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)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value per share
|
New York Stock Exchange
|
Large accelerated filer
R
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
|
|
|
Emerging growth company
o
|
Class
|
|
February 14, 2019
|
Common Stock, $0.01 par value per share
|
|
32,829,863 shares outstanding
|
|
|
Page
No.
|
|
|
|
|
||
|
|
|
Item 1
|
||
Item 1A
|
||
Item 1B
|
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Item 2
|
||
Item 3
|
||
Item 4
|
||
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Item 5
|
||
Item 6
|
||
Item 7
|
||
Item 7A
|
||
Item 8
|
||
Item 9
|
||
Item 9A
|
||
Item 9B
|
||
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Item 10
|
||
Item 11
|
||
Item 12
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||
Item 13
|
||
Item 14
|
||
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|
PART I
V
|
|
|
|
|
Item 15
|
||
|
|
|
•
|
were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
|
•
|
may have been qualified in such agreement by disclosures that were made to the other party in connection with the negotiation of the applicable agreement;
|
•
|
may apply contract standards of “materiality” that are different from “materiality” under the applicable securities laws; and
|
•
|
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(in millions, except ratios)
|
||||||||||
Net premiums written
|
|
$
|
742.8
|
|
|
$
|
723.7
|
|
|
$
|
694.6
|
|
Total revenues
|
|
800.4
|
|
|
801.4
|
|
|
779.8
|
|
|||
Net income
|
|
141.3
|
|
|
101.2
|
|
|
106.7
|
|
|||
|
|
|
|
|
|
|
||||||
Combined ratio
|
|
86.1
|
%
|
|
90.5
|
%
|
|
91.8
|
%
|
|||
Impact of the LPT Agreement
(1)
|
|
2.0
|
%
|
|
1.6
|
%
|
|
2.3
|
%
|
|||
Combined ratio before the impact of the LPT Agreement
(1)
|
|
88.1
|
%
|
|
92.1
|
%
|
|
94.1
|
%
|
(1)
|
The impact of the LPT Agreement includes: (a) amortization of the Deferred Gain; (b) adjustments to LPT Agreement ceded reserves; and (c) adjustments to Contingent commission receivable–LPT Agreement. The Deferred Gain reflects the unamortized gain from our LPT Agreement. Under GAAP, this gain is deferred and is being amortized using the recovery method. Amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries over the life of the LPT Agreement, except for the contingent profit commission, which is amortized through June 30, 2024. The amortization is reflected in losses and LAE. We periodically reevaluate the remaining direct reserves subject to the LPT Agreement and the expected losses and LAE subject to the contingent profit commission under the LPT Agreement. Our reevaluation results in corresponding adjustments, if needed, to loss reserves, ceded loss reserves, contingent commission receivable, and the Deferred Gain, with the net effect being an increase or decrease to our net income. Combined ratio before
|
|
State of Domicile
|
Employers Insurance Company of Nevada (EICN)
|
Nevada
|
Employers Compensation Insurance Company (ECIC)
|
California
|
Employers Preferred Insurance Company (EPIC)
|
Florida
|
Employers Assurance Company (EAC)
|
Florida
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(in millions)
|
||||||||||
Gross premiums earned
|
|
$
|
737.2
|
|
|
$
|
722.5
|
|
|
$
|
701.6
|
|
Less: Final audit and retroactive adjustments
|
|
61.1
|
|
|
85.5
|
|
|
72.6
|
|
|||
Less: Involuntary premium
|
|
9.9
|
|
|
10.2
|
|
|
10.4
|
|
|||
In-force premium
|
|
$
|
666.2
|
|
|
$
|
626.9
|
|
|
$
|
618.6
|
|
Hazard
Group
|
|
2018
|
|
Percentage
of 2018 Total |
|
2017
|
|
Percentage
of 2017 Total |
|
2016
|
|
Percentage
of 2016 Total |
|||||||||
|
|
(in millions, except percentages)
|
|||||||||||||||||||
A
|
|
$
|
189.5
|
|
|
28.4
|
%
|
|
$
|
176.9
|
|
|
28.2
|
%
|
|
$
|
162.6
|
|
|
26.3
|
%
|
B
|
|
171.6
|
|
|
25.8
|
|
|
159.4
|
|
|
25.4
|
|
|
161.0
|
|
|
26.0
|
|
|||
C
|
|
188.7
|
|
|
28.3
|
|
|
188.0
|
|
|
30.0
|
|
|
195.7
|
|
|
31.7
|
|
|||
D
|
|
100.5
|
|
|
15.1
|
|
|
91.9
|
|
|
14.7
|
|
|
88.0
|
|
|
14.2
|
|
|||
E
|
|
12.2
|
|
|
1.8
|
|
|
9.4
|
|
|
1.5
|
|
|
9.8
|
|
|
1.6
|
|
|||
F
|
|
3.2
|
|
|
0.5
|
|
|
1.0
|
|
|
0.2
|
|
|
1.3
|
|
|
0.2
|
|
|||
G
|
|
0.5
|
|
|
0.1
|
|
|
0.3
|
|
|
<0.1
|
|
|
0.2
|
|
|
<0.1
|
|
|||
Total
|
|
$
|
666.2
|
|
|
100.0
|
%
|
|
$
|
626.9
|
|
|
100.0
|
%
|
|
$
|
618.6
|
|
|
100.0
|
%
|
Employer Classifications
|
|
In-force Premiums
|
|
Percentage
of Total
|
|||
|
|
(in millions, except percentages)
|
|||||
Restaurants and Other Eating Places
|
|
$
|
185.5
|
|
|
27.8
|
%
|
Traveler Accommodation
|
|
51.0
|
|
|
7.7
|
|
|
Automobile Dealers
|
|
46.5
|
|
|
7.0
|
|
|
Activities Related to Real Estate
|
|
24.5
|
|
|
3.7
|
|
|
Offices of Physicians
|
|
22.2
|
|
|
3.3
|
|
|
Automotive Repair and Maintenance
|
|
19.6
|
|
|
2.9
|
|
|
Other Store Retailers
|
|
19.2
|
|
|
2.9
|
|
|
Grocery Stores
|
|
18.5
|
|
|
2.8
|
|
|
Nondurable Goods Merchant Wholesalers
|
|
17.9
|
|
|
2.7
|
|
|
Services to Buildings and Dwellings
|
|
16.2
|
|
|
2.4
|
|
|
Total
|
|
$
|
421.1
|
|
|
63.2
|
%
|
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
State
|
|
In-force Premiums
|
|
Policies
In-force
|
|
In-force Premiums
|
|
Policies
In-force
|
|
In-force Premiums
|
|
Policies
In-force
|
|||||||||
|
|
(dollars in millions)
|
|||||||||||||||||||
California
|
|
$
|
357.1
|
|
|
41,988
|
|
|
$
|
349.4
|
|
|
40,573
|
|
|
$
|
348.3
|
|
|
42,120
|
|
Florida
|
|
41.0
|
|
|
5,833
|
|
|
41.8
|
|
|
5,625
|
|
|
35.2
|
|
|
5,263
|
|
|||
Other (42 states and D.C.)
|
|
268.1
|
|
|
43,677
|
|
|
235.7
|
|
|
39,296
|
|
|
235.1
|
|
|
37,439
|
|
|||
Total
|
|
$
|
666.2
|
|
|
91,498
|
|
|
$
|
626.9
|
|
|
85,494
|
|
|
$
|
618.6
|
|
|
84,822
|
|
Reinsurer
|
|
A.M. Best
Rating
(1)
|
|
Total Paid Losses and LAE
|
|
Total Unpaid Losses and LAE
|
|
Total
|
||||||
|
|
|
|
(in millions)
|
||||||||||
ACE Property & Casualty Insurance Company
|
|
A++
|
|
$
|
—
|
|
|
$
|
1.7
|
|
|
$
|
1.7
|
|
American Healthcare Indemnity Company
|
|
N/R
|
|
—
|
|
|
2.1
|
|
|
2.1
|
|
|||
Aspen Insurance UK Limited
|
|
A
|
|
—
|
|
|
4.7
|
|
|
4.7
|
|
|||
Chubb Bermuda Insurance Limited
|
|
A++
|
|
0.6
|
|
|
40.8
|
|
|
41.4
|
|
|||
Finial Reinsurance
|
|
A-
|
|
—
|
|
|
4.5
|
|
|
4.5
|
|
|||
Hannover Ruck SE
|
|
A+
|
|
—
|
|
|
8.9
|
|
|
8.9
|
|
|||
Lloyd's Syndicates
|
|
A
|
|
0.1
|
|
|
36.8
|
|
|
36.9
|
|
|||
Markel Bermuda Limited
|
|
A
|
|
—
|
|
|
1.2
|
|
|
1.2
|
|
|||
Munich Reinsurance America, Inc.
|
|
A+
|
|
—
|
|
|
3.4
|
|
|
3.4
|
|
|||
National Indemnity Company
|
|
A++
|
|
3.2
|
|
|
224.5
|
|
|
227.7
|
|
|||
National Union Fire Insurance Co of Pittsburgh
|
|
A
|
|
0.1
|
|
|
1.2
|
|
|
1.3
|
|
|||
Partner Reinsurance Co of the US
|
|
A
|
|
—
|
|
|
1.5
|
|
|
1.5
|
|
|||
Safety National Casualty Corporation
|
|
A+
|
|
—
|
|
|
2.0
|
|
|
2.0
|
|
|||
St Paul Fire & Marine Insurance Company
|
|
A++
|
|
—
|
|
|
4.0
|
|
|
4.0
|
|
|||
Swiss Reinsurance America Corporation
|
|
A+
|
|
0.1
|
|
|
8.8
|
|
|
8.9
|
|
|||
Tokio Marine America Insurance Company (TMAIC) (US)
|
|
A++
|
|
0.1
|
|
|
6.4
|
|
|
6.5
|
|
|||
Tokio Millenium Re AG
|
|
A+
|
|
—
|
|
|
2.8
|
|
|
2.8
|
|
|||
XL Bermuda Ltd
|
|
A+
|
|
2.1
|
|
|
142.9
|
|
|
145.0
|
|
|||
XL Reinsurance America Inc.
|
|
A+
|
|
—
|
|
|
1.3
|
|
|
1.3
|
|
|||
All Other
|
|
Various
|
|
0.4
|
|
|
4.9
|
|
|
5.3
|
|
|||
Total
|
|
|
|
$
|
6.7
|
|
|
$
|
504.4
|
|
|
$
|
511.1
|
|
(1)
|
A.M. Best's highest financial strength ratings for insurance companies are “A++” and “A+” (Superior), “A” and “A-” (Excellent),
|
•
|
standards of solvency, including RBC measurements;
|
•
|
restrictions on the nature, quality, and concentration of investments;
|
•
|
restrictions on the types of terms that we can include in the insurance policies we offer;
|
•
|
mandates that may affect wage replacement and medical care benefits paid under the workers' compensation system;
|
•
|
requirements for the handling and reporting of claims and procedures for adjusting claims;
|
•
|
restrictions on the way rates are developed and premiums are determined;
|
•
|
the manner in which agents may be appointed;
|
•
|
establishment of liabilities for unearned premiums, unpaid losses and LAE;
|
•
|
limitations on our ability to transact business with affiliates;
|
•
|
mergers, acquisitions, and divestitures involving our insurance subsidiaries;
|
•
|
licensing requirements and approvals that affect our ability to do business;
|
•
|
compliance with all applicable privacy laws;
|
•
|
compliance with cyber-security laws and regulations;
|
•
|
potential assessments for the settlement of covered claims under insurance policies issued by impaired, insolvent, or failed insurance companies or other assessments imposed by regulatory agencies; and
|
•
|
the amount of dividends that our insurance subsidiaries may pay to EGI and, in turn, the ability of EGI to pay dividends to EHI.
|
•
|
dividing our Board of Directors into classes until the 2021 stockholder meeting;
|
•
|
eliminating the ability of our stockholders to call special meetings of stockholders;
|
•
|
permitting our Board of Directors to issue preferred stock in one or more series;
|
•
|
imposing advance notice requirements for nominations for election to our Board of Directors and/or for proposing matters that can be acted upon by stockholders at the stockholder meetings; and
|
•
|
prohibiting stockholder action by written consent, thereby limiting stockholder action to that taken at an annual or special meeting of our stockholders.
|
•
|
the surplus and earnings of our insurance subsidiaries and their ability to pay dividends and/or other statutorily permissible payments to their parent;
|
•
|
our results of operations and cash flows;
|
•
|
our financial position and capital requirements;
|
•
|
general business conditions;
|
•
|
any legal, tax, regulatory, and/or contractual restrictions on the payment of dividends; and
|
•
|
any other factors our Board of Directors deems relevant.
|
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)
|
||||||
October 1 – October 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
49.6
|
|
November 1 – November 30, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49.6
|
|
||
December 1 – December 31, 2018
|
|
102,531
|
|
|
41.06
|
|
|
102,531
|
|
|
45.4
|
|
||
Total
|
|
102,531
|
|
|
$
|
41.06
|
|
|
102,531
|
|
|
|
|
(1)
|
Includes fees and commissions paid on stock repurchases.
|
(2)
|
On February 21, 2018, the Board of Directors authorized a share repurchase program for repurchases of up to $50.0 million of the Company's common stock (the 2018 Program). The 2018 Program provides that shares may be purchased at prevailing market prices from February 26, 2018 through February 26, 2020 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 repurchased will depend on a variety of factors, including the share price, corporate and regulatory requirements, and other market and economic conditions. Repurchases under the 2018 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.
|
|
Period Ending
|
||||||||||||||||||||||
|
12/31/2013
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2017
|
|
12/31/2018
|
||||||||||||
Employers Holdings, Inc.
