(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
(Address of principal executive offices and zip code) | ||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ||
Emerging growth company | |||||||
Page No. | ||
Employers Holdings, Inc. and Subsidiaries | ||||||||
Consolidated Balance Sheets | ||||||||
(in millions, except share data) | ||||||||
As of | As of | |||||||
June 30, 2019 | December 31, 2018 | |||||||
Assets | (unaudited) | |||||||
Investments: | ||||||||
Fixed maturity securities at fair value (amortized cost $2,450.2 at June 30, 2019 and $2,513.7 at December 31, 2018) | $ | $ | ||||||
Equity securities at fair value (cost $143.1 at June 30, 2019 and $131.9 at December 31, 2018) | ||||||||
Equity securities at cost | ||||||||
Other invested assets | ||||||||
Short-term investments at fair value (amortized cost $25.0 at December 31, 2018) | ||||||||
Total investments | ||||||||
Cash and cash equivalents | ||||||||
Restricted cash and cash equivalents | ||||||||
Accrued investment income | ||||||||
Premiums receivable (less bad debt allowance of $6.6 at June 30, 2019 and $6.7 at December 31, 2018) | ||||||||
Reinsurance recoverable for: | ||||||||
Paid losses | ||||||||
Unpaid losses | ||||||||
Deferred policy acquisition costs | ||||||||
Deferred income taxes, net | ||||||||
Property and equipment, net | ||||||||
Operating lease right-of-use assets | ||||||||
Intangible assets, net | ||||||||
Goodwill | ||||||||
Contingent commission receivable—LPT Agreement | ||||||||
Cloud computing arrangements | ||||||||
Other assets | ||||||||
Total assets | $ | $ | ||||||
Liabilities and stockholders’ equity | ||||||||
Unpaid losses and loss adjustment expenses | $ | $ | ||||||
Unearned premiums | ||||||||
Commissions and premium taxes payable | ||||||||
Accounts payable and accrued expenses | ||||||||
Deferred reinsurance gain—LPT Agreement | ||||||||
Notes payable | ||||||||
Operating lease liability | ||||||||
Non-cancellable obligations | ||||||||
Other liabilities | ||||||||
Total liabilities | $ | $ | ||||||
Employers Holdings, Inc. and Subsidiaries | ||||||||
Consolidated Balance Sheets | ||||||||
(in millions, except share data) | ||||||||
As of | As of | |||||||
June 30, 2019 | December 31, 2018 | |||||||
Stockholders’ equity: | (unaudited) | |||||||
Common stock, $0.01 par value; 150,000,000 shares authorized; 57,157,926 and 56,975,675 shares issued and 31,904,916 and 32,765,792 shares outstanding at June 30, 2019 and December 31, 2018, respectively | $ | $ | ||||||
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued | ||||||||
Additional paid-in capital | ||||||||
Retained earnings | ||||||||
Accumulated other comprehensive income (loss), net of tax | ( | ) | ||||||
Treasury stock, at cost (25,253,010 shares at June 30, 2019 and 24,209,883 shares at December 31, 2018) | ( | ) | ( | ) | ||||
Total stockholders’ equity | ||||||||
Total liabilities and stockholders’ equity | $ | $ | ||||||
Employers Holdings, Inc. and Subsidiaries | ||||||||||||||||
Consolidated Statements of Comprehensive Income | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues | (unaudited) | (unaudited) | ||||||||||||||
Net premiums earned | $ | $ | $ | $ | ||||||||||||
Net investment income | ||||||||||||||||
Net realized and unrealized gains (losses) on investments | ( | ) | ||||||||||||||
Other income | ||||||||||||||||
Total revenues | ||||||||||||||||
Expenses | ||||||||||||||||
Losses and loss adjustment expenses | ||||||||||||||||
Commission expense | ||||||||||||||||
Underwriting and other operating expenses | ||||||||||||||||
Interest and financing expenses | ||||||||||||||||
Total expenses | ||||||||||||||||
Net income before income taxes | ||||||||||||||||
Income tax expense | ||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Comprehensive income | ||||||||||||||||
Unrealized AFS investment gains (losses) arising during the period (net of tax (expense) benefit of $(8.0) and $3.0 for the three months ended June 30, 2019 and 2018, respectively, and $(18.0) and $12.6 for the six months ended June 30, 2019 and 2018, respectively) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
Reclassification adjustment for realized AFS investment (gains) losses in net income (net of tax (expense) benefit of $0.1 for the three months ended June 30, 2019, and $0.2 and $(0.1) for the six months ended June 30, 2019 and 2018, respectively) | ( | ) | ( | ) | ||||||||||||
Other comprehensive income (loss), net of tax | ( | ) | ( | ) | ||||||||||||
Total comprehensive income | $ | $ | $ | $ | ||||||||||||
Net realized and unrealized gains (losses) on investments | ||||||||||||||||
Net realized and unrealized gains (losses) on investments before impairments | $ | $ | $ | $ | ( | ) | ||||||||||
Other than temporary impairment recognized in earnings | ( | ) | ||||||||||||||
Net realized and unrealized gains (losses) on investments | $ | $ | $ | $ | ( | ) | ||||||||||
Earnings per common share (Note 13): | ||||||||||||||||
Basic | $ | $ | $ | $ | ||||||||||||
Diluted | $ | $ | $ | $ | ||||||||||||
Cash dividends declared per common share and eligible RSUs and PSUs | $ | $ | $ | $ | ||||||||||||
Employers Holdings, Inc. and Subsidiaries | ||||||||||||||||||||||||||
Consolidated Statements of Stockholders' Equity | ||||||||||||||||||||||||||
For the Three Months Ended June 30, 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, April 1, 2019 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
Stock-based obligations | ||||||||||||||||||||||||||
Stock options exercised | ||||||||||||||||||||||||||
Vesting of RSUs and PSUs, net of shares withheld to satisfy tax withholdings | ||||||||||||||||||||||||||
Acquisition of common stock | ( | ) | ( | ) | ||||||||||||||||||||||
Dividends declared | ( | ) | ( | ) | ||||||||||||||||||||||
Net income for the period | — | |||||||||||||||||||||||||
Change in net unrealized gains on investments, net of taxes of $(7.9) | — | |||||||||||||||||||||||||
Balance, June 30, 2019 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
Balance, April 1, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Stock-based obligations | ||||||||||||||||||||||||||
Stock options exercised | ||||||||||||||||||||||||||
Vesting of RSUs and PSUs, net of shares withheld to satisfy tax withholdings | ||||||||||||||||||||||||||
Acquisition of common stock | ( | ) | ( | ) | ||||||||||||||||||||||
Dividends declared | ( | ) | ( | ) | ||||||||||||||||||||||
Net income for the period | — | |||||||||||||||||||||||||
Change in net unrealized losses on investments, net of taxes of $3.0 | — | ( | ) | ( | ) | |||||||||||||||||||||
Balance, June 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
See accompanying unaudited notes to the consolidated financial statements. | ||||||||||||||||||||||||||
Employers Holdings, Inc. and Subsidiaries | ||||||||||||||||||||||||||
Consolidated Statements of Stockholders' Equity | ||||||||||||||||||||||||||
For the Six Months Ended June 30, 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 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Stock-based obligations | ||||||||||||||||||||||||||
Stock options exercised | ||||||||||||||||||||||||||
Vesting of RSUs and PSUs, net of shares withheld to satisfy tax withholdings | ( | ) | ( | ) | ||||||||||||||||||||||
Acquisition of common stock | ( | ) | ( | ) | ||||||||||||||||||||||
Dividends declared | ( | ) | ( | ) | ||||||||||||||||||||||
Net income for the period | — | |||||||||||||||||||||||||
Change in net unrealized gains on investments, net of taxes of $(17.8) | — | |||||||||||||||||||||||||
Balance, June 30, 2019 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
Balance, January 1, 2018 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
Stock-based obligations | ||||||||||||||||||||||||||
Stock options exercised | ||||||||||||||||||||||||||
Vesting of RSUs and PSUs, net of shares withheld to satisfy tax withholdings | ( | ) | ( | ) | ||||||||||||||||||||||
Acquisition of common stock | — | ( | ) | ( | ) | |||||||||||||||||||||
Dividends declared | ( | ) | ( | ) | ||||||||||||||||||||||
Net income for the period | ||||||||||||||||||||||||||
Reclassification adjustment for adoption of ASU No. 2016-01 | ( | ) | ||||||||||||||||||||||||
Change in net unrealized gains on investments, net of taxes of $12.5 | ( | ) | ( | ) | ||||||||||||||||||||||
Balance, June 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Employers Holdings, Inc. and Subsidiaries | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(in millions) | ||||||||
Six Months Ended | ||||||||
June 30, | ||||||||
2019 | 2018 | |||||||
Operating activities | (unaudited) | |||||||
Net income | $ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | ||||||||
Stock-based compensation | ||||||||
Amortization of cloud computing arrangements | ||||||||
Amortization of premium on investments, net | ||||||||
Allowance for doubtful accounts | ( | ) | ( | ) | ||||
Deferred income tax expense | ||||||||
Net realized and unrealized (gains) losses on investments | ( | ) | ||||||
Change in operating assets and liabilities: | ||||||||
Premiums receivable | ( | ) | ( | ) | ||||
Reinsurance recoverable on paid and unpaid losses | ||||||||
Cloud computing arrangements | ( | ) | ||||||
Operating lease right-of-use-assets | ( | ) | ||||||
Current federal income taxes | ( | ) | ( | ) | ||||
Unpaid losses and loss adjustment expenses | ( | ) | ( | ) | ||||
Unearned premiums | ||||||||
Accounts payable, accrued expenses and other liabilities | ( | ) | ||||||
Deferred reinsurance gain—LPT Agreement | ( | ) | ( | ) | ||||
Operating lease liabilities | ||||||||
Non-cancellable obligations | ||||||||
Other | ( | ) | ||||||
Net cash provided by operating activities | ||||||||
Investing activities | ||||||||
Purchases of fixed maturity securities | ( | ) | ( | ) | ||||
Purchases of equity securities | ( | ) | ( | ) | ||||
Purchases of short-term investments | ( | ) | ||||||
Purchases of other invested assets | ( | ) | ||||||
Proceeds from sale of fixed maturity securities | ||||||||
Proceeds from sale of equity securities | ||||||||
Proceeds from maturities and redemptions of fixed maturity securities | ||||||||
Proceeds from maturities of short-term investments | ||||||||
Net change in unsettled investment purchases and sales | ( | ) | ||||||
Capital expenditures and other | ( | ) | ( | ) | ||||
Net cash provided by investing activities | ||||||||
Financing activities | ||||||||
Acquisition of common stock | ( | ) | ( | ) | ||||
Cash transactions related to stock-based compensation | ( | ) | ( | ) | ||||
Dividends paid to stockholders | ( | ) | ( | ) | ||||
Redemption of notes payable | ( | ) | ||||||
Payments on capital leases | ( | ) | ( | ) | ||||
Net cash used in financing activities | ( | ) | ( | ) | ||||
Net increase in cash, cash equivalents and restricted cash | ||||||||
Cash, cash equivalents and restricted cash at the beginning of the period | ||||||||
Cash, cash equivalents and restricted cash at the end of the period | $ | $ | ||||||
As of | As of | |||||||
June 30, 2019 | December 31, 2018 | |||||||
(in millions) | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Restricted cash and cash equivalents supporting reinsurance obligations | ||||||||
