Employers Holdings Inc. of Reno may be getting some relief from a pricing squeeze in California, its largest market.
The Golden State accounts for about 70 percent of the premiums written by Employers, a workers compensation carrier, but the amount of those premiums has been squeezed by rate declines.
In fact, the company's rates on California policies have fallen by more than 38 percent since the start of 2006, Chief Financial Officer William Yocke told securities analysts last week. But relief may be on the way.
The California Workers Compensation Rating Bureau has recommended a 5 percent increase in basic rates next year, the first recommended increase since late 2003.
The California Department of Insurance hasn't acted on the bureau's recommendation, and Employers hasn't decided how it might react, said Chief Executive Officer Douglas Dirks.
Despite challenging pricing, the number of Employers policies in force in California on Sept. 30 was 17.4 percent higher than year-earlier figures.
"California still presents us with attractive opportunities and remains a significant part of our growth plan," Dirks said.
In its home turf of Nevada, competition also is tough. Employers said the number of policies it had in force in Nevada on Sept. 30 was 7.2 percent less than year-earlier numbers. Nevada accounts for about 20 percent of Employers' business.
The company's basic strategy includes moving into new markets to reduce its reliance on California and Nevada.
Those new markets, which include Illinois and Florida, saw a 33 percent rise in the number of policies in force in the past year. Company-wide, the number of policies in force rose by 12.7 percent during the 12-month period.
The workers comp carrier earned $29.9 million in the third quarter compared with earnings of nearly $77 million in the same period a year earlier. The 2006 figures, however, included about $69 million in gains from adjustment of the company's loss reserves.
Employers' investment portfolio stood at $1.7 billion at the end of the third quarter, and the company said it earned a tax-equivalent yield of 5.35 percent on its investments.
Less than 3/100ths of 1 percent of the portfolio are made up subprime mortgage debt or financial derivatives of subprime loans, Yocke said.
On the marketing front, Employers has been named a workers compensation carrier of choice by the 22,000-member California Restaurant Association. That endorsement doesn't necessarily guarantee any increased business for Employers, executives said.
Separately, the company said it will pay a dividend of 6 cents a share Dec. 12 to shareholders of record on Nov. 22.
