Reno, Nev.-based Employers Holdings Inc. has reported consolidated net income of $30.8 million for the second quarter of 2007, an increase of 43.9 percent from $21.4 million in the second quarter of 2006. Net income includes amortization of the deferred reinsurance gain related to the loss portfolio transfer Agreement of $4.6 million and $4.9 million for the second quarter in 2007 and 2006, respectively. Excluding those amounts, consolidated net income before the impact of the LPT increased 59 percent to $26.2 million from $16.5 million in the second quarter of 2006.
Net income for the six months ended June 30, 2007, was $58.6 million, an increase of 48.5 percent from $39.5 million for the six months ended June 30, 2006. For the first six months of 2007, net income before the impact of the LPT was $49.5 million, an increase of 65.8 percent from $29.9 million for the same period in 2006.
The company said for the second quarter and first six months of 2007, the improvement in net income was largely due to a decrease in net losses and loss adjustment expense, primarily in California, and favorable reserve development related to prior accident years. Favorable prior accident year reserve development was $20.4 million in the second quarter of 2007 compared to $6.6 million in the second quarter of 2006. For the six months ended June 30, 2007, favorable prior accident year reserve development totaled $36 million compared to $12.8 million for the six months ended June 30, 2006.
Net income for the second quarter of 2007 included a realized loss of $0.7 million compared to a realized gain of $3.1 million in the second quarter of 2006. Realized losses for the six months ended June 30, 2007 totaled $0.5 million compared to a gain of $2.9 million for the same period in 2006. Losses in 2007 resulted from a sale of $55 million in fixed maturity securities in connection with the company’s share repurchase program. Realized gains in 2006 were primarily attributable to the sale of equity security holdings.
Second quarter net premiums earned declined 16.6 percent to $84.1 million in 2007 from $100.9 million in 2006. Net premiums earned for the six months ended June 30, 2007, were $173.9 million compared to $204.1 million for the same period in 2006, a decrease of 14.8 percent. The declines were largely due to rate decreases resulting from previously enacted reforms in California. The impact of these rate decreases was partially offset by an overall in-force policy count increase of 12.8 percent since June 30, 2006.
The combined ratio decreased 18.1 percentage points to 75.2 percent in the second quarter of 2007 from 93.3 percent in the second quarter of 2006. For the first six months in 2007, the combined ratio decreased 13.6 percentage points to 80.4 percent from 94 percent for the same period in 2006. Decreases in the combined ratios were primarily due to declines in losses and LAE.
The company will host a conference call Wednesday, Aug.15, 2007 at 10:30 a.m. PDT to discuss its results. The conference call also will be available on the company’s Web site at www.employers.com/. An archived version will be available for one month following the call. The conference call replay number is 888-286-8010 with a passcode of 37883606. International callers may dial 617-801-6888.
Source: EHI
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