Total cash, cash equivalents and restricted cash | $ | $ | ||||||
Three Months Ended | Six Months Ended | |||||||
June 30, 2019 | June 30, 2019 | |||||||
(in millions, except per share data) | ||||||||
LPT Reserve Adjustment | $ | ( | ) | $ | ( | ) | ||
Cumulative adjustment to the Deferred Gain(1) | ( | ) | ( | ) | ||||
Net income impact from this change in estimate | ||||||||
Earnings per common share impact from this change in estimate: | ||||||||
Basic and Diluted | ||||||||
(1) | The cumulative adjustment to the Deferred reinsurance gain–LPT Agreement (Deferred Gain) was also recognized in losses and LAE incurred in the Company's Consolidated Statement of Comprehensive Income, so that the Deferred Gain reflects the balance that would have existed had the revised loss and LAE reserves been recognized at the inception of the LPT Agreement. |
Three Months Ended | Six Months Ended | |||||||
June 30, 2019 | June 30, 2019 | |||||||
(in millions, except per share data) | ||||||||
LPT Contingent Commission Adjustment | $ | $ | ||||||
Net income impact from this change in estimate | ||||||||
Earnings per common share impact from this change in estimate: | ||||||||
Basic and Diluted | ||||||||
June 30, 2019 | December 31, 2018 | |||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||
(in millions) | ||||||||||||||||
Financial assets | ||||||||||||||||
Total investments at fair value | $ | $ | $ | $ | ||||||||||||
Cash and cash equivalents | ||||||||||||||||
Restricted cash and cash equivalents | ||||||||||||||||
Financial liabilities | ||||||||||||||||
Notes payable | $ | $ | $ | $ | ||||||||||||
• | 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. |
June 30, 2019 | December 31, 2018 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
U.S. Treasuries | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
U.S. Agencies | ||||||||||||||||||||||||
States and municipalities | ||||||||||||||||||||||||
Corporate securities | ||||||||||||||||||||||||
Residential mortgage-backed securities | ||||||||||||||||||||||||
Commercial mortgage-backed securities | ||||||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||||||
Other securities | ||||||||||||||||||||||||
Total fixed maturity securities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Equity securities at fair value: | ||||||||||||||||||||||||
Industrial and miscellaneous | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Other | ||||||||||||||||||||||||
Total equity securities at fair value | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Short-term investments | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Total investments at fair value | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Six Months Ended | ||||||||
June 30, 2019 | June 30, 2018 | |||||||
Level 3 Securities: | (in millions) | |||||||
Beginning balance, January 1 | $ | $ | ||||||
Transfers out of Level 3 (1) | ( | ) | ||||||
Purchases and sales, net | ||||||||
Ending balance, June 30 | $ | $ | ||||||
(1) | The transfer during the six months ended June 30, 2018 was the result of adoption of ASU 2016-01, which specified that FHLB stock shall be carried at cost and is therefore excluded from the fair value hierarchy. |
June 30, 2019 | December 31, 2018 | ||||||
(in millions) | |||||||
Cash equivalents carried at NAV | $ | $ | |||||
Other invested assets carried at NAV | |||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in millions) | ||||||||||||||||
At June 30, 2019 | ||||||||||||||||
Fixed maturity securities | ||||||||||||||||
U.S. Treasuries | $ | $ | $ | ( | ) | $ | ||||||||||
U.S. Agencies | ||||||||||||||||
States and municipalities | ||||||||||||||||
Corporate securities | ( | ) | ||||||||||||||
Residential mortgage-backed securities | ( | ) | ||||||||||||||
Commercial mortgage-backed securities | ||||||||||||||||
Asset-backed securities | ||||||||||||||||
Other securities | ( | ) | ||||||||||||||
Total fixed maturity securities | $ | ( | ) | $ | ||||||||||||
At December 31, 2018 | ||||||||||||||||
Fixed maturity securities | ||||||||||||||||
U.S. Treasuries | $ | $ | $ | ( | ) | $ | ||||||||||
U.S. Agencies | ||||||||||||||||
States and municipalities | ( | ) | ||||||||||||||
Corporate securities | ( | ) | ||||||||||||||
Residential mortgage-backed securities | ( | ) | ||||||||||||||
Commercial mortgage-backed securities | ( | ) | ||||||||||||||
Asset-backed securities | ( | ) | ||||||||||||||
Other securities | ( | ) | ||||||||||||||
Total fixed maturity securities | $ | ( | ) | $ | ||||||||||||
Total short-term investments | $ | $ | ||||||||||||||
Cost | Estimated Fair Value | |||||||
(in millions) | ||||||||
At June 30, 2019 | ||||||||
Equity securities at fair value | ||||||||
Industrial and miscellaneous | $ | $ | ||||||
Other | ||||||||
Total equity securities at fair value | $ | $ | ||||||
At December 31, 2018 | ||||||||
Equity securities at fair value | ||||||||
Industrial and miscellaneous | $ | $ | ||||||
Other | ||||||||
Total equity securities at fair value | $ | $ | ||||||
Cost | Net Asset Value | |||||||
(in millions) | ||||||||
At June 30, 2019 | ||||||||
Other invested assets | ||||||||
Private equity fund investments | $ | 2.0 | $ | 2.0 | ||||
Total other invested assets | $ | $ | ||||||
Amortized Cost | Estimated Fair Value | |||||||
(in millions) | ||||||||
Due in one year or less | $ | $ | ||||||
Due after one year through five years | ||||||||
Due after five years through ten years | ||||||||
Due after ten years | ||||||||
Mortgage and asset-backed securities | ||||||||
Total | $ | $ | ||||||
June 30, 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 | $ | $ | $ | $ | ( | ) | ||||||||||||||||
States and municipalities | ( | ) | ||||||||||||||||||||
Corporate securities | ( | ) | ||||||||||||||||||||
Residential mortgage-backed securities | ( | ) | ||||||||||||||||||||
Commercial mortgage-backed securities | ( | ) | ||||||||||||||||||||
Asset-backed securities | ( | ) | ||||||||||||||||||||
Other securities | ( | ) | ( | ) | ||||||||||||||||||
Total less than 12 months | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||
12 months or greater: | ||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||
U.S. Treasuries | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||
Corporate securities | ( | ) | ( | ) | ||||||||||||||||||
Residential mortgage-backed securities | ( | ) | ( | ) | ||||||||||||||||||
Commercial mortgage-backed securities | ( | ) | ||||||||||||||||||||
Asset-backed securities | ( | ) | ||||||||||||||||||||
Total 12 months or greater | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||
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 June 30, 2019 | ||||||||||||||||||||
Fixed maturity securities | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
Equity securities | ( | ) | ||||||||||||||||||
Total investments | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
Six Months Ended June 30, 2019 | ||||||||||||||||||||
Fixed maturity securities | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
Equity securities | ( | ) | ||||||||||||||||||
Total investments | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
Three Months Ended June 30, 2018 | ||||||||||||||||||||
Fixed maturity securities | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||
Equity securities | ( | ) | ||||||||||||||||||
Total investments | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||
Six Months Ended June 30, 2018 | ||||||||||||||||||||
Fixed maturity securities | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||
Equity securities | ( | ) | ( | ) | ( | ) | ||||||||||||||
Total investments | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in millions) | ||||||||||||||||
Fixed maturity securities | $ | $ | $ | $ | ||||||||||||
Equity securities | ||||||||||||||||
Cash equivalents and restricted cash | ||||||||||||||||
Gross investment income | ||||||||||||||||
Investment expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Net investment income | $ | $ | $ | $ | ||||||||||||
As of June 30, | As of December 31, | ||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Furniture and equipment | $ | $ | |||||
Leasehold improvements | |||||||
Computers and software | |||||||
Automobiles | |||||||
Property and equipment, gross | |||||||
Accumulated depreciation | ( | ) | ( | ) | |||
Property and equipment, net | $ | $ | |||||
Three Months Ended | Six Months Ended | |||||||
June 30, 2019 | June 30, 2019 | |||||||
(in millions) | ||||||||
Operating lease expense | $ | $ | ||||||
Finance lease expense | ||||||||
Total lease expense | $ | $ | ||||||
As of June 30, 2019 | ||||||||
Operating Leases | Finance Leases | |||||||
(in millions) | ||||||||
2019 | $ | $ | ||||||
2020 | ||||||||
2021 | ||||||||
2022 | ||||||||
2023 | ||||||||
Thereafter | ||||||||
Total lease payments | ||||||||
Less: inputed interest | ( | ) | ||||||
Total | $ | $ | ||||||
As of June 30, 2019 | ||||
(in millions) | ||||
Operating leases: | ||||
Operating lease right-of-use asset | $ | |||
Operating lease liability | ||||
Finance leases: | ||||
Property and equipment, gross | ||||
Accumulated depreciation | ( | ) | ||
Property and equipment, net | ||||
Other liabilities | $ | |||
Six Months Ended | ||||
June 30, 2019 | ||||
(in millions) | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ | |||
Financing cash flows from finance leases | ||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in millions) | ||||||||||||||||
Unpaid losses and LAE at beginning of period | $ | $ | $ | $ | ||||||||||||
Less reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE | ||||||||||||||||
Net unpaid losses and LAE at beginning of period | ||||||||||||||||
Losses and LAE, net of reinsurance, incurred during the period related to: | ||||||||||||||||
Current period | ||||||||||||||||
Prior periods | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total net losses and LAE incurred during the period | ||||||||||||||||
Paid losses and LAE, net of reinsurance, related to: | ||||||||||||||||
Current period | ||||||||||||||||
Prior periods | ||||||||||||||||
Total net paid losses and LAE during the period | ||||||||||||||||
Ending unpaid losses and LAE, net of reinsurance | ||||||||||||||||
Reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE | ||||||||||||||||
Unpaid losses and LAE at end of period | $ | $ | $ | $ | ||||||||||||
June 30, 2019 | December 31, 2018 | ||||||
(in millions) | |||||||
Dekania Surplus Note, due April 29, 2034 | $ | $ | |||||
Alesco Surplus Note, due December 15, 2034 | |||||||
Total | $ | $ | |||||
June 30, 2019 | December 31, 2018 | |||||||
(in millions) | ||||||||
Net unrealized gains (losses) on investments, before taxes | $ | $ | ( | ) | ||||
Deferred tax (expense) benefit on net unrealized gains (losses) | ( | ) | ||||||
Total accumulated other comprehensive income (loss) | $ | $ | ( | ) | ||||
Number Awarded | Weighted Average Fair Value on Date of Grant | Aggregate Fair Value on Date of Grant | ||||||||
(in millions) | ||||||||||
March 2019 | ||||||||||
RSUs(1) | $ | $ | ||||||||
PSUs(2) | ||||||||||
May 2019 | ||||||||||
RSUs(3) | $ | $ | ||||||||
