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
|
|
October 18, 2018
|
Common Stock, $0.01 par value per share
|
|
32,799,666 shares outstanding
|
|
|
Page
No.
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||
Consolidated Balance Sheets
|
||||||||
(in millions, except share data)
|
||||||||
|
|
As of
|
|
As of
|
||||
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Assets
|
|
(unaudited)
|
|
|
||||
Investments:
|
|
|
|
|
||||
Fixed maturity securities at fair value (amortized cost $2,423.0 at September 30, 2018 and $2,421.0 at December 31, 2017)
|
|
$
|
2,394.6
|
|
|
$
|
2,463.4
|
|
Equity securities at fair value (cost $94.2 at September 30, 2018 and $116.7 at December 31, 2017)
|
|
189.6
|
|
|
210.3
|
|
||
Equity securities at cost
|
|
6.4
|
|
|
—
|
|
||
Short-term investments at fair value (amortized cost $4.0 at December 31, 2017)
|
|
—
|
|
|
4.0
|
|
||
Total investments
|
|
2,590.6
|
|
|
2,677.7
|
|
||
Cash and cash equivalents
|
|
203.0
|
|
|
73.3
|
|
||
Restricted cash and cash equivalents
|
|
2.0
|
|
|
1.0
|
|
||
Accrued investment income
|
|
19.0
|
|
|
19.6
|
|
||
Premiums receivable (less bad debt allowance of $7.9 at September 30, 2018 and $10.0 at December 31, 2017)
|
|
352.7
|
|
|
326.7
|
|
||
Reinsurance recoverable for:
|
|
|
|
|
||||
Paid losses
|
|
7.9
|
|
|
7.2
|
|
||
Unpaid losses
|
|
511.8
|
|
|
537.0
|
|
||
Deferred policy acquisition costs
|
|
50.8
|
|
|
45.8
|
|
||
Deferred income taxes, net
|
|
20.6
|
|
|
28.7
|
|
||
Property and equipment, net
|
|
16.5
|
|
|
13.9
|
|
||
Intangible assets, net
|
|
7.7
|
|
|
7.9
|
|
||
Goodwill
|
|
36.2
|
|
|
36.2
|
|
||
Contingent commission receivable—LPT Agreement
|
|
32.0
|
|
|
31.4
|
|
||
Cloud computing arrangements
|
|
21.8
|
|
|
—
|
|
||
Other assets
|
|
25.9
|
|
|
33.7
|
|
||
Total assets
|
|
$
|
3,898.5
|
|
|
$
|
3,840.1
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
||
Unpaid losses and loss adjustment expenses
|
|
$
|
2,233.7
|
|
|
$
|
2,266.1
|
|
Unearned premiums
|
|
356.0
|
|
|
318.3
|
|
||
Commissions and premium taxes payable
|
|
59.8
|
|
|
55.3
|
|
||
Accounts payable and accrued expenses
|
|
24.6
|
|
|
23.7
|
|
||
Deferred reinsurance gain—LPT Agreement
|
|
152.1
|
|
|
163.6
|
|
||
Notes payable
|
|
20.0
|
|
|
20.0
|
|
||
Non-cancellable obligations
|
|
18.2
|
|
|
2.7
|
|
||
Other liabilities
|
|
42.9
|
|
|
42.7
|
|
||
Total liabilities
|
|
$
|
2,907.3
|
|
|
$
|
2,892.4
|
|
Commitments and contingencies
|
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
|
||
Common stock, $0.01 par value; 150,000,000 shares authorized; 56,904,018 and 56,695,174 shares issued and 32,796,666 and 32,597,819 shares outstanding at September 30, 2018 and December 31, 2017, respectively
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
385.2
|
|
|
381.2
|
|
||
Retained earnings
|
|
1,011.9
|
|
|
842.2
|
|
||
Accumulated other comprehensive (loss) income, net of tax
|
|
(22.5
|
)
|
|
107.4
|
|
||
Treasury stock, at cost (24,107,352 shares at September 30, 2018 and 24,097,355 shares at December 31, 2017)
|
|
(384.0
|
)
|
|
(383.7
|
)
|
||
Total stockholders’ equity
|
|
991.2
|
|
|
947.7
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
3,898.5
|
|
|
$
|
3,840.1
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||||||||||
Consolidated Statements of Comprehensive Income
|
||||||||||||||||
(in millions, except per share data)
|
||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues
|
|
(unaudited)
|
|
(unaudited)
|
||||||||||||
Net premiums earned
|
|
$
|
192.9
|
|
|
$
|
187.9
|
|
|
$
|
547.5
|
|
|
$
|
535.0
|
|
Net investment income
|
|
20.2
|
|
|
18.5
|
|
|
59.9
|
|
|
55.4
|
|
||||
Net realized and unrealized gains on investments
|
|
15.6
|
|
|
4.1
|
|
|
13.2
|
|
|
7.4
|
|
||||
Gain on redemption of notes payable
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
||||
Other income
|
|
0.2
|
|
|
0.4
|
|
|
0.4
|
|
|
0.5
|
|
||||
Total revenues
|
|
228.9
|
|
|
210.9
|
|
|
621.0
|
|
|
600.4
|
|
||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
||||||
Losses and loss adjustment expenses
|
|
106.6
|
|
|
116.9
|
|
|
289.7
|
|
|
332.0
|
|
||||
Commission expense
|
|
24.8
|
|
|
23.7
|
|
|
73.1
|
|
|
66.7
|
|
||||
Underwriting and other operating expenses
|
|
38.8
|
|
|
33.6
|
|
|
118.1
|
|
|
102.1
|
|
||||
Interest and financing expenses
|
|
0.4
|
|
|
0.3
|
|
|
1.1
|
|
|
1.1
|
|
||||
Other expenses
|
|
—
|
|
|
7.5
|
|
|
—
|
|
|
7.5
|
|
||||
Total expenses
|
|
170.6
|
|
|
182.0
|
|
|
482.0
|
|
|
509.4
|
|
||||
Net income before income taxes
|
|
58.3
|
|
|
28.9
|
|
|
139.0
|
|
|
91.0
|
|
||||
Income tax expense
|
|
10.7
|
|
|
7.0
|
|
|
23.3
|
|
|
21.1
|
|
||||
Net income
|
|
$
|
47.6
|
|
|
$
|
21.9
|
|
|
$
|
115.7
|
|
|
$
|
69.9
|
|
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
|
|
|
|
|
|
|
|
||||||||
Unrealized AFS investment (losses) gains arising during the period (net of taxes of $(2.4) and $1.6 for the three months ended September 30, 2018 and 2017, respectively, and $(15.0) and $11.3 for the nine months ended September 30, 2018 and 2017, respectively)
|
|
$
|
(9.2
|
)
|
|
$
|
3.0
|
|
|
$
|
(56.3
|
)
|
|
$
|
20.9
|
|
Reclassification adjustment for realized AFS investment losses (gains) in net income (net of taxes of $(1.4) for the three months ended September 30, 2017, and $0.1 and $(2.6) for the nine months ended September 30, 2018 and 2017, respectively)
