The nation's weak employment picture took a bite out of the earnings of Reno-based Employers Holdings Inc. during the fourth quarter.
The workers compensation carrier said last week it earned $11.3 million in the fourth quarter, a decrease of $4.6 million from the previous year.
The problem?
"Growth in our top line continues to be pressured by higher levels of unemployment, declines in payrolls, competitive market conditions, and the impacts of our continued disciplined underwriting," said Douglas Dirks, Employers' president and chief executive officer.
As employers cut payrolls, they need less workers compensation coverage.
Employers Holdings said the decline was particularly noticeable in Nevada and Florida, two of its keystone markets.
In Nevada, the number of policies Employers has in force fell by 21 percent during 2009, standing at 4,119 at the end of the year. In Florida, the number of policies in force declined by 15.6 percent during the year.
At the same time, however, the company held its own in California, which accounts for about half of Employers Holdings' business. There, the company had 27,812 policies in force at the end of 2009, a decline of less than 1 percent during the year.
And the company saw growth in policy numbers in some of its Midwestern markets such as Wisconsin and Illinois.
Dirks said Employers Holdings plans to raise its rates in California by 3 percent next month.
He said the company is uncertain about the pace of economic recovery, and it expects that unemployment will remain high for a while.
The Obama Administration's efforts to help small businesses get access to credit may prove to be particularly important, Dirks said.
Employers Holdings continues to focus on good underwriting, avoiding the temptation to chase poor risks for a short-term boost to premiums, said Martin Welch, the company's chief operating officer. That's particularly challenging a time when the company generates fewer premium dollars to cover its fixed costs.
While it waits for the employment situation to improve, Employers Holdings has been completing integration of AmCOMP, a Florida workers comp carrier that it acquired in October 2008.
It completed the combination of the two companies' claims and underwriting systems in January.
Employer Holdings, which is publicly held, said that it earned $90.5 million on its investment portfolio during 2009 compared with investment earnings of $78.1 million in 2008. The portfolio yielded 4.5 percent during 2009.
The company will pay a quarterly dividend of 6 cents a share on March 24 to shareholders of record March 10.
