Employers Holdings, Inc. Reports Second Quarter 2022 Financial Results; Declares Quarterly Cash Dividend of $0.26 per Share

Employers Holdings, Inc. (the “Company”) (NYSE:EIG), a holding company with subsidiaries that are specialty providers of workers' compensation insurance and services focused on select, small businesses engaged primarily in low-to-medium hazard industries, today reported financial results for its second quarter ended June 30, 2022.

Financial Highlights

Gross premiums written of $179.4 million, up 22% year-over-year;
Net premiums earned of $165.2 million, up 21% year-over-year;
Record number of ending policies in-force of 117,256, up 9% year-over-year;
Net investment income of $20.0 million, up 10% year-over-year;
Net loss of $15.6 million, a loss of $0.56 per common share;
Adjusted net income of $21.9 million, $0.79 per diluted share;
The Company repurchased 365,359 shares of its common stock at an average price of $39.81 per share.

Management Commentary

Chief Executive Officer Katherine Antonello commented: “Consistent with the momentum we have experienced in recent prior quarters, our written and earned premiums rose sharply year-over-year and we achieved yet another record number of policies in-force. This growth resulted from strong new and renewal business writings within our Employers segment, strong new business writings within our Cerity segment and further audit premium recognition.

We maintained our current accident year loss and LAE ratio on voluntary business at 64.0%, largely consistent with the 63.5% we recorded throughout 2021. We also performed our routine mid-year full reserve study and recognized $9.6 million of net favorable prior year loss reserve development from our voluntary business. Our combined ratio for Employers, our largest segment, was 92.4% versus 98.8% a year ago, driven primarily by the favorable loss reserve development recognized as well as a significantly lower underwriting expense ratio of 20.2% versus 23.0% a year ago.”

Ms. Antonello continued, "We remain committed to maintaining the highest level of underwriting discipline as we thoughtfully expand our underwriting appetite at both Employers and Cerity. The additional classes of business are contributing nicely to our top-line growth.

Our Cerity operations, which offers digital workers' compensation insurance solutions directly to consumers, experienced solid premium growth again this quarter, due to both its appetite expansion and its recent collaboration with Intuit’s QuickBooks. Cerity continues to develop additional strategic opportunities which will support our growth initiatives by attracting an untapped segment of our target market.

The sharp increases in market interest rates that have occurred throughout the first six months of 2022 have benefited our net investment income while generating unrealized investment losses from our fixed maturity portfolio. These unrealized losses, coupled with unrealized losses from our equity portfolio, have led to a decline in our book value and book value per share metrics.

Our balance sheet and underwriting capital remain very strong and are highly supportive of our continued growth and success.”

Summary ofSecond Quarter 2022 Results

(All comparisons vs. the second quarter of 2021, unless noted otherwise).

Gross premiums written were $179.4 million, an increase of 22%. The increase was primarily due to higher new and renewal premiums and higher final audit premiums. Net premiums earned were $165.2 million, an increase of 21%.

Losses and loss adjustment expenses were $93.3 million, an increase of 11%. The increase was primarily due to higher earned premiums, partially offset by an increase in net favorable prior accident year loss reserve development. The Company recognized $10.0 million of favorable development during the quarter versus $1.6 million of favorable development a year ago.

Commission expenses were $23.7 million, an increase of 32%. The increase was due primarily to higher earned premiums and higher agency incentives.

Underwriting and general and administrative expenses were $39.4 million, an increase of 6%. The increase resulted primarily from higher premium taxes, assessments and bad debt expenses, each of which vary with earned premium.

Net investment income was $20.0 million, an increase of 10%. The increase was primarily due to higher bond yields.

Income tax (benefit) expense was $(5.8) million (27% effective rate) versus $6.0 million (19% effective rate). The effective rates during each of the periods presented included income tax benefits and exclusions associated with tax-advantaged investment income, LPT adjustments, and deferred gain amortization.

The Company’s book value per share of $35.70 and book value per share including the Deferred Gain of $39.72 decreased by 8% and 7% during the second quarter of 2022, respectively, computed after taking into account dividends declared. These measures were adversely impacted by $73.5 million of after-tax unrealized losses arising from fixed maturity securities (which are reflected on the balance sheet) and $33.2 million of net after tax unrealized losses arising from equity securities and other investments (which are reflected on the income statement).

Summary of Results by Segment

(see page 14 of the Financial Supplement for a description of our reportable segments. All comparisons vs. the second quarter of 2021, unless noted otherwise).

Employers Segment

The Employers segment reported a net loss before income taxes of $11.6 million versus net income of $35.0 million.

Highlights include the following:

– Underwriting income of $12.5 million versus $1.7 million;

– Combined ratio of 92.4% versus 98.8%;

– Current accident year loss and LAE ratio of 63.9% versus 63.7%;

– Calendar year loss and LAE ratio of 57.8% versus 62.6%;

– Commission expense ratio of 14.4% versus 13.2%;

– Underwriting expense ratio of 20.2% versus 23.0%;

– Net investment income of $18.7 million versus $17.4 million; and

– Net realized and unrealized (losses) gains on investments recorded through the income statement of $(42.8) million versus $15.8 million.