|
|
—
|
|
|
(2.7
|
)
|
|
0.4
|
|
|
(4.8
|
)
|
||||
Other comprehensive (loss) income, net of tax
|
|
(9.2
|
)
|
|
0.3
|
|
|
(55.9
|
)
|
|
16.1
|
|
||||
Total comprehensive income
|
|
$
|
38.4
|
|
|
$
|
22.2
|
|
|
$
|
59.8
|
|
|
$
|
86.0
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net realized and unrealized gains on investments
|
|
|
|
|
|
|
|
|
||||||||
Net realized and unrealized gains on investments before impairments
|
|
$
|
15.6
|
|
|
$
|
4.1
|
|
|
$
|
15.2
|
|
|
$
|
7.6
|
|
Other than temporary impairment recognized in earnings
|
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
|
(0.2
|
)
|
||||
Net realized and unrealized gains on investments
|
|
$
|
15.6
|
|
|
$
|
4.1
|
|
|
$
|
13.2
|
|
|
$
|
7.4
|
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share (Note 12):
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
1.45
|
|
|
$
|
0.67
|
|
|
$
|
3.52
|
|
|
$
|
2.15
|
|
Diluted
|
|
$
|
1.43
|
|
|
$
|
0.66
|
|
|
$
|
3.48
|
|
|
$
|
2.12
|
|
Cash dividends declared per common share and eligible RSUs and PSUs
|
|
$
|
0.20
|
|
|
$
|
0.15
|
|
|
$
|
0.60
|
|
|
$
|
0.45
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||||||||||||||||||||
Consolidated Statements of Stockholders' Equity
|
||||||||||||||||||||||||||
For the Three Months Ended September 30, 2018 and 2017
|
||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income, Net
|
|
Treasury Stock at Cost
|
|
Total Stockholders' Equity
|
|||||||||||||||
|
Shares Issued
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
|
(in millions, except share data)
|
|||||||||||||||||||||||||
Balance, July 1, 2018
|
56,866,727
|
|
|
$
|
0.6
|
|
|
$
|
382.4
|
|
|
$
|
970.8
|
|
|
$
|
(13.3
|
)
|
|
$
|
(384.0
|
)
|
|
$
|
956.5
|
|
Stock-based obligations
|
—
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
||||||
Stock options exercised
|
37,291
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.6
|
)
|
|
—
|
|
|
—
|
|
|
(6.6
|
)
|
||||||
Net income for the period
|
—
|
|
|
—
|
|
|
—
|
|
|
47.6
|
|
|
—
|
|
|
—
|
|
|
47.6
|
|
||||||
Change in net unrealized losses on investments, net of taxes of $2.4
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9.2
|
)
|
|
—
|
|
|
(9.2
|
)
|
||||||
Balance, September 30, 2018
|
56,904,018
|
|
|
$
|
0.6
|
|
|
$
|
385.2
|
|
|
$
|
1,011.9
|
|
|
$
|
(22.5
|
)
|
|
$
|
(384.0
|
)
|
|
$
|
991.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, July 1, 2017
|
56,510,352
|
|
|
$
|
0.6
|
|
|
$
|
376.6
|
|
|
$
|
815.4
|
|
|
$
|
90.3
|
|
|
$
|
(383.7
|
)
|
|
$
|
899.2
|
|
Stock-based obligations
|
—
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
||||||
Stock options exercised
|
1,998
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Vesting of RSUs and PSUs, net of shares withheld to satisfy tax withholdings
|
8,934
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.9
|
)
|
|
—
|
|
|
—
|
|
|
(4.9
|
)
|
||||||
Net income for the period
|
—
|
|
|
—
|
|
|
—
|
|
|
21.9
|
|
|
—
|
|
|
—
|
|
|
21.9
|
|
||||||
Change in net unrealized gains on investments, net of taxes of $0.2
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
||||||
Balance, September 30, 2017
|
56,521,284
|
|
|
$
|
0.6
|
|
|
$
|
377.2
|
|
|
$
|
832.4
|
|
|
$
|
90.6
|
|
|
$
|
(383.7
|
)
|
|
$
|
917.1
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||||||||||||||||||||
Consolidated Statements of Stockholders' Equity
|
||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2018 and 2017
|
||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income, Net
|
|
Treasury Stock at Cost
|
|
Total Stockholders' Equity
|
|||||||||||||||
|
Shares Issued
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
|
(in millions, except share data)
|
|||||||||||||||||||||||||
Balance, January 1, 2018
|
56,695,174
|
|
|
$
|
0.6
|
|
|
$
|
381.2
|
|
|
$
|
842.2
|
|
|
$
|
107.4
|
|
|
$
|
(383.7
|
)
|
|
$
|
947.7
|
|
Stock-based obligations
|
—
|
|
|
—
|
|
|
5.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.9
|
|
||||||
Stock options exercised
|
51,091
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
||||||
Vesting of RSUs and PSUs, net of shares withheld to satisfy tax withholdings
|
157,753
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
||||||
Acquisition of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
(0.3
|
)
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(19.9
|
)
|
|
—
|
|
|
—
|
|
|
(19.9
|
)
|
||||||
Net income for the period
|
—
|
|
|
—
|
|
|
—
|
|
|
115.7
|
|
|
—
|
|
|
—
|
|
|
115.7
|
|
||||||
Reclassification adjustment for adoption of ASU No. 2016-01
|
—
|
|
|
—
|
|
|
—
|
|
|
74.0
|
|
|
(74.0
|
)
|
|
—
|
|
|
—
|
|
||||||
Change in net unrealized losses on investments, net of taxes of $14.9
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(55.9
|
)
|
|
—
|
|
|
(55.9
|
)
|
||||||
Balance, September 30, 2018
|
56,904,018
|
|
|
$
|
0.6
|
|
|
$
|
385.2
|
|
|
$
|
1,011.9
|
|
|
$
|
(22.5
|
)
|
|
$
|
(384.0
|
)
|
|
$
|
991.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, January 1, 2017
|
56,226,277
|
|
|
$
|
0.6
|
|
|
$
|
372.0
|
|
|
$
|
777.2
|
|
|
$
|
74.5
|
|
|
$
|
(383.7
|
)
|
|
$
|
840.6
|
|
Stock-based obligations
|
—
|
|
|
—
|
|
|
4.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.0