|
$
|
100.00
|
|
|
$
|
75.13
|
|
|
$
|
88.08
|
|
|
$
|
129.35
|
|
|
$
|
147.12
|
|
|
$
|
141.73
|
|
S&P 500
|
100.00
|
|
|
113.69
|
|
|
115.26
|
|
|
129.05
|
|
|
157.22
|
|
|
150.33
|
|
||||||
S&P 500 P&C Insurance Index
|
100.00
|
|
|
115.74
|
|
|
126.77
|
|
|
146.68
|
|
|
179.52
|
|
|
171.10
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Income Statement Data
|
(in millions, except per share amounts and ratios)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums earned
|
$
|
731.1
|
|
|
$
|
716.5
|
|
|
$
|
694.8
|
|
|
$
|
690.4
|
|
|
$
|
684.5
|
|
Net investment income
|
81.2
|
|
|
74.6
|
|
|
73.2
|
|
|
72.2
|
|
|
72.4
|
|
|||||
Net realized and unrealized (losses) gains on investments
|
(13.1
|
)
|
|
7.4
|
|
|
11.2
|
|
|
(10.7
|
)
|
|
16.3
|
|
|||||
Gain on redemption of notes payable
|
—
|
|
|
2.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other income
|
1.2
|
|
|
0.8
|
|
|
0.6
|
|
|
0.2
|
|
|
0.3
|
|
|||||
Total revenues
|
800.4
|
|
|
801.4
|
|
|
779.8
|
|
|
752.1
|
|
|
773.5
|
|
|||||
Total expenses
|
630.9
|
|
|
657.4
|
|
|
639.1
|
|
|
652.7
|
|
|
666.9
|
|
|||||
Net income before income taxes
|
169.5
|
|
|
144.0
|
|
|
140.7
|
|
|
99.4
|
|
|
106.6
|
|
|||||
Income tax expense
|
28.2
|
|
|
42.8
|
|
|
34.0
|
|
|
5.0
|
|
|
5.9
|
|
|||||
Net income
|
$
|
141.3
|
|
|
$
|
101.2
|
|
|
$
|
106.7
|
|
|
$
|
94.4
|
|
|
$
|
100.7
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
4.30
|
|
|
$
|
3.11
|
|
|
$
|
3.29
|
|
|
$
|
2.94
|
|
|
$
|
3.19
|
|
Diluted
|
4.24
|
|
|
3.06
|
|
|
3.24
|
|
|
2.90
|
|
|
3.14
|
|
|||||
Selected Operating Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
(1)
|
$
|
748.9
|
|
|
$
|
729.7
|
|
|
$
|
701.4
|
|
|
$
|
697.7
|
|
|
$
|
697.7
|
|
Net premiums written
(2)
|
$
|
742.8
|
|
|
$
|
723.7
|
|
|
$
|
694.6
|
|
|
$
|
689.3
|
|
|
$
|
687.6
|
|
Net income before impact of the LPT Agreement
(3)(4)(5)
|
$
|
126.7
|
|
|
$
|
89.6
|
|
|
$
|
90.1
|
|
|
$
|
74.0
|
|
|
$
|
45.7
|
|
Earnings per common share before impact of the LPT Agreement
(5)
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
3.85
|
|
|
$
|
2.76
|
|
|
$
|
2.78
|
|
|
$
|
2.31
|
|
|
1.45
|
|
|
Diluted
|
3.80
|
|
|
2.71
|
|
|
2.73
|
|
|
2.27
|
|
|
1.43
|
|
|||||
Cash dividends declared per common share
|
0.80
|
|
|
0.60
|
|
|
0.36
|
|
|
0.24
|
|
|
0.24
|
|
|
As of December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Balance Sheet Data
|
(in millions)
|
||||||||||||||||||
Cash and cash equivalents
|
$
|
101.4
|
|
|
$
|
73.3
|
|
|
$
|
67.2
|
|
|
$
|
56.6
|
|
|
$
|
103.6
|
|
Total investments
|
2,727.7
|
|
|
2,677.7
|
|
|
2,552.6
|
|
|
2,487.2
|
|
|
2,448.4
|
|
|||||
Reinsurance recoverable on paid and unpaid losses
|
511.1
|
|
|
544.2
|
|
|
588.7
|
|
|
635.9
|
|
|
680.2
|
|
|||||
Total assets
|
3,919.2
|
|
|
3,840.1
|
|
|
3,773.4
|
|
|
3,755.8
|
|
|
3,769.7
|
|
|||||
Unpaid losses and loss adjustment expense
|
2,207.9
|
|
|
2,266.1
|
|
|
2,301.0
|
|
|
2,347.5
|
|
|
2,369.7
|
|
|||||
Unearned premiums
|
336.3
|
|
|
318.3
|
|
|
310.3
|
|
|
308.9
|
|
|
310.8
|
|
|||||
Deferred Gain
(3)(4)
|
149.6
|
|
|
163.6
|
|
|
174.9
|
|
|
189.5
|
|
|
207.0
|
|
|||||
Notes payable
|
20.0
|
|
|
20.0
|
|
|
32.0
|
|
|
32.0
|
|
|
92.0
|
|
|||||
Total liabilities
|
2,901.0
|
|
|
2,892.4
|
|
|
2,932.8
|
|
|
2,995.0
|
|
|
3,082.9
|
|
|||||
Total stockholders' equity
|
1,018.2
|
|
|
947.7
|
|
|
840.6
|
|
|
760.8
|
|
|
686.8
|
|
|||||
Other Financial Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Total stockholders' equity including Deferred Gain
(3)(4)(6)
|
$
|
1,167.8
|
|
|
$
|
1,111.3
|
|
|
$
|
1,015.5
|
|
|
$
|
950.3
|
|
|
$
|
893.8
|
|
(1)
|
Gross premiums written is the sum of direct premiums written and assumed premiums written before the effect of ceded reinsurance. Direct premiums written are the premiums on all policies our insurance subsidiaries have issued during the year. Assumed premiums written are premiums that our insurance subsidiaries have received from any authorized state-mandated pools.
|
(2)
|
Net premiums written is the sum of direct premiums written and assumed premiums written less ceded premiums written. Ceded premiums written is the portion of direct premiums written that we cede to our reinsurers under our reinsurance contracts. (See Note
10
in the Notes to our Consolidated Financial Statements.)
|
(3)
|
In connection with our January 1, 2000 assumption of the assets, liabilities and operations of the Fund, EICN assumed the Fund's rights and obligations associated with the LPT Agreement, a retroactive 100% quota share reinsurance agreement with third party reinsurers, which substantially reduced our exposure to losses for pre-July 1, 1995 Nevada insured risks. Pursuant to the LPT Agreement, the Fund initially ceded $1.5 billion in liabilities for incurred but unpaid losses and LAE, which represented substantially all of the Fund's outstanding losses as of June 30, 1999 for claims with original dates of injury prior to July 1, 1995.
|
(4)
|
Deferred reinsurance gain–LPT Agreement reflects the unamortized gain from our LPT Agreement. Under GAAP, this gain is deferred and is being amortized using the recovery method. Amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries over the life of the LPT Agreement, except for the contingent profit commission, which is amortized through June 30, 2024. The amortization is reflected in losses and LAE. We periodically reevaluate the remaining direct reserves subject to the LPT Agreement and the expected losses and LAE subject to the contingent profit commission under the LPT Agreement. Our reevaluations result in corresponding adjustments, if needed, to reserves, ceded reserves, contingent commission receivable, and the Deferred Gain, with the net effect being an increase or decrease, as the case may be, to net income.
|
(5)
|
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 Contingent commission receivable–LPT Agreement. These are not measurements of financial performance under GAAP, but rather reflect the difference in accounting treatment between SAP and GAAP, and should not be considered in isolation or as an alternative to any other measure of performance derived in accordance with GAAP.
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Net income
|
$
|
141.3
|
|
|
$
|
101.2
|
|
|
$
|
106.7
|
|
|
$
|
94.4
|
|
|
$
|
100.7
|
|
Less amortization of the Deferred Gain related to losses
|
9.9
|
|
|
9.3
|
|
|
9.7
|
|
|
9.5
|
|
|
11.2
|
|
|||||
Less amortization of the Deferred Gain related to contingent commission
|
2.0
|
|
|
2.0
|
|
|
2.0
|
|
|
1.9
|
|
|
1.9
|
|
|||||
Less impact of LPT Reserve Adjustments
(a)
|
2.2
|
|
|
—
|
|
|
3.1
|
|
|
6.4
|
|
|
31.1
|
|
|||||
Less impact of LPT Contingent Commission Adjustments
(b)
|
0.5
|
|
|
0.3
|
|
|
1.8
|
|
|
2.6
|
|
|
10.8
|
|
|||||
Net income before impact of the LPT Agreement
|
$
|
126.7
|
|
|
$
|
89.6
|
|
|
$
|
90.1
|
|
|
$
|
74.0
|
|
|
$
|
45.7
|
|
(a)
|
Any adjustment to the estimated reserves ceded under the LPT Agreement results in a cumulative adjustment to the Deferred Gain, which is also included in losses and LAE incurred in the Consolidated Statements of Comprehensive Income, such that the Deferred Gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the LPT Agreement (LPT Reserve Adjustment). (See Note
2
in the Notes to our Consolidated Financial Statements.)
|
(b)
|
Any adjustment to the contingent profit commission under the LPT Agreement results in a cumulative adjustment to the Deferred Gain, which is also recognized in losses and LAE incurred 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 (LPT Contingent Commission Adjustment). (See Note
2
in the Notes to our Consolidated Financial Statements.)
|
(6)
|
We define Total stockholders' equity including the Deferred Gain as total stockholders' equity plus the Deferred Gain. Total stockholders' equity including the Deferred Gain is not a measurement of financial position under GAAP and should not be considered in isolation or as an alternative to Total stockholders' equity or any other measure of financial health derived in accordance with GAAP.
|
|
As of December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Total stockholders' equity
|
$
|
1,018.2
|
|
|
$
|
947.7
|
|
|
$
|
840.6
|
|
|
$
|
760.8
|
|
|
$
|
686.8
|
|
Deferred Gain
|
149.6
|
|
|
163.6
|
|
|
174.9
|
|
|
189.5
|
|
|
207.0
|
|
|||||
Total stockholders' equity including the Deferred Gain
|
$
|
1,167.8
|
|
|
$
|
1,111.3
|
|
|
$
|
1,015.5
|
|
|
$
|
950.3
|
|
|
$
|
893.8
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
GAAP stockholders' equity
|
$
|
1,018.2
|
|
|
$
|
947.7
|
|
Deferred reinsurance gain–LPT Agreement
|
149.6
|
|
|
163.6
|
|
||
Less: Accumulated other comprehensive (loss) income, net
(1)
|
(13.7
|
)
|
|
107.4
|
|
||
Adjusted stockholders' equity
(2)
|
$
|
1,181.5
|
|
|
$
|
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.
|
•
|
Losses and LAE decreased
10%
in
2018
and only slightly in
2017
, each compared to the previous year;
|
•
|
Underwriting and other operating expenses increased
13%
in
2018
and
3%
in
2017
, each compared to the previous year;
|
•
|
Net realized and unrealized (losses) gains on investments of
$(13.1) million
,
$7.4 million
, and
$11.2 million
in
2018
,
2017
, and
2016
, respectively; and
|
•
|
Income tax expense was
$28.2 million
($28.6 million excluding the impact of the enactment of Tax Cuts and Jobs Act on December 22, 2017 (Enactment)),
$42.8 million
($35.8 million excluding the impact of the Enactment, and
$34.0 million
in
2018
,
2017
, and
2016
, respectively.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Gross premiums written
|
$
|
748.9
|
|
|
$
|
729.7
|
|
|
$
|
701.4
|
|
Net premiums written
|
$
|
742.8
|
|
|
$
|
723.7
|
|
|
$
|
694.6
|
|
|
|
|
|
|
|
||||||
Net premiums earned
|
$
|
731.1
|
|
|
$
|
716.5
|
|
|
$
|
694.8
|
|
Net investment income
|
81.2
|
|
|
74.6
|
|
|
73.2
|
|
|||
Net realized and unrealized (losses) gains on investments
|
(13.1
|
)
|
|
7.4
|
|
|
11.2
|
|
|||
Gain on redemption of notes payable
|
—
|
|
|
2.1
|
|
|
—
|
|
|||
Other income
|
1.2
|
|
|
0.8
|
|
|
0.6
|
|
|||
Total revenues
|
800.4
|
|
|
801.4
|
|
|
779.8
|
|
|||
|
|
|
|
|
|
||||||
Losses and LAE
|
376.7
|
|
|
417.2
|
|
|
417.9
|
|
|||
Commission expense
|
94.2
|
|
|
91.4
|
|
|
83.5
|
|
|||
Underwriting and other operating expenses
|
158.5
|
|
|
139.9
|
|
|
136.1
|
|
|||
Interest and financing expenses
|
1.5
|
|
|
1.4
|
|
|
1.6
|
|
|||
Other expense
|
—
|
|
|
7.5
|
|
|
—
|
|
|||
Total expenses
|
630.9
|
|
|
657.4
|
|
|
639.1
|
|
|||
Income tax expense
|
28.2
|
|
|
42.8
|
|
|
34.0
|
|
|||
Net income
|
$
|
141.3
|
|
|
$
|
101.2
|
|
|
$
|
106.7
|
|
Less amortization of the Deferred Gain related to losses
|
9.9
|
|
|
9.3
|
|
|
9.7
|
|
|||
Less amortization of the Deferred Gain related to contingent commission
|
2.0
|
|
|
2.0
|
|
|
2.0
|
|
|||
Less impact of LPT Reserve Adjustments
(1)
|
2.2
|
|
|
—
|
|
|
3.1
|
|
|||
Less impact of LPT Contingent Commission Adjustments
(2)
|
0.5
|
|
|
0.3
|
|
|
1.8
|
|
|||
Net income before impact of the LPT Agreement
(3)
|
$
|
126.7
|
|
|
$
|
89.6
|
|
|
$
|
90.1
|
|
(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 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 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 the 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.