Cerity Segment

The Cerity segment reported a net loss before income taxes of $3.1 million versus a net loss of $1.6 million.

Highlights include the following:

– Underwriting loss of $3.0 million versus a loss of $2.5 million;

– Written premium of $0.9 million versus $0.3 million;

– Net investment income of $0.8 million versus $0.7 million;

– Net realized and unrealized (losses) gains on investments recorded through the income statement of $(0.9) million versus $0.2 million; and

– Underwriting expenses of $3.3 million versus $2.6 million.

Corporate and Other

Corporate and Other activities reported a net loss before income taxes of $6.7 million versus a net loss of $1.0 million.

Highlights include the following:

– LPT amortization, which served to reduce losses and LAE, of $2.1 million versus $2.0 million;

– Net investment income of $0.5 million versus $0.1 million;

– Net realized and unrealized losses on investments recorded through the income statement of $6.4 million versus zero; and

– General and administrative expenses of $2.8 million versus $2.9 million.

Share Repurchases and First Quarter 2022 Dividend Declarations

During the second quarter of 2022, the Company repurchased 365,359 shares of its common stock at an average price of $39.81 per share. During the period from July 1, 2022 through July 28, 2022, the Company repurchased a further 96,223 shares of its common stock at an average price of $40.89 per share. The Company currently has a remaining share repurchase authorization of $52.6 million.

On July 27, 2022, the Board of Directors declared a third quarter 2022 dividend of $0.26 per share. The dividend is payable on August 24, 2022 to stockholders of record as of August 10, 2022.

Earnings Conference Call and Webcast

The Company will host a conference call on Friday, July 29, 2022, at 11:00 a.m. Eastern Daylight Time / 8:00 a.m. Pacific Daylight Time.

To participate in the live conference call you must first register here. Once registered you will receive dial-in numbers and a unique PIN number.

The webcast will be accessible on the Company’s web site at www.employers.com through the “Investors” link. An archived version of the webcast will be accessible on the Company’s website following the live call.

Reconciliation of Non-GAAP Financial Measures to GAAP

The information in this press release should be read in conjunction with the Financial Supplement that is attached to this press release and is available on our website.

Within this earnings release we present various financial measures, some of which are “Non-GAAP financial measures” as defined in Regulation G pursuant to Section 401 of the Sarbanes - Oxley Act of 2002. A description of these Non-GAAP financial measures, as well as a reconciliation of such Non-GAAP measures to our most directly comparable GAAP financial measures is included in the attached Financial Supplement. Management believes that these Non-GAAP measures are important to the Company's investors, analysts and other interested parties who benefit from having an objective and consistent basis for comparison with other companies within our industry. Management further believes that these measures are more relevant than comparable GAAP measures in evaluating our financial performance.

Forward-Looking Statements

In this press release, the Company and its management discuss and make statements based on currently available information regarding their intentions, beliefs, current expectations, and projections of, among other things: the Company's future performance, economic or market conditions, including the evolving nature of the COVID-19 pandemic, current levels of inflation, labor market expectations, catastrophic events or geo-political conditions, legislative or regulatory actions or court decisions taken in response to the COVID-19 pandemic or otherwise, business growth, retention rates, loss costs, claim trends and the impact of key business initiatives, future technologies and planned investments. Certain of these statements may constitute “forward-looking” statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and are often identified by words such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “target,” “project,” “intend,” “believe,” “estimate,” “predict,” “potential,” “pro forma,” “seek,” “likely,” or “continue,” or other comparable terminology and their negatives. The Company and its management caution investors that such forward-looking statements are not guarantees of future performance. Risks and uncertainties are inherent in the Company’s future performance. Factors that could cause the Company's actual results to differ materially from those indicated by such forward-looking statements include, among other things, those discussed or identified from time to time in the Company’s public filings with the U.S. Securities and Exchange Commission (the "SEC"), including the risks detailed in the Company's Quarterly Reports on Form 10-Q and the Company's Annual Reports on Form 10-K. Except as required by applicable securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Filings with the SEC

The Company’s filings with the SEC and its quarterly investor presentations can be accessed through the “Investors” link on the Company's website, www.employers.com. The Company's filings with the SEC can also be accessed through the SEC's EDGAR Database at www.sec.gov (EDGAR CIK No. 0001379041).

About Employers Holdings, Inc.