|
|
||||||
Stock options exercised
|
169,024
|
|
|
—
|
|
|
3.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.3
|
|
||||||
Vesting of RSUs and PSUs, net of shares withheld to satisfy tax withholdings
|
125,983
|
|
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(14.7
|
)
|
|
—
|
|
|
—
|
|
|
(14.7
|
)
|
||||||
Net income for the period
|
|
|
—
|
|
|
—
|
|
|
69.9
|
|
|
—
|
|
|
—
|
|
|
69.9
|
|
|||||||
Change in net unrealized gains on investments, net of taxes of $8.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16.1
|
|
|
—
|
|
|
16.1
|
|
|||||||
Balance, September 30, 2017
|
56,521,284
|
|
|
$
|
0.6
|
|
|
$
|
377.2
|
|
|
$
|
832.4
|
|
|
$
|
90.6
|
|
|
$
|
(383.7
|
)
|
|
$
|
917.1
|
|
|
|
As of
|
|
As of
|
||||
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
|
|
(in millions)
|
||||||
Cash and cash equivalents
|
|
$
|
203.0
|
|
|
$
|
73.3
|
|
Restricted cash and cash equivalents supporting reinsurance obligations
|
|
2.0
|
|
|
1.0
|
|
||
Total cash, cash equivalents and restricted cash
|
|
$
|
205.0
|
|
|
$
|
74.3
|
|
|
|
Nine Months Ended
|
||
|
|
September 30, 2018
|
||
|
|
(in millions, except per share data)
|
||
LPT Reserve Adjustment
|
|
$
|
(6.3
|
)
|
Cumulative adjustment to the Deferred Gain
(1)
|
|
(2.2
|
)
|
|
Net income impact from this change in estimate
|
|
2.2
|
|
|
Earnings per common share impact from this change in estimate:
|
|
|
||
Basic and Diluted
|
|
0.07
|
|
(1)
|
The cumulative adjustment to the Deferred reinsurance gain–LPT Agreement (Deferred Gain) was also recognized in losses and LAE incurred in the Company's Consolidated Statement of Comprehensive Income, so that the Deferred Gain reflects the balance that would have existed had the revised loss and LAE reserves been recognized at the inception of the LPT Agreement.
|
|
|
Nine Months Ended
|
||
|
|
September 30, 2018
|
||
|
|
(in millions, except per share data)
|
||
LPT Contingent Commission Adjustment
|
|
$
|
0.5
|
|
Net income impact from this change in estimate
|
|
0.5
|
|
|
Earnings per common share impact from this change in estimate:
|
|
|
||
Basic and Diluted
|
|
0.02
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
Financial assets
|
|
|
|
|
|
|
|
|
||||||||
Total investments at fair value
|
|
$
|
2,584.2
|
|
|
$
|
2,584.2
|
|
|
$
|
2,677.7
|
|
|
$
|
2,677.7
|
|
Cash and cash equivalents
|
|
203.0
|
|
|
203.0
|
|
|
73.3
|
|
|
73.3
|
|
||||
Restricted cash and cash equivalents
|
|
2.0
|
|
|
2.0
|
|
|
1.0
|
|
|
1.0
|
|
||||
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||
Notes payable
|
|
$
|
20.0
|
|
|
$
|
23.4
|
|
|
$
|
20.0
|
|
|
$
|
23.6
|
|
•
|
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.
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasuries
|
|
$
|
—
|
|
|
$
|
111.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
137.0
|
|
|
$
|
—
|
|
U.S. Agencies
|
|
—
|
|
|
11.4
|
|
|
—
|
|
|
—
|
|
|
11.8
|
|
|
—
|
|
||||||
States and municipalities
|
|
—
|
|
|
527.4
|
|
|
—
|
|
|
—
|
|
|
642.5
|
|
|
—
|
|
||||||
Corporate securities
|
|
—
|
|
|
1,110.9
|
|
|
—
|
|
|
—
|
|
|
1,118.0
|
|
|
—
|
|
||||||
Residential mortgage-backed securities
|
|
—
|
|
|
423.9
|
|
|
—
|
|
|
—
|
|
|
389.3
|
|
|
—
|
|
||||||
Commercial mortgage-backed securities
|
|
—
|
|
|
95.1
|
|
|
—
|
|
|
—
|
|
|
106.0
|
|
|
—
|
|
||||||
Asset-backed securities
|
|
—
|
|
|
66.5
|
|
|
—
|
|
|
—
|
|
|
58.8
|
|
|
—
|
|
||||||
Other securities
|
|
—
|
|
|
48.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total fixed maturity securities
|
|
$
|
—
|
|
|
$
|
2,394.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,463.4
|
|
|
$
|
—
|
|
Equity securities at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Industrial and miscellaneous
|
|
$
|
162.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
181.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-redeemable preferred stock (FHLB)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.7
|
|
||||||
Other
|
|
27.6
|
|
|
—
|
|
|
—
|
|
|
23.9
|
|
|
—
|
|
|
—
|
|
||||||
Total equity securities at fair value
|
|
189.6
|
|
|
—
|
|
|
—
|
|
|
205.6
|
|
|
—
|
|
|
4.7
|
|
||||||
Short-term investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.0
|
|
|
—
|
|
||||||
Total investments at fair value
|
|
$
|
189.6
|
|
|
$
|
2,394.6
|
|
|
$
|
—
|
|
|
$
|
205.6
|
|
|
$
|
2,467.4
|
|
|
$
|
4.7
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(in millions)
|
||||||
Cash and cash equivalents at fair value
|
$
|
56.0
|
|
|
$
|
34.3
|
|
Cash equivalents measured at NAV, which approximates fair value
|
147.0
|
|
|
39.0
|
|
||
Total cash and cash equivalents
|
$
|
203.0
|
|
|
$
|
73.3
|
|
|
|
Level 3 Securities
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Beginning balance, January 1
|
|
$
|
4.7
|
|
|
$
|
11.9
|
|
Transfers out of Level 3
(1)
|
|
(4.7
|
)
|
|
(7.0
|
)
|
||
Purchases and sales, net
|
|
—
|
|
|
(0.2
|
)
|
||
Ending balance, September 30
|
|
$
|
—
|
|
|
$
|
4.7
|
|
(1)
|
The transfer during the
nine
months ended
September 30, 2018
was the result of adoption of ASU 2016-01, which specified that FHLB stock shall be carried at cost and is no longer measured at fair value. Transfers during the
nine
months ended
September 30, 2017
were from Level 3 to Level 2 as observable market data became available for these securities.