|
|
Percentage Change
2018 Over 2017 |
|
Percentage Change
2017 Over 2016
|
||||||||||||||
|
Overall
|
|
California
|
|
All Other States
|
|
Overall
|
|
California
|
|
All Other States
|
||||||
In-force premiums
|
6.3
|
%
|
|
2.2
|
%
|
|
11.4
|
%
|
|
1.3
|
%
|
|
0.3
|
%
|
|
2.7
|
%
|
In-force policy count
|
7.0
|
|
|
3.5
|
|
|
10.2
|
|
|
0.8
|
|
|
(3.7
|
)
|
|
5.2
|
|
Average in-force policy size
|
(0.7
|
)
|
|
(1.2
|
)
|
|
1.1
|
|
|
0.5
|
|
|
4.1
|
|
|
(2.4
|
)
|
In-force payroll exposure
|
22.0
|
|
|
24.4
|
|
|
20.5
|
|
|
3.1
|
|
|
5.7
|
|
|
1.5
|
|
|
Years Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Loss and LAE ratio
|
51.5
|
%
|
|
58.2
|
%
|
|
60.1
|
%
|
Underwriting and other operating expenses ratio
|
21.7
|
|
|
19.5
|
|
|
19.7
|
|
Commission expense ratio
|
12.9
|
|
|
12.8
|
|
|
12.0
|
|
Combined ratio
|
86.1
|
%
|
|
90.5
|
%
|
|
91.8
|
%
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Prior accident year favorable development, net
|
$
|
66.2
|
|
|
$
|
18.5
|
|
|
$
|
18.4
|
|
Amortization of the Deferred Gain related to losses
|
$
|
9.9
|
|
|
$
|
9.3
|
|
|
$
|
9.7
|
|
Amortization of the Deferred Gain related to contingent commission
|
2.0
|
|
|
2.0
|
|
|
2.0
|
|
|||
Impact of LPT Reserve Adjustments
|
2.2
|
|
|
—
|
|
|
3.1
|
|
|||
Impact of LPT Contingent Commission Adjustments
|
0.5
|
|
|
0.3
|
|
|
1.8
|
|
|||
Total impact of the LPT
|
14.6
|
|
|
11.6
|
|
|
16.6
|
|
|||
Total losses and LAE reserve adjustments
|
$
|
80.8
|
|
|
$
|
30.1
|
|
|
$
|
35.0
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash, cash equivalents, and restricted cash provided by (used in):
|
(in millions)
|
||||||||||
Operating activities
|
$
|
180.2
|
|
|
$
|
142.3
|
|
|
$
|
122.8
|
|
Investing activities
|
(119.6
|
)
|
|
(112.8
|
)
|
|
(87.5
|
)
|
|||
Financing activities
|
(32.9
|
)
|
|
(26.0
|
)
|
|
(23.6
|
)
|
|||
Increase in cash, cash equivalents, and restricted cash
|
$
|
27.7
|
|
|
$
|
3.5
|
|
|
$
|
11.7
|
|
|
December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Beginning Balance
|
$
|
947.7
|
|
|
$
|
840.6
|
|
|
$
|
760.8
|
|
Stock-based obligations
|
9.4
|
|
|
6.9
|
|
|
5.8
|
|
|||
Stock options exercised
|
1.1
|
|
|
6.0
|
|
|
9.6
|
|
|||
Shares withheld to satisfy minimum tax withholdings for certain stock-based obligations
|
(2.9
|
)
|
|
(2.2
|
)
|
|
(0.6
|
)
|
|||
Grant date fair value adjustment
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|||
Acquisition of common stock
|
(4.6
|
)
|
|
—
|
|
|
(21.1
|
)
|
|||
Dividends declared
|
(26.7
|
)
|
|
(19.7
|
)
|
|
(11.5
|
)
|
|||
Net income for the year
|
141.3
|
|
|
101.2
|
|
|
106.7
|
|
|||
Change in net unrealized (losses) gains on investments, net of taxes
|
(47.1
|
)
|
|
15.1
|
|
|
(9.1
|
)
|
|||
Ending Balance
|
$
|
1,018.2
|
|
|
$
|
947.7
|
|
|
$
|
840.6
|
|
|
Payment Due By Period
|
||||||||||||||||||
|
Total
|
|
Less Than
1-Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More Than
5 Years
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Operating leases
|
$
|
22.5
|
|
|
$
|
5.3
|
|
|
$
|
7.3
|
|
|
$
|
3.7
|
|
|
$
|
6.2
|
|
Non-cancellable contracts
|
18.8
|
|
|
5.9
|
|
|
6.7
|
|
|
6.2
|
|
|
—
|
|
|||||
Notes payable
(1)
|
41.4
|
|
|
1.4
|
|
|
2.7
|
|
|
2.7
|
|
|
34.6
|
|
|||||
Capital leases
|
0.9
|
|
|
0.3
|
|
|
0.5
|
|
|
0.1
|
|
|
—
|
|
|||||
Unpaid losses and LAE reserves
(2)(3)
|
2,207.9
|
|
|
370.4
|
|
|
480.2
|
|
|
288.7
|
|
|
1,068.6
|
|
|||||
Unfunded investments
|
50.0
|
|
|
50.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
2,341.5
|
|
|
$
|
433.3
|
|
|
$
|
497.4
|
|
|
$
|
301.4
|
|
|
$
|
1,109.4
|
|
(1)
|
Notes payable includes payments of the principal and estimated interest expense on our surplus notes outstanding based on LIBOR plus a margin. The interest rates used ranged from
6.8%
to
6.9%
.
|
(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. For a discussion of our reserving process, see ''–Critical Accounting Policies–Reserves for Losses and LAE.'' 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
|
$
|
(504.4
|
)
|
|
$
|
(27.4
|
)
|
|
$
|
(52.0
|
)
|
|
$
|
(49.2
|
)
|
|
$
|
(375.8
|
)
|
Category
|
|
Estimated Fair Value
|
|
Percentage of Total
|
|
Book Yield
|
|
Tax Equivalent Yield
(1)
|
|||||
|
|
(in millions, except percentages)
|
|||||||||||
U.S. Treasuries
|
|
$
|
106.4
|
|
|
3.9
|
%
|
|
2.2
|
%
|
|
2.2
|
%
|
U.S. Agencies
|
|
11.4
|
|
|
0.4
|
|
|
4.3
|
|
|
4.3
|
|
|
States and municipalities
|
|
528.0
|
|
|
19.4
|
|
|
3.3
|
|
|
3.9
|
|
|
Corporate securities
|
|
1,090.4
|
|
|
40.1
|
|
|
3.3
|
|
|
3.3
|
|
|
Residential mortgaged-backed securities
|
|
451.5
|
|
|
16.6
|
|
|
3.2
|
|
|
3.2
|
|
|
Commercial mortgaged-backed securities
|
|
94.3
|
|
|
3.5
|
|
|
2.9
|
|
|
2.9
|
|
|
Asset-backed securities
|
|
64.5
|
|
|
2.4
|
|
|
3.3
|
|
|
3.3
|
|
|
Other securities
|
|
149.9
|
|
|
5.5
|
|
|
5.3
|
|
|
5.3
|
|
|
Equity securities
|
|
199.9
|
|
|
7.3
|
|
|
4.8
|
|
|
5.2
|
|
|
Short-term investments
|
|
25.0
|
|
|
0.9
|
|
|
2.4
|
|
|
2.4
|
|
|
Total investments at fair value
|
|
$
|
2,721.3
|
|
|
100.0
|
%
|
|
|
|
|
||
Weighted average yield
|
|
|
|
|
|
3.4
|
%
|
|
3.5
|
%
|
(1)
|
Computed using a statutory income tax rate of 21%.
|
Rating
|
|
Percentage of Total
Estimated Fair Value
|
|
“AAA”
|
|
8.3
|
%
|
“AA”
|
|
42.2
|
|
“A”
|
|
31.3
|
|
“BBB”
|
|
12.4
|
|
Below Investment Grade
|
|
5.8
|
|
Total
|
|
100.0
|
%
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Case reserves
|
$
|
940.6
|
|
|
$
|
986.2
|
|
IBNR
|
955.7
|
|
|
964.4
|
|
||
LAE reserves
|
311.6
|
|
|
315.5
|
|
||
Gross unpaid losses and LAE reserves
|
2,207.9
|
|
|
2,266.1
|
|
||
Less reinsurance recoverables on unpaid losses and LAE
|
504.4
|
|
|
537.0
|
|
||
Net unpaid losses and LAE reserves
|
$
|
1,703.5
|
|
|
$
|
1,729.1
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Low end of actuarial range
|
$
|
1,484.8
|
|
|
$
|
1,533.1
|
|
Carried reserves
|
1,703.5
|
|
|
1,729.1
|
|
||
High end of actuarial range
|
1,897.3
|
|
|
1,916.5
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Increase (decrease) in reserves
|
(in millions)
|
||||||
At low end of range
|
$
|
(218.7
|
)
|
|
$
|
(196.0
|
)
|
At high end of range
|
193.8
|
|
|
187.4
|
|
||
Increase (decrease) in stockholders' equity and net income
|
|
|
|
||||
At low end of range
|
$
|
172.8
|
|
|
$
|
127.4
|
|
At high end of range
|
(153.1
|
)
|
|
(121.8
|
)
|
|
As of December 31,
|
||
|
2018
|
||
|
(in millions)
|
||
Low end of actuarial range
|
$
|
374.9
|
|
LPT carried reserves
|
408.2
|
|
|
High end of actuarial range
|
470.4
|
|
Hypothetical Changes in Interest Rates
|
|
Estimated Pre-tax Increase (Decrease) in Fair Value
|
|||||
|
|
(in millions, except percentages)
|
|||||
300 basis point rise
|
|
$
|
(288.2
|
)
|
|
(11.4
|
)%
|
200 basis point rise
|
|
(194.3
|
)
|
|
(7.7
|
)
|
|
100 basis point rise
|
|
(97.4
|
)
|
|
(3.9
|
)
|
|
50 basis point decline
|
|
48.0
|
|
|
1.9
|
|
|
100 basis point decline
|
|
95.2
|
|
|
3.8
|
|
(in millions)
|
Cost
|
|
Fair Value
|
|
10% Fair Value Decrease
|
|
Pre-tax Impact on Total Equity Securities
|
|
10% Fair Value Increase
|
|
Pre-tax Impact on Total Equity Securities
|
||||||||||||
Equity securities
|
$
|
131.9
|
|
|
$
|
199.9
|
|
|
$
|
179.9
|
|
|
$
|
(20.0
|
)
|
|
$
|
219.9
|
|
|
$
|
20.0
|
|
|
Page
|
Management's Report on Internal Control Over Financial Reporting
|
|
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
|
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets as of December 31, 2018 and 2017
|
|
Consolidated Statements of Comprehensive Income for each of the years ended December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Stockholders' Equity for each of the years ended December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Cash Flows for each of the years ended December 31, 2018, 2017 and 2016
|
|
Notes to Consolidated Financial Statements
|
|
|
|
The following Financial Statement Schedules are filed in Item 15 of Part IV of this report:
|
|
|
|
Financial Statement Schedules:
|
|
Schedule II. Condensed Financial Information of Registrant
|
|
|
|
Pursuant to Rule 7-05 of Regulation S-X, Financial Statement Schedules I, III, IV, V, and VI have been omitted as the information to be set forth therein is included in the Notes to Consolidated Financial Statements.