(1) | The RSUs awarded in March 2019 were awarded to certain employees of the Company and |
(2) | The PSUs awarded in March 2019 were awarded to certain employees of the Company and have a performance period of |
(3) | The RSUs awarded in May 2019 were awarded to non-employee Directors of the Company and vest in full on May 23, 2020. |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in millions, except share data) | ||||||||||||||||
Net income—basic and diluted | $ | $ | $ | $ | ||||||||||||
Weighted average number of shares outstanding—basic | ||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||
PSUs | ||||||||||||||||
Stock options | ||||||||||||||||
RSUs | ||||||||||||||||
Dilutive potential shares | ||||||||||||||||
Weighted average number of shares outstanding—diluted | ||||||||||||||||
June 30, 2019 | December 31, 2018 | |||||||
(in millions) | ||||||||
GAAP stockholders' equity | $ | 1,121.5 | $ | 1,018.2 | ||||
Deferred reinsurance gain–LPT Agreement | 141.7 | 149.6 | ||||||
Less: Accumulated other comprehensive income (loss), net | 53.3 | (13.7 | ) | |||||
Adjusted stockholders' equity(1) | $ | 1,209.9 | $ | 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 | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in millions) | ||||||||||||||||
Gross premiums written | $ | 176.6 | $ | 186.4 | $ | 386.6 | $ | 398.0 | ||||||||
Net premiums written | $ | 175.2 | $ | 185.0 | $ | 383.9 | $ | 395.2 | ||||||||
Net premiums earned | $ | 175.5 | $ | 178.0 | $ | 350.3 | $ | 354.6 | ||||||||
Net investment income | 21.4 | 20.3 | 43.2 | 39.7 | ||||||||||||
Net realized and unrealized gains (losses) on investments | 7.4 | 5.7 | 30.7 | (2.4 | ) | |||||||||||
Other income | — | 0.1 | 0.4 | 0.1 | ||||||||||||
Total revenues | 204.3 | 204.1 | 424.6 | 392.0 | ||||||||||||
Losses and LAE | 86.8 | 87.8 | 175.3 | 183.2 | ||||||||||||
Commission expense | 23.8 | 24.5 | 45.8 | 48.2 | ||||||||||||
Underwriting and other operating expenses | 43.8 | 40.1 | 91.3 | 79.2 | ||||||||||||
Interest and financing expenses | 0.2 | 0.4 | 0.6 | 0.7 | ||||||||||||
Total expenses | 154.6 | 152.8 | 313.0 | 311.3 | ||||||||||||
Income tax expense | 9.0 | 8.8 | 19.0 | 12.6 | ||||||||||||
Net income | $ | 40.7 | $ | 42.5 | $ | 92.6 | $ | 68.1 | ||||||||
Less amortization of the Deferred Gain related to losses | $ | 3.2 | $ | 3.6 | $ | 5.2 | $ | 5.7 | ||||||||
Less amortization of the Deferred Gain related to contingent commission | 0.5 | 0.6 | 1.0 | 1.1 | ||||||||||||
Less impact of LPT Reserve Adjustments(1) | 1.8 | 2.2 | 1.8 | 2.2 | ||||||||||||
Less impact of LPT Contingent Commission Adjustments(2) | 0.2 | 0.5 | 0.2 | 0.5 | ||||||||||||
Net income before impact of the LPT Agreement(3) | $ | 35.0 | $ | 35.6 | $ | 84.4 | $ | 58.6 | ||||||||
(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. |
(2) | LPT Contingent Commission Adjustments result in an adjustment to the Deferred Gain, which is recognized in losses and LAE incurred on our Consolidated Statements of Comprehensive Income, such that the Deferred Gain reflects the balance that would have existed had the revised contingent profit commission been recognized at the inception of the LPT Agreement. |
(3) | We define net income before impact of the LPT Agreement as net income before the impact of: (a) amortization of the Deferred Gain; (b) adjustments to the LPT Agreement ceded reserves; and (c) adjustments to the Contingent commission receivable–LPT Agreement. The Deferred Gain reflects the unamortized gain from the LPT Agreement. Under GAAP, this gain is deferred and is being amortized using the recovery method in which amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries over the life of the LPT Agreement, except for the contingent profit commission, which is amortized through June 30, 2024. The amortization is reflected in losses and LAE. We periodically reevaluate the remaining direct reserves subject to the LPT Agreement and the expected losses and LAE subject to the contingent profit commission under the LPT Agreement. Our reevaluation results in corresponding adjustments, if needed, to reserves, ceded reserves, contingent commission receivable, and the Deferred Gain, with the net effect being an increase or decrease to our net income. Net income before impact of the LPT Agreement is not a measurement of financial performance under GAAP, but rather reflects a difference in accounting treatment between statutory and GAAP, and should not be considered in isolation or as an alternative to net income before income taxes or net income, or any other measure of performance derived in accordance with GAAP. |
As of June 30, 2019 | |||||||||||||||||
Year-to-Date Change | Year-Over-Year Change | ||||||||||||||||
Overall | California | All Other States | Overall | California | All Other States | ||||||||||||
In-force premiums | 0.6 | % | (2.6 | )% | 4.3 | % | 2.9 | % | (1.6 | )% | 8.1 | % | |||||
In-force policy count | 4.9 | 4.3 | 5.4 | 8.8 | 8.4 | 9.1 | |||||||||||
Average in-force policy size | (4.1 | ) | (6.6 | ) | (1.1 | ) | (5.5 | ) | (9.2 | ) | (0.9 | ) | |||||
In-force payroll exposure | 10.2 | 9.0 | 11.1 | 21.1 | 23.9 | 19.5 | |||||||||||
June 30, 2019 | December 31, 2018 | June 30, 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 | $ | 348.0 | 43,813 | $ | 357.1 | 41,988 | $ | 353.6 | 40,400 | $ | 349.4 | 40,573 | ||||||||||||||||
Florida | 37.2 | 5,743 | 41.0 | 5,833 | 43.0 | 5,734 | 41.8 | 5,625 | ||||||||||||||||||||
Other (43 states and D.C.) | 285.1 | 46,465 | 268.1 | 43,677 | 255.1 | 42,108 | 235.7 | 39,296 | ||||||||||||||||||||
Total | $ | 670.3 | 96,021 | $ | 666.2 | 91,498 | $ | 651.7 | 88,242 | $ | 626.9 | 85,494 | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Loss and LAE ratio | 49.5 | % | 49.3 | % | 50.0 | % | 51.7 | % | ||||
Underwriting and other operating expenses ratio | 25.0 | 22.5 | 26.1 | 22.3 | ||||||||
Commission expense ratio | 13.5 | 13.8 | 13.1 | 13.6 | ||||||||
Combined ratio | 88.0 | % | 85.6 | % | 89.2 | % | 87.6 | % | ||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in millions) | ||||||||||||||||
Prior accident year favorable loss development, net | $ | 23.7 | $ | 16.5 | $ | 45.9 | $ | 28.9 | ||||||||
Amortization of the Deferred Gain related to losses | $ | 3.2 | $ | 3.6 | $ | 5.2 | $ | 5.7 | ||||||||
Amortization of the Deferred Gain related to contingent commission | 0.5 | 0.6 | 1.0 | 1.1 | ||||||||||||
Impact of LPT Reserve Adjustments | 1.8 | 2.2 | 1.8 | 2.2 | ||||||||||||
Impact of LPT Contingent Commission Adjustments | 0.2 | 0.5 | 0.2 | 0.5 | ||||||||||||
Total impact of the LPT on losses and LAE | 5.7 | 6.9 | 8.2 | 9.5 | ||||||||||||
Total losses and LAE reserve adjustments | $ | 29.4 | $ | 23.4 | $ | 54.1 | $ | 38.4 | ||||||||
June 30, | ||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Cash, cash equivalents, and restricted cash provided by (used in): | ||||||||
Operating activities | $ | 42.3 | $ | 86.2 | ||||
Investing activities | 42.5 | 3.2 | ||||||
Financing activities | (81.0 | ) | (16.4 | ) | ||||
Increase in cash, cash equivalents, and restricted cash | $ | 3.8 | $ | 73.0 | ||||
Payment Due By Period | ||||||||||||||||||||
Total | Less Than 1-Year | 1-3 Years | 4-5 Years | More Than 5 Years | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Operating leases | $ | 20.0 | $ | 5.1 | $ | 7.8 | $ | 3.6 | $ | 3.5 | ||||||||||
Non-cancellable contracts | 20.2 | 4.7 | 8.7 | 6.1 | 0.7 | |||||||||||||||
Capital leases | 0.8 | 0.3 | 0.5 | — | — | |||||||||||||||
Unpaid losses and LAE reserves (1)(2) | 2,161.8 | 364.0 | 456.6 | 279.3 | 1,061.9 | |||||||||||||||
Unfunded investment commitments | 68.0 | 68.0 | — | — | — | |||||||||||||||
Total contractual obligations | $ | 2,270.8 | $ | 442.1 | $ | 473.6 | $ | 289.0 | $ | 1,066.1 | ||||||||||
(1) | 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. |
(2) | 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 | $ | (484.2 | ) | $ | (26.7 | ) | $ | (50.8 | ) | $ | (48.5 | ) | $ | (358.2 | ) | |||||
Category | Estimated Fair Value | Percentage of Total | Book Yield | Tax Equivalent Yield (1) | |||||||||
(in millions, except percentages) | |||||||||||||
U.S. Treasuries | $ | 94.9 | 3.4 | % | 2.3 | % | 2.3 | % | |||||
U.S. Agencies | 9.9 | 0.4 | 4.7 | 4.7 | |||||||||
States and municipalities | 505.4 | 18.3 | 3.3 | 3.8 | |||||||||
Corporate securities | 1,098.5 | 39.8 | 3.3 | 3.3 | |||||||||
Residential mortgage-backed securities | 463.0 | 16.8 | 3.1 | 3.1 | |||||||||
Commercial mortgage-backed securities | 103.7 | 3.8 | 3.2 | 3.2 | |||||||||
Asset-backed securities | 65.4 | 2.4 | 3.4 | 3.4 | |||||||||
Other securities | 176.9 | 6.4 | 5.3 | 5.3 | |||||||||
Equity securities | 239.1 | 8.7 | 5.1 | 5.6 | |||||||||
Total investments at fair value | $ | 2,756.8 | 100.0 | % | |||||||||
Weighted average yield | 3.5 | % | 3.6 | % | |||||||||
(1) Computed using a statutory income tax rate of 21% | |||||||||||||
Rating | Percentage of Total Estimated Fair Value | ||
“AAA” | 7.3 | % | |
“AA” | 42.4 | ||
“A” | 32.5 | ||
“BBB” | 12.0 | ||
Below investment grade | 5.8 | ||
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) | ||||||||||||||
April 1 – April 30, 2019 | 254,968 | $ | 40.80 | 254,968 | $ | 57.6 | ||||||||
May 1 – May 31, 2019 | 100,000 | 41.52 | 100,000 | 53.4 | ||||||||||
June 1 – June 30, 2019 | 17,322 | 41.91 | 17,322 | 52.7 | ||||||||||
372,290 | $ | 41.05 | 372,290 | |||||||||||
Incorporated by Reference Herein | ||||||||||||
Exhibit No. | Description of Exhibit | Included Herewith | Form | File No. | Exhibit | Filing Date | ||||||
*10.1 | X | |||||||||||
*10.2 | 8-K | 001-33245 | 10.1 | April 26, 2019 | ||||||||
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: | July 29, 2019 | /s/ Michael S. Paquette |
Michael S. Paquette | ||
Executive Vice President and Chief Financial Officer | ||
Employers Holdings, Inc. | ||
(Principal Financial and Accounting Officer) | ||
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 $330,000 (“Base Salary”), which amount shall be paid according to the Company’s regular payroll practices. The Company agrees to review the Base Salary on an annual basis and adjust the salary to comply with the executive compensation policy in effect at the time of the review. Any adjustment made to the annual salary will establish the new Base Salary for the Employee. All payments made pursuant to this Agreement, including but not limited to this subsection 4(a), shall be reduced by and subject to withholding for all federal, state, and local taxes and any other withholding required by applicable laws and regulations. |
(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 he 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 his 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. |
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 his 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 his 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 thereof and which is not cured by the Company within thirty (30) days of the Company’s receipt of written notice from the Employee of the events alleged to constitute such Good Reason: |