|
|
|
Cost or Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
At September 30, 2018
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries
|
|
$
|
112.7
|
|
|
$
|
0.8
|
|
|
$
|
(2.2
|
)
|
|
$
|
111.3
|
|
U.S. Agencies
|
|
11.3
|
|
|
0.2
|
|
|
(0.1
|
)
|
|
11.4
|
|
||||
States and municipalities
|
|
518.4
|
|
|
11.5
|
|
|
(2.5
|
)
|
|
527.4
|
|
||||
Corporate securities
|
|
1,129.1
|
|
|
5.9
|
|
|
(24.1
|
)
|
|
1,110.9
|
|
||||
Residential mortgage-backed securities
|
|
437.7
|
|
|
1.6
|
|
|
(15.4
|
)
|
|
423.9
|
|
||||
Commercial mortgage-backed securities
|
|
98.6
|
|
|
—
|
|
|
(3.5
|
)
|
|
95.1
|
|
||||
Asset-backed securities
|
|
67.1
|
|
|
0.1
|
|
|
(0.7
|
)
|
|
66.5
|
|
||||
Other securities
|
|
48.1
|
|
|
—
|
|
|
—
|
|
|
48.1
|
|
||||
Total fixed maturity securities
|
|
2,423.0
|
|
|
20.1
|
|
|
(48.5
|
)
|
|
2,394.6
|
|
||||
Total AFS investments
|
|
$
|
2,423.0
|
|
|
$
|
20.1
|
|
|
$
|
(48.5
|
)
|
|
$
|
2,394.6
|
|
At December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries
|
|
$
|
135.8
|
|
|
$
|
2.0
|
|
|
$
|
(0.8
|
)
|
|
$
|
137.0
|
|
U.S. Agencies
|
|
11.3
|
|
|
0.5
|
|
|
—
|
|
|
11.8
|
|
||||
States and municipalities
|
|
617.0
|
|
|
25.5
|
|
|
—
|
|
|
642.5
|
|
||||
Corporate securities
|
|
1,103.4
|
|
|
18.0
|
|
|
(3.4
|
)
|
|
1,118.0
|
|
||||
Residential mortgage-backed securities
|
|
388.3
|
|
|
3.6
|
|
|
(2.6
|
)
|
|
389.3
|
|
||||
Commercial mortgage-backed securities
|
|
106.5
|
|
|
0.4
|
|
|
(0.9
|
)
|
|
106.0
|
|
||||
Asset-backed securities
|
|
58.7
|
|
|
0.3
|
|
|
(0.2
|
)
|
|
58.8
|
|
||||
Total fixed maturity securities
|
|
2,421.0
|
|
|
50.3
|
|
|
(7.9
|
)
|
|
2,463.4
|
|
||||
Equity securities at fair value
|
|
|
|
|
|
|
|
|
||||||||
Industrial and miscellaneous
|
|
100.8
|
|
|
81.5
|
|
|
(0.6
|
)
|
|
181.7
|
|
||||
Non-redeemable preferred stock (FHLB)
|
|
4.7
|
|
|
—
|
|
|
—
|
|
|
4.7
|
|
||||
Other
|
|
11.2
|
|
|
12.7
|
|
|
—
|
|
|
23.9
|
|
||||
Total equity securities at fair value
|
|
116.7
|
|
|
94.2
|
|
|
(0.6
|
)
|
|
210.3
|
|
||||
Short-term investments
|
|
4.0
|
|
|
—
|
|
|
—
|
|
|
4.0
|
|
||||
Total AFS investments
|
|
$
|
2,541.7
|
|
|
$
|
144.5
|
|
|
$
|
(8.5
|
)
|
|
$
|
2,677.7
|
|
|
|
Cost
|
|
Estimated Fair Value
|
||||
|
|
(in millions)
|
||||||
At September 30, 2018
|
|
|
|
|
||||
Equity securities at fair value
|
|
|
|
|
||||
Industrial and miscellaneous
|
|
$
|
78.3
|
|
|
$
|
162.0
|
|
Other
|
|
15.9
|
|
|
27.6
|
|
||
Total equity securities at fair value
|
|
$
|
94.2
|
|
|
$
|
189.6
|
|
|
|
Amortized Cost
|
|
Estimated Fair Value
|
||||
|
|
(in millions)
|
||||||
Due in one year or less
|
|
$
|
154.3
|
|
|
$
|
154.6
|
|
Due after one year through five years
|
|
804.4
|
|
|
803.1
|
|
||
Due after five years through ten years
|
|
730.4
|
|
|
718.5
|
|
||
Due after ten years
|
|
130.5
|
|
|
132.9
|
|
||
Mortgage and asset-backed securities
|
|
603.4
|
|
|
585.5
|
|
||
Total
|
|
$
|
2,423.0
|
|
|
$
|
2,394.6
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||
|
|
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
|
|
$
|
52.3
|
|
|
$
|
(1.4
|
)
|
|
20
|
|
|
$
|
86.0
|
|
|
$
|
(0.5
|
)
|
|
28
|
|
U.S. Agencies
|
|
3.7
|
|
|
(0.1
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
States and municipalities
|
|
148.9
|
|
|
(2.5
|
)
|
|
41
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Corporate securities
|
|
828.6
|
|
|
(19.5
|
)
|
|
267
|
|
|
307.6
|
|
|
(2.3
|
)
|
|
113
|
|
||||
Residential mortgage-backed securities
|
|
293.4
|
|
|
(9.4
|
)
|
|
97
|
|
|
165.0
|
|
|
(0.8
|
)
|
|
45
|
|
||||
Commercial mortgage-backed securities
|
|
66.8
|
|
|
(2.1
|
)
|
|
29
|
|
|
41.8
|
|
|
(0.2
|
)
|
|
19
|
|
||||
Asset-backed securities
|
|
52.8
|
|