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||
|
|
|
|
|
||||
Consolidated Balance Sheets
|
||||||||
|
|
As of December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Assets
|
|
(in millions, except share data)
|
||||||
Investments:
|
|
|
|
|
||||
Fixed maturity securities at fair value (amortized cost $2,513.7 at December 31, 2018 and $2,421.0 at December 31, 2017)
|
|
$
|
2,496.4
|
|
|
$
|
2,463.4
|
|
Equity securities at fair value (cost $131.9 at December 31, 2018 and $116.7 at December 31, 2017)
|
|
199.9
|
|
|
210.3
|
|
||
Equity securities at cost
|
|
6.4
|
|
|
—
|
|
||
Short-term investments at fair value (amortized cost $25.0 at December 31, 2018 and $4.0 at December 31, 2017)
|
|
25.0
|
|
|
4.0
|
|
||
Total investments
|
|
2,727.7
|
|
|
2,677.7
|
|
||
Cash and cash equivalents
|
|
101.4
|
|
|
73.3
|
|
||
Restricted cash and cash equivalents
|
|
0.6
|
|
|
1.0
|
|
||
Accrued investment income
|
|
18.0
|
|
|
19.6
|
|
||
Premiums receivable (less bad debt allowance of $6.7 at December 31, 2018 and $10.0 at December 31, 2017)
|
|
333.1
|
|
|
326.7
|
|
||
Reinsurance recoverable for:
|
|
|
|
|
|
|||
Paid losses
|
|
6.7
|
|
|
7.2
|
|
||
Unpaid losses
|
|
504.4
|
|
|
537.0
|
|
||
Deferred policy acquisition costs
|
|
48.2
|
|
|
45.8
|
|
||
Deferred income taxes, net
|
|
26.9
|
|
|
28.7
|
|
||
Property and equipment, net
|
|
18.2
|
|
|
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
|
|
26.0
|
|
|
—
|
|
||
Other assets
|
|
32.1
|
|
|
33.7
|
|
||
Total assets
|
|
$
|
3,919.2
|
|
|
$
|
3,840.1
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
||
Unpaid losses and loss adjustment expenses
|
|
$
|
2,207.9
|
|
|
$
|
2,266.1
|
|
Unearned premiums
|
|
336.3
|
|
|
318.3
|
|
||
Commissions and premium taxes payable
|
|
57.3
|
|
|
55.3
|
|
||
Accounts payable and accrued expenses
|
|
37.1
|
|
|
23.7
|
|
||
Deferred reinsurance gain—LPT Agreement
|
|
149.6
|
|
|
163.6
|
|
||
Notes payable
|
|
20.0
|
|
|
20.0
|
|
||
Non-cancellable obligations
|
|
18.8
|
|
|
2.7
|
|
||
Other liabilities
|
|
74.0
|
|
|
42.7
|
|
||
Total liabilities
|
|
$
|
2,901.0
|
|
|
$
|
2,892.4
|
|
Commitments and contingencies (Note 12)
|
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
|
||
Common stock, $0.01 par value; 150,000,000 shares authorized; 56,975,675 and 56,695,174 shares issued and 32,765,792 and 32,597,819 shares outstanding at December 31, 2018 and 2017, respectively
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
388.8
|
|
|
381.2
|
|
||
Retained earnings
|
|
1,030.7
|
|
|
842.2
|
|
||
Accumulated other comprehensive (loss) income, net of tax
|
|
(13.7
|
)
|
|
107.4
|
|
||
Treasury stock, at cost (24,209,883 shares at December 31, 2018 and 24,097,355 shares at December 31, 2017)
|
|
(388.2
|
)
|
|
(383.7
|
)
|
||
Total stockholders’ equity
|
|
1,018.2
|
|
|
947.7
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
3,919.2
|
|
|
$
|
3,840.1
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||||||
|
|
|
|
|
|
|
||||||
Consolidated Statements of Comprehensive Income
|
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues
|
|
(in millions, except per share data)
|
||||||||||
Net premiums earned
|
|
$
|
731.1
|
|
|
$
|
716.5
|
|
|
$
|
694.8
|
|
Net investment income
|
|
81.2
|
|
|
74.6
|
|
|
73.2
|
|
|||
Net realized and unrealized (losses) gains on investments
|
|
(13.1
|
)
|
|
7.4
|
|
|
11.2
|
|
|||
Gain on redemption of notes payable
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|||
Other income
|
|
1.2
|
|
|
0.8
|
|
|
0.6
|
|
|||
Total revenues
|
|
800.4
|
|
|
801.4
|
|
|
779.8
|
|
|||
|
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
||||
Losses and loss adjustment expenses
|
|
376.7
|
|
|
417.2
|
|
|
417.9
|
|
|||
Commission expense
|
|
94.2
|
|
|
91.4
|
|
|
83.5
|
|
|||
Underwriting and other operating expenses
|
|
158.5
|
|
|
139.9
|
|
|
136.1
|
|
|||
Interest and financing expenses
|
|
1.5
|
|
|
1.4
|
|
|
1.6
|
|
|||
Other expenses
|
|
—
|
|
|
7.5
|
|
|
—
|
|
|||
Total expenses
|
|
630.9
|
|
|
657.4
|
|
|
639.1
|
|
|||
|
|
|
|
|
|
|
||||||
Net income before income taxes
|
|
169.5
|
|
|
144.0
|
|
|
140.7
|
|
|||
Income tax expense
|
|
28.2
|
|
|
42.8
|
|
|
34.0
|
|
|||
Net income
|
|
$
|
141.3
|
|
|
$
|
101.2
|
|
|
$
|
106.7
|
|
|
|
|
|
|
|
|
||||||
Comprehensive income
|
|
|
|
|
|
|
||||||
Unrealized AFS investment (losses) gains during the period (net of tax benefit (expense) of $12.9, $(8.9), and $1.0 for the years ended December 31, 2018, 2017, and 2016, respectively)
|
|
$
|
(48.5
|
)
|
|
$
|
19.9
|
|
|
$
|
(1.8
|
)
|
Reclassification adjustment for realized AFS investment losses (gains) in net income (net of tax benefit (expense) of $0.4, $(2.6), and $(3.9) for the years ended December 31, 2018, 2017, and 2016, respectively)
|
|
1.4
|
|
|
(4.8
|
)
|
|
(7.3
|
)
|
|||
Other comprehensive (loss) income, net of tax
|
|
(47.1
|
)
|
|
15.1
|
|
|
(9.1
|
)
|
|||
Total comprehensive income
|
|
$
|
94.2
|
|
|
$
|
116.3
|
|
|
$
|
97.6
|
|
|
|
|
|
|
|
|
||||||
Net realized and unrealized (losses) gains on investments
|
|
|
|
|
|
|
|
|
||||
Net realized and unrealized (losses) gains on investments before impairments
|
|
$
|
(9.8
|
)
|
|
$
|
8.8
|
|
|
$
|
17.0
|
|
Other than temporary impairments recognized in earnings
|
|
(3.3
|
)
|
|
(1.4
|
)
|
|
(5.8
|
)
|
|||
Net realized and unrealized (losses) gains on investments
|
|
$
|
(13.1
|
)
|
|
$
|
7.4
|
|
|
$
|
11.2
|
|
|
|
|
|
|
|
|
||||||
Earnings per common share (Note 18):
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
$
|
4.30
|
|
|
$
|
3.11
|
|
|
$
|
3.29
|
|
Diluted
|
|
$
|
4.24
|
|
|
$
|
3.06
|
|
|
$
|
3.24
|
|
Cash dividends declared per common share and eligible RSUs and PSUs
|
|
$
|
0.80
|
|
|
$
|
0.60
|
|
|
$
|
0.36
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||||||
Consolidated Statements of Cash Flows
|
||||||||||||
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Operating activities
|
|
(in millions)
|
||||||||||
Net income
|
|
$
|
141.3
|
|
|
$
|
101.2
|
|
|
$
|
106.7
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|||||
Depreciation and amortization
|
|
6.3
|
|
|
8.2
|
|
|
8.5
|
|
|||
Stock-based compensation
|
|
9.4
|
|
|
6.8
|
|
|
5.8
|
|
|||
Amortization of premium on investments, net
|
|
8.4
|
|
|
14.3
|
|
|
14.6
|
|
|||
Allowance for doubtful accounts
|
|
(3.3
|
)
|
|
0.2
|
|
|
(2.4
|
)
|
|||
Deferred income tax expense
|
|
14.4
|
|
|
24.2
|
|
|
13.4
|
|
|||
Net realized and unrealized losses (gains) on investments
|
|
13.1
|
|
|
(7.4
|
)
|
|
(11.2
|
)
|
|||
Gain on redemption of notes payable
|
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|||
Write-off of previously capitalized costs
|
|
—
|
|
|
7.5
|
|
|
—
|
|
|||
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|||||
Premiums receivable
|
|
(3.1
|
)
|
|
(22.2
|
)
|
|
(1.2
|
)
|
|||
Reinsurance recoverable on paid and unpaid losses
|
|
33.1
|
|
|
44.5
|
|
|
47.2
|
|
|||
Cloud computing arrangements
|
|
(26.0
|
)
|
|
—
|
|
|
—
|
|
|||
Current federal income taxes
|
|
8.6
|
|
|
(2.7
|
)
|
|
7.7
|
|
|||
Unpaid losses and loss adjustment expenses
|
|
(58.2
|
)
|
|
(34.9
|
)
|
|
(46.5
|
)
|
|||
Unearned premiums
|
|
18.0
|
|
|
8.0
|
|
|
1.4
|
|
|||
Accounts payable, accrued expenses and other liabilities
|
|
19.1
|
|
|
(7.0
|
)
|
|
(4.2
|
)
|
|||
Deferred reinsurance gain–LPT Agreement
|
|
(14.0
|
)
|
|
(11.3
|
)
|
|
(14.6
|
)
|
|||
Non-cancellable obligations
|
|
16.1
|
|
|
2.7
|
|
|
—
|
|
|||
Other
|
|
(3.0
|
)
|
|
12.3
|
|
|
(2.4
|
)
|
|||
Net cash provided by operating activities
|
|
180.2
|
|
|
142.3
|
|
|
122.8
|
|
|||
Investing activities
|
|
|
|
|
|
|
|
|
|
|||
Purchases of fixed maturity securities
|
|
(636.7
|
)
|
|
(592.3
|
)
|
|
(466.8
|
)
|
|||
Purchases of equity securities
|
|
(79.3
|
)
|
|
(36.8
|
)
|
|
(49.1
|
)
|
|||
Purchases of short-term investments
|
|
(59.7
|
)
|
|
(8.2
|
)
|
|
(10.0
|
)
|
|||
Proceeds from sale of fixed maturity securities
|
|
204.8
|
|
|
249.8
|
|
|
132.4
|
|
|||
Proceeds from sale of equity securities
|
|
70.7
|
|
|
41.2
|
|
|
80.4
|
|
|||
Proceeds from maturities and redemptions of fixed maturity securities
|
|
329.4
|
|
|
215.7
|
|
|
230.6
|
|
|||
Proceeds from maturities of short-term investments
|
|
39.0
|
|
|
20.2
|
|
|
—
|
|
|||
Net change in unsettled investment purchases and sales
|
|
22.4
|
|
|
5.8
|
|
|
—
|
|
|||
Capital expenditures and other
|
|
(10.2
|
)
|
|
(8.2
|
)
|
|
(5.0
|
)
|
|||
Net cash used in investing activities
|
|
(119.6
|
)
|
|
(112.8
|
)
|
|
(87.5
|
)
|
|||
Financing activities
|
|
|
|
|
|
|
|
|
||||
Acquisition of common stock
|
|
(4.2
|
)
|
|
—
|
|
|
(21.1
|
)
|
|||
Cash transactions related to stock-based compensation
|
|
(1.8
|
)
|
|
3.8
|
|
|
9.0
|
|
|||
Dividends paid to stockholders
|
|
(26.7
|
)
|
|
(19.7
|
)
|
|
(11.5
|
)
|
|||
Redemption of notes payable
|
|
—
|
|
|
(9.9
|
)
|
|
—
|
|
|||
Payments on capital leases
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|
—
|
|
|||
Net cash used in financing activities
|
|
(32.9
|
)
|
|
(26.0
|
)
|
|
(23.6
|
)
|
|||
Net increase in cash, cash equivalents, and restricted cash
|
|
27.7
|
|
|
3.5
|
|
|
11.7
|
|
|||
Cash, cash equivalents, and restricted cash at the beginning of the period
|
|
74.3
|
|
|
70.8
|
|
|
59.1
|
|
|||
Cash, cash equivalents, and restricted cash at the end of the period
|
|
$
|
102.0
|
|
|
$
|
74.3
|
|
|
$
|
70.8
|
|
Non-cash transactions
|
|
|
|
|
|
|
||||||
Financed property and equipment purchases
|
|
$
|
0.3
|
|
|
$
|
0.4
|
|
|
$
|
0.7
|
|
Non-cash exchange of fixed maturity investments for short-term investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6.0
|
|
|
|
As of
|
|
As of
|
||||
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
|
|
(in millions)
|
||||||
Cash and cash equivalents
|
|
$
|
101.4
|
|
|
$
|
73.3
|
|
Restricted cash and cash equivalents supporting reinsurance obligations
|
|
0.6
|
|
|
1.0
|
|
||
Total cash, cash equivalents and restricted cash
|
|
$
|
102.0
|
|
|
$
|
74.3
|
|
December 31, 2018
|
|
|
2018
|
|
2016
|
||||
|
|
(in millions, except per share data)
|
||||||
LPT Reserve Adjustments
|
|
$
|
(6.3
|
)
|
|
$
|
(5.0
|
)
|
Cumulative adjustment to the Deferred Gain
(1)
|
|
(2.2
|
)
|
|
(3.1
|
)
|
||
Net income impact from this change in estimate
|
|
2.2
|
|
|
3.1
|
|
||
Earnings per common share impact from this change in estimate:
|
|
|
|
|
||||
Basic
|
|
0.07
|
|
|
0.10
|
|
||
Diluted
|
|
0.07
|
|
|
0.09
|
|
(1)
|
The cumulative adjustments to the Deferred Gain were also recognized in losses and LAE incurred in the Company's Consolidated Statements 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.
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(in millions, except per share data)
|
||||||||||
LPT Contingent Commission Adjustments
|
|
$
|
0.5
|
|
|
$
|
0.3
|
|
|
$
|
1.9
|
|
Net income impact from this change in estimate
|
|
0.5
|
|
|
0.3
|
|
|
1.8
|
|
|||
Earnings per common share impact from this change in estimate:
|
|
|
|
|
|
|
||||||
Basic
|
|
0.02
|
|
|
0.01
|
|
|
0.06
|
|
|||
Diluted
|
|
0.02
|
|
|
0.01
|
|
|
0.05
|
|
|
2018
|
|
2017
|
||||||||||||||||||||
|
Gross
Carrying
Value
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
|
Gross
Carrying
Value
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
State licenses
|
$
|
7.7
|
|
|
$
|
—
|
|
|
$
|
7.7
|
|
|
$
|
7.7
|
|
|
$
|
—
|
|
|
$
|
7.7
|
|
Insurance relationships
|
9.4
|
|
|
$
|
(9.4
|
)
|
|
—
|
|
|
9.4
|
|
|
$
|
(9.2
|
)
|
|
0.2
|
|
||||
Total
|
$
|
17.1
|
|
|
$
|
(9.4
|
)
|
|
$
|
7.7
|
|
|
$
|
17.1
|
|
|
$
|
(9.2
|
)
|
|
$
|
7.9
|
|
|
2018
|
|
2017
|
||||||||||||
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
||||||||
Financial assets
|
(in millions)
|
||||||||||||||
Investments at fair value (Note 6)
|
$
|
2,721.3
|
|
|
$
|
2,721.3
|
|
|
$
|
2,677.7
|
|
|
$
|
2,677.7
|
|
Cash and cash equivalents
|
101.4
|
|
|
101.4
|
|
|
73.3
|
|
|
73.3
|
|
||||
Restricted cash and cash equivalents
|
0.6
|
|
|
0.6
|
|
|
1.0
|
|
|
1.0
|
|
||||
Financial liabilities
|
|
|
|
|
|
|
|
||||||||
Notes payable (Note 11)
|
$
|
20.0
|
|
|
$
|
23.5
|
|
|
$
|
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.