(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 his 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 such Termination Date, for twenty four (24) months following the 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 his 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 his employment for Good Reason, that actual damages are speculative and that the amount of the Severance Pay or, if applicable, the CIC Severance Pay (as defined below) set forth herein is liquidated damages and is a reasonable estimate of what damages would be for a material breach of this Agreement. |
(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 he 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 he 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 he 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 his 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 his employment and this Agreement pursuant to this subsection 7(d), he 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 his 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 in Control, (y) was by the Employee for Good Reason and the circumstance or event that constitutes Good Reason occurred at the request or direction of such person or (z) was by the Company without Cause and the Employee reasonably demonstrates that such termination was otherwise in connection with or in anticipation of a Change in Control; and if the Employee is not entitled to CIC Severance Pay hereunder, then the Employee's termination of employment will not be deemed to have occurred during the CIC Period for purposes of subsection 7(a): |
(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, $181,500, (ii) if the Change in Control occurs in 2020, the average of $181,500 and the annual bonus amount earned by the Employee for 2019, or (iii) if the Change in Control occurs in 2021, the average of the annual bonus amounts earned by the Employee for the two (2) years preceding the year in which the Change in Control occurs. 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 his 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) |
(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 rather, to the extent the conditions set forth in subsection 7(a) and subsection 7(e) are satisfied, the Employee shall be eligible to receive payments and benefits under only subsection 7(e). |
(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 |
(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 shall be made in respect of fees or expenses incurred by the Employee after the later of the tenth (10th) anniversary of the effective date of the Employee's termination with the Company or the Employee's death and, provided further, that, upon the Employee’s “separation from service” (as such term is defined under Section 409A) with the Company, in no event shall any additional such payments be made prior to the date that is six (6) months after the date of the Employee’s “separation from service” to the extent such payment delay is required under section 409A(a)(2)(B) of the Code. |
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 he 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, he 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), he 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 he permanently ceases such violation. If any provision of these covenants is invalid in whole or in part, it will be limited, whether as to time, area covered, or otherwise as and to the extent required for its validity under the applicable law and as so limited, will be enforceable. |
(d) | Confidential Information. The Employee acknowledges that he 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 his 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 his 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 his 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: | By: | ||||
Douglas D. Dirks | Jeffrey C. Shaw | ||||
Chief Executive Officer | |||||
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: | July 29, 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: | July 29, 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: | July 29, 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: | July 29, 2019 | /s/ Michael S. Paquette |
Michael S. Paquette | ||
Executive Vice President and Chief Financial Officer | ||
Employers Holdings, Inc. | ||
(Principal Financial and Accounting Officer) | ||
Consolidated Balance Sheets Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Available for sale: | ||
| Debt securities, available-for-sale, amortized cost | $ 2,450,200 | $ 2,513,700 |
| Equity Securities, FV-NI, Cost | 143,100 | 131,900 |
| Available for sale, short-term investments, at amortized cost | 0 | 25,000 |
| Premiums receivable, bad debt allowance | 6,600 | 6,700 |
| Reinsurance recoverables on unpaid losses, allowance | $ 0 | $ 0 |
| Stockholders' equity | ||
| Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
| Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
| Common stock, shares issued (in shares) | 57,157,926 | 56,975,675 |
| Common stock, shares outstanding (in shares) | 31,904,916 | 32,765,792 |
| Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
| Preferred stock, shares issued (in shares) | 0 | 0 |
| Treasury stock, at cost (in shares) | 25,253,010 | 24,209,883 |
Consolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
| Income Statement Parenthetical [Abstract] | ||||
| Other comprehensive income (loss), unrealized holding gain (loss) on securities arising during period, tax | $ (8,000) | $ 3,000 | $ (18,000) | $ 12,600 |
| Other comprehensive income (loss), reclassification adjustment for sale of securities included in net income, tax | $ 100 | $ 0 | $ 200 | $ (100) |
Consolidated Statements of Stockholders Equity (Parentheticals) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
| Statement of Stockholders' Equity [Abstract] | ||||
| Change in net unrealized (losses) gains on investments, net of tax | $ (7.9) | $ 3.0 | $ (17.8) | $ 12.5 |
Basis of Presentation |
6 Months Ended |
|---|---|
Jun. 30, 2019 | |
| Basis of Presentation [Abstract] | |
| Basis of Presentation | Basis of Presentation and Summary of Operations Employers Holdings, Inc. (EHI) is a Nevada holding company. Through its wholly owned insurance subsidiaries, Employers Insurance Company of Nevada (EICN), Employers Compensation Insurance Company (ECIC), Employers Preferred Insurance Company (EPIC), and Employers Assurance Company (EAC), EHI is engaged in the commercial property and casualty insurance industry, specializing in workers' compensation products and services. Unless otherwise indicated, all references to the “Company” refer to EHI, together with its subsidiaries. In 1999, the Nevada State Industrial Insurance System (the Fund) entered into a retroactive 100% quota share reinsurance agreement (the LPT Agreement) through a loss portfolio transfer transaction with third party reinsurers. The LPT Agreement commenced on June 30, 1999 and will remain in effect until all claims under the covered policies have closed, the LPT Agreement is commuted or terminated, upon the mutual agreement of the parties, or the reinsurers' aggregate maximum limit of liability is exhausted, whichever occurs first. The LPT Agreement does not provide for any additional termination terms. On January 1, 2000, EICN assumed all of the assets, liabilities and operations of the Fund, including the Fund's rights and obligations associated with the LPT Agreement (See Note 9). The Company accounts for the LPT Agreement as retroactive reinsurance. Upon entry into the LPT Agreement, an initial deferred reinsurance gain (the Deferred Gain) was recorded as a liability on the Company’s Consolidated Balance Sheets. The Company is entitled to receive a contingent profit commission under the LPT Agreement. The contingent profit commission is estimated based on both actual paid results to date and projections of expected paid losses under the LPT Agreement and is recorded as an asset on the Company's Consolidated Balance Sheets. The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of the Company’s consolidated financial position and results of operations for the periods presented have been included. The results of operations for an interim period are not necessarily indicative of the results for an entire year. These financial statements have been prepared consistent with the accounting policies described in the Company’s Form 10-K for the year ended December 31, 2018 (Annual Report). The Company operates as a single operating segment, workers' compensation insurance, through its wholly owned subsidiaries. The Company considers an operating segment to be any component of its business whose operating results are regularly reviewed by the Company’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance based on discrete financial information. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. As a result, actual results could differ from these estimates. The most significant areas that require management judgment are the estimate of unpaid losses and loss adjustment expenses (LAE), evaluation of reinsurance recoverables, recognition of premium revenue, recoverability of deferred income taxes, and valuation of investments. Pending Acquisition On August 11, 2017, the Company entered into a stock purchase agreement (Purchase Agreement), as most recently amended on October 25, 2018, with Partner Reinsurance Company of the U.S. (PRUS) with respect to the acquisition (Acquisition) of all of the outstanding shares of capital stock of PartnerRe Insurance Company of New York (PRNY). The purchase price is equal to the sum of: (i) the amount of statutory capital and surplus of PRNY at closing (which is currently estimated to be approximately $47.0 million); and (ii) $5.8 million. The Company expects to fund the Acquisition with cash on hand. Pursuant to the Purchase Agreement, all liabilities and obligations of PRNY existing as of the closing date, whether known or unknown, will be indemnified by PRUS. In addition, PartnerRe Ltd., the parent company of PRUS, has provided the Company with a guaranty that unconditionally, absolutely and irrevocably guarantees the full and prompt payment and performance by PRUS of all of its obligations, liabilities, and indemnities under the Purchase Agreement and the transactions contemplated thereby. The Company will not be acquiring any employees or ongoing business operations pursuant to the Acquisition. The Acquisition is subject to certain closing conditions, including, among other things, approval from the Department of Financial Services of the State of New York, which occurred in June 2019. The Company expects to close the Acquisition on July 31, 2019.
|
Change in Estimates (Notes) |
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Change in Estimates [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in Estimates | Change in Estimates The Company reduced its estimated loss and LAE reserves ceded under the Loss Portfolio Transfer Agreement (LPT Reserve Adjustment) during the second quarter of 2019 as a result of the determination that an adjustment was necessary to reflect observed favorable paid loss trends. The following table shows the financial statement impact related to the LPT Reserve Adjustment.