|
(0.7
|
)
|
|
35
|
|
|
29.3
|
|
|
(0.2
|
)
|
|
25
|
|
||||
Total less than 12 months
|
|
$
|
1,446.5
|
|
|
$
|
(35.7
|
)
|
|
491
|
|
|
$
|
629.7
|
|
|
$
|
(4.0
|
)
|
|
230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
12 months or greater:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasuries
|
|
$
|
42.8
|
|
|
$
|
(0.8
|
)
|
|
16
|
|
|
$
|
23.4
|
|
|
$
|
(0.3
|
)
|
|
10
|
|
Corporate securities
|
|
82.3
|
|
|
(4.6
|
)
|
|
32
|
|
|
53.2
|
|
|
(1.1
|
)
|
|
17
|
|
||||
Residential mortgage-backed securities
|
|
101.8
|
|
|
(6.0
|
)
|
|
42
|
|
|
77.1
|
|
|
(1.8
|
)
|
|
32
|
|
||||
Commercial mortgage-backed securities
|
|
26.7
|
|
|
(1.4
|
)
|
|
12
|
|
|
25.1
|
|
|
(0.7
|
)
|
|
8
|
|
||||
Total 12 months or greater
|
|
$
|
253.6
|
|
|
$
|
(12.8
|
)
|
|
102
|
|
|
$
|
178.8
|
|
|
$
|
(3.9
|
)
|
|
67
|
|
|
|
Gross Realized Gains
|
|
Gross Realized Losses
|
|
Change in Net Unrealized Gains (Losses)
|
|
Changes in Fair Value Reflected in Earnings
|
|
Changes in Fair Value Reflected in AOCI, before tax
|
||||||||||
|
|
|
|
(in millions)
|
||||||||||||||||
Three Months Ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(11.6
|
)
|
|
$
|
—
|
|
|
$
|
(11.6
|
)
|
Equity securities
|
|
4.9
|
|
|
(0.5
|
)
|
|
11.2
|
|
|
15.6
|
|
|
—
|
|
|||||
Total investments
|
|
$
|
4.9
|
|
|
$
|
(0.5
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
15.6
|
|
|
$
|
(11.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Nine Months Ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
$
|
2.1
|
|
|
$
|
(2.6
|
)
|
|
$
|
(70.8
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(70.8
|
)
|
Equity securities
|
|
13.0
|
|
|
(1.1
|
)
|
|
1.8
|
|
|
13.7
|
|
|
—
|
|
|||||
Total investments
|
|
$
|
15.1
|
|
|
$
|
(3.7
|
)
|
|
$
|
(69.0
|
)
|
|
$
|
13.2
|
|
|
$
|
(70.8
|
)
|
Three Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
$
|
3.5
|
|
|
$
|
(0.7
|
)
|
|
$
|
(1.9
|
)
|
|
$
|
2.8
|
|
|
$
|
(1.9
|
)
|
Equity securities
|
|
1.3
|
|
|
—
|
|
|
2.4
|
|
|
1.3
|
|
|
2.4
|
|
|||||
Total investments
|
|
$
|
4.8
|
|
|
$
|
(0.7
|
)
|
|
$
|
0.5
|
|
|
$
|
4.1
|
|
|
$
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Nine Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
$
|
4.0
|
|
|
$
|
(0.8
|
)
|
|
$
|
17.0
|
|
|
$
|
3.2
|
|
|
$
|
17.0
|
|
Equity securities
|
|
4.4
|
|
|
(0.2
|
)
|
|
7.8
|
|
|
4.2
|
|
|
7.8
|
|
|||||
Total investments
|
|
$
|
8.4
|
|
|
$
|
(1.0
|
)
|
|
$
|
24.8
|
|
|
$
|
7.4
|
|
|
$
|
24.8
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(in millions)
|
||||||||||||||
Fixed maturity securities
|
|
$
|
18.8
|
|
|
$
|
17.4
|
|
|
$
|
56.5
|
|
|
$
|
52.4
|
|
Equity securities
|
|
1.5
|
|
|
1.7
|
|
|
4.8
|
|
|
5.2
|
|
||||
Cash equivalents and restricted cash
|
|
0.9
|
|
|
0.2
|
|
|
1.4
|
|
|
0.4
|
|
||||
Gross investment income
|
|
21.2
|
|
|
19.3
|
|
|
62.7
|
|
|
58.0
|
|
||||
Investment expenses
|
|
(1.0
|
)
|
|
(0.8
|
)
|
|
(2.8
|
)
|
|
(2.6
|
)
|
||||
Net investment income
|
|
$
|
20.2
|
|
|
$
|
18.5
|
|
|
$
|
59.9
|
|
|
$
|
55.4
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(in millions)
|
||||||||||||||
Unpaid losses and LAE at beginning of period
|
|
$
|
2,227.9
|
|
|
$
|
2,284.9
|
|
|
$
|
2,266.1
|
|
|
$
|
2,301.0
|
|
Less reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE
|
|
512.5
|
|
|
559.8
|
|
|
537.0
|
|
|
580.0
|
|
||||
Net unpaid losses and LAE at beginning of period
|
|
1,715.4
|
|
|
1,725.1
|
|
|
1,729.1
|
|
|
1,721.0
|
|
||||
Losses and LAE, net of reinsurance, incurred during the period related to:
|
|
|
|
|
|
|
|
|
|
|
||||||
Current period
|
|
121.1
|
|
|
119.7
|
|
|
342.5
|
|
|
341.0
|
|
||||
Prior periods
|
|
(11.9
|
)
|
|
(0.2
|
)
|
|
(40.8
|
)
|
|
(0.5
|
)
|
||||