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasuries
|
$
|
—
|
|
|
$
|
106.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
137.0
|
|
|
$
|
—
|
|
U.S. Agencies
|
—
|
|
|
11.4
|
|
|
—
|
|
|
—
|
|
|
11.8
|
|
|
—
|
|
||||||
States and municipalities
|
—
|
|
|
528.0
|
|
|
—
|
|
|
—
|
|
|
642.5
|
|
|
—
|
|
||||||
Corporate securities
|
—
|
|
|
1,090.4
|
|
|
—
|
|
|
—
|
|
|
1,118.0
|
|
|
—
|
|
||||||
Residential mortgage-backed securities
|
—
|
|
|
451.5
|
|
|
—
|
|
|
—
|
|
|
389.3
|
|
|
—
|
|
||||||
Commercial mortgage-backed securities
|
—
|
|
|
94.3
|
|
|
—
|
|
|
—
|
|
|
106.0
|
|
|
—
|
|
||||||
Asset-backed securities
|
—
|
|
|
64.5
|
|
|
—
|
|
|
—
|
|
|
58.8
|
|
|
—
|
|
||||||
Other securities
|
—
|
|
|
149.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total fixed maturity securities
|
$
|
—
|
|
|
$
|
2,496.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,463.4
|
|
|
$
|
—
|
|
Equity securities at fair value
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Industrial and miscellaneous
|
$
|
174.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
181.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-redeemable preferred (FHLB stock)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.7
|
|
||||||
Other
|
25.1
|
|
|
—
|
|
|
—
|
|
|
23.9
|
|
|
—
|
|
|
—
|
|
||||||
Total equity securities at fair value
|
$
|
199.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
205.6
|
|
|
$
|
—
|
|
|
$
|
4.7
|
|
Short-term investments
|
$
|
—
|
|
|
$
|
25.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.0
|
|
|
$
|
—
|
|
Total investments at fair value
|
$
|
199.9
|
|
|
$
|
2,521.4
|
|
|
$
|
—
|
|
|
$
|
205.6
|
|
|
$
|
2,467.4
|
|
|
$
|
4.7
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
|
||||||
Cash and cash equivalents at fair value
|
$
|
43.9
|
|
|
$
|
34.3
|
|
Cash equivalents measured at NAV, which approximates fair value
|
57.5
|
|
|
39.0
|
|
||
Total cash and cash equivalents
|
$
|
101.4
|
|
|
$
|
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, December 31
|
$
|
—
|
|
|
$
|
4.7
|
|
(1)
|
The transfer during the year ended December 31, 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 year ended December 31, 2017 were 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
|
||||||||
At December 31, 2018
|
|
(in millions)
|
||||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries
|
|
$
|
106.7
|
|
|
$
|
0.9
|
|
|
$
|
(1.2
|
)
|
|
$
|
106.4
|
|
U.S. Agencies
|
|
11.3
|
|
|
0.1
|
|
|
—
|
|
|
11.4
|
|
||||
States and municipalities
|
|
513.4
|
|
|
15.3
|
|
|
(0.7
|
)
|
|
528.0
|
|
||||
Corporate securities
|
|
1,106.2
|
|
|
5.8
|
|
|
(21.6
|
)
|
|
1,090.4
|
|
||||
Residential mortgage-backed securities
|
|
459.1
|
|
|
2.2
|
|
|
(9.8
|
)
|
|
451.5
|
|
||||
Commercial mortgage-backed securities
|
|
96.7
|
|
|
0.1
|
|
|
(2.5
|
)
|
|
94.3
|
|
||||
Asset-backed securities
|
|
64.7
|
|
|
0.2
|
|
|
(0.4
|
)
|
|
64.5
|
|
||||
Other securities
(1)
|
|
155.6
|
|
|
—
|
|
|
(5.7
|
)
|
|
149.9
|
|
||||
Total fixed maturity securities
|
|
2,513.7
|
|
|
24.6
|
|
|
(41.9
|
)
|
|
2,496.4
|
|
||||
Short-term investments
|
|
25.0
|
|
|
—
|
|
|
—
|
|
|
25.0
|
|
||||
Total AFS investments
|
|
$
|
2,538.7
|
|
|
$
|
24.6
|
|
|
$
|
(41.9
|
)
|
|
$
|
2,521.4
|
|
|
|
|
|
|
|
|
|
|
||||||||
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 (FHLB stock)
|
|
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
|
|
(1)
|
Other securities within fixed maturity securities consist of bank loans, which are classified as AFS and reported at fair value.
|
|
|
Cost
|
|
Estimated Fair Value
|
||||
|
|
(in millions)
|
||||||
At December 31, 2018
|
|
|
|
|
||||
Equity securities at fair value
|
|
|
|
|
||||
Industrial and miscellaneous
|
|
$
|
114.6
|
|
|
$
|
174.8
|
|
Other
|
|
17.3
|
|
|
25.1
|
|
||
Total equity securities at fair value
|
|
$
|
131.9
|
|
|
$
|
199.9
|
|
|
|
Amortized Cost
|
|
Estimated Fair Value
|
||||
|
|
(in millions)
|
||||||
Due in one year or less
|
|
$
|
141.8
|
|
|
$
|
142.1
|
|
Due after one year through five years
|
|
856.9
|
|
|
856.3
|
|
||
Due after five years through ten years
|
|
794.3
|
|
|
784.3
|
|
||
Due after ten years
|
|
100.2
|
|
|
103.4
|
|
||
Mortgage and asset-backed securities
|
|
620.5
|
|
|
610.3
|
|
||
Total
|
|
$
|
2,513.7
|
|
|
$
|
2,496.4
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||
|
|
Estimated Fair Value
|
|
Gross Unrealized Losses
|
|
Number of Issues
|
|
Estimated Fair Value
|
|
Gross Unrealized Losses
|
|
Number of Issues
|
||||||||||
Less than 12 months:
|
|
(dollars in millions)
|
||||||||||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasuries
|
|
$
|
12.2
|
|
|
$
|
(0.1
|
)
|
|
7
|
|
|
$
|
86.0
|
|
|
$
|
(0.5
|
)
|
|
28
|
|
States and municipalities
|
|
70.1
|
|
|
(0.7
|
)
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Corporate securities
|
|
624.4
|
|
|
(13.4
|
)
|
|
205
|
|
|
307.6
|
|
|
(2.3
|
)
|
|
113
|
|
||||
Residential mortgage-backed securities
|
|
156.9
|
|
|
(2.5
|
)
|
|
59
|
|
|
165.0
|
|
|
(0.8
|
)
|
|
45
|
|
||||
Commercial mortgage-backed securities
|
|
30.9
|
|
|
(0.5
|
)
|
|
13
|
|
|
41.8
|
|
|
(0.2
|
)
|
|
19
|
|
||||
Asset-backed securities
|
|
25.1
|
|
|
(0.2
|
)
|
|
18
|
|
|
29.3
|
|
|
(0.2
|
)
|
|
25
|
|
||||
Other securities
|
|
137.1
|
|
|
(5.7
|
)
|
|
215
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total less than 12 months
|
|
$
|
1,056.7
|
|
|
$
|
(23.1
|
)
|
|
538
|
|
|
$
|
629.7
|
|
|
$
|
(4.0
|
)
|
|
230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
12 months or greater:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasuries
|
|
$
|
72.7
|
|
|
$
|
(1.1
|
)
|
|
25
|
|
|
$
|
23.4
|
|
|
$
|
(0.3
|
)
|
|
10
|
|
Corporate securities
|
|
193.7
|
|
|
(8.2
|
)
|
|
69
|
|
|
53.2
|
|
|
(1.1
|
)
|
|
17
|
|
||||
Residential mortgage-backed securities
|
|
199.8
|
|
|
(7.3
|
)
|
|
72
|
|
|
77.1
|
|
|
(1.8
|
)
|
|
32
|
|
||||
Commercial mortgage-backed securities
|
|
55.0
|
|
|
(2.0
|
)
|
|
22
|
|
|
25.1
|
|
|
(0.7
|
)
|
|
8
|
|
||||
Asset-backed securities
|
|
16.5
|
|
|
(0.2
|
)
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total 12 months or greater
|
|
$
|
537.7
|
|
|
$
|
(18.8
|
)
|
|
205
|
|
|
$
|
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)
|
||||||||||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
$
|
2.2
|
|
|
$
|
(4.0
|
)
|
|
$
|
(59.7
|
)
|
|
$
|
(1.8
|
)
|
|
$
|
(59.7
|
)
|
Equity securities
|
|
15.9
|
|
|
(1.6
|
)
|
|
(25.6
|
)
|
|
(11.3
|
)
|
|
—
|
|
|||||
Total investments
|
|
$
|
18.1
|
|
|
$
|
(5.6
|
)
|
|
$
|
(85.3
|
)
|
|
$
|
(13.1
|
)
|
|
$
|
(59.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
$
|
4.7
|
|
|
$
|
(2.2
|
)
|
|
$
|
3.9
|
|
|
$
|
2.5
|
|
|
$
|
3.9
|
|
Equity securities
|
|
9.3
|
|
|
(4.4
|
)
|
|
17.5
|
|
|
4.9
|
|
|
17.5
|
|
|||||
Total investments
|
|
$
|
14.0
|
|
|
$
|
(6.6
|
)
|
|
$
|
21.4
|
|
|
$
|
7.4
|
|
|
$
|
21.4
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
$
|
1.9
|
|
|
$
|
(0.7
|
)
|
|
$
|
(28.9
|
)
|
|
$
|
1.2
|
|
|
$
|
(28.9
|
)
|
Equity securities
|
|
16.6
|
|
|
(6.6
|
)
|
|
14.9
|
|
|
10.0
|
|
|
14.9
|
|
|||||
Total investments
|
|
$
|
18.5
|
|
|
$
|
(7.3
|
)
|
|
$
|
(14.0
|
)
|
|
$
|
11.2
|
|
|
$
|
(14.0
|
)
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(in millions)
|
||||||||||
Fixed maturity securities
|
|
$
|
76.0
|
|
|
$
|
70.4
|
|
|
$
|
68.5
|
|
Equity securities
|
|
6.5
|
|
|
6.9
|
|
|
7.4
|
|
|||
Short-term investments
|
|
0.3
|
|
|
0.1
|
|
|
—
|
|
|||
Cash equivalents and restricted cash
|
|
2.0
|
|
|
0.6
|
|
|
0.4
|
|
|||
Gross investment income
|
|
84.8
|
|
|
78.0
|
|
|
76.3
|
|
|||
Investment expenses
|
|
(3.6
|
)
|
|
(3.4
|
)
|
|
(3.1
|
)
|
|||
Net investment income
|
|
$
|
81.2
|
|
|
$
|
74.6
|
|
|
$
|
73.2
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Furniture and equipment
|
$
|
3.3
|
|
|
$
|
1.7
|
|
Leasehold improvements
|
3.2
|
|
|
2.9
|
|
||
Computers and software
|
61.9
|
|
|
54.2
|
|
||
Automobiles
|
1.1
|
|
|
1.1
|
|
||
Property and equipment, gross
|
69.5
|
|
|
59.9
|
|
||
Accumulated depreciation
|
(51.3
|
)
|
|
(46.0
|
)
|
||
Property and equipment, net
|
$
|
18.2
|
|
|
$
|
13.9
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Current tax expense:
|
(in millions)
|
||||||||||
Federal
|
$
|
13.2
|
|
|
$
|
17.9
|
|
|
$
|
20.3
|
|
State
|
0.6
|
|
|
0.7
|
|
|
0.3
|
|
|||
Total current tax expense
|
13.8
|
|
|
18.6
|
|
|
20.6
|
|
|||
Deferred federal tax expense:
|
|
|
|
|
|
||||||
Impact of tax Enactment
|
(0.4
|
)
|
|
7.0
|
|
|
—
|
|
|||
Other
|
14.8
|
|
|
17.2
|
|
|
13.4
|
|
|||
Total deferred federal tax expense
|
14.4
|
|
|
24.2
|
|
|
13.4
|
|
|||
Income tax expense
|
$
|
28.2
|
|
|
$
|
42.8
|
|
|
$
|
34.0
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Expense computed at statutory rate
|
$
|
35.6
|
|
|
$
|
50.4
|
|
|
$
|
49.3
|
|
Tax-advantaged investment income
|
(2.9
|
)
|
|
(7.6
|
)
|
|
(8.5
|
)
|
|||
LPT deferred gain amortization
|
(2.6
|
)
|
|
(4.0
|
)
|
|
(4.7
|
)
|
|||
Stock based compensation
|
(1.4
|
)
|
|
(3.4
|
)
|
|
(1.6
|
)
|
|||
LPT Reserve Adjustment
|
(0.5
|
)
|
|
—
|
|
|
(1.1
|
)
|
|||
Impact of tax Enactment
|
(0.4
|
)
|
|
7.0
|
|
|
—
|
|
|||
Other
|
0.4
|
|
|
0.4
|
|
|
0.6
|
|
|||
Income tax expense
|
$
|
28.2
|
|
|
$
|
42.8
|
|
|
$
|
34.0
|
|
|
2018
|
|
2017
|
||||||||||||
|
Deferred Tax
|
|
Deferred Tax
|
||||||||||||
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
||||||||
|
(in millions)
|
||||||||||||||
Unrealized capital gains, net
|
$
|
—
|
|
|
$
|
10.6
|
|
|
$
|
—
|
|
|
$
|
28.5
|
|
Deferred policy acquisition costs
|
—
|
|
|
10.3
|
|
|
—
|
|
|
9.7
|
|
||||
Intangible assets
|
—
|
|
|
1.6
|
|
|
—
|
|
|
1.7
|
|
||||
Loss reserve discounting for tax reporting
|
31.1
|
|
|
—
|
|
|
29.0
|
|
|
—
|
|
||||
Unearned premiums
|
13.3
|
|
|
—
|
|
|
12.8
|
|
|
—
|
|
||||
Allowance for bad debt
|
1.4
|
|
|
—
|
|
|
2.1
|
|
|
—
|
|
||||
Stock-based compensation
|
2.9
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
||||
Accrued liabilities
|
4.9
|
|
|
—
|
|
|
4.2
|
|
|
—
|
|
||||
Minimum tax credit
|
—
|
|
|
—
|
|
|
20.0
|
|
|
—
|
|
||||
Other
|
2.6
|
|
|
6.8
|
|
|
2.8
|
|
|
4.8
|
|
||||
Total
|
$
|
56.2
|
|
|
$
|
29.3
|
|
|
$
|
73.4
|
|
|
$
|
44.7
|
|
Deferred income taxes, net
|
$
|
26.9
|
|
|
|
|
$
|
28.7
|
|
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Unpaid losses and LAE at beginning of period
|
$
|
2,266.1
|
|
|
$
|
2,301.0
|
|
|
$
|
2,347.5
|
|
Less reinsurance recoverable on unpaid losses and LAE
|
537.0
|
|
|
580.0
|
|
|
628.2
|
|
|||
Net unpaid losses and LAE at beginning of period
|
1,729.1
|
|
|
1,721.0
|
|
|
1,719.3
|
|
|||
Losses and LAE, net of reinsurance, incurred during the period related to:
|
|
|
|
|
|
||||||
Current year
|
457.5
|
|
|
447.3
|
|
|
452.9
|
|
|||
Prior years
(1)
|
(66.2
|
)
|
|
(18.5
|
)
|
|
(18.4
|
)
|
|||
Total net losses and LAE incurred during the period
(1)
|
391.3
|
|
|
428.8
|
|
|
434.5
|
|
|||
Paid losses and LAE, net of reinsurance, related to:
|
|
|
|
|
|
||||||
Current year
|
93.0
|
|
|
76.9
|
|
|
78.7
|
|
|||
Prior years
(2)
|
323.9
|
|
|
343.8
|
|
|
354.1
|
|
|||
Total net paid losses and LAE during the period
(2)
|
416.9
|
|
|
420.7
|
|
|
432.8
|
|
|||
Ending unpaid losses and LAE, net of reinsurance
|
1,703.5
|
|
|
1,729.1
|
|
|
1,721.0
|
|
|||
Reinsurance recoverable on unpaid losses and LAE
|
504.4
|
|
|
537.0
|
|
|
580.0
|
|
|||
Unpaid losses and LAE at end of period
|
$
|
2,207.9
|
|
|
$
|
2,266.1
|
|
|
$
|
2,301.0
|
|
(1)
|
Losses and LAE, net of reinsurance, incurred during the period related to prior years and Total net losses and LAE incurred during the period included in the above table excludes the impact of the amortization of the Deferred Gain and LPT Reserve Adjustments (Note
10
). Including these amounts, Losses and LAE, net of reinsurance, incurred during the period related to prior years was
$(80.8) million
,
$(30.1) million
, and
$(35.0) million
and Total net losses and LAE incurred during the period was
$376.7 million
,
$417.2 million
, and
$417.9 million
for the years ended
December 31, 2018
,
2017
, and
2016
, respectively.
