 6(c)(ii) for disability, or if the Employee terminates her employment for Good Reason pursuant to subsection 6(b), the Employee shall receive the following severance pay (the "Severance Pay"):
|
(i)
|
In lieu of any further salary payments to the Employee for periods subsequent to the Termination Date and in lieu of any severance benefit otherwise payable to the Employee, an amount equal to Base Salary, payable in equal bi-weekly installments on the Company's regular payroll dates as in effect on such Termination Date, for twelve (12) months following the Termination Date, with payments commencing on the payroll date applicable to the first full payroll period occurring following the Applicable Release Period (as defined below), which first payment date shall be no later than sixty (60) days following the Termination Date; provided, however, that (A) such payments shall be delayed to the extent required under subsection 7(c)(iv) or Section 25 below and (B) the amount of the first payment shall be equal to the total amount of bi-weekly installments that would have been paid had the first payment been made on the first full payroll date occurring following the Termination Date, with each subsequent payment equal to the bi-weekly installment. The payments shall be subject to normal payroll deductions.
|
(ii)
|
Continuation of the medical, dental and vision insurance coverage in effect on the Termination Date for a period of twelve (12) months following the Termination Date with the Company paying the employer portion of the premium and the Employee paying the employee portion, including dependents if applicable, of the premium during such twelve (12) month period, provided that the Employee elects to continue such insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended ("COBRA"). The Employee is solely responsible for taking the actions necessary to exercise her rights under COBRA for the insurance coverage the Employee has in effect, including coverage for
|
(b)
|
Severance Pay as Liquidated Damages
.
The parties agree, in the event of a material breach of this Agreement by the Company with respect to which the Employee has given notice and that is not cured, in either case, in accordance with subsection 6(b), following which the Employee terminates her employment for Good Reason, that actual damages are speculative and that the amount of the Severance Pay or, if applicable, the CIC
Severance Pay (as defined below) set forth herein is liquidated damages and is a reasonable estimate of what damages would be for a material breach of this Agreement.
|
(i)
|
That the Employee returns any and all equipment, software, data, property and information of the Company or the Company Affiliates, including documents and records or copies thereof relating in any way to any proprietary information of the Company or any of the Company Affiliates whether prepared by the Employee or any other person or entity. That the Employee further agrees that she shall not retain any proprietary information of the Company or any of the Company Affiliates after the Termination Date;
|
(ii)
|
That the Employee executes a Global Release of Liability, in a form to be determined by the Company in its sole discretion, which releases the
|
(iii)
|
That the Employee reaffirms the covenants contained herein, in writing, including, but not limited to, the covenants set forth in Section 1 0.
|
(iv)
|
Notwithstanding anything in this Agreement to the contrary, in any case where the first and last days of the applicable release and nonrevocability periods provided for in the Global Release of Liability (the "Applicable Release Period") are in two separate taxable years, any payments required to be made to the Employee under this Agreement that are treated as deferred compensation for purposes of section 409A of the Internal Revenue Code of 1986, as amended (the "Code") and the regulations and guidance promulgated thereunder ("Section 409A") shall be made in the later taxable year, as soon as practicable, but in no event later than thirty (30) days following the conclusion of the Applicable Release Period. In addition to the foregoing, the Applicable Release Period shall conclude no later than sixty (60) days following the Termination Date.
|
(d)
|
Voluntary Termination by the Employee
.
The Employee may terminate her employment and this Agreement for reasons other than those identified in subsection 6(b) upon not less than sixty (60) days prior written notice. If the Employee terminates her employment and this Agreement pursuant to this subsection 7(d), she shall be entitled only to the following:
|
(e)
|
Qualifying Change in Control Termination.