Total net losses and LAE incurred during the period
|
|
109.2
|
|
|
119.5
|
|
|
301.7
|
|
|
340.5
|
|
||||
Paid losses and LAE, net of reinsurance, related to:
|
|
|
|
|
|
|
|
|
|
|
||||||
Current period
|
|
31.2
|
|
|
23.5
|
|
|
56.9
|
|
|
45.2
|
|
||||
Prior periods
|
|
71.5
|
|
|
75.3
|
|
|
252.0
|
|
|
270.5
|
|
||||
Total net paid losses and LAE during the period
|
|
102.7
|
|
|
98.8
|
|
|
308.9
|
|
|
315.7
|
|
||||
Ending unpaid losses and LAE, net of reinsurance
|
|
1,721.9
|
|
|
1,745.8
|
|
|
1,721.9
|
|
|
1,745.8
|
|
||||
Reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE
|
|
511.8
|
|
|
553.1
|
|
|
511.8
|
|
|
553.1
|
|
||||
Unpaid losses and LAE at end of period
|
|
$
|
2,233.7
|
|
|
$
|
2,298.9
|
|
|
$
|
2,233.7
|
|
|
$
|
2,298.9
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(in millions)
|
||||||
Dekania Surplus Note, due April 29, 2034
|
$
|
10.0
|
|
|
$
|
10.0
|
|
Alesco Surplus Note, due December 15, 2034
|
10.0
|
|
|
10.0
|
|
||
Total
|
$
|
20.0
|
|
|
$
|
20.0
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
|
(in millions)
|
||||||
Net unrealized (losses) gains on investments, before taxes
|
|
$
|
(28.4
|
)
|
|
$
|
136.0
|
|
Deferred tax benefit (expense) on net unrealized (losses) gains
|
|
5.9
|
|
|
(28.6
|
)
|
||
Total accumulated other comprehensive (loss) income
|
|
$
|
(22.5
|
)
|
|
$
|
107.4
|
|
|
Number Awarded
|
|
Weighted Average Fair Value on Date of Grant
|
|
Aggregate Fair Value on Date of Grant
|
|||||
|
|
|
|
|
(in millions)
|
|||||
March 2018
|
|
|
|
|
|
|||||
RSUs
(1)
|
71,400
|
|
|
$
|
40.30
|
|
|
$
|
2.9
|
|
RSUs
(2)
|
736
|
|
|
40.50
|
|
|
—
|
|
||
PSUs
(3)
|
96,940
|
|
|
40.30
|
|
|
3.9
|
|
||
|
|
|
|
|
|
|||||
May 2018
|
|
|
|
|
|
|||||
RSUs
(4)
|
13,347
|
|
|
$
|
39.65
|
|
|
$
|
0.5
|
|
(1)
|
The RSUs awarded in
March 2018
were awarded to certain employees of the Company and
vest 25% on March 15, 2019, 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 a change of control of the Company.
|
(2)
|
The RSUs awarded in
March 2018
were awarded to non-employee Directors of the Company and
vested in full on May 25, 2018
.
|
(3)
|
The PSUs awarded in
March 2018
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.
|
(4)
|
The RSUs awarded in
May 2018
were awarded to non-employee Directors of the Company and
vest in full on May 24, 2019
.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(in millions, except share data)
|
||||||||||||||
Net income—basic and diluted
|
|
$
|
47.6
|
|
|
$
|
21.9
|
|
|
$
|
115.7
|
|
|
$
|
69.9
|
|
Weighted average number of shares outstanding—basic
|
|
32,906,250
|
|
|
32,563,800
|
|
|
32,864,612
|
|
|
32,454,443
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
||||||||
PSUs
|
|
253,612
|
|
|
243,470
|
|
|
253,269
|
|
|
262,992
|
|
||||
Stock options
|
|
104,450
|
|
|
180,421
|
|
|
101,907
|
|
|
212,044
|
|
||||
RSUs
|
|
51,852
|
|
|
66,294
|
|
|
59,002
|
|
|
77,738
|
|
||||
Dilutive potential shares
|
|
409,914
|
|
|
490,185
|
|
|
414,178
|
|
|
552,774
|
|
||||
Weighted average number of shares outstanding—diluted
|
|
33,316,164
|
|
|
33,053,985
|
|
|
33,278,790
|
|
|
33,007,217
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
|
(in millions)
|
||||||
GAAP stockholders' equity
|
|
$
|
991.2
|
|
|
$
|
947.7
|
|
Deferred reinsurance gain–LPT Agreement
|
|
152.1
|
|
|
163.6
|
|
||
Less: Accumulated other comprehensive (loss) income, net
(1)
|
|
(22.5
|
)
|
|
107.4
|
|
||
Adjusted stockholders' equity
(2)
|
|
$
|
1,165.8
|
|
|
$
|
1,003.9
|
|
(1)
|
The adoption of ASU No. 2016-01 resulted in a $74.0 million reclassification adjustment from Accumulated other comprehensive income, net to Retained earnings as of January 1, 2018.