|
(2)
|
Paid losses and LAE, net of reinsurance, related to prior years and Total net paid losses and LAE during the period included in the above table excludes the impact of the amortization of the Deferred Gain and LPT Reserve Adjustments (Note
10
). Including these amounts, Paid losses and LAE, net of reinsurance, related to prior years was
$309.3 million
,
$332.2 million
, and
$337.5 million
and Total net paid losses and LAE during the period was
$402.4 million
,
$409.1 million
, and
$416.2 million
for the years ended
December 31, 2018
,
2017
, and
2016
, respectively.
|
|
Incurred Losses and LAE, Net of Reinsurance
|
|
|
|
||||||||||||||||||||||||||||||||
|
Years Ended December 31,
|
|
As of December 31, 2018
|
|||||||||||||||||||||||||||||||||
Accident Year
|
2009
(1)
|
2010
(1)
|
2011
(1)
|
2012
(1)
|
2013
(1)
|
2014
(1)
|
2015
(1)
|
2016
(1)
|
2017
(1)
|
2018
|
|
IBNR
|
Cumulative number of reported claims
|
|||||||||||||||||||||||
|
(in millions, except claims counts)
|
|||||||||||||||||||||||||||||||||||
2009
|
$
|
255.4
|
|
$
|
266.9
|
|
$
|
279.0
|
|
$
|
280.1
|
|
$
|
283.6
|
|
$
|
283.7
|
|
$
|
291.2
|
|
$
|
290.5
|
|
$
|
290.5
|
|
$
|
287.9
|
|
|
$
|
11.0
|
|
22,681
|
|
2010
|
|
204.9
|
|
224.4
|
|
228.1
|
|
246.1
|
|
250.2
|
|
262.0
|
|
259.9
|
|
258.8
|
|
255.2
|
|
|
16.7
|
|
18,540
|
|
||||||||||||
2011
|
|
|
253.7
|
|
267.3
|
|
272.0
|
|
277.4
|
|
296.3
|
|
292.6
|
|
288.8
|
|
287.8
|
|
|
24.0
|
|
19,578
|
|
|||||||||||||
2012
|
|
|
|
348.8
|
|
359.9
|
|
360.9
|
|
386.4
|
|
388.2
|
|
382.8
|
|
379.8
|
|
|
41.1
|
|
25,989
|
|
||||||||||||||
2013
|
|
|
|
|
452.6
|
|
460.6
|
|
478.6
|
|
472.6
|
|
468.9
|
|
464.6
|
|
|
61.2
|
|
28,869
|
|
|||||||||||||||
2014
|
|
|
|
|
|
463.4
|
|
445.8
|
|
432.9
|
|
434.6
|
|
430.5
|
|
|
72.2
|
|
28,524
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
422.2
|
|
425.8
|
|
423.9
|
|
419.6
|
|
|
78.7
|
|
27,135
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
419.0
|
|
414.6
|
|
395.4
|
|
|
94.4
|
|
25,621
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
412.4
|
|
391.3
|
|
|
145.1
|
|
24,746
|
|
|||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
422.5
|
|
|
220.0
|
|
23,617
|
|
||||||||||||||||||||
Total
|
$
|
3,734.7
|
|
|
|
|
|
Cumulative Paid Losses and LAE, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
Years Ended December 31,
|
|||||||||||||||||||||||||||||
Accident Year
|
2009
(1)
|
2010
(1)
|
2011
(1)
|
2012
(1)
|
2013
(1)
|
2014
(1)
|
2015
(1)
|
2016
(1)
|
2017
(1)
|
2018
|
||||||||||||||||||||
|
(in millions)
|
|||||||||||||||||||||||||||||
2009
|
$
|
59.0
|
|
$
|
130.6
|
|
$
|
174.1
|
|
$
|
202.0
|
|
$
|
219.3
|
|
$
|
232.1
|
|
$
|
242.3
|
|
$
|
249.5
|
|
$
|
255.1
|
|
$
|
258.7
|
|
2010
|
|
47.1
|
|
105.6
|
|
143.8
|
|
171.7
|
|
190.7
|
|
206.2
|
|
215.4
|
|
221.3
|
|
226.5
|
|
|||||||||||
2011
|
|
|
47.4
|
|
115.1
|
|
162.6
|
|
193.8
|
|
217.5
|
|
230.1
|
|
238.2
|
|
243.8
|
|
||||||||||||
2012
|
|
|
|
58.6
|
|
148.3
|
|
214.2
|
|
261.4
|
|
289.9
|
|
305.0
|
|
316.9
|
|
|||||||||||||
2013
|
|
|
|
|
68.5
|
|
184.4
|
|
263.8
|
|
317.4
|
|
346.1
|
|
365.9
|
|
||||||||||||||
2014
|
|
|
|
|
|
65.3
|
|
172.7
|
|
248.9
|
|
297.2
|
|
323.4
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
65.5
|
|
174.5
|
|
246.9
|
|
290.5
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
65.6
|
|
166.8
|
|
227.7
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
63.5
|
|
160.2
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
77.9
|
|
|||||||||||||||||||
Total
|
$
|
2,491.6
|
|
|||||||||||||||||||||||||||
All outstanding liabilities for unpaid losses and LAE prior to 2009, net of reinsurance
|
371.5
|
|
||||||||||||||||||||||||||||
Total outstanding liabilities for unpaid losses and LAE, net of reinsurance
|
$
|
1,614.6
|
|
(1)
|
Data presented for these calendar years is required supplementary information, which is unaudited.
|
|
|
December 31, 2018
|
||
|
|
(in millions)
|
||
Liabilities for unpaid losses and LAE, net of reinsurance
|
|
$
|
1,614.6
|
|
Reinsurance recoverable on unpaid losses
|
|
504.4
|
|
|
Unallocated LAE (adjusting and other)
|
|
88.9
|
|
|
Total liability for unpaid losses and LAE
|
|
$
|
2,207.9
|
|
Average Annual Percentage Payout of Claims by Age, Net of Reinsurance
|
|||||||||||||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
||||||||||
16.8
|
%
|
24.6
|
%
|
16.4
|
%
|
11.0
|
%
|
6.9
|
%
|
4.6
|
%
|
3.3
|
%
|
2.3
|
%
|
2.0
|
%
|
1.3
|
%
|
|
Years Ended December 31,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Direct premiums
|
$
|
739.0
|
|
|
$
|
727.2
|
|
|
$
|
719.5
|
|
|
$
|
712.5
|
|
|
$
|
691.0
|
|
|
$
|
691.0
|
|
Assumed premiums
|
9.9
|
|
|
10.0
|
|
|
10.2
|
|
|
10.0
|
|
|
10.4
|
|
|
10.6
|
|
||||||
Gross premiums
|
748.9
|
|
|
737.2
|
|
|
729.7
|
|
|
722.5
|
|
|
701.4
|
|
|
701.6
|
|
||||||
Ceded premiums
|
(6.1
|
)
|
|
(6.1
|
)
|
|
(6.0
|
)
|
|
(6.0
|
)
|
|
(6.8
|
)
|
|
(6.8
|
)
|
||||||
Net premiums
|
$
|
742.8
|
|
|
$
|
731.1
|
|
|
$
|
723.7
|
|
|
$
|
716.5
|
|
|
$
|
694.6
|
|
|
$
|
694.8
|
|
Ceded losses and LAE incurred
|
$
|
9.5
|
|
|
|
|
$
|
(0.5
|
)
|
|
|
|
$
|
0.1
|
|
|
|
|
December 31,
|
||||||
|
2018
|
|
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
|
|
Year
|
|
Principal Due
|
||
|
|
(in millions)
|
||
2019 - 2023
|
|
$
|
—
|
|
Thereafter
|
|
20.0
|
|
|
Total
|
|
$
|
20.0
|
|
Year
|
|
Operating Leases
|
|
Capital Leases
|
||||
|
|
(in millions)
|
||||||
2019
|
|
$
|
5.3
|
|
|
$
|
0.3
|
|
2020
|
|
4.4
|
|
|
0.3
|
|
||
2021
|
|
2.9
|
|
|
0.2
|
|
||
2022
|
|
1.9
|
|
|
0.1
|
|
||
2023
|
|
1.8
|
|
|
—
|
|
||
Thereafter
|
|
6.2
|
|
|
—
|
|
||
Total
|
|
$
|
22.5
|
|
|
$
|
0.9
|
|
Asset Class
|
|
2018
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Automobiles
|
|
1.1
|
|
|
1.1
|
|
||
Accumulated amortization
|
|
(0.4
|
)
|
|
(0.3
|
)
|
||
Total
|
|
$
|
0.7
|
|
|
$
|
0.8
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Stock-based compensation expense related to:
|
(in millions)
|
||||||||||
Stock options
|
$
|
0.3
|
|
|
$
|
0.5
|
|
|
$
|
0.7
|
|
RSUs
|
2.5
|
|
|
2.0
|
|
|
1.9
|
|
|||
PSUs
|
6.5
|
|
|
4.3
|
|
|
3.2
|
|
|||
Total
|
9.3
|
|
|
6.8
|
|
|
5.8
|
|
|||
Less: related tax benefit
|
2.0
|
|
|
2.4
|
|
|
2.0
|
|
|||
Net stock-based compensation expense
|
$
|
7.3
|
|
|
$
|
4.4
|
|
|
$
|
3.8
|
|
|
2016
|
|
Expected volatility
|
38.0
|
%
|
Expected life (in years)
|
4.8
|
|
Dividend yield
|
1.3
|
%
|
Risk-free interest rate
|
1.4
|
%
|
Weighted average grant date fair values of stock options granted
|
$8.46
|
|
Number of Stock Options
|
|
Weighted-Average Price
|
|
Weighted Average Remaining Contractual Life
|
|||
Stock options outstanding at December 31, 2015
|
1,121,545
|
|
|
$
|
18.31
|
|
|
2.8 years
|
Granted
|
67,431
|
|
|
27.72
|
|
|
6.2 years
|
|
Exercised
|
(586,132
|
)
|
|
16.39
|
|
|
|
|
Expired
|
(6,075
|
)
|
|
22.48
|
|
|
|
|
Forfeited
|
(32,673
|
)
|
|
24.35
|
|
|
|
|
Stock options outstanding at December 31, 2016
|
564,096
|
|
|
21.04
|
|
|
3.3 years
|
|
Exercised
|
(307,076
|
)
|
|
19.44
|
|
|
|
|
Forfeited
|
(9,673
|
)
|
|
24.45
|
|
|
|
|
Stock options outstanding at December 31, 2017
|
247,347
|
|
|
22.90
|
|
|
3.4 years
|
|
Exercised
|
(57,091
|
)
|
|
20.17
|
|
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
|
|
Stock options outstanding at December 31, 2018
|
190,256
|
|
|
23.71
|
|
|
2.7 years
|
|
Exercisable at December 31, 2018
|
149,327
|
|
|
22.95
|
|
|
2.4 years
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Fair value of stock options vested
|
$
|
0.4
|
|
|
$
|
0.6
|
|
|
$
|
0.8
|
|
Intrinsic value of outstanding stock options
|
3.4
|
|
|
5.3
|
|
|
10.6
|
|
|||
Intrinsic value of exercisable stock options
|
2.8
|
|
|
3.6
|
|
|
7.6
|
|
|
|
Number of RSUs
|
|
Weighted Average Grant Date Fair Value
|
|||
RSUs outstanding at December 31, 2015
|
|
319,033
|
|
|
$
|
20.71
|
|
Granted
|
|
100,218
|
|
|
28.20
|
|
|
Forfeited
|
|
(21,872
|
)
|
|
24.87
|
|
|
Vested
|
|
(72,995
|
)
|
|
21.56
|
|
|
RSUs outstanding at December 31, 2016
|
|
324,384
|
|
|
22.55
|
|
|
Granted
|
|
87,276
|
|
|
37.94
|
|
|
Forfeited
|
|
(13,711
|
)
|
|
29.28
|
|
|
Vested
|
|
(102,785
|
)
|
|
22.89
|
|
|
RSUs outstanding at December 31, 2017
|
|
295,164
|
|
|
26.67
|
|
|
Granted
|
|
87,857
|
|
|
40.26
|
|
|
Forfeited
|
|
(3,370
|
)
|
|
33.51
|
|
|
Vested
|
|
(129,351
|
)
|
|
24.53
|
|
|
RSUs outstanding at December 31, 2018
|
|
250,300
|
|
|
32.45
|
|
|
Vested but unsettled RSUs at December 31, 2018
|
|
67,620
|
|
|
23.35
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Grant date fair value of RSUs vested
|
$
|
3.2
|
|
|
$
|
2.4
|
|
|
$
|
1.6
|
|
Intrinsic value of RSUs vested
|
5.5
|
|
|
4.3
|
|
|
2.1
|
|
Date of Grant
|
|
Target Number Awarded
|
|
Fair Value on Date of Grant
|
|
Aggregate Fair Value on Date of Grant
|
|||||
|
|
|
|
|
|
(in millions)
|
|||||
March 2016
(1)
|
|
97,236
|
|
|
$
|
27.72
|
|
|
$
|
2.7
|
|
March 2017
(1)
|
|
97,440
|
|
|
37.60
|
|
|
3.7
|
|
||
March 2018
(1)
|
|
96,940
|
|
|
40.30
|
|
|
3.9
|
|
(1)
|
The PSUs awarded in March 2016, 2017, and 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 values shown in the table represent the aggregate number of PSUs awarded at the target level.