If, before the expiration of the Term, the Company terminates the Employee's employment within the period commencing six (6) months prior to and ending eighteen (18) months following a Change in Control (as defined below), such period referred to herein as the "CIC Period," for any reason other than as specified above in subsection 6(a) for Cause, subsection 6(c)(i) for the death of the Employee, or subsection 6(c)(ii) for disability, or if the Employee terminates her employment and this Agreement for Good Reason pursuant to subsection 6(b), the Employee shall receive the severance pay set forth in subsections (i) and (ii) below (the "CIC Severance Pay"), provided that if the Employee's employment is terminated during the six
|
(i)
|
In lieu of any further salary payments to the Employee for periods subsequent to the Termination Date and in lieu of any severance benefit otherwise payable to the Employee, a lump sum cash payment equal to two (2) times the sum of(A) Base Salary and (B) $162,500. Such payment shall be made as soon as practicable (but in no event later than sixty (60) days) following the Termination Date; provided, however, that such payments shall be delayed to the extent required under subsection 7(c)(iv) or Section 25 below; and
|
(ii)
|
Continuation of the medical, dental and vision insurance coverage in effect on the Employee's Termination Date for a period of eighteen (18) months following the Termination Date with the Company paying the employer portion of the premium and the Employee paying the employee portion, including dependents if applicable, of the premium during such eighteen (18)-month period, provided that the Employee elects to continue such insurance coverage under COBRA. The Employee is solely responsible for taking the actions necessary to exercise her rights under COBRA for the insurance coverage the Employee has in effect, including coverage for dependents if applicable, on the Termination Date.
|
(J)
|
Definition of Change in Control
.
For purposes of this Agreement, a "Change in Control" shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:
|
(i)
|
Any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company; or
|
(ii)
|
Any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12)-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 35% or more of the total voting power of the stock of the Company; or
|
(iii)
|
A majority of members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or
|
(iv)
|
Any one person or group acquires (or has acquired during the immediately preceding twelve (12)-month period ending on the date of the most recent acquisition) assets of the Company with an aggregate gross fair market value of not less than forty percent (40%) of the aggregate gross fair market value of the assets of the Company immediately prior to such acquisition. For this purpose, gross fair market value shall mean the fair value of the affected assets determined without regard to any liabilities associated with such assets.
|
(g)
|
No Duplication of Payments or Benefits
.
Notwithstanding any provision of this Agreement to the contrary, the Employee shall not be eligible to receive any payments or benefits under both subsections 7(a) and 7(e); but rather,
|
(i)
|
If it is determined that any payment or benefit received or to be received by the Employee, whether pursuant to this Agreement or otherwise (the "Severance Payments"), is a "parachute payment" within the meaning of section 280G of the Code (all such payments and benefits, including the Severance Payments as applicable hereinafter called the "Total Payments") that will be subject (in whole or part) to the tax imposed under section 4999 of the Code (the "Excise Tax"), then if(A) the Total Payments exceed the largest amount that would result in no portion of the Total Payments being subject to the Excise Tax (the "Safe Harbor"), and (B) the reduction of the Total Payments to an amount equal to the Safe Harbor would provide the Employee with a greater after-tax amount than would be provided to the Employee if the Total Payments were not reduced, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the Safe Harbor. If the Severance Payments are reduced pursuant to this subsection, then the non-cash portion of the Total Payments shall first be reduced, and the cash portion of the Total Payments shall thereafter be reduced (in each case in reverse order beginning with payments or benefits that are to be paid or provided the farthest in time from the Change in Control), so that the amount of the Total Payments is equal to the Safe Harbor. Any reduction pursuant to the preceding sentence shall take precedence over the provisions of any other plan, program, agreement or arrangement governing the Employee's rights and entitlements to any benefits or compensation.
|
(ii)
|
For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel ("Tax Counsel") selected by the Board in existence immediately prior to the Change in Control, does not constitute a "parachute payment" within the meaning of section 280G(b)(2) of the Code, including by reason of section 280G(b)(4)(A) of the Code, (B) the Severance Payments shall be reduced only to the extent necessary so that the Total Payments (other than those referred to in clause (A)) in their entirety constitute reasonable compensation for services actually rendered within the meaning of section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions by reason of section 280G of the Code, in the opinion of Tax Counsel, and (C) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. If the Employee disputes the Company's calculations (in whole or in part), the reasonable opinion of Tax Counsel with respect to the matter in dispute shall prevail.