|
(2)
|
Adjusted stockholders' equity is a non-GAAP measure consisting of total GAAP stockholders' equity plus the Deferred Gain, less Accumulated other comprehensive (loss) income, net.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(in millions)
|
||||||||||||||
Gross premiums written
|
|
$
|
189.2
|
|
|
$
|
179.2
|
|
|
$
|
587.2
|
|
|
$
|
561.3
|
|
Net premiums written
|
|
$
|
187.3
|
|
|
$
|
177.6
|
|
|
$
|
582.5
|
|
|
$
|
556.8
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
|
$
|
192.9
|
|
|
$
|
187.9
|
|
|
$
|
547.5
|
|
|
$
|
535.0
|
|
Net investment income
|
|
20.2
|
|
|
18.5
|
|
|
59.9
|
|
|
55.4
|
|
||||
Net realized and unrealized gains on investments
|
|
15.6
|
|
|
4.1
|
|
|
13.2
|
|
|
7.4
|
|
||||
Gain on redemption of notes payable
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
||||
Other income
|
|
0.2
|
|
|
0.4
|
|
|
0.4
|
|
|
0.5
|
|
||||
Total revenues
|
|
228.9
|
|
|
210.9
|
|
|
621.0
|
|
|
600.4
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Losses and LAE
|
|
106.6
|
|
|
116.9
|
|
|
289.7
|
|
|
332.0
|
|
||||
Commission expense
|
|
24.8
|
|
|
23.7
|
|
|
73.1
|
|
|
66.7
|
|
||||
Underwriting and other operating expenses
|
|
38.8
|
|
|
33.6
|
|
|
118.1
|
|
|
102.1
|
|
||||
Interest and financing expenses
|
|
0.4
|
|
|
0.3
|
|
|
1.1
|
|
|
1.1
|
|
||||
Other expense
|
|
—
|
|
|
7.5
|
|
|
—
|
|
|
7.5
|
|
||||
Total expenses
|
|
170.6
|
|
|
182.0
|
|
|
482.0
|
|
|
509.4
|
|
||||
Income tax expense
|
|
10.7
|
|
|
7.0
|
|
|
23.3
|
|
|
21.1
|
|
||||
Net income
|
|
$
|
47.6
|
|
|
$
|
21.9
|
|
|
$
|
115.7
|
|
|
$
|
69.9
|
|
Less amortization of the Deferred Gain related to losses
|
|
$
|
2.1
|
|
|
$
|
2.1
|
|
|
$
|
7.8
|
|
|
$
|
7.0
|
|
Less amortization of the Deferred Gain related to contingent commission
|
|
0.5
|
|
|
0.4
|
|
|
1.5
|
|
|
1.5
|
|
||||
Less impact of LPT Reserve Adjustments
(1)
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
||||
Less impact of LPT Contingent Commission Adjustments
(2)
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
||||
Net income before impact of the LPT Agreement
(3)
|
|
$
|
45.0
|
|
|
$
|
19.4
|
|
|
$
|
103.7
|
|
|
$
|
61.4
|
|
(1)
|
LPT Reserve Adjustments result in a cumulative adjustment to the Deferred Gain, which is recognized in losses and LAE incurred on our 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. (See Note
2
in the Notes to our Consolidated Financial Statements.)
|
(2)
|
LPT Contingent Commission Adjustments result in an adjustment to the Deferred Gain, which is recognized in losses and LAE incurred on our Consolidated Statements of Comprehensive Income, such that the Deferred Gain reflects the balance that would have existed had the revised contingent profit commission been recognized at the inception of the LPT Agreement. (See Note
2
in the Notes to our Consolidated Financial Statements.)
|
(3)
|
We define net income before impact of the LPT Agreement as net income before the impact of: (a) amortization of the 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 September 30, 2018
|
||||||||||||||||
|
Year-to-Date Increase
|
|
Year-Over-Year Increase
|
||||||||||||||
|
Overall
|
|
California
|
|
All Other States
|
|
Overall
|
|
California
|
|
All Other States
|
||||||
In-force premiums
|
5.6
|
%
|
|
2.5
|
%
|
|
9.6
|
%
|
|
5.7
|
%
|
|
2.3
|
%
|
|
10.0
|
%
|
In-force policy count
|
5.5
|
|
|
1.9
|
|
|
8.8
|
|
|
5.2
|
|
|
0.7
|
|
|
9.3
|
|
Average in-force policy size
|
0.1
|
|
|
0.6
|
|
|
0.7
|
|
|
0.5
|
|
|
1.6
|
|
|
0.6
|
|
In-force payroll exposure
|
16.6
|
|
|
17.4
|
|
|
16.0
|
|
|
17.3
|
|
|
19.7
|
|
|
15.8
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
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
|
|
$
|
358.1
|
|
|
41,335
|
|
|
$
|
349.4
|
|
|
40,573
|
|
|
$
|
349.9
|
|
|
41,051
|
|
|
$
|
348.3
|
|
|
42,120
|
|
Florida
|
|
42.0
|
|
|
5,745
|
|
|
41.8
|
|
|
5,625
|
|
|
40.0
|
|
|
5,611
|
|
|
35.2
|
|
|
5,263
|
|
||||
Other
(41 states and D.C.)
|
|
262.0
|
|
|
43,110
|
|
|
235.7
|
|
|
39,296
|
|
|
236.4
|
|
|
39,078
|
|
|
235.1
|
|
|
37,439
|
|
||||
Total
|
|
$
|
662.1
|
|
|
90,190
|
|
|
$
|
626.9
|
|
|
85,494
|
|
|
$
|
626.3
|
|
|
85,740
|
|
|
$
|
618.6
|
|
|
84,822
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
|
September 30,
|
|
September 30,
|
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Loss and LAE ratio
|
|
55.3
|
%
|
|
62.2
|
%
|
|
52.9
|
%
|
|
62.1
|
%
|
Underwriting and other operating expenses ratio
|
|
20.0
|
|
|
17.9
|
|
|
21.5
|
|
|
19.1
|
|
Commission expense ratio
|
|
12.9
|
|
|
12.6
|
|
|
13.4
|
|
|
12.4
|
|
Combined ratio
|
|
88.2
|
%
|
|
92.7
|
%
|
|
87.8
|
%
|
|
93.6
|
%
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(in millions)
|
||||||||||||||
Prior accident year favorable loss development, net
|
|
$
|
11.9
|
|
|
$
|
0.2
|
|
|
$
|
40.8
|
|
|
$
|
0.5
|
|
Amortization of the Deferred Gain related to losses
|
|
$
|
2.1
|
|
|
$
|
2.1
|
|
|
$
|
7.8
|
|
|
$
|
7.0
|
|
Amortization of the Deferred Gain related to contingent commission
|
|
0.5
|
|
|
0.4
|
|
|
1.5
|
|
|
1.5
|
|
||||
Impact of LPT Reserve Adjustments
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
||||
Impact of LPT Contingent Commission Adjustments
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
||||
Total impact of the LPT on losses and LAE
|
|
2.6
|
|
|
2.5
|
|
|
12.0
|
|
|
8.5
|
|
||||
Total losses and LAE reserve adjustments
|
|
$
|
14.5
|
|
|
$
|
2.7
|
|
|
$
|
52.8
|
|
|
$
|
9.0
|
|
|
|
September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Cash, cash equivalents, and restricted cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
133.1
|
|
|
$
|
103.8
|
|
Investing activities
|
|
19.9
|
|
|
(80.5
|
)
|
||
Financing activities
|
|
(22.3
|
)
|
|
(23.6
|
)
|
||
Increase (decrease) in cash, cash equivalents, and restricted cash
|
|
$
|
130.7
|
|
|
$
|
(0.3
|
)
|
|
|
Payment Due By Period
|
||||||||||||||||||
|
|
Total
|
|
Less Than
1-Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More Than
5 Years
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Operating leases
|
|
$
|
23.8
|
|
|
$
|
5.3
|
|
|
$
|
7.9
|
|
|
$
|
3.9
|
|
|
$
|
6.7
|
|
Non-cancellable obligations
|
|
18.2
|
|
|
3.3
|
|
|
8.0
|
|
|
6.2
|
|
|
0.7
|
|
|||||
Notes payable
(1)
|
|
30.6
|
|
|
1.3
|
|
|
2.6
|
|
|
2.6
|
|
|
24.1
|
|
|||||
Capital leases
|
|
1.0
|
|
|
0.3
|
|
|
0.5
|
|
|
0.2
|
|
|
—
|
|
|||||
Unpaid losses and LAE reserves
(2)(3)
|
|
2,233.7
|
|
|
382.9
|
|
|
491.2
|
|
|
288.2
|
|
|
1,071.4
|
|
|||||
Total contractual obligations
|
|
$
|
2,307.3
|
|
|
$
|
393.1
|
|
|
$
|
510.2
|
|
|
$
|
301.1
|
|
|
$
|
1,102.9
|
|
(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
6.4%
to
6.6%
.