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Capital stock and unassigned surplus
|
$
|
558.5
|
|
|
$
|
510.6
|
|
Paid in capital
|
349.4
|
|
|
349.8
|
|
||
Surplus notes
|
20.0
|
|
|
32.0
|
|
||
Total statutory surplus
|
$
|
927.9
|
|
|
$
|
892.4
|
|
|
Years Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Net unrealized (losses) gains on investments, before taxes
|
$
|
(17.3
|
)
|
|
$
|
136.0
|
|
Deferred tax benefit (expense) on net unrealized (losses) gains
|
3.6
|
|
|
(28.6
|
)
|
||
Total accumulated other comprehensive (loss) income
|
$
|
(13.7
|
)
|
|
$
|
107.4
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions, except share data)
|
||||||||||
Net income
|
$
|
141.3
|
|
|
$
|
101.2
|
|
|
$
|
106.7
|
|
Weighted average number of shares outstanding–basic
|
32,884,828
|
|
|
32,501,576
|
|
|
32,434,580
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Stock options
|
97,810
|
|
|
208,602
|
|
|
246,562
|
|
|||
PSUs
|
268,030
|
|
|
271,738
|
|
|
222,594
|
|
|||
RSUs
|
60,669
|
|
|
78,844
|
|
|
73,099
|
|
|||
Dilutive potential shares
|
426,509
|
|
|
559,184
|
|
|
542,255
|
|
|||
Weighted average number of shares outstanding–diluted
|
33,311,337
|
|
|
33,060,760
|
|
|
32,976,835
|
|
|
Years Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Stock options excluded as the exercise price was greater than the average market price
|
—
|
|
|
—
|
|
|
—
|
|
Stock options excluded under the treasury method, as the potential proceeds on settlement or exercise was greater than the value of shares acquired
|
—
|
|
|
—
|
|
|
89,221
|
|
|
|
2018 Quarters Ended
|
||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
|
|
(in millions, except per share data)
|
||||||||||||||
Net premiums earned
|
|
$
|
176.6
|
|
|
$
|
178.0
|
|
|
$
|
192.9
|
|
|
$
|
183.6
|
|
Net realized and unrealized (losses) gains on investments
|
|
(8.0
|
)
|
|
5.7
|
|
|
15.6
|
|
|
(26.4
|
)
|
||||
Losses and loss adjustment expenses
|
|
95.4
|
|
|
87.8
|
|
|
106.6
|
|
|
86.9
|
|
||||
Commission expense
|
|
23.7
|
|
|
24.5
|
|
|
24.8
|
|
|
21.2
|
|
||||
Underwriting and other operating expenses
|
|
39.2
|
|
|
40.1
|
|
|
38.8
|
|
|
40.4
|
|
||||
Income tax expense
|
|
3.8
|
|
|
8.8
|
|
|
10.7
|
|
|
4.9
|
|
||||
Net income
|
|
25.6
|
|
|
42.5
|
|
|
47.6
|
|
|
25.6
|
|
||||
Earnings per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
0.78
|
|
|
1.29
|
|
|
1.45
|
|
|
0.78
|
|
||||
Diluted
|
|
0.77
|
|
|
1.28
|
|
|
1.43
|
|
|
0.77
|
|
|
|
2017 Quarters Ended
|
||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
|
|
(in millions, except per share data)
|
||||||||||||||
Net premiums earned
|
|
$
|
175.3
|
|
|
$
|
171.7
|
|
|
$
|
187.9
|
|
|
$
|
181.6
|
|
Net realized gains on investments
|
|
2.2
|
|
|
1.1
|
|
|
4.1
|
|
|
—
|
|
||||
Losses and loss adjustment expenses
|
|
109.0
|
|
|
106.1
|
|
|
116.9
|
|
|
85.2
|
|
||||
Commission expense
|
|
21.5
|
|
|
21.5
|
|
|
23.7
|
|
|
24.7
|
|
||||
Underwriting and other operating expenses
|
|
35.9
|
|
|
32.6
|
|
|
33.6
|
|
|
37.8
|
|
||||
Other expenses
|
|
—
|
|
|
—
|
|
|
7.5
|
|
|
—
|
|
||||
Income tax expense
|
|
6.3
|
|
|
7.8
|
|
|
7.0
|
|
|
21.7
|
|
||||
Net income
|
|
23.2
|
|
|
24.8
|
|
|
21.9
|
|
|
31.3
|
|
||||
Earnings per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
0.72
|
|
|
0.76
|
|
|
0.67
|
|
|
0.96
|
|
||||
Diluted
|
|
0.70
|
|
|
0.75
|
|
|
0.66
|
|
|
0.94
|
|
Plan Category
|
|
(a)
Number of securities
to be issued upon
exercise of outstanding
options, warrants, and
rights
|
|
(b)
Weighted-average
exercised price of
outstanding options,
warrants, and
rights
(4)
|
|
(c)
Number of securities remaining available for further issuance
under compensation plans
(excluding securities
reflected in column (a))
|
||||
Equity compensation plans approved by stockholders
(1)
:
|
|
|
|
|
|
|
||||
Stock options
|
|
190,256
|
|
|
$
|
23.71
|
|
|
3,276,190
|
|
RSUs
(2)
|
|
250,300
|
|
|
|
|
3,025,890
|
|
||
PSUs
(3)
|
|
291,616
|
|
|
|
|
2,734,274
|
|
||
Equity compensation plans not approved by stockholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
732,172
|
|
|
$
|
23.71
|
|
|
2,734,274
|
|
(1)
|
The Plan is administered by the Compensation Committee of the Board of Directors, which is authorized to grant, at its discretion, awards to officers, employees, non-employee directors, consultants, and independent contractors. The maximum number of common shares currently being reserved for grants of awards under the Plan was
5,500,000
shares, prior to reductions for grants made.
|
(2)
|
RSUs are phantom (as opposed to actual) shares of common stock which, depending on the individual award, vest in equal tranches over one- to four-year periods, subject to the recipient maintaining a continuous relationship with the Company through the applicable vesting date.
|
(3)
|
PSUs are phantom (as opposed to actual) shares of common stock, which are subject to a performance period of two years followed by an additional one-year vesting period, subject to the recipient maintaining a continuous relationship with the Company through the applicable vesting date. PSU awards are subject to certain performance goals with payouts that range from 0% to 200% of the target awards. The values shown in the table above represent the aggregate number of PSUs based on the expectation of the Company achieving an
200%
of target rate for the
2016
PSUs, a
200%
of target rate for the
2017
PSUs, and a
125%
of target rate for the
2018
PSUs.
|
(4)
|
Holders of RSUs and PSUs are not entitled to voting rights. Commencing in 2017, employees who were awarded RSUs and PSUs are entitled to receive dividend equivalents for eligible awards, payable in cash, when the underlying award vests and becomes payable. RSUs and PSUs do not require the payment of an exercise price, accordingly, there is no weighted average exercise price for these awards.
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets as of December 31, 2018 and 2017
|
|
Consolidated Statements of Comprehensive Income for each of the three years ended December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Stockholders' Equity for each of the three years ended December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Cash Flows for each of the three years ended December 31, 2018, 2017 and 2016
|
|
Notes to Consolidated Financial Statements
|
|
|
|
Financial Statement Schedules:
|
|
Schedule II. Condensed Financial Information of Registrant
|
|
|
|
Pursuant to Rule 7-05 of Regulation S-X, Financial Statement Schedules I, III, IV, V, and VI have been omitted as the information to be set forth therein is included in the notes to the audited consolidated financial statements.
|
Employers Holdings, Inc.
|
||||||||
|
||||||||
Condensed Balance Sheets
|
||||||||
|
|
|
|
|
||||
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Assets
|
|
(in millions, except share data)
|
||||||
Investments:
|
|
|
|
|
||||
Investment in subsidiaries
|
|
$
|
873.8
|
|
|
$
|
849.6
|
|
Fixed maturity securities at fair value (amortized cost $24.2 at December 31, 2018 and $40.2 at December 31, 2017)
|
|
24.6
|
|
|
41.4
|
|
||
Equity securities at fair value (cost $40.0 at December 31, 2018)
|
|
38.7
|
|
|
—
|
|
||
Short-term investments at fair value (amortized cost $25.0 at December 31, 2018 and $3.7 at December 31, 2017)
|
|
25.0
|
|
|
3.7
|
|
||
Total investments
|
|
962.1
|
|
|
894.7
|
|
||
|
|
|
|
|
||||
Cash and cash equivalents
|
|
41.3
|
|
|
39.6
|
|
||
Accrued investment income
|
|
0.3
|
|
|
0.3
|
|
||
Intercompany receivable
|
|
0.3
|
|
|
—
|
|
||
Federal income taxes receivable
|
|
22.7
|
|
|
4.2
|
|
||
Deferred income taxes, net
|
|
—
|
|
|
14.5
|
|
||
Other assets
|
|
0.9
|
|
|
0.8
|
|
||
Total assets
|
|
$
|
1,027.6
|
|
|
$
|
954.1
|
|
|
|
|
|
|
||||
Liabilities and stockholders' equity
|
|
|
|
|
||||
Accounts payable and accrued expenses
|
|
$
|
5.0
|
|
|
$
|
4.5
|
|
Intercompany payable
|
|
—
|
|
|
1.9
|
|
||
Deferred income taxes, net
|
|
0.4
|
|
|
—
|
|
||
Other liabilities
|
|
4.0
|
|
|
—
|
|
||
Total liabilities
|
|
9.4
|
|
|
6.4
|
|
||
|
|
|
|
|
||||
Stockholders' equity
:
|
|
|
|
|
||||
Common stock, $0.01 par value; 150,000,000 shares authorized; 56,975,675 and 56,695,174 shares issued and 32,765,792 and 32,597,819 shares outstanding at December 31, 2018 and 2017, respectively
|
|
0.6
|
|
|
0.6
|
|
||
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
388.8
|
|
|
381.2
|
|
||
Retained earnings
|
|
1,030.7
|
|
|
842.2
|
|
||
Accumulated other comprehensive (loss) income, net of tax
|
|
(13.7
|
)
|
|
107.4
|
|
||
Treasury stock, at cost (24,209,883 shares at December 31, 2018 and 24,097,355 shares at December 31, 2017)
|
|
(388.2
|
)
|
|
(383.7
|
)
|
||
Total stockholders' equity
|
|
1,018.2
|
|
|
947.7
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
1,027.6
|
|
|
$
|
954.1
|
|
Employers Holdings, Inc.
|
||||||||||||
|
|
|
|
|
|
|||||||
Condensed Statements of Income
|
||||||||||||
|
|
|
|
|
|
|||||||
|
Years Ended December 31,
|
|||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||
|
(in millions, except per share data)
|
|||||||||||
Revenues
|
|
|
|
|
|
|||||||
Net investment income
|
$
|
2.5
|
|
|
$
|
1.3
|
|
|
$
|
1.9
|
|
|
Net realized and unrealized gains on investments
|
0.8
|
|
|
—
|
|
|
8.0
|
|
||||
Total revenues
|
3.3
|
|
|
1.3
|
|
|
9.9
|
|
||||
|
|
|
|
|
|
|||||||
Expenses
|
|
|
|
|
|
|||||||
Other operating expenses
|
17.5
|
|
|
15.2
|
|
|
13.8
|
|
||||
Total expenses
|
17.5
|
|
|
15.2
|
|
|
13.8
|
|
||||
|
|
|
|
|
|
|||||||
Loss before income taxes and equity in earnings of subsidiaries
|
(14.2
|
)
|
|
(13.9
|
)
|
|
(3.9
|
)
|
||||
Income tax benefit
|
(4.3
|
)
|
|
(5.8
|
)
|
|
(3.5
|
)
|
||||
Net loss before equity in earnings of subsidiaries
|
(9.9
|
)
|
|
(8.1
|
)
|
|
(0.4
|
)
|
||||
Equity in earnings of subsidiaries
|
151.2
|
|
|
109.3
|
|
|
107.1
|
|
||||
Net income
|
$
|
141.3
|
|
|
$
|
101.2
|
|
|
$
|
106.7
|
|
|
|
|
|
|
|
|
|||||||
Earnings per common share:
|
|
|
|
|
|
|||||||
Basic
|
$
|
4.30
|
|
|
$
|
3.11
|
|
|
$
|
3.29
|
|
|
Diluted
|
$
|
4.24
|
|
|
$
|
3.06
|
|
|
$
|
3.24
|
|
|
|
|
|
|
|
|
|||||||
Cash dividends declared per common share
|
$
|
0.80
|
|
|
$
|
0.60
|
|
|
$
|
0.36
|
|
Employers Holdings, Inc.