EMPLOYERS® and America’s small business insurance specialist® are registered trademarks of EIG Services, Inc. Employers Holdings, Inc. is a holding company with subsidiaries that are specialty providers of workers' compensation insurance and services focused on select, small businesses engaged primarily in low-to-medium hazard industries. The Company operates throughout the United States, with the exception of four states that are served exclusively by their state funds. Insurance is offered through Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company, Employers Assurance Company and Cerity Insurance Company, all rated A- (Excellent) by the A.M. Best Company. Not all companies do business in all jurisdictions. See www.employers.com and www.cerity.com for coverage availability.

Employers Holdings, Inc.

Second Quarter 2022

Financial Supplement

EMPLOYERS HOLDINGS, INC. Table of Contents

Page

1		Consolidated Financial Highlights

2		Summary Consolidated Balance Sheets

3		Summary Consolidated Income Statements

4		Net Income Before Income Taxes by Segment

8		Return on Equity

9		Roll-forward of Unpaid Losses and LAE

10		Consolidated Investment Portfolio

11		Book Value Per Share

12		Earnings Per Share

13		Non-GAAP Financial Measures

14		Description of Reportable Segments

EMPLOYERS HOLDINGS, INC. Consolidated Financial Highlights (unaudited) $ in millions, except per share amounts

	Three Months Ended								Six Months Ended
	June 30,								June 30,
		2022			2021		% change			2022			2021		% change
*Selected financial highlights:*
Gross premiums written	$	179.4		$	147.1		22	%	$	351.8		$	295.4		19	%
Net premiums written		178.1			146.0		22			348.5			292.9		19
Net premiums earned		165.2			137.0		21			315.4			270.9		16
Net investment income		20.0			18.2		10			39.1			36.6		7
Net (loss) income before impact of the LPT⁽¹⁾		(17.7	)		24.4		(173	)		(22.0	)		45.4		(148	)
Adjusted net income⁽¹⁾		21.9			11.8		86			31.2			26.5		18
Net (loss) income before income taxes		(21.4	)		32.4		(166	)		(23.8	)		60.0		(140	)
Net (loss) income		(15.6	)		26.4		(159	)		(17.8	)		49.5		(136	)
Comprehensive (loss) income		(82.7	)		35.2		(335	)		(173.1	)		22.2		(880	)
Total assets										3,685.5			3,836.7		(4	)
Stockholders' equity										977.5			1,203.6		(19	)
Stockholders' equity including the Deferred Gain⁽²⁾										1,087.7			1,324.9		(18	)
Adjusted stockholders' equity⁽²⁾										1,182.4			1,237.1		(4	)
Annualized adjusted return on stockholders' equity⁽³⁾		7.2	%		3.8	%	89	%		5.1	%		4.3	%	19	%
*Amounts per share:*
Cash dividends declared per share	$	1.26		$	0.25		404	%	$	1.51		$	0.50		202	%
Earnings (loss) per share⁽⁴⁾		(0.56	)		0.92		(161	)		(0.65	)		1.71		(138	) %
Earnings (loss) per share before impact of the LPT⁽⁴⁾		(0.64	)		0.85		(175	)		(0.80	)		1.57		(151	) %
Adjusted earnings per diluted share⁽⁴⁾		0.79			0.41		93			1.12			0.92		22
Book value per share⁽²⁾										35.70			42.54		(16	)
Book value per share including the Deferred Gain⁽²⁾										39.72			46.83		(15	)
Adjusted book value per share⁽²⁾										43.18			43.73		(1	)
*Financial information by Segment⁽⁵⁾:*
Net income (loss) before income taxes
Employers	$	(11.6	)	$	35.0		(133	) %	$	(9.6	)	$	69.1		(114	) %
Cerity		(3.1	)		(1.6	)	(94	)		(5.7	)		(4.6	)	(24	)
Corporate and Other		(6.7	)		(1.0	)	570			(8.5	)		(4.5	)	(89	)

(1) See Page 3 for calculations and Page 13 for information regarding our use of Non-GAAP Financial Measures.
(2)See Page 11 for calculations and Page 13 for information regarding our use of Non-GAAP Financial Measures.
(3) See Page 8 for calculations and Page 13 for information regarding our use of Non-GAAP Financial Measures.
(4) See Page 12 for description and calculations and Page 13 for information regarding our use of Non-GAAP Financial Measures.
(5) See Pages 4-7 for details and Page 14 for a description of our reportable segments.

