Nevada
(State or other jurisdiction
of incorporation or organization)
|
|
04-3850065
(I.R.S. Employer
Identification Number)
|
|
|
|
10375 Professional Circle, Reno, Nevada 89521
(Address of principal executive offices and zip code)
|
Large accelerated filer R
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting company o
|
|
|
|
Emerging growth company o
|
Class
|
|
April 18, 2019
|
Common Stock, $0.01 par value per share
|
|
32,052,420 shares outstanding
|
|
|
Page
No.
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||
Consolidated Balance Sheets
|
||||||||
(in millions, except share data)
|
||||||||
|
|
As of
|
|
As of
|
||||
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
(unaudited)
|
|
|
||||
Investments:
|
|
|
|
|
||||
Fixed maturity securities at fair value (amortized cost $2,491.1 at March 31, 2019 and $2,513.7 at December 31, 2018)
|
|
$
|
2,521.0
|
|
|
$
|
2,496.4
|
|
Equity securities at fair value (cost $140.8 at March 31, 2019 and $131.9 at December 31, 2018)
|
|
230.0
|
|
|
199.9
|
|
||
Equity securities at cost
|
|
6.4
|
|
|
6.4
|
|
||
Short-term investments at fair value (amortized cost $25.0 at December 31, 2018)
|
|
—
|
|
|
25.0
|
|
||
Total investments
|
|
2,757.4
|
|
|
2,727.7
|
|
||
Cash and cash equivalents
|
|
92.3
|
|
|
101.4
|
|
||
Restricted cash and cash equivalents
|
|
2.5
|
|
|
0.6
|
|
||
Accrued investment income
|
|
18.2
|
|
|
18.0
|
|
||
Premiums receivable (less bad debt allowance of $5.7 at March 31, 2019 and $6.7 at December 31, 2018)
|
|
352.7
|
|
|
333.1
|
|
||
Reinsurance recoverable for:
|
|
|
|
|
||||
Paid losses
|
|
6.7
|
|
|
6.7
|
|
||
Unpaid losses
|
|
498.7
|
|
|
504.4
|
|
||
Deferred policy acquisition costs
|
|
52.5
|
|
|
48.2
|
|
||
Deferred income taxes, net
|
|
12.9
|
|
|
26.9
|
|
||
Property and equipment, net
|
|
21.8
|
|
|
18.2
|
|
||
Operating lease right-of-use assets
|
|
16.8
|
|
|
—
|
|
||
Intangible assets, net
|
|
7.7
|
|
|
7.7
|
|
||
Goodwill
|
|
36.2
|
|
|
36.2
|
|
||
Contingent commission receivable—LPT Agreement
|
|
32.0
|
|
|
32.0
|
|
||
Cloud computing arrangements
|
|
25.1
|
|
|
26.0
|
|
||
Other assets
|
|
39.6
|
|
|
32.1
|
|
||
Total assets
|
|
$
|
3,973.1
|
|
|
$
|
3,919.2
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
||
Unpaid losses and loss adjustment expenses
|
|
$
|
2,189.3
|
|
|
$
|
2,207.9
|
|
Unearned premiums
|
|
368.9
|
|
|
336.3
|
|
||
Commissions and premium taxes payable
|
|
53.8
|
|
|
57.3
|
|
||
Accounts payable and accrued expenses
|
|
24.6
|
|
|
37.1
|
|
||
Deferred reinsurance gain—LPT Agreement
|
|
147.1
|
|
|
149.6
|
|
||
Notes payable
|
|
20.0
|
|
|
20.0
|
|
||
Operating lease liability
|
|
19.0
|
|
|
—
|
|
||
Non-cancellable obligations
|
|
17.4
|
|
|
18.8
|
|
||
Other liabilities
|
|
61.3
|
|
|
74.0
|
|
||
Total liabilities
|
|
$
|
2,901.4
|
|
|
$
|
2,901.0
|
|
Commitments and contingencies
|
|
|
|
|
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||
Consolidated Balance Sheets
|
||||||||
(in millions, except share data)
|
||||||||
|
|
As of
|
|
As of
|
||||
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Stockholders’ equity:
|
|
(unaudited)
|
|
|
|
|||
Common stock, $0.01 par value; 150,000,000 shares authorized; 57,144,530 and 56,975,675 shares issued and 32,263,810 and 32,765,792 shares outstanding at March 31, 2019 and December 31, 2018, respectively
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
388.1
|
|
|
388.8
|
|
||
Retained earnings
|
|
1,075.1
|
|
|
1,030.7
|
|
||
Accumulated other comprehensive income (loss), net of tax
|
|
23.6
|
|
|
(13.7
|
)
|
||
Treasury stock, at cost (24,880,720 shares at March 31, 2019 and 24,209,883 shares at December 31, 2018)
|
|
(415.7
|
)
|
|
(388.2
|
)
|
||
Total stockholders’ equity
|
|
1,071.7
|
|
|
1,018.2
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
3,973.1
|
|
|
$
|
3,919.2
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||
Consolidated Statements of Comprehensive Income
|
||||||||
(in millions, except per share data)
|
||||||||
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Revenues
|
|
(unaudited)
|
||||||
Net premiums earned
|
|
$
|
174.8
|
|
|
$
|
176.6
|
|
Net investment income
|
|
21.8
|
|
|
19.4
|
|
||
Net realized and unrealized gains (losses) on investments
|
|
23.3
|
|
|
(8.0
|
)
|
||
Other income
|
|
0.4
|
|
|
—
|
|
||
Total revenues
|
|
220.3
|
|
|
188.0
|
|
||
Expenses