|
|||||||||||
|
|
|
|
|
|
||||||
Condensed Statement of Cash Flows
|
|||||||||||
|
|
|
|
|
|
||||||
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
141.3
|
|
|
$
|
101.2
|
|
|
$
|
106.7
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Equity in undistributed earnings of subsidiaries
|
(66.7
|
)
|
|
(71.5
|
)
|
|
(107.1
|
)
|
|||
Net realized and unrealized gains on investments
|
(0.8
|
)
|
|
—
|
|
|
(8.0
|
)
|
|||
Stock-based compensation
|
9.4
|
|
|
6.8
|
|
|
5.8
|
|
|||
Amortization of premium on investments, net
|
0.2
|
|
|
0.1
|
|
|
0.4
|
|
|||
Deferred income tax expense
|
14.7
|
|
|
5.3
|
|
|
2.9
|
|
|||
Change in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts payable and accrued expenses
|
0.2
|
|
|
(0.3
|
)
|
|
(0.7
|
)
|
|||
Federal income taxes
|
(18.5
|
)
|
|
5.4
|
|
|
(7.9
|
)
|
|||
Other assets
|
(0.1
|
)
|
|
(0.1
|
)
|
|
0.8
|
|
|||
Intercompany payables and receivables
|
(2.2
|
)
|
|
1.8
|
|
|
0.3
|
|
|||
Other
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|||
Net cash provided by (used in) operating activities
|
77.5
|
|
|
48.7
|
|
|
(7.2
|
)
|
|||
|
|
|
|
|
|
||||||
Investing activities
|
|
|
|
|
|
||||||
Purchases of fixed maturity securities
|
(14.4
|
)
|
|
(30.6
|
)
|
|
(31.0
|
)
|
|||
Purchases of equity securities
|
(40.0
|
)
|
|
—
|
|
|
(3.6
|
)
|
|||
Purchases of short-term securities
|
(59.6
|
)
|
|
(7.9
|
)
|
|
—
|
|
|||
Proceeds from sale of fixed maturity securities
|
12.0
|
|
|
5.0
|
|
|
—
|
|
|||
Proceeds from maturities and redemptions of investments
|
59.2
|
|
|
4.5
|
|
|
24.9
|
|
|||
Proceeds from sale of equity securities
|
—
|
|
|
—
|
|
|
88.5
|
|
|||
Net change in unsettled purchases and sales
|
3.9
|
|
|
—
|
|
|
—
|
|
|||
Capital contributions to subsidiaries
|
(4.2
|
)
|
|
(5.6
|
)
|
|
(8.0
|
)
|
|||
Net cash (used in) provided by investing activities
|
(43.1
|
)
|
|
(34.6
|
)
|
|
70.8
|
|
|||
|
|
|
|
|
|
||||||
Financing activities
|
|
|
|
|
|
||||||
Acquisition of common stock
|
(4.2
|
)
|
|
—
|
|
|
(21.1
|
)
|
|||
Cash transactions related to stock-based compensation
|
(1.8
|
)
|
|
3.8
|
|
|
9.0
|
|
|||
Dividends paid to stockholders
|
(26.7
|
)
|
|
(19.7
|
)
|
|
(11.5
|
)
|
|||
Net cash used in financing activities
|
(32.7
|
)
|
|
(15.9
|
)
|
|
(23.6
|
)
|
|||
|
|
|
|
|
|
||||||
Net increase (decrease) in cash and cash equivalents
|
1.7
|
|
|
(1.8
|
)
|
|
40.0
|
|
|||
Cash and cash equivalents at the beginning of the period
|
39.6
|
|
|
41.4
|
|
|
1.4
|
|
|||
Cash and cash equivalents at the end of the period
|
$
|
41.3
|
|
|
$
|
39.6
|
|
|
$
|
41.4
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
Included Herewith
|
|
Incorporated by Reference Herein
|
|||||||
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|||||||
3.1
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
|
|
|
8-K
|
|
001-33245
|
|
3.1
|
|
June 13, 2018
|
|
4.1
|
|
|
|
|
|
S-1/A
|
|
333-139092
|
|
4.1
|
|
January 18, 2007
|
|
10.1
|
|
|
|
|
|
S-1/A
|
|
333-139092
|
|
10.1
|
|
January 18, 2007
|
|
10.2
|
|
|
|
|
|
S-1/A
|
|
333-139092
|
|
10.2
|
|
January 18, 2007
|
|
10.3
|
|
|
|
|
|
S-1/A
|
|
333-139092
|
|
10.3
|
|
January 18, 2007
|
|
10.4
|
|
|
|
|
|
S-1/A
|
|
333-139092
|
|
10.4
|
|
January 18, 2007
|
|
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
|
|
|
|
|
|
10-Q
|
|
001-33245
|
|
10.11
|
|
October 25, 2018
|
|
*10.11
|
|
|
|
|
|
10-Q
|
|
001-33245
|
|
10.1
|
|
August 7, 2009
|
|
*10.12
|
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.1
|
|
March 13, 2018
|
|
*10.13
|
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.2
|
|
March 13, 2018
|
*10.14
|
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.1
|
|
June 30, 2017
|
|
*10.15
|
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.2
|
|
June 30, 2017
|
|
*10.16.
|
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.3
|
|
June 30, 2017
|
|
*10.17
|
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.4
|
|
June 30, 2017
|
|
*10.18
|
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.1
|
|
November 8, 2018
|
|
*10.19
|
|
|
|
|
|
8-K
|
|
001-33245
|
|
10.1
|
|
November 8, 2018
|
|
*10.20
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
*10.21
|
|
|
|
|
|
10-Q
|
|
001-33245
|
|
10.2
|
|
April 27, 2017
|
|
*10.22
|
|
|
|
|
|
10-Q
|
|
001-33245
|
|
10.3
|
|
April 27, 2017
|
|
*10.23
|
|
|
|
|
|
10-Q
|
|
001-33245
|
|
10.3
|
|
April 30, 2015
|
|
*10.24
|
|
|
|
|
|
8-K
|
|
001-3324
|
|
10.1
|
|
May 22, 2015
|
|
21.1
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
23.1
|
|
|
|
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 Definition Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
(1)
|
Confidential treatment has been requested for certain confidential portions of this exhibit; these confidential portions have been omitted from this exhibit and filed separately with the Securities and Exchange Commission.
|
Date:
|
February 28, 2019
|
EMPLOYERS HOLDINGS, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Michael S. Paquette
|
|
|
|
Name: Michael S. Paquette
|
|
|
|
Title: Executive Vice President and Chief Financial Officer
|
Signature
|
Title
|
Date
|
|
|
|
/s/ Michael D. Rumbolz
|
Chairman of the Board
|
February 28, 2019
|
Michael D. Rumbolz
|
|
|
|
|
|
/s/ Douglas D. Dirks
|
President and Chief Executive Officer, Director (Principal Executive Officer)
|
February 28, 2019
|
Douglas D. Dirks
|
|
|
|
|
|
/s/ Michael S. Paquette
|
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
|
February 28, 2019
|
Michael S. Paquette
|
|
|
|
|
|
/s/ Richard W. Blakey
|
Director
|
February 28, 2019
|
Richard W. Blakey
|
|
|
|
|
|
/s/ Prasanna G. Dhoré
|
Director
|
February 28, 2019
|
Prasanna G. Dhoré
|
|
|
|
|
|
/s/ Valerie R. Glenn
|
Director
|
February 28, 2019
|
Valerie R. Glenn
|
|
|
|
|
|
/s/ Barbara A. Higgins
|
Director
|
February 28, 2019
|
Barbara A. Higgins
|
|
|
|
|
|
/s/ James R. Kroner
|
Director
|
February 28, 2019
|
James R. Kroner
|
|
|
|
|
|
/s/ Michael J. McColgan
|
Director
|
February 28, 2019
|
Michael J. McColgan
|
|
|
|
|
|
/s/ Michael J. McSally
|
Director
|
February 28, 2019
|
Michael J. McSally
|
|
|
|
|
|
/s/ Jeanne L. Mockard
|
Director
|
February 28, 2019
|
Jeanne L. Mockard
|
|
1.
|
Employment
.
|
2.
|
Term
.
|
3.
|
Services and Duties
.
|
4.
|
Compensation and Benefits
.
|
(a)
|
During the Term, the Company shall pay to the Employee an annual salary of not less than $350,000 (“Base Salary”), which amount shall be paid according to the Company’s regular payroll practices. The Company agrees
|
(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-five percent (55%) 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).
|
(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.
|
5.
|
Insurance
.
|
6.
|
Termination
.
|
(a)
|
The Company, at any time, may terminate this Agreement and the Employee's employment immediately for “Cause.” Cause is defined as:
|
(i)
|
A material breach of this Agreement by the Employee;
|
(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
|
(i)
|
A material diminution in the Employee’s base compensation;
|
(ii)
|
A material diminution in the Employee’s authority, duties or responsibilities; or
|
(iii)
|
Any other action or inaction that constitutes a material breach by the Company of this Agreement.
|
(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.
|
7.
|
Payments Upon Termination
.
|
(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 two (2) times Base Salary, payable in equal bi-weekly installments on the Company’s regular payroll dates as in effect on the Termination Date, for twenty four (24) months following such 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 26 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 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 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 dependents if applicable, on the Termination Date.
|
(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
|
(c)
|
Conditions to Severance Pay or CIC Severance Pay; the Applicable Release Period
. The Employee agrees and acknowledges that the following must be satisfied by the Employee before she is entitled to the Severance Pay or, if applicable, the CIC Severance Pay, as provided in subsections (i), (ii) and (iii) herein:
|
(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 separation agreement and release of claims, in a form to be determined by the Company in its sole discretion, which releases the Company and the Company Affiliates from liability for any and all claims, complaints and causes of action, whether based in law or equity, arising from, related to or associated with the Employee’s employment by the Company or under this Agreement and that such release has become effective and non-revocable no later than sixty (60) days following the Termination Date (such deadline, the “Release Deadline”). If the release of claims does not become effective by the Release Deadline, the Employee will forfeit any rights to severance or benefits under this Agreement. In no event will severance payments or benefits be paid or provided until the release of claims becomes effective and irrevocable. That the Employee further acknowledges and agrees that she has not made and will not make any assignment of any claim, cause or right of action, or any right of any kind whatsoever, arising from, related to or associated with the employment of the Employee by the Company; and
|
(iii)
|
That the Employee reaffirms the covenants contained herein, in writing, including, but not limited to, the covenants set forth in Section 10.
|
(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 separation agreement and release of claims (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:
|
(i)
|
Any unpaid salary through the Termination Date; and
|
(ii)
|
Payment for any accrued and unused vacation as of the Termination Date.
|
(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 (6) month period prior to a Change in Control, the Employee shall be entitled to CIC Severance Pay only if such termination (x) was by the Company other than for Cause but at the request or direction of any person that has entered into an agreement with the Company the consummation of which would constitute a Change
|
(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) (i) if the Change in Control occurs in 2019, $192,500, and (ii) if the Change in Control occurs in 2020, the average of $192,500 and the annual bonus amount earned by the Employee for 2019. 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 payment shall be delayed to the extent required under subsection 7(c)(iv) or Section 26 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.
|
(f)
|
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
|
(h)
|
Golden Parachute (Section 280G) Safe Harbor
.
|
(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.
|
(iv)
|
The Employee and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. The Company also shall pay to the Employee all legal fees and expenses incurred by the Employee in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within sixty (60) business days after delivery of the Employee's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require (but in no event shall any such payment be made after the end of the calendar year following the calendar year in which the expenses were incurred), provided that no such payment
|
8.
|
Licensing
.
|
9.
|
Rules and Regulations
.
|
10.
|
Restrictive Covenants
.
|
(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 eighteen (18) months commencing on the Termination Date, the Employee agrees that, without the written permission of the Company, she will not hold the same or a similar position (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 Area”) as of the Termination Date.
|
(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 Date (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, (i) 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, provided that the
Employee was aware of the Company’s business with such person or entity, (ii) any persons or entities that have been customers of the Company or any of the Company Affiliates or (iii) recruit or solicit 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. Nothing in this Section 10(b) prohibits the Employee from the placement of general advertisements and/or participation at job fairs or recruiting workshops that are not specifically targeted toward any employee or customer of the Company.
|
(c)
|
In the event the Employee violates subsection 10(a) or 10(b), the applicable period of time during which the respective restriction applies will automatically be extended for the period of time from which the Employee began such violation until she permanently ceases such violation. If any provision of these covenants is invalid
|
(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, subject to her right to engage in Protected Activity as defined herein, 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 his 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 10(a) through (g), inclusive, of this Agreement shall survive either termination of the employment relationship and/or termination of this Agreement for the full period set forth in subsections 10(a) through (g), inclusive.
|
11.
|
Work for Hire
.
|
12.
|
Assignment of Agreement
.
|
13.
|
Indemnification of the Employee
.
|
14.
|
Notices
.
|
15.
|
Severability
.
|
16.
|
Remedy for Breach
.
|
17.
|
Mitigation of Damages
.
|
18.
|
Attorneys' Fees and Costs
.
|
19.
|
Integration, Amendment, and Waiver
.
|
20.
|
Captions
.
|
21.
|
Applicable Law
.
|
22.
|
Arbitration
.
|
23.
|
Authorization
.
|
24.
|
Acknowledgment
.
|
25.
|
Protected Activity Not Prohibited
.
|
COMPANY:
|
EMPLOYEE:
|
||
By:
|
/s/ Douglas D. Dirks
|
By:
|
/s/ Lori A. Brown
|
|
Douglas D. Dirks
|
|
Lori A. Brown
|
|
Chief Executive Officer
|
|
|
•
|
Movement of household goods and vehicles 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) months;
|
•
|
Reimbursement of reasonable expenses necessary to facilitate your relocation, such as airfare or driving expenses, hotel costs and meals for the trip from your current residence;
|
•
|
Reimbursement of temporary housing living expenses (rent, deposit, utilities) up to 12 months;
|
•
|
If as a result of your relocation to the Reno, Nevada area, you choose to sell your current home in San Ramon, California, the Company will pay realtor fees (not to exceed six percent (6%) of the sales price). The Company will also reimburse you for any closing costs related to 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;
|
•
|
Reimbursement of sales and use tax charged to you by the Nevada Department of Motor Vehicles when registering the vehicles owned by you as of January 1, 2019, upon your relocation to Reno Nevada. The reimbursement shall be limited to no more than $2,500, in the aggregate.
|
•
|
To the extent that the reimbursement of any of the relocation expenses described in this Appendix A (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 $100,000. 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.
|
Name
|
Jurisdiction of Organization
|
Employers Group, Inc.
|
Nevada
|
Employers Insurance Company of Nevada
|
Nevada
|
Elite Insurance Services, Inc.
|
Nevada
|
Employers Compensation Insurance Company
|
California
|
Employers Preferred Insurance Company
|
Florida
|
Employers Assurance Company
|
Florida
|
EIG Services, Inc.
|
Florida
|
1.
|
I have reviewed this annual report on Form 10-K 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:
|
February 28, 2019
|
/s/ Douglas D. Dirks
|
|
|
Douglas D. Dirks
|
|
|
President and Chief Executive Officer
|
|
|
Employers Holdings, Inc.
|
1.
|
I have reviewed this annual report on Form 10-K 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:
|
February 28, 2019
|
/s/ Michael S. Paquette
|
|
|
Michael S. Paquette
|
|
|
Executive Vice President and Chief Financial 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:
|
February 28, 2019
|
/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:
|
February 28, 2019
|
/s/ Michael S. Paquette
|
|
|
Michael S. Paquette
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
Employers Holdings, Inc.
|