Shrinking workforces among its small business customers continued to pinch earnings for Reno-based Employers Holdings Inc. during the first quarter.
The publicly held company, which writes workers compensation coverage in 30 states, earned $20.9 million during the first quarter. That compares with earnings of $25.5 million a year earlier.
Douglas Dirks, Employers' president and chief executive officer, said price competition also remains stiff in many of the company's primary markets.
About 40 percent of the company's business is written in California. Florida where it purchased the workers comp carrier AmCOMP late last year accounts for 10 percent of its business. Wisconsin is third at 9 percent, and Nevada is its fourth biggest market as it accounted for 6 percent of Employers' premiums.
While declining workforces hurt Employers fewer workers mean smaller workers comp policies Dirks said the company believes it's well-positioned to be among the early beneficiaries of an economic recovery.
"Historically, small businesses lead recoveries," he said.
But the recovery clearly hasn't started in Nevada or California.
Employers reported the amount of premiums it wrote in Nevada during the first quarter fell by $6.6 million compared with a year earlier. Premiums in California were down by $6.2 million.
Dirks said the company expects pressure on premiums to continue, although it hopes to make up some of the lost ground by taking market share from competitors. But the company's management team has said repeatedly that Employers won't chase business that doesn't make economic sense and it focuses on disciplined underwriting to make sure that premiums are sufficient for the risks that are involved with a
workers comp policy.
Instead, Employers looks to protect its bottom line through continued focus on cost control.
It's continuing the consolidation of administrative and other functions that began with its acquisition of AmCOMP. Some of those jobs are moving to the Reno headquarters.
Dirks said the company also is installing technology to improve the efficiency of its claims operation.
"We are moving to restructure our cost base more in line with our revenues," he said. But some of the cost-cutting won't hit Employers' bottom line until the end of 2009.
In other news, Employers said last week it repurchased 1.6 million shares of its common stock during the first quarter. The purchases came at an average price of $9.56 a share.
The company's board, meanwhile, declared a quarterly dividend of 6 cents a share. It will be paid June 3 to shareholders of record May 20.