|
|
|
|
|
||||
Losses and loss adjustment expenses
|
|
88.6
|
|
|
95.4
|
|
||
Commission expense
|
|
22.0
|
|
|
23.7
|
|
||
Underwriting and other operating expenses
|
|
47.5
|
|
|
39.2
|
|
||
Interest and financing expenses
|
|
0.4
|
|
|
0.3
|
|
||
Total expenses
|
|
158.5
|
|
|
158.6
|
|
||
Net income before income taxes
|
|
61.8
|
|
|
29.4
|
|
||
Income tax expense
|
|
10.0
|
|
|
3.8
|
|
||
Net income
|
|
$
|
51.8
|
|
|
$
|
25.6
|
|
|
|
|
|
|
||||
Comprehensive income (loss)
|
|
|
|
|
||||
Unrealized AFS investment gains (losses) arising during the period (net of tax (expense) benefit of $(10.0) and $9.6 for the three months ended March 31, 2019 and 2018, respectively)
|
|
$
|
37.8
|
|
|
$
|
(35.8
|
)
|
Reclassification adjustment for realized AFS investment (gains) losses in net income (net of tax (expense) benefit of $0.1 and $(0.1) for the three months ended March 31, 2019 and 2018, respectively)
|
|
(0.5
|
)
|
|
0.4
|
|
||
Other comprehensive income (loss), net of tax
|
|
37.3
|
|
|
(35.4
|
)
|
||
Total comprehensive income (loss)
|
|
$
|
89.1
|
|
|
$
|
(9.8
|
)
|
|
|
|
|
|
||||
Net realized and unrealized gains (losses) on investments
|
|
|
|
|
||||
Net realized and unrealized gains (losses) on investments before impairments
|
|
$
|
23.3
|
|
|
$
|
(6.0
|
)
|
Other than temporary impairment recognized in earnings
|
|
—
|
|
|
(2.0
|
)
|
||
Net realized and unrealized gains (losses) on investments
|
|
$
|
23.3
|
|
|
$
|
(8.0
|
)
|
|
|
|
|
|
||||
Earnings per common share (Note 12):
|
|
|
|
|
||||
Basic
|
|
$
|
1.60
|
|
|
$
|
0.78
|
|
Diluted
|
|
$
|
1.57
|
|
|
$
|
0.77
|
|
Cash dividends declared per common share and eligible RSUs and PSUs
|
|
$
|
0.22
|
|
|
$
|
0.20
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||||||||||||||||||||
Consolidated Statements of Stockholders' Equity
|
||||||||||||||||||||||||||
For the Three Months Ended March 31, 2019 and 2018
|
||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss), Net
|
|
Treasury Stock at Cost
|
|
Total Stockholders' Equity
|
|||||||||||||||
|
Shares Issued
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
|
(in millions, except share data)
|
|||||||||||||||||||||||||
Balance, January 1, 2019
|
56,975,675
|
|
|
$
|
0.6
|
|
|
$
|
388.8
|
|
|
$
|
1,030.7
|
|
|
$
|
(13.7
|
)
|
|
$
|
(388.2
|
)
|
|
$
|
1,018.2
|
|
Stock-based obligations
|
—
|
|
|
—
|
|
|
2.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
||||||
Stock options exercised
|
1,300
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||||
Vesting of RSUs and PSUs, net of shares withheld to satisfy tax withholdings
|
167,555
|
|
|
—
|
|
|
(3.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.2
|
)
|
||||||
Acquisition of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27.5
|
)
|
|
(27.5
|
)
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.4
|
)
|
|
—
|
|
|
—
|
|
|
(7.4
|
)
|
||||||
Net income for the period
|
—
|
|
|
—
|
|
|
—
|
|
|
51.8
|
|
|
—
|
|
|
—
|
|
|
51.8
|
|
||||||
Change in net unrealized gains on investments, net of taxes of $(9.9)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37.3
|
|
|
—
|
|
|
37.3
|
|
||||||
Balance, March 31, 2019
|
57,144,530
|
|
|
$
|
0.6
|
|
|
$
|
388.1
|
|
|
$
|
1,075.1
|
|
|
$
|
23.6
|
|
|
$
|
(415.7
|
)
|
|
$
|
1,071.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, January 1, 2018
|
56,695,174
|
|
|
$
|
0.6
|
|
|
$
|
381.2
|
|
|
$
|
842.2
|
|
|
$
|
107.4
|
|
|
$
|
(383.7
|
)
|
|
$
|
947.7
|
|
Stock-based obligations
|
—
|
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
||||||
Stock options exercised
|
275
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Vesting of RSUs and PSUs, net of shares withheld to satisfy tax withholdings
|
154,045
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.6
|
)
|
|
—
|
|
|
—
|
|
|
(6.6
|
)
|
||||||
Net income for the period
|
—
|
|
|
—
|
|
|
—
|
|
|
25.6
|
|
|
—
|
|
|
—
|
|
|
25.6
|
|
||||||
Reclassification adjustment for adoption of ASU No. 2016-01
|
—
|
|
|
—
|
|
|
—
|
|
|
74.0
|
|
|
(74.0
|
)
|
|
—
|
|
|
—
|
|
||||||
Change in net unrealized losses on investments, net of taxes of $9.5
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35.4
|
)
|
|
—
|
|
|
(35.4
|
)
|
||||||
Balance, March 31, 2018
|
56,849,494
|
|
|
$
|
0.6
|
|
|
$
|
380.4
|
|
|
$
|
935.0
|
|
|
$
|
(2.0
|
)
|
|
$
|
(383.7
|
)
|
|
$
|
930.3
|
|