The Company increased its estimate of Contingent commission receivable – LPT Agreement (LPT Contingent Commission Adjustment) during the second quarter of 2019 as a result of the determination that an adjustment was necessary to reflect observed favorable paid loss trends. The following table shows the financial statement impact related to the LPT Contingent Commission Adjustment.
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New Accounting Standards Level 1 (Notes) |
6 Months Ended |
|---|---|
Jun. 30, 2019 | |
| New Accounting Standards [Abstract] | |
| New Accounting Standards | New Accounting Standards Recently Issued Accounting Standards In April 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updated (ASU) 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments in this update represent changes to clarify, correct errors in, or improve the codification within various ASC topics. The Company will adopt the updates related to Topic 815 when it adopts ASU 2016-13. The Company will adopt any remaining codification improvements as they become applicable and has determined that the impact of these improvements will not be material to its consolidated financial condition and results of operations. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This update removes the disclosure requirements for the amounts of and the reasons for transfers between Level 1 and Level 2 and disclosure of the policy for timing of transfers between levels. This update also removes disclosure requirements for the valuation processes for Level 3 fair value measurements. Additionally, this update adds disclosure requirements for the changes in unrealized gains and losses for recurring Level 3 fair value measurements and quantitative information for certain unobservable inputs in Level 3 fair value measurements. This update becomes effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company does not expect that this update will have a material impact on its consolidated financial condition and results of operations. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350). This update simplifies the measurement of goodwill by eliminating the performance of Step 2 in the goodwill impairment testing. This update allows the testing to be performed by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge when the carrying amount exceeds fair value. Additionally, this update eliminates the requirements of any reporting unit with a zero or negative carrying value to perform Step 2, but requires disclosure of the amount of goodwill allocated to a reporting unit with zero or negative carrying amount of net assets. This update becomes effective for fiscal years beginning after December 15, 2019. The Company does not expect that this update will have a material impact on its consolidated financial condition and results of operations. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This update replaces the incurred loss impairment methodology for recognizing credit losses on financial instruments with a methodology that reflects an entity's current estimate of all expected credit losses. This update requires financial assets measured at amortized cost to be presented net of an allowance for credit losses. Additionally, this update requires credit losses on available-for-sale fixed maturity securities to be presented as an allowance rather than as a write-down, allowing an entity to also record reversals of credit losses in current period net income. This update becomes effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Additionally, in December 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. This update provides clarification on the effective and transition dates and the exclusion of operating lease receivables from Topic 326. In May 2019, the FASB issued ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief. This update adds optional transition relief for entities to elect the fair value option for certain financial assets previously measured at amortized cost basis to increase comparability of similar financial assets. The Company is currently evaluating the impact that the adoption of these updates will have on its consolidated financial condition and results of operations. Recently Adopted Accounting Standards In July 2018, the FASB issued ASU 2018-09, Codification Improvements. This update provides clarification, corrects errors in and makes minor improvements to the Codification within various ASC topics. Many of the amendments in this update have transition guidance with effective dates for annual periods beginning after December 15, 2018 and some amendments in this update do not require transition guidance and became effective upon issuance of this update. The Company has adopted these amendments and has determined that there was no impact to its consolidated financial condition and results of operations. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. This update provides entities with an additional and optional transition method to adopt ASU 2016-02 with a cumulative-effect adjustment in the period of adoption. This update also provides guidance for a practical expedient that permits lessors to not separate non-lease components from the associated lease components. Additionally, in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases. This update provides additional guidance on the new lease model with improvements in numerous aspects of the guidance in ASC 842 including, but not limited to, implicit rates, reassessment of lease classification, terms and purchase options, investment tax credits, and various other transition guidance. In December 2018, the FASB issued ASU 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors. This update provides amendments to various lease topics including sales taxes collected from lessees, certain lessor costs paid to third parties, and variable payments for contracts with lease and non-lease components. In March 2019, the FASB issued ASU 2019-01, Leases Topics (842) Codification Improvements. The amendments in this update increase transparency and comparability for the recognition of leases and disclosures about leasing transactions. This update provides additional clarity on determining the value of the underlying asset by lessors that are not manufacturers or dealers. This update further clarifies the presentation of the statement of cash flows related to lessors that are depository and lending institutions within the scope of Topic 942. Additionally, this update provides guidance on transition disclosures related to leases. The Company adopted these updates concurrently with ASU 2016-02. See Note 6 regarding the impact of adopting this standard on the Company's Consolidated Financial Statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update provides guidance on a new lease model that includes the recognition of assets and liabilities arising from lease transactions on the balance sheet. Additionally, the update provides clarity on the definition of a lease and the distinction between finance and operating leases. Furthermore, the update requires certain qualitative and quantitative disclosures pertaining to the amounts recorded in the financial statements. This update became effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2018 and early adoption is permitted. As a result of the implementation of this standard, the Company recognized an Operating lease right-of-use asset of $16.8 million and $19.0 million of Lease liabilities on its Consolidated Balance Sheet at March 31, 2019. See Note 6 for additional detail regarding the adoption of this standard.
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Valuation of Financial Instruments |
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| Fair Value of Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Financial Instruments | Valuation of Financial Instruments Financial Instruments Carried at Fair Value The carrying value and the estimated fair value of the Company’s financial instruments at fair value were as follows:
Assets and liabilities recorded at fair value on the Company's Consolidated Balance Sheets are categorized based upon the levels of judgment associated with the inputs used to measure their fair value. Level inputs are defined as follows:
The Company uses third party pricing services to assist it with its investment accounting function. The ultimate pricing source varies depending on the investment security and pricing service used, but investment securities valued on the basis of observable inputs (Levels 1 and 2) are generally assigned values on the basis of actual transactions. Securities valued on the basis of pricing models with significant unobservable inputs or non-binding broker quotes are classified as Level 3. The Company performs quarterly analyses on the prices it receives from third parties to determine whether the prices are reasonable estimates of fair value, including confirming the fair values of these securities through observable market prices using an alternative pricing source, as it is ultimately management’s responsibility to ensure that the fair values reflected in the Company’s consolidated financial statements are appropriate. If differences are noted in these analyses, the Company may obtain additional information from other pricing services to validate the quoted price. The Company bases all of its estimates of fair value for assets on the bid prices, when available, as they represent what a third-party market participant would be willing to pay in an arm's length transaction. For securities not actively traded, third party pricing services may use quoted market prices of similar instruments or discounted cash flow analyses, incorporating inputs that are currently observable in the markets for similar securities. Inputs that are often used in the valuation methodologies include, but are not limited to, broker quotes, benchmark yields, credit spreads, default rates, and prepayment speed assumptions. There were no material adjustments made to the prices obtained from third party pricing services as of June 30, 2019 and December 31, 2018. These methods of valuation only produce an estimate of fair value if there is objectively verifiable information to produce a valuation. When objectively verifiable information is not available, the Company produces an estimate of fair value using some of the same methodologies, making assumptions for market-based inputs that are unavailable. The Company's estimates of fair value for its notes payable are based on a combination of the variable interest rates for notes with similar durations to discount the projection of future payments on notes payable. The fair value measurements for notes payable have been determined to be Level 2 at December 31, 2018. As of June 30, 2019, all outstanding notes payable were redeemed. See Note 10 for further details. Each of the Company's insurance operating subsidiaries is a member of the Federal Home Loan Bank of San Francisco (FHLB). Members are required to purchase stock in the FHLB in addition to maintaining collateral deposits that back any funds advanced. The Company's investment in FHLB stock is recorded at cost, which approximates fair value, as purchases and sales of these securities are at par value with the issuer. FHLB stock is considered a restricted security and is periodically evaluated by the Company for impairment based on the ultimate recovery of par value. The following table presents the Company's investments at fair value and the corresponding fair value measurements.
The following table provides a reconciliation of the beginning and ending balances of investments that are recorded at fair value and are measured using Level 3 inputs for the six months ended June 30, 2019 and 2018.
Financial Instruments Carried at Net Asset Value (NAV) The Company has investments in private equity limited partnership interests that are included in Other invested assets on the Company's Consolidated Balance Sheets. These investments do not have readily determinable fair values, use NAV and are excluded from the fair value hierarchy. The Company initially estimates the value of these investments using the transaction price. In subsequent periods, the Company measures these investments using NAV per share provided quarterly by the general partner, based on financial statements that are audited annually. The Company performs certain control procedures to validate the appropriateness of using the NAV as a measurement. These investments are generally not redeemable by the investees and cannot be sold without approval of the general partner. These investments have a fund term of 12 years, subject to three one year extensions at the general partner's discretion. The Company will receive distributions of proceeds from dividends and interest from fund investments, as well as from the disposition of a fund investment, or portion thererof. The Company expects these distributions from time-to-time during the full course of the fund term. As of June 30, 2019, the Company had unfunded commitments to these private equity limited partnerships totaling $48.0 million. Additionally, certain cash equivalents, principally money market securities, are measured using NAV, which approximates fair value. The following table presents cash and investments carried at NAV on the Company's Consolidated Balance Sheets.