|
(iii)
|
In the event that a change is finally determined to be required in the amount of taxes paid by, or withheld on behalf of, the Employee, then appropriate adjustments will be made under this Agreement such that the net amount that is payable to the Employee reflects the intent of the parties pursuant to this Agreement. If the Company owes the Employee an additional payment under this subsection, such payment shall be made to the Employee promptly, but in no event more than sixty (60) days following the date the underpayment is finally determined, but no later than the calendar year following the calendar year in which the underpayment is finally determined. If the Employee owes an amount to the Company pursuant to this Section, then the Employee shall repay such amount to the Company promptly, but in no event more than sixty (60) days following the date that the overpayment by the Company is finally determined, but no later than the calendar year following the calendar year in which the overpayment is finally determined. Any repayment pursuant to this subsection (either by the Company or the Employee) shall include applicable interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code.
|
(a)
|
Non-Competition.
The Employee understands and agrees that the Company and the Company Affiliates do business throughout the State of Nevada and other states. The Employee further understands and agrees that she is a high ranking officer of the Company and will have access to confidential and trade secret information and goodwill of the Company and the Company Affiliates that will allow the Employee to unfairly compete with the Company and the Company Affiliates justifying this restriction. If the Employee's employment is terminated (by either the Employee or the Company), during the Term, for any reason other than as specified above in subsection 6(c)(i) by reason of the death of the Employee, then for a period of twelve (12) months commencing on the Termination Date, the Employee agrees that, without the written permission of the Company, she will not engage (whether as owner, partner, controlling stockholder, controlling investor, employee, adviser, consultant, or otherwise) in any business that is in direct competition with the business being conducted by the Company or any of the Company Affiliates as of the Termination Date, in Nevada or in any other state in which the Company is conducting such business (the "Non-Compete
|
(b)
|
Non-Solicitation.
Without limiting the generality of the foregoing, the Employee agrees that for a period of eighteen (18) months following the Employee's termination of employment (for any reason, by either the Employee or the Employer), she will not, without the prior written consent of the Company, directly or indirectly solicit or attempt to solicit, within the Non-Compete Area, any business from any person or entity that the Company or any of the Company Affiliates called upon, solicited, or conducted business with as of such Termination Date, any persons or entities that have been customers of the Company or any of the Company Affiliates or recruit any person who has been or is an employee of the Company or any of the Company Affiliates, during the preceding one (1)-year period from the Termination Date. In addition, the Employee agrees that she shall not directly or indirectly solicit or encourage any employee of the Company or any of the Company Affiliates to go to work for or with the Employee for a period of one (1)-year following the Termination Date.
|
(c)
|
In
the event the Employee violates subsection l0(a) or 10(b), the applicable period of time during which the
|
(d)
|
Confidential Information.
The Employee acknowledges that she has had or will have access to the confidential information of the Company and the Company Affiliates (including, but not limited to, records regarding sales, price and cost information, marketing plans, customer names, customer lists, sales techniques, distribution plans or procedures, and other material relating to the business conducted by the Company and the Company Affiliates), proprietary, or trade secret information (the "Confidential Information"), and agrees never to use the Confidential Information other than for the sole benefit of the Company and the Company Affiliates and further agrees to never disclose such Confidential Information (except as may be required by regulatory authorities or as may be required by law) to any entity or person that is not an officer of the Company or a Company Affiliate at the time of such disclosure, without the prior written consent of the Company. The Employee further acknowledges that this covenant to maintain Confidential Information is necessary to protect the goodwill and proprietary interests of the Company and the Company Affiliates and the restriction against the disclosure of Confidential Information is reasonable in light of the consideration and other value the Employee has received or will receive pursuant to this Agreement and otherwise pursuant to her employment by the Company.