Employers Holdings, Inc. and Subsidiaries
|
||||||||
Consolidated Statements of Cash Flows
|
||||||||
(in millions)
|
||||||||
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Operating activities
|
|
(unaudited)
|
||||||
Net income
|
|
$
|
51.8
|
|
|
$
|
25.6
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
1.2
|
|
|
2.0
|
|
||
Stock-based compensation
|
|
2.4
|
|
|
2.1
|
|
||
Amortization of cloud computing arrangements
|
|
1.0
|
|
|
—
|
|
||
Amortization of premium on investments, net
|
|
1.9
|
|
|
2.4
|
|
||
Allowance for doubtful accounts
|
|
(1.0
|
)
|
|
—
|
|
||
Deferred income tax expense
|
|
4.0
|
|
|
11.7
|
|
||
Net realized and unrealized (gains) losses on investments
|
|
(23.3
|
)
|
|
8.0
|
|
||
Change in operating assets and liabilities:
|
|
|
|
|
|
|
||
Premiums receivable
|
|
(18.6
|
)
|
|
(23.3
|
)
|
||
Reinsurance recoverable on paid and unpaid losses
|
|
5.7
|
|
|
6.2
|
|
||
Cloud computing arrangements
|
|
(0.1
|
)
|
|
—
|
|
||
Operating lease right-of-use-assets
|
|
(16.8
|
)
|
|
—
|
|
||
Current federal income taxes
|
|
6.4
|
|
|
(8.0
|
)
|
||
Unpaid losses and loss adjustment expenses
|
|
(18.6
|
)
|
|
(8.0
|
)
|
||
Unearned premiums
|
|
32.6
|
|
|
33.6
|
|
||
Accounts payable, accrued expenses and other liabilities
|
|
(10.7
|
)
|
|
0.7
|
|
||
Deferred reinsurance gain—LPT Agreement
|
|
(2.5
|
)
|
|
(2.6
|
)
|
||
Operating lease liabilities
|
|
19.0
|
|
|
—
|
|
||
Non-cancellable obligations
|
|
(1.4
|
)
|
|
—
|
|
||
Other
|
|
(12.9
|
)
|
|
(4.2
|
)
|
||
Net cash provided by operating activities
|
|
20.1
|
|
|
46.2
|
|
||
Investing activities
|
|
|
|
|
|
|
||
Purchases of fixed maturity securities
|
|
(95.4
|
)
|
|
(231.9
|
)
|
||
Purchases of equity securities
|
|
(16.1
|
)
|
|
(6.8
|
)
|
||
Purchases of short-term investments
|
|
(0.1
|
)
|
|
(34.9
|
)
|
||
Proceeds from sale of fixed maturity securities
|
|
51.2
|
|
|
133.7
|
|
||
Proceeds from sale of equity securities
|
|
8.7
|
|
|
10.9
|
|
||
Proceeds from maturities and redemptions of fixed maturity securities
|
|
65.6
|
|
|
78.9
|
|
||
Proceeds from maturities of short-term investments
|
|
25.0
|
|
|
4.0
|
|
||
Net change in unsettled investment purchases and sales
|
|
(24.2
|
)
|
|
(4.7
|
)
|
||
Capital expenditures and other
|
|
(4.8
|
)
|
|
(2.9
|
)
|
||
Net cash provided by (used in) investing activities
|
|
9.9
|
|
|
(53.7
|
)
|
||
Financing activities
|
|
|
|
|
|
|
||
Acquisition of common stock
|
|
(26.6
|
)
|
|
—
|
|
||
Cash transactions related to stock-based compensation
|
|
(3.2
|
)
|
|
(2.9
|
)
|
||
Dividends paid to stockholders
|
|
(7.3
|
)
|
|
(6.6
|
)
|
||
Payments on capital leases
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Net cash used in financing activities
|
|
(37.2
|
)
|
|
(9.6
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
|
(7.2
|
)
|
|
(17.1
|
)
|
||
Cash, cash equivalents and restricted cash at the beginning of the period
|
|
102.0
|
|
|
74.3
|
|
||
Cash, cash equivalents and restricted cash at the end of the period
|
|
$
|
94.8
|
|
|
$
|
57.2
|
|
|
|
As of
|
|
As of
|
||||
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
|
(in millions)
|
||||||
Cash and cash equivalents
|
|
$
|
92.3
|
|
|
$
|
101.4
|
|
Restricted cash and cash equivalents supporting reinsurance obligations
|
|
2.5
|
|
|
0.6
|
|
||
Total cash, cash equivalents and restricted cash
|
|
$
|
94.8
|
|
|
$
|
102.0
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
Financial assets
|
|
|
|
|
|
|
|
|
||||||||
Total investments at fair value
|
|
$
|
2,751.0
|
|
|
$
|
2,751.0
|
|
|
$
|
2,721.3
|
|
|
$
|
2,721.3
|
|
Cash and cash equivalents
|
|
92.3
|
|
|
92.3
|
|
|
101.4
|
|
|
101.4
|
|
||||
Restricted cash and cash equivalents
|
|
2.5
|
|
|
2.5
|
|
|
0.6
|
|
|
0.6
|
|
||||
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||
Notes payable
|
|
$
|
20.0
|
|
|
$
|
25.6
|
|
|
$
|
20.0
|
|
|
$
|
23.5
|
|
•
|
Level 1 - Inputs are unadjusted quoted market prices for identical assets or liabilities in active markets at the measurement date.
|
•
|
Level 2 - Inputs other than Level 1 prices that are observable for similar assets or liabilities through corroboration with market data at the measurement date.
|
•
|
Level 3 - Inputs that are unobservable that reflect management's best estimate of what willing market participants would use in pricing the assets or liabilities at the measurement date.