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Investments |
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| Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments | Investments The Company's investments in fixed maturity securities and short-term investments are classified as available-for-sale (AFS) and are reported at fair value with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders' equity, net of deferred taxes, in Accumulated other comprehensive income (loss) (AOCI) on the Company’s Consolidated Balance Sheets. Other securities within fixed maturity securities consist of bank loans, which are classified as AFS and are reported at fair value. The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the Company’s AFS investments were as follows:
The Company's investment in equity securities are recorded at fair value with changes in the fair value included in Net realized and unrealized gains (losses) on investments on the Company's Consolidated Statements of Comprehensive Income. The Company's investment in FHLB stock is presented within Equity securities at cost on the Company's Consolidated Balance Sheets. The cost and estimated fair value of the Company’s equity securities recorded at fair value at June 30, 2019 and December 31, 2018 were as follows:
The Company also invests in private equity limited partnerships, which are included in Other invested assets on the Company's Consolidated Balance Sheets. These investments are carried at NAV based on information provided by the general partner. Changes in the value of these investments are recorded through net realized and unrealized gains and losses on the Company's Consolidated Statements of Comprehensive Income. The following table shows the cost and net asset value of the Company's Other invested assets at June 30, 2019. The Company had no Other invested assets at December 31, 2018.
The amortized cost and estimated fair value of the Company's fixed maturity securities at June 30, 2019, by contractual maturity, are shown below. Expected maturities differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
The following is a summary of AFS investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 months or greater as of June 30, 2019 and December 31, 2018.
There were no other-than-temporary impairments on fixed maturity securities recognized during the six months ended June 30, 2019. The Company recognized impairments on fixed maturity securities of $2.0 million (consisting of fifty-seven securities) during the six months ended June 30, 2018 as a result of the Company's intent to sell these securities. The Company determined that the remaining unrealized losses on fixed maturity securities for the six months ended June 30, 2018 were primarily the result of changes in prevailing interest rates and not the credit quality of the issuers. The fixed maturity securities whose total fair value was less than amortized cost were not determined to be other-than-temporarily impaired given the lack of severity and duration of the impairment, the credit quality of the issuers, the Company’s intent to not sell the securities, and a determination that it is not more likely than not that the Company will be required to sell the securities at an amount less than their amortized cost. Realized gains and losses on investments include the gain or loss on a security at the time of sale compared to its original or adjusted cost (equity securities) or amortized cost (fixed maturity securities). Realized losses on fixed maturity securities are also recognized when securities are written down as a result of an other-than-temporary impairment. Net realized gains (losses) on investments and the change in unrealized gains on the Company's investments recorded at fair value are determined on a specific-identification basis and were as follows:
Net investment income was as follows:
The Company is required by various state laws and regulations to hold securities or letters of credit in depository accounts with certain states in which it does business. These laws and regulations govern not only the amount but also the types of securities that are eligible for deposit. As of June 30, 2019 and December 31, 2018, securities having a fair value of $902.2 million and $867.7 million, respectively, were on deposit. Additionally, standby letters of credit from the FHLB were in place in lieu of $260.0 million of securities on deposit as of June 30, 2019 (See Note 10). Certain reinsurance contracts require the Company's funds to be held in trust for the benefit of the ceding reinsurer to secure the outstanding liabilities assumed by the Company. The fair value of fixed maturity securities and restricted cash and cash equivalents held in trust for the benefit of ceding reinsurers at June 30, 2019 and December 31, 2018 was $3.2 million and $23.2 million, respectively.
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Property and Equipment Level 1 (Notes) |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment Disclosure [Text Block] | Property and Equipment Property and equipment consists of the following:
Depreciation expenses related to property and equipment for the three and six months ended June 30, 2019 were $2.6 million and $3.7 million, respectively, and $6.1 million for the year ended December 31, 2018. Internally developed software costs of $0.8 million and $1.6 million were capitalized during the three and six months ended June 30, 2019, respectively, and $2.9 million in internally developed software costs were capitalized during the year ended December 31, 2018. Cloud Computing Arrangements The Company's capitalized costs associated with cloud computing arrangements totaled $29.5 million and $26.0 million, which was comprised of service contract fees and implementation costs associated with hosting arrangements on the Company's Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018, respectively. Total amortization for hosting arrangements for the three and six months ended June 30, 2019 was $1.1 million and $2.1 million, respectively, and $0.8 million for the year ended December 31, 2018. Leases The Company determines if an arrangement is a lease at the inception of the transaction. Operating leases for offices are presented as a right-of-use asset (ROU asset) and lease liability on the Company's Consolidated Balance Sheets. Financing leases for automobiles are included in property and equipment and other liabilities on the Company's Consolidated Balance Sheets. The Company elected the practical expedients provided in ASU Number 2018-11, Leases (Topic 842): Targeted Improvements and ASU Number 2016-02, Leases (Topic 842), allowing the Company to apply provisions of the new guidance at the date of adoption without adjusting comparative periods presented. ROU assets represent the right to use an underlying asset for the lease term and the lease liability represents the obligation to make lease payments arising from the lease transaction. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. The Company uses collateralized incremental borrowing rates to determine the present value of lease payments. The ROU assets also include lease payments less any lease incentives within a lease agreement. The Company's lease terms may include options to extend or terminate a lease. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company's operating leases have remaining terms of 1 year to 8 years, which have options to extend up to 10 years with no termination provision. The Company's finance leases have an option to terminate after 1 year. Components of lease expense were as follows:
As of June 30, 2019, the weighted average remaining lease term for operating leases was 6.0 years and for finance leases was 3.1 years. The weighted average discount rate was 3.3% and 3.7% for operating and finance leases, respectively. Maturities of lease liabilities were as follows:
Supplemental balance sheet information related to leases was as follows:
Supplemental cash flow information related to leases was as follows:
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Income Taxes |
6 Months Ended |
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Jun. 30, 2019 | |
| Income Taxes [Abstract] | |
| Income Taxes | Income Taxes Income tax expense for interim periods is measured using an estimated effective tax rate for the annual period. The Company's effective tax rates were 18.1% and 17.0% for the three and six months ended June 30, 2019, respectively, compared to 17.2% and 15.6% for the same periods of 2018. Tax-advantaged investment income, Deferred Gain amortization, LPT Reserve Adjustments, LPT Contingent Commission Adjustments, and certain other adjustments reduced the Company's effective income tax rate below the U.S. statutory rate of 21%.
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Liability for Unpaid Losses and Loss Adjustment Expenses |
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| Liability for Unpaid Losses and Loss Adjustment Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liability for Unpaid Losses and Loss Adjustment Expenses | Liability for Unpaid Losses and Loss Adjustment Expenses The following table represents a reconciliation of changes in the liability for unpaid losses and LAE.
Total net losses and LAE included in the above table exclude amortization of the deferred reinsurance gain—LPT Agreement, LPT Reserve Adjustments, and LPT Contingent Commission Adjustments, which totaled $5.7 million and $6.9 million for the three months ended June 30, 2019 and 2018, respectively and $8.2 million and $9.5 million for the six months ended June 30, 2019 and 2018, respectively (See Note 9). The change in incurred losses and LAE attributable to prior periods included $24.0 million and $46.0 million of favorable development on the Company's voluntary risk business for the three and six months ended June 30, 2019, respectively, and $0.3 million and $0.1 million of unfavorable development on the Company's assigned risk business for the same periods. The change in incurred losses and LAE attributable to prior periods for the three and six months ended June 30, 2018 included $16.5 million and $28.5 million of favorable development on the Company's voluntary risk business, respectively, and $0.4 million of favorable development on the Company's assigned risk business for the six months ended June 30, 2018. The favorable prior accident year loss development on voluntary business during the three and six months ended June 30, 2019 and 2018 was the result of the Company's determination that adjustments were necessary to reflect observed favorable paid loss trends, which have been impacted by cost savings associated with accelerated claims settlement activity that began in 2014 and continued in 2019.
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LPT Agreement |
6 Months Ended |
|---|---|
Jun. 30, 2019 | |
| LPT Agreement [Abstract] | |
| LPT Agreement | LPT Agreement The Company is party to the LPT Agreement under which $1.5 billion in liabilities for losses and LAE related to claims incurred by the Fund prior to July 1, 1995 were reinsured for consideration of $775.0 million. The LPT Agreement provides coverage up to $2.0 billion. The Company records its estimate of contingent profit commission in the accompanying Consolidated Balance Sheets as Contingent commission receivable–LPT Agreement and a corresponding liability is recorded in the accompanying Consolidated Balance Sheets in Deferred reinsurance gain–LPT Agreement. The Deferred Gain 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 date through which the Company is entitled to receive a contingent profit commission under the LPT Agreement. The amortization is recorded in losses and LAE incurred in the accompanying consolidated statements of comprehensive income. Any adjustments to the Deferred Gain are recorded in losses and LAE incurred in the accompanying consolidated statements of comprehensive income. The Company amortized $3.7 million and $4.2 million of the Deferred Gain for the three months ended June 30, 2019 and 2018, respectively, and $6.2 million and $6.8 million for the six months ended June 30, 2019 and 2018, respectively. Additionally, the Deferred Gain was further reduced by $1.8 million and $2.2 million for the three and six months ended June 30, 2019 and 2018, respectively, due to a favorable LPT Reserve Adjustment and favorable LPT Contingent Commission Adjustments in the amount of $0.2 million and $0.5 million for the three and six months ended June 30, 2019 and 2018, respectively. The remaining Deferred Gain was $141.7 million and $149.6 million as of June 30, 2019 and December 31, 2018, respectively. The estimated remaining liabilities subject to the LPT Agreement were $391.3 million and $408.2 million as of June 30, 2019 and December 31, 2018, respectively. Losses and LAE paid with respect to the LPT Agreement totaled $785.3 million and $773.7 million from inception through June 30, 2019 and December 31, 2018, respectively.