|
(e)
|
From and following the Employee's termination of employment, the Employee agrees to cooperate with the Company and the Company Affiliates in any litigation, administrative proceeding, investigation or audit involving any matters with which the Employee has knowledge of from her employment with the Company. The Company shall reimburse the Employee for reasonable expenses, including reasonable compensation for services rendered at her hourly rate of compensation as of the Termination Date, incurred in providing such assistance and approved by the Company. The Company shall reimburse the Employee for such expenses incurred in accordance with the policies and procedures of the Company, but in no event no later than the end of the year following the year in which the expenses were incurred.
|
(f)
|
In the event of a violation of this Section 10, the Company and the Company Affiliates shall be entitled to any form of relief at law or equity, and the parties agree and acknowledge that injunctive relief is an appropriate, but not exclusive, remedy to enforce the provisions hereof. The existence of any claim or cause of action of the Employee against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense of the Company's enforcement of the covenants set forth in this Section 10. The Employee hereby submits to the jurisdiction of the courts of the State of Nevada and federal courts therein for the purposes of any actions or proceedings instituted by the Company to enforce its rights under this Agreement, to seek money damages or seek injunctive relief. The Employee further acknowledges and agrees (i) that the obligations contained in Section 10 of this Agreement are necessary to protect the interests of the Company and the Company Affiliates, (ii) that the restrictions contained herein are fair, do not unreasonably restrict the Employee's further employment and business opportunities, and are commensurate with the
|
|
compensation arrangements set out in this Agreement and (iii) that such compensation arrangements constitute separate consideration for the obligations set forth in this Section 10. The covenants contained in Section 10 shall each be construed as an agreement independent of any other provisions of this Agreement. Both parties intend to make the covenants of Section 10 binding only to the extent that it may be lawfully done under existing applicable laws. If a court of competent jurisdiction decides any part of any covenant is overly broad, thereby making the covenant unenforceable, the parties agree that such court shall substitute a reasonable, judicially enforceable limitation in place of the offensive part of the covenant and as so modified the covenant shall be as fully enforceable as set forth herein by the parties themselves in the modified form.
|
(g)
|
The Employee acknowledges that it is possible that the corporate structure of the Company could change during the Term. The Employee hereby acknowledges and affirms that the Company may assign its rights under this Agreement, including but not limited to its rights to enforce the covenants set forth in this Section 10, to a third-party without the approval of or additional consideration to the Employee. The Employee acknowledges and agrees that the consideration called for herein is good and sufficient consideration for the Company's right to assign its rights under this Agreement.
|
(h)
|
Subsections l0(a) through (g), inclusive, of this Agreement shall survive either termination of the employment
|
•
|
Movement of household goods and automobiles from your current residence to Reno, Nevada through a professional mover including packing, unpacking and professional storage of household goods for up to six (6) mouths;
|
•
|
Reimbursement of an airline trip to prepare for/supervise movement of goods; Reimbursement of two house-hunting trips for you and one other person up to four days per trip;
|
•
|
Reimbursement of reasonable expenses necessary to complete your move, such as airfare for you and your family, hotel costs and meals for the trip from your current residence;
|
•
|
Reimbursement of temporary housing living expenses (rent, deposit, utilities) up to 6 months;
|
•
|
If as a result of your relocation to the Reno, Nevada area, you choose to sell your current home in West Bend, Wisconsin, then the Company will pay for two (2) independent appraisals for your home at the time it is placed on the market for sale, each conducted by licensed appraisers. The Company agrees that the appropriate sales price should be the average of these two appraisals. In the event that you incur a loss on the sale of this home, with loss defined as the difference between the appropriate sales price and the actual sales price (gross), the Company will pay you the difference up to $40,000;
|
•
|
If as a result of your relocation to the Reno, Nevada area, you choose to sell your current home in West Bend, Wisconsin, the Company will pay realtor fees (not to exceed six percent (6%) of the sales price and closing costs for the sale of your current house, in
the aggregate up to $5,000;
|
•
|
If as a result of your relocation to the Reno, Nevada area, you choose to buy a home in the Reno, Nevada area, the Company will reimburse you for standard closing costs (excluding financing related costs) for the purchase of a home in the Reno area; Should your family remain in West Bend, Wisconsin during your transition to Reno, Nevada the Company will provide airfare or reimbursement for two (2) trips for you to West Bend, Wisconsin per month, not to exceed six (6) months from your start date, or alternatively, will provide you with a lump sum payment of $6,000.