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasuries
|
|
$
|
—
|
|
|
$
|
108.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
106.4
|
|
|
$
|
—
|
|
U.S. Agencies
|
|
—
|
|
|
9.9
|
|
|
—
|
|
|
—
|
|
|
11.4
|
|
|
—
|
|
||||||
States and municipalities
|
|
—
|
|
|
519.5
|
|
|
—
|
|
|
—
|
|
|
528.0
|
|
|
—
|
|
||||||
Corporate securities
|
|
—
|
|
|
1,086.0
|
|
|
—
|
|
|
—
|
|
|
1,090.4
|
|
|
—
|
|
||||||
Residential mortgage-backed securities
|
|
—
|
|
|
461.8
|
|
|
—
|
|
|
—
|
|
|
451.5
|
|
|
—
|
|
||||||
Commercial mortgage-backed securities
|
|
—
|
|
|
99.5
|
|
|
—
|
|
|
—
|
|
|
94.3
|
|
|
—
|
|
||||||
Asset-backed securities
|
|
—
|
|
|
60.9
|
|
|
—
|
|
|
—
|
|
|
64.5
|
|
|
—
|
|
||||||
Other securities
|
|
—
|
|
|
175.4
|
|
|
—
|
|
|
—
|
|
|
149.9
|
|
|
—
|
|
||||||
Total fixed maturity securities
|
|
$
|
—
|
|
|
$
|
2,521.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,496.4
|
|
|
$
|
—
|
|
Equity securities at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Industrial and miscellaneous
|
|
$
|
151.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
174.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other
|
|
78.7
|
|
|
—
|
|
|
—
|
|
|
25.1
|
|
|
—
|
|
|
—
|
|
||||||
Total equity securities at fair value
|
|
230.0
|
|
|
—
|
|
|
—
|
|
|
199.9
|
|
|
—
|
|
|
—
|
|
||||||
Short-term investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25.0
|
|
|
—
|
|
||||||
Total investments at fair value
|
|
$
|
230.0
|
|
|
$
|
2,521.0
|
|
|
$
|
—
|
|
|
$
|
199.9
|
|
|
$
|
2,521.4
|
|
|
$
|
—
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(in millions)
|
||||||
Cash and cash equivalents at fair value
|
$
|
23.5
|
|
|
$
|
43.9
|
|
Cash equivalents measured at NAV, which approximates fair value
|
68.8
|
|
|
57.5
|
|
||
Total cash and cash equivalents
|
$
|
92.3
|
|
|
$
|
101.4
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31, 2019
|
|
March 31, 2018
|
||||
Level 3 Securities:
|
|
(in millions)
|
||||||
Beginning balance, January 1
|
|
$
|
—
|
|
|
$
|
4.7
|
|
Transfers out of Level 3 (1)
|
|
—
|
|
|
(4.7
|
)
|
||
Purchases and sales, net
|
|
—
|
|
|
—
|
|
||
Ending balance, March 31
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
The transfer during the three months ended March 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.
|
|
|
Cost or Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
At March 31, 2019
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries
|
|
$
|
107.5
|
|
|
$
|
1.1
|
|
|
$
|
(0.6
|
)
|
|
$
|
108.0
|
|
U.S. Agencies
|
|
9.8
|
|
|
0.1
|
|
|
—
|
|
|
9.9
|
|
||||
States and municipalities
|
|
497.7
|
|
|
21.9
|
|
|
(0.1
|
)
|
|
519.5
|
|
||||
Corporate securities
|
|
1,075.3
|
|
|
14.5
|
|
|
(3.8
|
)
|
|
1,086.0
|
|
||||
Residential mortgage-backed securities
|
|
463.8
|
|
|
2.9
|
|
|
(4.9
|
)
|
|
461.8
|
|
||||
Commercial mortgage-backed securities
|
|
99.7
|
|
|
0.5
|
|
|
(0.7
|
)
|
|
99.5
|
|
||||
Asset-backed securities
|
|
60.7
|
|
|
0.4
|
|
|
(0.2
|
)
|
|
60.9
|
|
||||
Other securities
|
|
176.6
|
|
|
0.4
|
|
|
(1.6
|
)
|
|
175.4
|
|
||||
Total fixed maturity securities
|
|
2,491.1
|
|
|
41.8
|
|
|
(11.9
|
)
|
|
2,521.0
|
|
||||
Total AFS investments
|
|
$
|
2,491.1
|
|
|
$
|
41.8
|
|
|
$
|
(11.9
|
)
|
|
$
|
2,521.0
|
|
At December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
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
|
|
|
|
Cost
|
|
Estimated Fair Value
|
||||
|
|
(in millions)
|
||||||
At March 31, 2019
|
|
|
|
|
||||
Equity securities at fair value
|
|
|
|
|
||||
Industrial and miscellaneous
|
|
$
|
123.5
|
|
|
$
|
202.6
|
|
Other
|
|
17.3
|
|
|
27.4
|
|
||
Total equity securities at fair value
|
|
$
|
140.8
|
|
|
$
|
230.0
|
|
|
|
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
|
|
$
|
142.3
|
|
|
$
|
142.7
|
|
Due after one year through five years
|
|
850.4
|
|
|
861.0
|
|
||
Due after five years through ten years
|
|
779.3
|
|
|
794.9
|
|
||
Due after ten years
|
|
94.9
|
|
|
100.2
|
|
||
Mortgage and asset-backed securities
|
|
624.2
|
|
|
622.2
|
|
||
Total
|
|
$
|
2,491.1
|
|
|
$
|
2,521.0
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||
|
|
Estimated Fair Value
|
|
Gross
Unrealized Losses |
|
Number of Issues
|
|
Estimated Fair Value
|
|
Gross
Unrealized Losses |
|
Number of Issues
|
||||||||||
|
|
(in millions, except number of issues data)
|
||||||||||||||||||||
Less than 12 months:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasuries
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
12.2
|
|
|
$
|
(0.1
|
)
|
|
7
|
|
States and municipalities
|
|
9.9
|
|
|
(0.1
|
)
|
|
3
|
|
|
70.1
|
|
|
(0.7
|
)
|
|
21
|
|
||||
Corporate securities
|
|
70.9
|
|
|
(0.1
|
)
|
|
26
|
|
|
624.4
|
|
|
(13.4
|
)
|
|
205
|
|
||||
Residential mortgage-backed securities
|
|
19.9
|
|
|
(0.1
|
)
|
|
6
|
|
|
156.9
|
|
|
(2.5
|
)
|
|
59
|
|
||||
Commercial mortgage-backed securities
|
|
18.8
|
|
|
(0.1
|
)
|
|
5
|
|
|
30.9
|
|
|
(0.5
|
)
|
|
13
|
|
||||
Asset-backed securities
|
|
9.6
|
|
|
(0.1
|
)
|
|
5
|
|
|
25.1
|
|
|
(0.2
|
)
|
|
18
|
|