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Notes Payable Level 1 (Notes) |
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| Notes Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Text Block] | Notes Payable and Other Financing Arrangements Notes payable is comprised of the following:
EPIC had a $10.0 million surplus note to Dekania CDO II, Ltd. (Dekania) issued as part of a pooled transaction. On April 12, 2019, the Florida Office of Insurance Regulation approved EPIC's request to pay off the Dekania surplus note. Subsequently, on April 15, 2019, EPIC formally called this note. The outstanding principal, plus accrued and unpaid interest, in the amount of $10.2 million, was paid on May 14, 2019. EPIC had a $10.0 million surplus note to Alesco Preferred Funding V, LTD (Alesco) issued as part of a pooled transaction. On April 12, 2019, the Florida Office of Insurance Regulation approved EPIC's request to pay off the Alesco surplus note. Subsequently, on May 6, 2019, EPIC formally called this note. The outstanding principal, plus accrued and unpaid interest, in the amount of $10.2 million, was paid on June 13, 2019. Other financing arrangements are comprised of the following: Each of the Company's insurance subsidiaries is a member of the FHLB. Membership allows the insurance subsidiaries access to collateralized advances, which may be used to support and enhance liquidity management. The amount of advances that may be taken is dependent on statutory admitted assets on a per company basis. Currently, none of the Company's insurance subsidiaries has advances outstanding under the FHLB facility. FHLB membership also allows the Company's insurance subsidiaries access to standby letters of credit. On March 9, 2018, ECIC, EPIC, and EAC entered into standby Letter of Credit Reimbursement Agreements (Letter of Credit Agreements) with the FHLB. On March 1, 2019, FHLB and ECIC, EPIC, and EAC each amended their Letter of Credit Agreements to increase their respective credit amounts. The Letter of Credit Agreements are between the FHLB and each of EAC, in the amount of $60.0 million, ECIC, in the amount of $90.0 million, and EPIC, in the amount of $110.0 million. The amended Letter of Credit Agreements will expire on March 31, 2020; however, the Letter of Credit Agreements will remain evergreen with automatic one-year extensions unless the FHLB notifies the beneficiary at least 60 days prior to the then applicable expiration date of its election not to renew. The Letter of Credit Agreements may only be used to satisfy, in whole or in part, insurance deposit requirements with the State of California and are fully secured with eligible collateral at all times. The Letter of Credit Agreements are subject to annual maintenance charges and a fee of 15 basis points on issued amounts. As of June 30, 2019, letters of credit totaling $260.0 million were issued in lieu of securities on deposit with the State of California under these Letter of Credit Agreements. As of June 30, 2019, investment securities having a fair value of $356.8 million were pledged to the FHLB by the Company's insurance subsidiaries in support of the collateralized advance facility and the Letter of Credit Agreements.
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Accumulated Other Comprehensive Income |
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| Accumulated Other Comprehensive Income [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income, Net | Accumulated Other Comprehensive Income Accumulated other comprehensive income is comprised of unrealized gains (losses) on investments classified as AFS, net of deferred tax expense. Beginning in 2018, with the adoption of ASU 2016-01, the Company's investments in equity securities at fair value are no longer considered to be AFS and are reported at fair value with unrealized gains and losses included in Net realized and unrealized gains (losses) on investments on the Company's Consolidated Statements of Comprehensive Income. Prior to 2018, investments in equity securities at fair value were classified as AFS and changes in fair value were excluded from earnings and reported in accumulated other comprehensive income. The following table summarizes the components of accumulated other comprehensive income (loss):
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Stock-Based Compensation |
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| Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based compensation | Stock-Based Compensation The Company awarded restricted stock units (RSUs) and performance share units (PSUs) to certain employees and non-employee Directors of the Company as follows:
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. If the underlying award does not vest or is forfeited, any dividend equivalents with respect to the underlying award will also fail to become payable and will be forfeited. Stock options exercised totaled 5,186 for the six months ended June 30, 2019, 13,800 for the six months ended June 30, 2018, and 57,091 for the year ended December 31, 2018. As of June 30, 2019, the Company had 180,460 options, 241,159 RSUs, and 249,144 PSUs (based on target number awarded) outstanding.
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Earnings Per Share |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share | Earnings Per Share Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding for the period. Diluted earnings per share reflects the potential dilutive impact of all common stock equivalents on earnings per share. Diluted earnings per share includes shares that are assumed to be issued under the “treasury stock method,” which reflects the potential dilution that would occur if outstanding RSUs and PSUs had vested and options were to be exercised. Commencing in 2017, certain stock-based compensation awards are eligible to receive dividend equivalents on awards that fully vest or become payable. The dividend equivalents are reflected in the Company's net income; therefore, these awards are not considered participating securities for the purposes of determining earnings per share. The following table presents the net income and the weighted average number of shares outstanding used in the earnings per common share calculations.
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Change in Estimates Change in Estimates (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Change in Estimates [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Change due to Estimated Reserves Ceded Under the LPT agreement [Table Text Block] | The following table shows the financial statement impact related to the LPT Reserve Adjustment.
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| Change to Contingent Profit Commission [Table Text Block] | The following table shows the financial statement impact related to the LPT Contingent Commission Adjustment.
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Valuation of Financial Instruments (Tables) |
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Estimated fair value of financial instruments table | The carrying value and the estimated fair value of the Company’s financial instruments at fair value were as follows:
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| Fair value, assets measured on recurring basis, unobservable input reconciliation table | The following table provides a reconciliation of the beginning and ending balances of investments that are recorded at fair value and are measured using Level 3 inputs for the six months ended June 30, 2019 and 2018.
Financial Instruments Carried at Net Asset Value (NAV) The Company has investments in private equity limited partnership interests that are included in Other invested assets on the Company's Consolidated Balance Sheets. These investments do not have readily determinable fair values, use NAV and are excluded from the fair value hierarchy. The Company initially estimates the value of these investments using the transaction price. In subsequent periods, the Company measures these investments using NAV per share provided quarterly by the general partner, based on financial statements that are audited annually. The Company performs certain control procedures to validate the appropriateness of using the NAV as a measurement. These investments are generally not redeemable by the investees and cannot be sold without approval of the general partner. These investments have a fund term of 12 years, subject to three one year extensions at the general partner's discretion. The Company will receive distributions of proceeds from dividends and interest from fund investments, as well as from the disposition of a fund investment, or portion thererof. The Company expects these distributions from time-to-time during the full course of the fund term. As of June 30, 2019, the Company had unfunded commitments to these private equity limited partnerships totaling $48.0 million. Additionally, certain cash equivalents, principally money market securities, are measured using NAV, which approximates fair value. The following table presents cash and investments carried at NAV on the Company's Consolidated Balance Sheets.
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| Fair value, assets and liabilities measured on recurring basis table | The following table presents the Company's investments at fair value and the corresponding fair value measurements.
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| Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Table Text Block] | The following table presents cash and investments carried at NAV on the Company's Consolidated Balance Sheets.
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Investments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale securities table | The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the Company’s AFS investments were as follows:
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| Equity securities table | The cost and estimated fair value of the Company’s equity securities recorded at fair value at June 30, 2019 and December 31, 2018 were as follows:
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| Other invested assets | The following table shows the cost and net asset value of the Company's Other invested assets at June 30, 2019. The Company had no Other invested assets at December 31, 2018.
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| Investments classified by contractual maturity date table | The amortized cost and estimated fair value of the Company's fixed maturity securities at June 30, 2019, by contractual maturity, are shown below. Expected maturities differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
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| Unrealized loss on investments table | The following is a summary of AFS investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 months or greater as of June 30, 2019 and December 31, 2018.
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| Unrealized gain (loss) on investments | Net realized gains (losses) on investments and the change in unrealized gains on the Company's investments recorded at fair value are determined on a specific-identification basis and were as follows:
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| Investment income table | Net investment income was as follows:
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Property and Equipment (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment [Table Text Block] | Property and equipment consists of the following:
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| Lease, Cost [Table Text Block] | Components of lease expense were as follows:
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| Lessee, Operating and Finance Lease Liability Maturity [Table Text Block] | Maturities of lease liabilities were as follows:
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| Supplemental Balance Sheet Information related to Leases [Table Text Block] | Supplemental balance sheet information related to leases was as follows:
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| Schedule of Cash Flow, Supplemental Disclosures [Table Text Block] | Supplemental cash flow information related to leases was as follows:
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Liability for Unpaid Losses and Loss Adjustment Expenses (Tables) |
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| Liability for Unpaid Losses and Loss Adjustment Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in the liability for unpaid losses and LAE table | The following table represents a reconciliation of changes in the liability for unpaid losses and LAE.
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Notes Payable (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of long-term debt instruments table | Notes payable is comprised of the following:
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Accumulated Other Comprehensive Income (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accumulated other comprehensive income (loss) table | The following table summarizes the components of accumulated other comprehensive income (loss):
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Stock-Based Compensation Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation arrangements by share-based payment award table | The Company awarded restricted stock units (RSUs) and performance share units (PSUs) to certain employees and non-employee Directors of the Company as follows:
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income and weighted average common shares outstanding used in earnings per share calculations table | The following table presents the net income and the weighted average number of shares outstanding used in the earnings per common share calculations.