EMPLOYERS HOLDINGS, INC. Summary Consolidated Balance Sheets (unaudited) $ in millions, except per share amounts

	June 30, 2022			December 31, 2021
ASSETS
Investments, cash and cash equivalents	$	2,642.7		$	2,811.3
Accrued investment income		15.9			14.5
Premiums receivable, net		282.4			244.7
Reinsurance recoverable, net of allowance, on paid and unpaid losses and LAE		469.1			483.8
Deferred policy acquisition costs		48.4			43.7
Deferred income tax asset, net		50.0			—
Contingent commission receivable—LPT Agreement		13.9			13.9
Other assets		163.1			171.3
Total assets	$	3,685.5		$	3,783.2

LIABILITIES
Unpaid losses and LAE	$	1,972.8		$	1,981.2
Unearned premiums		338.8			304.7
Commissions and premium taxes payable		46.5			42.1
Deferred Gain		110.2			114.4
FHLB Advances⁽¹⁾		126.0			—
Deferred income tax liability, net		—			7.7
Other liabilities		113.7			120.0
Total liabilities	$	2,708.0		$	2,570.1

STOCKHOLDERS' EQUITY
Common stock and additional paid-in capital	$	412.4		$	411.3
Retained earnings		1,278.4			1,338.5
Accumulated other comprehensive income, net		(94.7	)		60.6
Treasury stock, at cost		(618.6	)		(597.3	)
Total stockholders’ equity		977.5			1,213.1
Total liabilities and stockholders’ equity	$	3,685.5		$	3,783.2

Stockholders' equity including the Deferred Gain ⁽²⁾	$	1,087.7		$	1,327.5
Adjusted stockholders' equity ⁽²⁾		1,182.4			1,266.9
Book value per share ⁽²⁾	$	35.70		$	43.73
Book value per share including the Deferred Gain⁽²⁾		39.72			47.85
Adjusted book value per share ⁽²⁾		43.18			45.67

(1) FHLB=Federal Home Loan Bank
(2) See Page 11 for calculations and Page 13 for information regarding our use of Non-GAAP Financial Measures.

EMPLOYERS HOLDINGS, INC. Summary Consolidated Income Statements (unaudited) $ in millions

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2022			2021			2022			2021
Revenues:
Net premiums earned	$	165.2		$	137.0		$	315.4		$	270.9
Net investment income		20.0			18.2			39.1			36.6
Net realized and unrealized (losses) gains on investments⁽¹⁾		(50.1	)		16.0			(67.4	)		26.9
Other income		0.2			0.2			0.2			0.6
Total revenues		135.3			171.4			287.3			335.0
Expenses:
Losses and LAE incurred		(93.3	)		(83.7	)		(187.5	)		(153.3	)
Commission expense		(23.7	)		(18.0	)		(44.6	)		(34.8	)
Underwriting and general and administrative expenses		(39.4	)		(37.0	)		(78.6	)		(83.6	)
Interest and financing expenses		(0.3	)		(0.2	)		(0.4	)		(0.3	)
Other expenses		—			(0.1	)		—			(3.0	)
Total expenses		(156.7	)		(139.0	)		(311.1	)		(275.0	)
Net (loss) income before income taxes		(21.4	)		32.4			(23.8	)		60.0
Income tax benefit (expense)		5.8			(6.0	)		6.0			(10.5	)
Net (loss) income		(15.6	)		26.4			(17.8	)		49.5
Unrealized AFS investment losses arising during the period, net of tax⁽²⁾		(73.5	)		10.4			(161.9	)		(25.1	)
Reclassification adjustment for net realized AFS investment losses (gains) in net income, net of tax⁽²⁾		6.4			(1.6	)		6.6			(2.2	)
Total comprehensive (loss) income	$	(82.7	)	$	35.2		$	(173.1	)	$	22.2
Net (loss) income	$	(15.6	)	$	26.4		$	(17.8	)	$	49.5
Amortization of the Deferred Gain - losses		(1.7	)		(1.6	)		(3.4	)		(3.3	)
Amortization of the Deferred Gain - contingent commission		(0.4	)		(0.4	)		(0.8	)		(0.8	)
Net (loss) income before impact of the LPT Agreement ⁽³⁾		(17.7	)		24.4			(22.0	)		45.4
Net realized and unrealized losses (gains) on investments		50.1			(16.0	)		67.4			(26.9	)
Severance costs		—			0.1			—			3.0
Income tax (benefit) expense related to items excluded from Net income or loss		(10.5	)		3.3			(14.2	)		5.0
Adjusted net income	$	21.9		$	11.8		$	31.2		$	26.5

(1) Includes net realized and unrealized (losses) gains on equity securities and other investments of $(42.0) million and $14.0 million for the three months ended June 30, 2022 and 2021, respectively, and $(59.0) million and $24.1 million for the six months ended June 30, 2022 and 2021, respectively.

(2) AFS = Available for Sale securities.

(3) See Page 13 regarding our use of Non-GAAP Financial Measures.