|
•
|
To the extent that the reimbursement of any of the relocation expenses results in taxable income to you (after taking into account any and all offsetting deductions), the Company will pay you an additional amount (the "Relocation Gross-Up") such that the net after-tax amount of the reimbursement of the Relocation Expenses and the Relocation Gross-Up (at your then-current combined state and federal marginal income tax rates, taking into account the deductibility of state and local income taxes for federal income tax purposes and all other applicable deductions) is equal to the Relocation Expenses. Notwithstanding the foregoing, the Relocation Gross-Up shall not exceed $65,000. The Company will not gross-up any income associated with any profit resulting from the sale of your current house. Any tax gross-up payment will be paid to you no later than the end of the taxable year next following the taxable year in which you remit the related taxes.
|
1.
|
Performance and Vesting Periods: January 1, 2017 (the “Performance Period Start Date”) to December 31, 2018 (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, 2019 (the “Vesting Start Date”) until December 31, 2019 (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 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, so long as the Grantee refrains from engaging in Harmful Conduct. For purposes of this Agreement, “Retirement” shall mean the Grantee’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 Grantee has given written notice of the Grantee’s intent to retire to the Company (or its designate), no fewer than six months prior to the date that the Grantee terminates employment, in a form satisfactory to the Company (or its designate).
|
(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
|
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 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.
|
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 and any dividend equivalents 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 and any dividend equivalents 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: Subject to Section 18 below, 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 until the date of issuance of a stock certificate for such shares of Stock.
|
18.
|
Dividend Equivalents: Upon achievement of the applicable Performance Goals, the Grantee shall be credited with a dividend equivalent with respect to the Performance Shares that are earned thereon (such Performance Shares, the “Earned Performance Shares”) (such credit, the “Initial Credit”). The amount of the Initial Credit shall be equal to the dividends or distributions made on or before the Performance Certification Date. In addition, the Grantee shall be credited with a dividend equivalent for each dividend or distribution made following the Performance Certification Date with respect to the shares of Stock covered by the then-outstanding Earned Performance Shares, with the amount of each such dividend equivalent equal to the amount of the applicable dividend or distribution. The dividend equivalents shall be subject to the same terms and conditions, and shall be payable in cash (without interest) when the underlying Performance Share becomes payable. If the underlying Performance Share does not become payable or is forfeited, any dividend equivalents with respect to the underlying Performance Share will also fail to become payable and be forfeited.
|
19.
|
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.
|
20.
|
Amendment: This Agreement may not be amended, terminated, suspended or otherwise modified except in a written instrument duly executed by both parties.
|
21.
|
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.
|
22.
|
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
|
|
EMPLOYERS HOLDINGS, INC.
|
By:
|
|
|
Douglas D. Dirks
|
|
President and Chief Executive Officer
|
|
|
|
|
|
GRANTEE
|
|
|
|
Insert name of Grantee
|
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 27, 2017
|
/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 27, 2017
|
/s/ Michael S. Paquette
|
|
|
Michael S. Paquette
|
|
|
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 27, 2017
|
/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 27, 2017
|
/s/ Michael S. Paquette
|
|
|
Michael S. Paquette
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
Employers Holdings, Inc.
|
|
|
(Principal Financial and Accounting Officer)
|