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Basis of Presentation Pending Purchase of PRUS (Details) $ in Millions |
6 Months Ended |
|---|---|
|
Jun. 30, 2019
USD ($)
| |
| Business Acquisition [Line Items] | |
| Estimated statutory capital and surplus of pending acquisition | $ 47.0 |
| Net cash payment to acquire business | $ 5.8 |
Change in Estimates (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|||
| Change in Accounting Estimate [Line Items] | ||||||
| Net income | $ 40,700 | $ 42,500 | $ 92,600 | $ 68,100 | ||
| Change Due To Estimated Reserves Ceded Under LPT Agreement Member [Member] | ||||||
| Change in Accounting Estimate [Line Items] | ||||||
| LPT reserve adjustment | (5,300) | (5,300) | ||||
| Cumulative adjustment to the Deferred Gain | [1] | (1,800) | (2,200) | (1,800) | ||
| Net income | $ 1,800 | $ 1,800 | ||||
| Basic and Diluted | $ 0.06 | $ 0.06 | ||||
| Change to Contingent Profit Commission [Member] | ||||||
| Change in Accounting Estimate [Line Items] | ||||||
| Net income | $ 200 | $ 500 | $ 200 | |||
| Change in estimate of contingent commission receivable | $ 300 | $ 300 | ||||
| Basic and Diluted | $ 0.01 | $ 0.01 | ||||
| ||||||
New Accounting Standards Adopted ASU (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
|---|---|---|---|
| Operating lease right-of-use assets | $ 15.7 | $ 16.8 | $ 0.0 |
| Operating lease liability | $ 17.8 | $ 19.0 | $ 0.0 |
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
| Total investments at fair value | $ 2,756,800 | $ 2,721,300 |
| Total Investments at fair value, estimated fair value | 2,756,800 | 2,721,300 |
| Cash and cash equivalents | 105,500 | 101,400 |
| Cash and cash equivalents, estimated fair value | 105,500 | 101,400 |
| Equity securities at cost | 6,700 | 6,400 |
| Restricted cash and cash equivalents | 300 | 600 |
| Notes payable | 0 | 20,000 |
| Notes Payable, estimated fair value | 0 | 23,500 |
| Estimate of Fair Value, Fair Value Disclosure [Member] | ||
| Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
| Restricted cash and cash equivalents | $ 300 | $ 600 |
Valuation of Financial Instruments Fair Value of Financial Instruments, Reconciliation of Level 3 Securities (Details) - USD ($) $ in Millions |
6 Months Ended | |||
|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|||
| Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
| Beginning balance, January 1 | $ 2,727.7 | |||
| Ending balance, June 30 | 2,765.5 | |||
| Fair Value, Inputs, Level 3 [Member] | ||||
| Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
| Beginning balance, January 1 | 0.0 | $ 4.7 | ||
| Transfers out of Level 3 (1) | [1] | 0.0 | (4.7) | |
| Purchases and sales, net | 0.0 | 0.0 | ||
| Ending balance, June 30 | $ 0.0 | $ 0.0 | ||
| ||||
Valuation of Financial Instruments Investments at NAV (Details) - USD ($) $ in Millions |
6 Months Ended | |
|---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
| Investments at NAV [Abstract] | ||
| Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Liquidating Investment, Remaining Period | 12 years | |
| Fair value investments entities that calculate net asset value per share liquidating investment original expected lives increments | 1 year | |
| Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Unfunded Commitments | $ 48.0 | |
| Cash Equivalents Measured at Net Asset Value | 68.4 | $ 57.5 |
| Other invested assets at NAV | $ 2.0 | $ 0.0 |
Investments Equity Securities (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Schedule of Equity Securities and Other [Line Items] | ||
| Equity Securities, FV-NI, Cost | $ 143,100 | $ 131,900 |
| Equity Securities, FV-NI | 239,100 | 199,900 |
| Industrial and Miscellaneous [Member] | ||
| Schedule of Equity Securities and Other [Line Items] | ||
| Equity Securities, FV-NI, Cost | 126,300 | 114,600 |
| Equity Securities, FV-NI | 211,100 | 174,800 |
| Other [Member] | ||
| Schedule of Equity Securities and Other [Line Items] | ||
| Equity Securities, FV-NI, Cost | 16,800 | 17,300 |
| Equity Securities, FV-NI | $ 28,000 | $ 25,100 |
Investments, Amortized Cost and Estimated Fair Value (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Amortized Cost | ||
| Due in one year or less, amortized cost | $ 145,900 | |
| Due after one year through five years, amortized cost | 835,500 | |
| Due after five years through ten years, amortized cost | 789,100 | |
| Due after ten years, amortized cost | 55,200 | |
| Mortgage and asset-backed securities, amortized cost | 624,500 | |
| Total, amortized cost | 2,450,200 | $ 2,513,700 |
| Estimated Fair Value | ||
| Due in one year or less, fair value | 146,800 | |
| Due after one year through five years, fair value | 855,600 | |
| Due after five years through ten years, fair value | 823,200 | |
| Due after ten years, fair value | 60,000 | |
| Mortgage and asset-backed securities, fair value | 632,100 | |
| Total, fair value | $ 2,517,700 | $ 2,496,400 |
Net Investment Income (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
| Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
| Gross investment income | $ 22.6 | $ 21.2 | $ 45.4 | $ 41.5 |
| Investment expenses | 1.2 | 0.9 | 2.2 | 1.8 |
| Net investment income | 21.4 | 20.3 | 43.2 | 39.7 |
| Debt Securities [Member] | ||||
| Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
| Investment income related to fixed maturity securities and short-term investments and cash equivalents | 20.2 | 19.2 | 40.6 | 37.7 |
| Equity Securities [Member] | ||||
| Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
| Investment income related to equity securities | 1.9 | 1.7 | 3.8 | 3.3 |
| Short-term Investments [Member] | ||||
| Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
| Investment income related to fixed maturity securities and short-term investments and cash equivalents | $ 0.5 | $ 0.3 | $ 1.0 | $ 0.5 |
Investments Investments, Held in Trust or on Deposit (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Deposit Assets [Abstract] | ||
| Investments | $ 2,765.5 | $ 2,727.7 |
| Assets Held-in-trust [Abstract] | ||
| Funds Held under Reinsurance Agreements, Asset | 3.2 | 23.2 |
| Federal Home Loan Bank [Member] | ||
| Deposit Assets [Abstract] | ||
| Investments | 260.0 | |
| Required by various state laws and regulations to hold securities or letters of credit in depository account [Member] | ||
| Deposit Assets [Abstract] | ||
| Investments | $ 902.2 | $ 867.7 |
Investments Other Invested Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Other Invest Assets [Abstract] | ||
| Total other invested assets | $ 2.0 | $ 0.0 |
Property and Equipment Leases (Details) |
6 Months Ended |
|---|---|
Jun. 30, 2019 | |
| Minimum [Member] | |
| Lessee, Lease, Description [Line Items] | |
| Lessee, operating lease, remaining lease term | 1 year |
| Lessee, operating lease, renewal term | 1 year |
| Maximum [Member] | |
| Lessee, Lease, Description [Line Items] | |
| Lessee, operating lease, remaining lease term | 8 years |
| Lessee, operating lease, renewal term | 10 years |
Property and Equipment Leases, Components of Lease Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended |
|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
| Components of Lease Expense [Abstract] | ||
| Operating lease expense | $ 1.2 | $ 2.5 |
| Finance lease expense | 0.1 | 0.1 |
| Total lease expense | $ 1.3 | $ 2.6 |
Property and Equipment Leases, Supplement Balance Sheet Information (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
|---|---|---|---|
| Lessee, Lease, Description [Line Items] | |||
| Operating lease right-of-use assets | $ 15.7 | $ 16.8 | $ 0.0 |
| Operating lease liability | 17.8 | $ 19.0 | 0.0 |
| Property and equipment, gross | 76.7 | 69.5 | |
| Accumulated depreciation, depletion and amortization, property and equipment | (53.9) | (51.3) | |
| Property and equipment, net | 22.8 | 18.2 | |
| Other liabilities | 42.8 | $ 74.0 | |
| Finance leases [Member] | |||
| Lessee, Lease, Description [Line Items] | |||
| Property and equipment, gross | 1.1 | ||
| Accumulated depreciation, depletion and amortization, property and equipment | (0.5) | ||
| Property and equipment, net | 0.6 | ||
| Other liabilities | $ 0.6 |
Property and Equipment Leases, Supplemental Cash Flow Information (Details) $ in Millions |
6 Months Ended |
|---|---|
|
Jun. 30, 2019
USD ($)
| |
| Leases, Supplement Balance Sheet Information [Abstract] | |
| Operating cash flows from operating leases | $ 2.5 |
| Financing cash flows from finance leases | $ 0.1 |
Income Taxes (Details) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
| Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract] | ||||
| Statutory tax rate | 21.00% | |||
| Effective tax rate | 18.10% | 17.20% | 17.00% | 15.60% |
LPT Agreement (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|||
| Reinsurance Agreement [Line Items] | |||||||
| Liabilities for the incurred but unpaid losses and LAE related to claims prior to July 1, 1995 | $ 1,500,000 | $ 1,500,000 | |||||
| Ceded premiums written | 775,000 | ||||||
| Amortization of deferred gain | 3,700 | $ 4,200 | 6,200 | $ 6,800 | |||
| Net income | 40,700 | 42,500 | 92,600 | $ 68,100 | |||
| Deferred reinsurance gain—LPT Agreement | 141,700 | 141,700 | $ 149,600 | ||||
| Estimated remaining liabilities - LPT Agreement | 391,300 | 391,300 | 408,200 | ||||
| Paid losses and LAE claims related to LPT | 785,300 | 785,300 | $ 773,700 | ||||
| Indemnification Agreement [Member] | |||||||
| Reinsurance Agreement [Line Items] | |||||||
| Coverage provided under LPT Agreement | 2,000,000 | 2,000,000 | |||||
| Change to Contingent Profit Commission [Member] | |||||||
| Reinsurance Agreement [Line Items] | |||||||
| Net income | 200 | 500 | 200 | ||||
| Change in estimate of contingent commission receivable | (300) | (300) | |||||
| Change Due To Estimated Reserves Ceded Under LPT Agreement Member [Member] | |||||||
| Reinsurance Agreement [Line Items] | |||||||
| Cumulative adjustment to the Deferred Gain | [1] | 1,800 | $ 2,200 | 1,800 | |||
| Net income | $ 1,800 | $ 1,800 | |||||
| |||||||
Notes Payable Outstanding (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |
|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
Dec. 31, 2018 |
|
| Debt Instrument [Line Items] | |||
| Notes payable | $ 0 | $ 0 | $ 20,000 |
| Dekania Surplus Note [Member] | |||
| Debt Instrument [Line Items] | |||
| Notes payable | 0 | $ 0 | 10,000 |
| Repayments of Notes Payable | 10,200 | ||
| Interest rate, basis points in excess of the 90-day LIBOR | 425 basis points in excess of the 90-day LIBOR | ||
| Alesco Surplus Note [Member] | |||
| Debt Instrument [Line Items] | |||
| Notes payable | 0 | $ 0 | $ 10,000 |
| Repayments of Notes Payable | $ 10,200 | ||
| Interest rate, basis points in excess of the 90-day LIBOR | 405 basis points in excess of the 90-day LIBOR |
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Accumulated Other Comprehensive Income [Abstract] | ||
| Net unrealized gains (losses) on investments, before taxes | $ 67,500 | $ (17,300) |
| Deferred tax (expense) benefit on net unrealized gains (losses) | (14,200) | 3,600 |
| Total accumulated other comprehensive income (loss) | $ 53,300 | $ (13,700) |
Earnings Per Share (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
| Earnings Per Share, Basic and Diluted, by Common Class [Line Items] | ||||
| Net income available to stockholders - basic and diluted | $ 40,700 | $ 42,500 | $ 92,600 | $ 68,100 |
| Weighted average number of shares outstanding - basic | 32,077,698 | 32,880,023 | 32,197,523 | 32,843,448 |
| Effect of dilutive securities: | ||||
| Dilutive securities | 372,930 | 342,683 | 442,362 | 416,311 |
| Weighted average number of shares outstanding - diluted | 32,450,628 | 33,222,706 | 32,639,885 | 33,259,759 |
| Performance Shares [Member] | ||||
| Effect of dilutive securities: | ||||
| Dilutive securities | 233,635 | 202,149 | 290,130 | 253,098 |
| Share-based Payment Arrangement, Option [Member] | ||||
| Effect of dilutive securities: | ||||
| Dilutive securities | 78,836 | 100,357 | 79,487 | 100,635 |
| Restricted Stock Units (RSUs) [Member] | ||||
| Effect of dilutive securities: | ||||
| Dilutive securities | 60,459 | 40,177 | 72,745 | 62,578 |
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