EMPLOYERS HOLDINGS, INC. Net Income Before Income Taxes by Segment ⁽¹⁾ (unaudited) $ in millions

		Employers			Cerity			Corporate and Other			Consolidated
Three Months Ended June 30, 2022
Gross premiums written		$	178.5		$	0.9		$	—		$	179.4
Net premiums written			177.2			0.9			—			178.1

Net premiums earned	A		164.6			0.6			—			165.2
Net investment income			18.7			0.8			0.5			20.0
Net realized and unrealized losses on investments			(42.8	)		(0.9	)		(6.4	)		(50.1	)
Other income			0.2			—			—			0.2
Total revenues			140.7			0.5			(5.9	)		135.3

Losses and LAE incurred ⁽²⁾	B		(95.1	)		(0.3	)		2.1			(93.3	)
Commission expense	C		(23.7	)		—			—			(23.7	)
Underwriting and general and administrative expenses	D		(33.3	)		(3.3	)		(2.8	)		(39.4	)
Interest and financing expenses			(0.2	)		—			(0.1	)		(0.3	)
Total expenses			(152.3	)		(3.6	)		(0.8	)		(156.7	)
Net loss before income taxes		$	(11.6	)	$	(3.1	)	$	(6.7	)	$	(21.4	)

Underwriting income (loss)	A+B+C+D		12.5			(3.0	)

Loss and LAE expense ratio:
Current year			63.9	%		n/m
Prior years			(6.1	)		—
Loss and LAE ratio			57.8			n/m
Commission expense ratio			14.4			n/m
Underwriting expense ratio			20.2			n/m
Combined ratio			92.4	%		n/m

n/m - not meaningful
(1) See Page 14 for a description of our reportable segments
(2) Losses and LAE in Corporate and Other represent the impact of the LPT Agreement

EMPLOYERS HOLDINGS, INC. Net Income Before Income Taxes by Segment ⁽¹⁾ (unaudited) $ in millions

		Employers			Cerity			Corporate and Other			Consolidated
Three Months Ended June 30, 2021
Gross premiums written		$	146.8		$	0.3		$	—		$	147.1
Net premiums written			145.7			0.3			—			146.0

Net premiums earned	A		136.8			0.2			—			137.0
Net investment income			17.4			0.7			0.1			18.2
Net realized and unrealized gains on investments			15.8			0.2			—			16.0
Other income			0.2			—			—			0.2
Total revenues			170.2			1.1			0.1			171.4

Losses and LAE incurred ⁽²⁾	B		(85.6	)		(0.1	)		2.0			(83.7	)
Commission expense	C		(18.0	)		—			—			(18.0	)
Underwriting and general and administrative expenses	D		(31.5	)		(2.6	)		(2.9	)		(37.0	)
Interest and financing expenses			—			—			(0.2	)		(0.2	)
Other expenses			(0.1	)		—			—			(0.1	)
Total expenses			(135.2	)		(2.7	)		(1.1	)		(139.0	)
Net income (loss) before income taxes		$	35.0		$	(1.6	)	$	(1.0	)	$	32.4

Underwriting income (loss)	A+B+C+D	$	1.7		$	(2.5	)

Loss and LAE expense ratio:
Current year			63.7	%		n/m
Prior years			(1.1	)		—
Loss and LAE ratio			62.6			n/m
Commission expense ratio			13.2			n/m
Underwriting expense ratio			23.0			n/m
Combined ratio			98.8	%		n/m

n/m - not meaningful
(1) See Page 14 for a description of our reportable segments
(2) Losses and LAE in Corporate and Other represent the impact of the LPT Agreement

EMPLOYERS HOLDINGS, INC. Net Income Before Income Taxes by Segment ⁽¹⁾ (unaudited) $ in millions

		Employers			Cerity			Corporate and Other			Consolidated
Six Months Ended June 30, 2022
Gross premiums written		$	349.7		$	2.1		$	—		$	351.8
Net premiums written			346.4			2.1			—			348.5

Net premiums earned	A		314.2			1.2			—			315.4
Net investment income			36.3			1.6			1.2			39.1
Net realized and unrealized gains (losses) on investments			(58.4	)		(1.3	)		(7.7	)		(67.4	)
Other income			0.2			—			—			0.2
Total revenues			292.3			1.5			(6.5	)		287.3

Losses and LAE incurred ⁽²⁾	B		(191.0	)		(0.7	)		4.2			(187.5	)
Commission expense	C		(44.6	)		—			—			(44.6	)
Underwriting and general and administrative expenses	D		(66.1	)		(6.5	)		(6.0	)		(78.6	)
Interest and financing expenses			(0.2	)		—			(0.2	)		(0.4	)
Total expenses			(301.9	)		(7.2	)		(2.0	)		(311.1	)
Net loss before income taxes		$	(9.6	)	$	(5.7	)	$	(8.5	)	$	(23.8	)

Underwriting income (loss)	A+B+C+D		12.5			(6.0	)

Loss and LAE expense ratio:
Current year			64.0	%		n/m
Prior years			(3.2	)		—
Loss and LAE ratio			60.8			n/m
Commission expense ratio			14.2			n/m
Underwriting expense ratio			21.0			n/m
Combined ratio			96.0	%		n/m

n/m - not meaningful
(1) See Page 14 for a description of our reportable segments
(2) Losses and LAE in Corporate and Other represent the impact of the LPT Agreement

EMPLOYERS HOLDINGS, INC. Net Income Before Income Taxes by Segment ⁽¹⁾ (unaudited) $ in millions