|
(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 on unpaid losses and LAE
|
|
$
|
(511.8
|
)
|
|
$
|
(27.8
|
)
|
|
$
|
(52.6
|
)
|
|
$
|
(49.6
|
)
|
|
$
|
(381.8
|
)
|
Rating
|
|
Percentage of Total
Estimated Fair Value
|
|
“AAA”
|
|
8.4
|
%
|
“AA”
|
|
43.1
|
|
“A”
|
|
34.1
|
|
“BBB”
|
|
12.2
|
|
Below investment grade
|
|
2.2
|
|
Total
|
|
100.0
|
%
|
Period
|
|
Total Number of Shares Purchased
|
|
Average
Price Paid
Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Approximate
Dollar Value of Shares that
May Yet be Purchased Under the Program
|
||||||
|
|
|
|
|
|
|
|
(in millions)
|
||||||
July 1 – July 31, 2018
|
|
200
|
|
|
$
|
39.97
|
|
|
200
|
|
|
$
|
49.6
|
|
August 1 – August 31, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49.6
|
|
||
September 1 – September 30, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49.6
|
|
||
Total
|
|
200
|
|
|
$
|
39.97
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference Herein
|
|||||||
Exhibit
No.
|
|
Description of Exhibit
|
|
Included
Herewith
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
*10.1
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.1
|
|
March 13, 2018
|
||
*10.2
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.2
|
|
March 13, 2018
|
||
*10.3
|
|
|
|
|
8-K
|
|
001-33245
|
|
|
|
May 29, 2018
|
||
*10.4
|
|
|
|
|
8-K
|
|
001-33245
|
|
|
|
May 29, 2018
|
||
10.5
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.1
|
|
March 15, 2018
|
||
10.6
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.2
|
|
March 15, 2018
|
||
10.7
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.3
|
|
March 15, 2018
|
||
10.8
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.4
|
|
March 15, 2018
|
||
10.9
|
|
|
|
|
8-K/A
|
|
001-33245
|
|
10.1
|
|
|
May 24, 2018
|
|
10.10
|
|
|
|
|
8-K
|
|
001-33245
|
|
3.1
|
|
|
June 13, 2018
|
|
10.11
|
|
|
X
|
|
|
|
|
|
|
|
|
||
31.1
|
|
|
X
|
|
|
|
|
|
|
|
|
||
31.2
|
|
|
X
|
|
|
|
|
|
|
|
|
||
32.1
|
|
|
X
|
|
|
|
|
|
|
|
|
||
32.2
|
|
|
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:
|
October 25, 2018
|
/s/ Michael S. Paquette
|
|
|
Michael S. Paquette
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
Employers Holdings, Inc.
|
|
|
(Principal Financial and Accounting Officer)
|
2.
|
This Amendment shall be enforced by and construed in accordance with the laws of the State ofNew York, as set forth in Section 11.8 of the Agreement.
|
3.
|
This Amendment may be executed in counterparts, each of which shall be deemed an original for all purposes and all of which shall be deemed, collectively, one and the same agreement. Execution of a counterpart hereof in facsimile or electronic fo1m will be deemed to be the execution of an original counterpart hereof. This Amendment shall become effective when executed and delivered by the Parties hereto.
|
4.
|
Except as modified by this Amendment
,
the Agreement is hereby confirmed in all respects
.
|
SELLER:
|
|
|
|
|
PARTNER REINSURE COMPANY OF THE U.S.
|
||||
|
|
|
|
|
BY:
|
|
/s/ Anthony F. Albano
|
|
|
|
|
Name: Anthony F. Albano
|
||
|
|
Title: VP, CFO
|
|
|
PURCHASER:
|
||||
CERITY GROUP, INC.
|
||||
|
|
|
|
|
BY:
|
|
/s/ Tracey L. Berg
|
||
|
|
Name: Tracey L. Berg
|
||
|
|
Title: President
|
|
|
GUARANTOR:
|
||||
EMPLOYERS HOLDINGS, INC.
|
||||
|
|
|
|
|
BY:
|
|
/s/ Michael Paquette
|
||
|
|
Name: Michael Paquette
|
||
|
|
Title: EVP & CFO
|
|
|
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;
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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:
|
October 25, 2018
|
/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.;
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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:
|
October 25, 2018
|
/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:
|
October 25, 2018
|
/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:
|
October 25, 2018
|
/s/ Michael S. Paquette
|
|
|
Michael S. Paquette
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
Employers Holdings, Inc.
|
|
|
(Principal Financial and Accounting Officer)
|