||||
Other securities
|
|
133.9
|
|
|
(1.6
|
)
|
|
228
|
|
|
137.1
|
|
|
(5.7
|
)
|
|
215
|
|
||||
Total less than 12 months
|
|
$
|
263.0
|
|
|
$
|
(2.1
|
)
|
|
273
|
|
|
$
|
1,056.7
|
|
|
$
|
(23.1
|
)
|
|
538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
12 months or greater:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasuries
|
|
$
|
67.1
|
|
|
$
|
(0.6
|
)
|
|
23
|
|
|
$
|
72.7
|
|
|
$
|
(1.1
|
)
|
|
25
|
|
Corporate securities
|
|
317.9
|
|
|
(3.7
|
)
|
|
95
|
|
|
193.7
|
|
|
(8.2
|
)
|
|
69
|
|
||||
Residential mortgage-backed securities
|
|
257.2
|
|
|
(4.8
|
)
|
|
89
|
|
|
199.8
|
|
|
(7.3
|
)
|
|
72
|
|
||||
Commercial mortgage-backed securities
|
|
44.0
|
|
|
(0.6
|
)
|
|
19
|
|
|
55.0
|
|
|
(2.0
|
)
|
|
22
|
|
||||
Asset-backed securities
|
|
16.3
|
|
|
(0.1
|
)
|
|
16
|
|
|
16.5
|
|
|
(0.2
|
)
|
|
17
|
|
||||
Total 12 months or greater
|
|
$
|
702.5
|
|
|
$
|
(9.8
|
)
|
|
242
|
|
|
$
|
537.7
|
|
|
$
|
(18.8
|
)
|
|
205
|
|
|
|
Gross Realized Gains
|
|
Gross Realized Losses
|
|
Change in Net Unrealized Gains (Losses)
|
|
Changes in Fair Value Reflected in Earnings
|
|
Changes in Fair Value Reflected in AOCI, before tax
|
||||||||||
|
|
|
|
(in millions)
|
||||||||||||||||
Three Months Ended March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
$
|
1.0
|
|
|
$
|
(0.4
|
)
|
|
$
|
47.2
|
|
|
$
|
0.6
|
|
|
$
|
47.2
|
|
Equity securities
|
|
1.6
|
|
|
(0.1
|
)
|
|
21.2
|
|
|
22.7
|
|
|
—
|
|
|||||
Total investments
|
|
$
|
2.6
|
|
|
$
|
(0.5
|
)
|
|
$
|
68.4
|
|
|
$
|
23.3
|
|
|
$
|
47.2
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
$
|
1.8
|
|
|
$
|
(2.3
|
)
|
|
$
|
(44.9
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(44.9
|
)
|
Equity securities
|
|
5.6
|
|
|
(0.2
|
)
|
|
(12.9
|
)
|
|
(7.5
|
)
|
|
—
|
|
|||||
Total investments
|
|
$
|
7.4
|
|
|
$
|
(2.5
|
)
|
|
$
|
(57.8
|
)
|
|
$
|
(8.0
|
)
|
|
$
|
(44.9
|
)
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Fixed maturity securities
|
|
$
|
20.4
|
|
|
$
|
18.5
|
|
Equity securities
|
|
1.9
|
|
|
1.6
|
|
||
Cash equivalents and restricted cash
|
|
0.5
|
|
|
0.2
|
|
||
Gross investment income
|
|
22.8
|
|
|
20.3
|
|
||
Investment expenses
|
|
(1.0
|
)
|
|
(0.9
|
)
|
||
Net investment income
|
|
$
|
21.8
|
|
|
$
|
19.4
|
|
|
As of March 31,
|
|
As of December 31,
|
||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Furniture and equipment
|
$
|
2.3
|
|
|
$
|
3.3
|
|
Leasehold improvements
|
4.7
|
|
|
3.2
|
|
||
Computers and software
|
65.0
|
|
|
61.9
|
|
||
Automobiles
|
1.1
|
|
|
1.1
|
|
||
Property and equipment, gross
|
73.1
|
|
|
69.5
|
|
||
Accumulated depreciation
|
(51.3
|
)
|
|
(51.3
|
)
|
||
Property and equipment, net
|
$
|
21.8
|
|
|
$
|
18.2
|
|
|
|
Three Months Ended
|
||
|
|
March 31, 2019
|
||
|
|
(in millions)
|
||
Operating lease expense
|
|
$
|
1.3
|
|
Finance lease expense
|
|
0.1
|
|
|
Total lease expense
|
|
$
|
1.4
|
|
|
|
As of March 31, 2019
|
||||||
|
|
Operating Leases
|
|
Finance Leases
|
||||
|
|
(in millions)
|
||||||
2019
|
|
$
|
3.9
|
|
|
$
|
0.2
|
|
2020
|
|
4.4
|
|
|
0.3
|
|
||
2021
|
|
2.9
|
|
|
0.2
|
|
||
2022
|
|
1.9
|
|
|
—
|
|
||
2023
|
|
1.8
|
|
|
—
|
|
||
Thereafter
|
|
6.2
|
|
|
—
|
|
||
Total lease payments
|
|
21.1
|
|
|
0.7
|
|
||
Less: inputed interest
|
|
(2.1
|
)
|
|
—
|
|
||
Total
|
|
$
|
19.0
|
|
|
$
|
0.7
|
|
|
|
As of March 31, 2019
|
||
|
|
(in millions)
|
||
Operating leases:
|
|
|
||
Operating lease right-of-use asset
|
|
$
|
16.8
|
|
Operating lease liability
|
|
19.0
|
|
|
Finance leases:
|
|
|
||
Property and equipment, gross
|
|
1.1
|
|
|
Accumulated depreciation
|
|
(0.4
|
)
|
|
Property and equipment, net
|
|
0.7
|
|
|
Other liabilities
|
|
$
|
0.7
|
|
|
|
Three Months Ended
|
||
|
|
March 31, 2019
|
||
|
|
(in millions)
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
||
Operating cash flows from operating leases
|
|
$
|
1.3
|
|
Financing cash flows from finance leases
|
|
0.1
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Unpaid losses and LAE at beginning of period
|
|
$
|
2,207.9
|
|
|
$
|
2,266.1
|
|
Less reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE
|
|
504.4
|
|
|
537.0
|
|
||
Net unpaid losses and LAE at beginning of period
|
|
1,703.5
|
|
|
1,729.1
|
|
||
Losses and LAE, net of reinsurance, incurred during the period related to:
|
|
|
|
|
|
|
||
Current period
|
|
113.3
|
|
|
110.4
|
|
||
Prior periods
|
|
(22.2
|
)
|
|
(12.4
|
)
|
||
Total net losses and LAE incurred during the period
|
|
91.1
|
|
|
98.0
|
|
||
Paid losses and LAE, net of reinsurance, related to:
|
|
|
|
|
|
|
||
Current period
|
|
7.4
|
|
|
5.9
|
|
||
Prior periods
|
|
96.6
|
|
|
94.2
|
|
||
Total net paid losses and LAE during the period
|
|
104.0
|
|
|
100.1
|
|
||
Ending unpaid losses and LAE, net of reinsurance
|
|
1,690.6
|
|
|
1,727.0
|
|
||
Reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE
|
|
498.7
|
|
|
531.1
|
|
||
Unpaid losses and LAE at end of period
|
|
$
|
2,189.3
|
|
|
$
|
2,258.1
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(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