		Employers			Cerity			Corporate and Other			Consolidated
Six Months Ended June 30, 2021
Gross premiums written		$	294.8		$	0.6		$	—		$	295.4
Net premiums written			292.3			0.6			—			292.9

Net premiums earned	A		270.7			0.2			—			270.9
Net investment income			35.1			1.4			0.1			36.6
Net realized and unrealized gains (losses) on investments			26.6			0.3			—			26.9
Other income			0.6			—			—			0.6
Total revenues			333.0			1.9			0.1			335.0

Losses and LAE incurred ⁽²⁾	B		(157.3	)		(0.1	)		4.1			(153.3	)
Commission expense	C		(34.8	)		—			—			(34.8	)
Underwriting and general and administrative expenses	D		(68.8	)		(6.4	)		(8.4	)		(83.6	)
Interest and financing expenses			—			—			(0.3	)		(0.3	)
Other expenses			(3.0	)		—			—			(3.0	)
Total expenses			(263.9	)		(6.5	)		(4.6	)		(275.0	)
Net income (loss) before income taxes		$	69.1		$	(4.6	)	$	(4.5	)	$	60.0

Underwriting income (loss)	A+B+C+D	$	9.8		$	(6.3	)

Loss and LAE expense ratio:
Current year			63.8	%		n/m
Prior years			(5.7	)		—
Loss and LAE ratio			58.1			n/m
Commission expense ratio			12.9			n/m
Underwriting expense ratio			25.4			n/m
Combined ratio			96.4	%		n/m

n/m - not meaningful
(1) See Page 14 for a description of our reportable segments
(2) Losses and LAE in Corporate and Other represent the impact of the LPT Agreement

EMPLOYERS HOLDINGS, INC. Return on Equity (unaudited) $ in millions

		Three Months Ended						Six Months Ended
		June 30,						June 30,
			2022			2021			2022			2021

Net (loss) income	A	$	(15.6	)	$	26.4		$	(17.8	)	$	49.5
Impact of the LPT Agreement			(2.1	)		(2.0	)		(4.2	)		(4.1	)
Net realized and unrealized losses (gains) on investments			50.1			(16.0	)		67.4			(26.9	)
Severance costs			—			0.1			—			3.0
Income tax (benefit) expense related to items excluded from Net income			(10.5	)		3.3			(14.2	)		5.0
Adjusted net income ⁽¹⁾	B		21.9			11.8			31.2			26.5

Stockholders' equity - end of period		$	977.5		$	1,203.6		$	977.5		$	1,203.6

Stockholders' equity - beginning of period			1,109.3			1,186.6			1,213.1			1,212.8

Average stockholders' equity	C		1,043.4			1,195.1			1,095.3			1,208.2

Stockholders' equity - end of period		$	977.5		$	1,203.6		$	977.5		$	1,203.6
Deferred Gain - end of period			110.2			121.3			110.2			121.3
Accumulated other comprehensive loss (income) - end of period			119.8			(111.1	)		119.8			(111.1	)
Income taxes related to accumulated other comprehensive (loss) income - end of period			(25.1	)		23.3			(25.1	)		23.3
Adjusted stockholders' equity - end of period			1,182.4			1,237.1			1,182.4			1,237.1
Adjusted stockholders' equity - beginning of period			1,249.2			1,230.9			1,266.9			1,223.1
Average adjusted stockholders' equity⁽¹⁾	D		1,215.8			1,234.0			1,224.7			1,230.1

Return on stockholders' equity	A / C		(1.5	) %		2.2	%		(1.6	) %		4.1	%
Annualized return on stockholders' equity			(6.0	)		8.8			(3.3	)		8.2

Adjusted return on stockholders' equity ⁽¹⁾	B / D		1.8	%		1.0	%		2.5	%		2.2	%
Annualized adjusted return on stockholders' equity ⁽¹⁾			7.2			3.8			5.1			4.3

(1) See Page 13 for information regarding our use of Non-GAAP Financial Measures.

EMPLOYERS HOLDINGS, INC. Roll-forward of Unpaid Losses and LAE (unaudited) $ in millions

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2022			2021			2022			2021

Unpaid losses and LAE at beginning of period	$	1,981.9		$	2,034.1		$	1,981.2		$	2,069.4
Reinsurance recoverable, excluding CECL allowance, on unpaid losses and LAE		471.7			492.3			476.9			497.0
Net unpaid losses and LAE at beginning of period		1,510.2			1,541.8			1,504.3			1,572.4
Losses and LAE incurred:
Current year losses		105.4			87.3			201.7			172.9
Prior year losses on voluntary business		(9.6	)		(1.6	)		(9.6	)		(15.0	)
Prior year losses on involuntary business		(0.4	)		—			(0.4	)		(0.5	)
Total losses incurred		95.4			85.7			191.7			157.4
Losses and LAE paid:
Current year losses		18.5			15.9			23.1			20.6
Prior year losses		76.7			87.5			162.5			185.1
Total paid losses		95.2			103.4			185.6			205.7
Net unpaid losses and LAE at end of period		1,510.4			1,524.1			1,510.4			1,524.1
Reinsurance recoverable, excluding CECL allowance, on unpaid losses and LAE		462.4			483.5			462.4			483.5
Unpaid losses and LAE at end of period	$	1,972.8		$	2,007.6		$	1,972.8		$	2,007.6

