Reno, Nev.-based Employers Holdings Inc. reported net income for the fourth quarter of 2008 of $15.9 million compared with $31.8 million in the fourth quarter of 2007. Net income includes amortization of the deferred reinsurance gain related to the loss portfolio transfer agreement. Consolidated net income before the impact of the LPT was $11.3 million in the fourth quarter of 2008 compared with $27.4 million in the fourth quarter of 2007.
Net income for the year ended Dec. 31, 2008, decreased 15.4 percent to $101.8 million from $120.3 million for the same period in 2007. Net income before the impact of the LPT for the year ended Dec. 31, 2008, was $83.4 million compared with $102.2 million for the same period in 2007.
Fourth quarter net premiums earned increased 25.6 percent to $106.1 million in 2008 from $84.4 million in 2007 due to $31.6 million in acquired earned premium. Net premiums earned for the 12 months ended Dec. 31, 2008 declined 5.2 percent to $328.9 million from $346.9 million for the same period in 2007. The company said declines in premium were largely attributable to reductions in premium rates, competition and the economic recession. These impacts were partially offset by an overall in force policy count increase of 35.3 percent, including 9,318 acquired policies, to 45,599 at Dec. 31, 2008 from 33,699 at Dec. 31, 2007.
The fourth quarter 2008 combined ratio of 99.1 percent (103.4 percent before the LPT) increased from the fourth quarter 2007 combined ratio of 75.9 percent (81.1 percent before the LPT). The full year 2008 combined ratio increased 5.5 percentage points to 85.9 percent (91.5 percent before the LPT) from 80.4 percent (85.6 percent before the LPT) in 2007, with 2.1 percentage points of the increase related to its acquisitions in November and December 2008.
Commenting on the results, President and CEO Douglas D. Dirks said, “Despite unprecedented uncertainty in financial markets and the downturn in national and regional economies, we delivered increased book value, a strengthened balance sheet and stable net investment income. Our results for the quarter and the year include the results of our acquired operations for November and December of 2008. With our recent acquisition, we saw fourth quarter increases in invested assets, premium and associated losses, and in underwriting expenses prior to the staffing reductions we announced in January of 2009. Our sales activities remain strong as overall organic policy count increased 7.7 percent since Dec. 31, 2007 and 35.3 percent when 9,318 acquired policies are included. Our acquisition, including the state licenses, operations and premium, is pivotal in implementing our expansion strategy, particularly given the challenge of growing organically in a contracting economy. We will continue to integrate our expanded operations throughout 2009 with a focus on systems and best practices. Consistent with our conservative reserving philosophy, we recognized benefits from better than expected loss development related to prior years.”
Source: Employers Holdings
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