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
|
(in millions)
|
||||||
Net unrealized gains (losses) on investments, before taxes
|
|
$
|
29.9
|
|
|
$
|
(17.3
|
)
|
Deferred tax (expense) benefit on net unrealized gains (losses)
|
|
(6.3
|
)
|
|
3.6
|
|
||
Total accumulated other comprehensive income (loss)
|
|
$
|
23.6
|
|
|
$
|
(13.7
|
)
|
|
Number Awarded
|
|
Weighted Average Fair Value on Date of Grant
|
|
Aggregate Fair Value on Date of Grant
|
|||||
|
|
|
|
|
(in millions)
|
|||||
March 2019
|
|
|
|
|
|
|||||
RSUs(1)
|
72,060
|
|
|
$
|
40.54
|
|
|
$
|
2.9
|
|
PSUs(2)
|
95,940
|
|
|
40.54
|
|
|
3.9
|
|
(1)
|
The RSUs awarded in March 2019 were awarded to certain employees of the Company and vest 25% on March 15, 2020, and each of the subsequent three anniversaries of that date. The RSUs are subject to accelerated vesting in certain circumstances, including but not limited to: death, disability, retirement, or in connection with a change of control of the Company.
|
(2)
|
The PSUs awarded in March 2019 were awarded to certain employees of the Company and have a performance period of two years followed by an additional one year vesting period. The PSU awards are subject to certain performance goals with payouts that range from 0% to 200% of the target awards. The value shown in the table represents the aggregate number of PSUs awarded at the target level.
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in millions, except share data)
|
||||||
Net income—basic and diluted
|
|
$
|
51.8
|
|
|
$
|
25.6
|
|
Weighted average number of shares outstanding—basic
|
|
32,442,287
|
|
|
32,830,481
|
|
||
Effect of dilutive securities:
|
|
|
|
|
||||
PSUs
|
|
346,624
|
|
|
304,047
|
|
||
Stock options
|
|
80,138
|
|
|
100,914
|
|
||
RSUs
|
|
85,030
|
|
|
84,978
|
|
||
Dilutive potential shares
|
|
511,792
|
|
|
489,939
|
|
||
Weighted average number of shares outstanding—diluted
|
|
32,954,079
|
|
|
33,320,420
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
|
(in millions)
|
||||||
GAAP stockholders' equity
|
|
$
|
1,071.7
|
|
|
$
|
1,018.2
|
|
Deferred reinsurance gain–LPT Agreement
|
|
147.1
|
|
|
149.6
|
|
||
Less: Accumulated other comprehensive income (loss), net
|
|
23.6
|
|
|
(13.7
|
)
|
||
Adjusted stockholders' equity(1)
|
|
$
|
1,195.2
|
|
|
$
|
1,181.5
|
|
(1)
|
Adjusted stockholders' equity is a non-GAAP measure consisting of total GAAP stockholders' equity plus the Deferred Gain, less Accumulated other comprehensive income (loss), net.
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Gross premiums written
|
|
$
|
210.0
|
|
|
$
|
211.6
|
|
Net premiums written
|
|
$
|
208.7
|
|
|
$
|
210.1
|
|
|
|
|
|
|
||||
Net premiums earned
|
|
$
|
174.8
|
|
|
$
|
176.6
|
|
Net investment income
|
|
21.8
|
|
|
19.4
|
|
||
Net realized and unrealized gains on investments
|
|
23.3
|
|
|
(8.0
|
)
|
||
Other income
|
|
0.4
|
|
|
—
|
|
||
Total revenues
|
|
220.3
|
|
|
188.0
|
|
||
|
|
|
|
|
||||
Losses and LAE
|
|
88.6
|
|
|
95.4
|
|
||
Commission expense
|
|
22.0
|
|
|
23.7
|
|
||
Underwriting and other operating expenses
|
|
47.5
|
|
|
39.2
|
|
||
Interest and financing expenses
|
|
0.4
|
|
|
0.3
|
|
||
Total expenses
|
|
158.5
|
|
|
158.6
|
|
||
Income tax expense
|
|
10.0
|
|
|
3.8
|
|
||
Net income
|
|
$
|
51.8
|
|
|
$
|
25.6
|
|
Less amortization of the Deferred Gain related to losses
|
|
$
|
2.0
|
|
|
$
|
2.1
|
|
Less amortization of the Deferred Gain related to contingent commission
|
|
0.5
|
|
|
0.5
|
|
||
Net income before impact of the LPT Agreement(1)
|
|
$
|
49.3
|
|
|
$
|
23.0
|
|
(1)
|
We define net income before impact of the LPT Agreement as net income before the impact of: (a) amortization of the Deferred Gain; (b) adjustments to the LPT Agreement ceded reserves; and (c) adjustments to the Contingent commission receivable–LPT Agreement. The Deferred Gain reflects the unamortized gain from the LPT Agreement. Under GAAP, this gain is deferred and is being amortized using the recovery method in which amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries over the life of the LPT Agreement, except for the contingent profit commission, which is amortized through June 30, 2024. The amortization is reflected in losses and LAE. We periodically reevaluate the remaining direct reserves subject to the LPT Agreement and the expected losses and LAE subject to the contingent profit commission under the LPT Agreement. Our reevaluation results in corresponding adjustments, if needed, to reserves, ceded reserves, contingent commission receivable, and the Deferred Gain, with the net effect being an increase or decrease to our net income. Net income before impact of the LPT Agreement is not a measurement of financial performance under GAAP, but rather reflects a difference in accounting treatment between statutory and GAAP, and should not be considered in isolation or as an alternative to net income before income taxes or net income, or any other measure of performance derived in accordance with GAAP.