Total losses and LAE shown in the above table exclude amortization of the Deferred Gain, which totaled $2.1 million and $2.0 million for the three months ended June 30, 2022 and 2021, respectively and $4.2 million and $4.1 million for the six months ended June 30, 2022 and 2021, respectively.

EMPLOYERS HOLDINGS, INC. Consolidated Investment Portfolio (unaudited) $ in millions

	June 30, 2022										December 31, 2021
Investment Positions:	Cost or Amortized Cost		Net Unrealized Gain (Loss)			Fair Value			%		Fair Value			%
Fixed maturity securities	$	2,320.1	$	(119.8	)	$	2,190.3		83	%	$	2,342.7		83	%
Equity securities		218.8		52.3			271.1		10			344.4		12
Short-term investments		3.2		—			3.2		—			10.5		—
Other invested assets		41.5		6.3			47.8		2			38.4		1
Cash and cash equivalents		129.1		—			129.1		5			75.1		3
Restricted cash and cash equivalents		1.2		—			1.2		—			0.2		—
Total investments and cash	$	2,713.9	$	(61.2	)	$	2,642.7		100	%	$	2,811.3		100	%

Breakout of Fixed Maturity Securities:
U.S. Treasuries and agencies	$	65.4	$	(2.4	)	$	63.0		3	%	$	68.1		3	%
States and municipalities		354.8		(0.8	)		353.9		16			436.1		19
Corporate securities		1,017.7		(66.5	)		945.3		43			1,080.3		46
Mortgage-backed securities		435.6		(31.5	)		404.1		18			414.1		18
Asset-backed securities		69.8		(5.4	)		64.4		3			68.5		3
Collateralized loan obligations		209.8		(6.7	)		203.1		9			85.4		4
Bank loans and other		167.0		(6.5	)		156.5		7			190.2		8
Total fixed maturity securities	$	2,320.1	$	(119.8	)	$	2,190.3		100	%	$	2,342.7		100	%

Weighted average book yield							3.3	%				3.0	%
Average credit quality (S&P)						A+					A+
Duration							4.1					3.4

EMPLOYERS HOLDINGS, INC. Book Value Per Share (unaudited) $ in millions, except per share amounts

		June 30, 2022			March 31, 2022			December 31, 2021			June 30, 2021
Numerators:
Stockholders' equity	A	$	977.5		$	1,109.3		$	1,213.1		$	1,203.6
Plus: Deferred Gain			110.2			112.3			114.4			121.3
Stockholders' equity including the Deferred Gain⁽¹⁾	B		1,087.7			1,221.6			1,327.5			1,324.9
Accumulated other comprehensive loss (income)			119.8			34.9			(76.7	)		(111.1	)
Income taxes related to accumulated other comprehensive (loss) income			(25.1	)		(7.3	)		16.1			23.3
Adjusted stockholders' equity ⁽¹⁾	C	$	1,182.4		$	1,249.2		$	1,266.9		$	1,237.1

Denominator (shares outstanding)	D		27,383,132			27,738,429			27,741,400			28,291,782

Book value per share ⁽¹⁾	A / D	$	35.70		$	39.99		$	43.73		$	42.54
Book value per share including the Deferred Gain⁽¹⁾	B / D		39.72			44.04			47.85			46.83
Adjusted book value per share ⁽¹⁾	C / D		43.18			45.03			45.67			43.73

YTD Change in: ⁽²⁾
Book value per share			(14.9	) %								1.4	%
Book value per share including the Deferred Gain			(13.8	)								1.0
Adjusted book value per share			(2.1	)								3.3

(1) See Page 13 for information regarding our use of Non-GAAP Financial Measures.
(2) Reflects the change in book value per share after taking into account dividends declared of $1.51 and $0.50 for the six month ended June 30, 2022 and 2021, respectively.

EMPLOYERS HOLDINGS, INC. Earnings Per Share (unaudited) $ in millions, except per share amounts

		Three Months Ended						Six Months Ended
		June 30,						June 30,
			2022			2021			2022			2021
Numerators:
Net (loss) income	A	$	(15.6	)	$	26.4		$	(17.8	)	$	49.5
Impact of the LPT Agreement			(2.1	)		(2.0	)		(4.2	)		(4.1	)
Net (loss) income before impact of the LPT ⁽¹⁾	B		(17.7	)		24.4			(22.0	)		45.4
Net realized and unrealized losses (gains) on investments			50.1			(16.0	)		67.4			(26.9	)
Severance costs			—			0.1			—			3.0
Income tax (benefit) expense related to items excluded from Net income			(10.5	)		3.3			(14.2	)		5.0
Adjusted net income ⁽¹⁾	C	$	21.9		$	11.8		$	31.2		$	26.5

Denominators:
Average common shares outstanding (basic)	D		27,650,277			28,478,788			27,585,447			28,497,654
Average common shares outstanding (diluted)	E		27,782,921			28,809,341			27,789,087			28,888,735

Earnings (loss) per share:
Basic	A / D	$	(0.56	)	$	0.93		$	(0.65	)	$	1.74
Diluted⁽²⁾	A / E		(0.56	)		0.92			(0.65	)		1.71

Earnings (loss) per share before impact of the LPT: ⁽¹⁾
Basic	B / D	$	(0.64	)	$	0.86		$	(0.80	)	$	1.59
Diluted	B / E		(0.64	)		0.85			(0.80	)		1.57

Adjusted earnings per share: ⁽¹⁾
Basic	C / D	$	0.79		$	0.41		$	1.13		$	0.93
Diluted	C / E		0.79			0.41			1.12			0.92

(1) See Page 13 for information regarding our use of Non-GAAP Financial Measures.
(2) Represents basic loss per share or diluted earnings per share, as appropriate.

Non-GAAP Financial Measures

Within this earnings release we present the following measures, each of which are "non-GAAP financial measures." A reconciliation of these measures to the Company's most directly comparable GAAP financial measures is included herein. Management believes that these non-GAAP measures are important to the Company's investors, analysts and other interested parties who benefit from having an objective and consistent basis for comparison with other companies within our industry. Management further believes that these measures are more relevant than comparable GAAP measures in evaluating our financial performance.

The LPT Agreement is a non-recurring transaction that does not result in ongoing cash benefits to the Company. Management believes that providing non-GAAP measures that exclude the effects of the LPT Agreement (amortization of deferred reinsurance gain, adjustments to LPT Agreement ceded reserves and adjustments to contingent commission receivable) is useful in providing investors, analysts and other interested parties a meaningful understanding of the Company's ongoing underwriting performance.

Deferred reinsurance gain (Deferred Gain) reflects the unamortized gain from the LPT Agreement. This gain has been deferred and is being amortized using the recovery method, whereby the amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries, except for the contingent profit commission, which is being amortized through June 30, 2024. Amortization is reflected in losses and LAE incurred.

Adjusted net income (see Page 3 for calculations)is net income excluding the effects of the LPT Agreement, and net realized and unrealized gains and losses on investments (net of tax), and any miscellaneous non-recurring transactions (net of tax). Management believes that providing this non-GAAP measures is helpful to investors, analysts and other interested parties in identifying trends in the Company's operating performance because such items have limited significance to its ongoing operations or can be impacted by both discretionary and other economic factors and may not represent operating trends.

Stockholders' equity including the Deferred Gain (see Page 11 for calculations) is stockholders' equity including the Deferred Gain. Management believes that providing this non-GAAP measure is useful in providing investors, analysts and other interested parties a meaningful measure of the Company's total underwriting capital.

Adjusted stockholders' equity (see Page 11 for calculations) is stockholders' equity including the Deferred Gain, less accumulated other comprehensive income (net of tax). Management believes that providing this non-GAAP measure is useful to investors, analysts and other interested parties since it serves as the denominator to the Company's adjusted return on stockholders' equity metric.

Return on stockholders' equity and Adjusted return on stockholders' equity (see Page 8 for calculations). Management believes that these profitability measures are widely used by our investors, analysts and other interested parties.

Book value per share, Book value per share including the Deferred Gain, and Adjusted book value per share (see Page 11 for calculations). Management believes that these valuation measures are widely used by our investors, analysts and other interested parties.

Net income before impact of the LPT (see Page 3 for calculations). Management believes that these performance and underwriting measures are widely used by our investors, analysts and other interested parties.

Description of Reportable Segments

The Company has determined that it has two reportable segments: Employers and Cerity. Each of these segments represents a separate and distinct distribution channel through which the Company conducts insurance business.

The nature and composition of each reportable segment and its Corporate and Other activities are as follows:

The Employers segment represents the traditional business offered through the EMPLOYERS brand name (Employers) through its agents, including business originated from its strategic partnerships and alliances;
The Cerity segment represents the as business offered under the Cerity brand name, which includes the Company's direct-to-customer business; and
Corporate and Other activities consist of those holding company expenses that are not considered to be underwriting in nature, the financial impact of the LPT Agreement and legacy (pre-acquisition) business assumed and ceded by Cerity Insurance Company. These expenses are not considered to be part of a reportable segment and are not otherwise allocated to a reportable segment.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220728005804/en/

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