|
|
As of March 31, 2019
|
||||||||||||||||
|
Year-to-Date Change
|
|
Year-Over-Year Change
|
||||||||||||||
|
Overall
|
|
California
|
|
All Other States
|
|
Overall
|
|
California
|
|
All Other States
|
||||||
In-force premiums
|
1.2
|
%
|
|
(0.9
|
)%
|
|
3.7
|
%
|
|
4.7
|
%
|
|
(0.2
|
)%
|
|
10.6
|
%
|
In-force policy count
|
2.6
|
|
|
2.3
|
|
|
2.8
|
|
|
8.3
|
|
|
6.3
|
|
|
10.1
|
|
Average in-force policy size
|
(1.3
|
)
|
|
(3.2
|
)
|
|
0.9
|
|
|
(3.4
|
)
|
|
(6.1
|
)
|
|
0.4
|
|
In-force payroll exposure
|
6.6
|
|
|
5.8
|
|
|
7.2
|
|
|
22.0
|
|
|
24.4
|
|
|
20.6
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
State
|
|
In-force
Premiums
|
|
Policies
In-force |
|
In-force
Premiums
|
|
Policies
In-force |
|
In-force
Premiums
|
|
Policies
In-force |
|
In-force
Premiums
|
|
Policies
In-force |
||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||
California
|
|
$
|
353.9
|
|
|
42,973
|
|
|
$
|
357.1
|
|
|
41,988
|
|
|
$
|
354.6
|
|
|
40,436
|
|
|
$
|
349.4
|
|
|
40,573
|
|
Florida
|
|
40.8
|
|
|
5,753
|
|
|
41.0
|
|
|
5,833
|
|
|
42.0
|
|
|
5,653
|
|
|
41.8
|
|
|
5,625
|
|
||||
Other (43 states and D.C.)
|
|
279.7
|
|
|
45,138
|
|
|
268.1
|
|
|
43,677
|
|
|
247.9
|
|
|
40,550
|
|
|
235.7
|
|
|
39,296
|
|
||||
Total
|
|
$
|
674.4
|
|
|
93,864
|
|
|
$
|
666.2
|
|
|
91,498
|
|
|
$
|
644.5
|
|
|
86,639
|
|
|
$
|
626.9
|
|
|
85,494
|
|
|
|
Three Months Ended
|
||||
|
|
March 31,
|
||||
|
|
2019
|
|
2018
|
||
Loss and LAE ratio
|
|
50.7
|
%
|
|
54.0
|
%
|
Underwriting and other operating expenses ratio
|
|
27.1
|
|
|
22.2
|
|
Commission expense ratio
|
|
12.6
|
|
|
13.4
|
|
Combined ratio
|
|
90.4
|
%
|
|
89.6
|
%
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Prior accident year favorable loss development, net
|
|
$
|
22.2
|
|
|
$
|
12.4
|
|
Amortization of the Deferred Gain related to losses
|
|
$
|
2.0
|
|
|
$
|
2.1
|
|
Amortization of the Deferred Gain related to contingent commission
|
|
0.5
|
|
|
0.5
|
|
||
Total impact of the LPT on losses and LAE
|
|
2.5
|
|
|
2.6
|
|
||
Total losses and LAE reserve adjustments
|
|
$
|
24.7
|
|
|
$
|
15.0
|
|
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Cash, cash equivalents, and restricted cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
20.1
|
|
|
$
|
46.2
|
|
Investing activities
|
|
9.9
|
|
|
(53.7
|
)
|
||
Financing activities
|
|
(37.2
|
)
|
|
(9.6
|
)
|
||
Decrease in cash, cash equivalents, and restricted cash
|
|
$
|
(7.2
|
)
|
|
$
|
(17.1
|
)
|
|
|
Payment Due By Period
|
||||||||||||||||||
|
|
Total
|
|
Less Than
1-Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More Than
5 Years
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Operating leases
|
|
$
|
21.2
|
|
|
$
|
5.1
|
|
|
$
|
6.7
|
|
|
$
|
3.6
|
|
|
$
|
5.8
|
|
Non-cancellable contracts
|
|
17.4
|
|
|
5.3
|
|
|
6.7
|
|
|
5.4
|
|
|
—
|
|
|||||
Notes payable(1)
|
|
41.3
|
|
|
1.4
|
|
|
2.7
|
|
|
2.7
|
|
|
34.5
|
|
|||||
Capital leases
|
|
0.8
|
|
|
0.3
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|||||
Unpaid losses and LAE reserves (2)(3)
|
|
2,189.3
|
|
|
380.9
|
|
|
476.8
|
|
|
284.9
|
|
|
1,046.7
|
|
|||||
Unfunded investments
|
|
50.0
|
|
|
50.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
|
$
|
2,320.0
|
|
|
$
|
443.0
|
|
|
$
|
493.4
|
|
|
$
|
296.6
|
|
|
$
|
1,087.0
|
|
(1)
|
Notes payable includes payments for the principal and estimated interest expense on our surplus notes outstanding based on LIBOR plus a margin. The interest rates used ranged from 6.7% 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. 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
|
|
$
|
(498.7
|
)
|
|
$
|
(27.1
|
)
|
|
$
|
(51.4
|
)
|
|
$
|
(48.8
|
)
|
|
$
|
(371.4
|
)
|
Rating
|
|
Percentage of Total
Estimated Fair Value
|
|
“AAA”
|
|
7.5
|
%
|
“AA”
|
|
42.3
|
|
“A”
|
|
32.2
|
|
“BBB”
|
|
11.2
|
|
Below investment grade
|
|
6.8
|
|
Total
|
|
100.0
|
%
|
Period
|
|
Total Number of Shares Purchased
|
|
Average
Price Paid
Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Approximate
Dollar Value of Shares that
May Yet be Purchased Under the Program
|
||||||
|
|
|
|
|
|
|
|
(in millions)
|
||||||
January 1 – January 31, 2019
|
|
50,772
|
|
|
$
|
41.69
|
|
|
50,772
|
|
|
$
|
43.3
|
|
February 1 – February 28, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43.3
|
|
||
March 1 – March 31, 2019
|
|
620,065
|
|
|
40.83
|
|
|
620,065
|
|
|
18.0
|
|
||
Total
|
|
670,837
|
|
|
$
|
40.90
|
|
|
670,837
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference Herein
|
||||||
Exhibit
No.
|
|
Description of Exhibit
|
|
Included
Herewith
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
10.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.2
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.3
|
|
|
X
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
X
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
32.2
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded with the Inline XBRL document.
|
|
X
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
X
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
Date:
|
April 25, 2019
|
/s/ Michael S. Paquette
|
|
|
Michael S. Paquette
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
Employers Holdings, Inc.
|
|
|
(Principal Financial and Accounting Officer)
|
A.
|
Beneficiary Name and Address:
|
Insurance Commissioner, State of California
c/o Chief, Securities Transaction Unit
300 Capitol Mall, Suite 14th Floor
Sacramento, CA 95814
|
B.
|
Type of Transaction:
|
Liquidity - Other Funding
|
C.
|
Current Credit Amount:
|
$40,000,000
|
D.
|
Amended Credit Amount:
|
$60,000,000
|
E.
|
Current Expiration Date:
|
March 31, 2019 (Evergreen with automatic one (1) year extensions unless the Bank notifies the beneficiary at least sixty (60) days prior to the then applicable Expiration Date of its election not to renew.)
|
F.
|
Effective Date of Amendment:
|
March 1, 2019
|
G.
|
Amendment Fee
|
$500 (charged to the Member's Settlement/ Transaction Account (STA) on the effective date of the amendment)
|
By
|
/s/ Michael S. Paquette
|
|
/s/ Matthew Hendricksen
|
|
|
|
|
Title
|
Treasurer
|
|
VP Treasury & Investments
|
A.
|
Beneficiary Name and Address:
|
Insurance Commissioner, State of California
c/o Chief, Securities Transaction Unit
300 Capitol Mall, Suite 14th Floor
Sacramento, CA 95814
|
B.
|
Type of Transaction:
|
Liquidity - Other Funding
|
C.
|
Current Credit Amount:
|
$50,000,000
|
D.
|
Amended Credit Amount:
|
$90,000,000
|
E.
|
Current Expiration Date:
|
March 31, 2019 (Evergreen with automatic one (1) year extensions unless the Bank notifies the beneficiary at least sixty (60) days prior to the then applicable Expiration Date of its election not to renew.)
|
F.
|
Effective Date of Amendment:
|
March 1, 2019
|
G.
|
Amendment Fee
|
$500 (charged to the Member's Settlement/ Transaction Account (STA) on the effective date of the amendment)
|
By
|
/s/ Michael S. Paquette
|
|
/s/ Matthew Hendricksen
|
|
|
|
|
Title
|
Treasurer
|
|
VP Treasury & Investments
|
A.
|
Beneficiary Name and Address:
|
Insurance Commissioner, State of California
c/o Chief, Securities Transaction Unit
300 Capitol Mall, Suite 14th Floor
Sacramento, CA 95814
|
B.
|
Type of Transaction:
|
Liquidity - Other Funding
|
C.
|
Current Credit Amount:
|
$50,000,000
|
D.
|
Amended Credit Amount:
|
$110,000,000
|
E.
|
Current Expiration Date:
|
March 31, 2019 (Evergreen with automatic one (1) year extensions unless the Bank notifies the beneficiary at least sixty (60) days prior to the then applicable Expiration Date of its election not to renew.)
|
F.
|
Effective Date of Amendment:
|
March 1, 2019
|
G.
|
Amendment Fee
|
$500 (charged to the Member's Settlement/ Transaction Account (STA) on the effective date of the amendment)
|
By
|
/s/ Michael S. Paquette
|
|
/s/ Matthew Hendricksen
|
|
|
|
|
Title
|
Treasurer
|
|
VP Treasury & Investments
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Employers Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
|
Date:
|
April 25, 2019
|
/s/ Douglas D. Dirks
|
|
|
Douglas D. Dirks
|
|
|
President and Chief Executive Officer
|
|
|
Employers Holdings, Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Employers Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
|
Date:
|
April 25, 2019
|
/s/ Michael S. Paquette
|
|
|
Michael S. Paquette
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
Employers Holdings, Inc.
|
|
|
(Principal Financial and Accounting Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
Date:
|
April 25, 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:
|
April 25, 2019
|
/s/ Michael S. Paquette
|
|
|
Michael S. Paquette
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
Employers Holdings, Inc.
|
|
|
(Principal Financial and Accounting Officer)
|